Urstadt Biddle Properties Inc. Reports Second Quarter Operating Results for Fiscal 2018
GREENWICH, Conn.--(BUSINESS WIRE)--Jun 8, 2018--Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real estate investment trust, today reported its operating results for the three and six months ended April 30, 2018.
Net income applicable to Class A Common and Common stockholders for the second quarter of fiscal 2018 was $9,598,000 or $0.25 per diluted Class A Common share and $0.23 per diluted Common share, compared to $24,101,000 or $0.64 per diluted Class A Common share and $0.57 per diluted Common share in last year’s second quarter. Net income attributable to Class A Common and Common stockholders for the first six months of fiscal 2018 was $14,519,000 or $0.39 per diluted Class A Common share and $0.34 per diluted Common share, compared to $27,513,000 or $0.74 per diluted Class A Common share and $0.65 per diluted Common share in the first six months of fiscal 2017. Net income in the three and six months ended April 30, 2017 includes a gain on sale of property in the amount of $19.5 million. Net income in the three and six months ended April 30, 2018 includes lease termination income in the amount of $3.7 million.
Funds from operations (“FFO”) for the second quarter of fiscal 2018 was $16,950,000 or $0.45 per diluted Class A Common share and $0.40 per diluted Common share, compared with $11,204,000 or $0.30 per diluted Class A Common share and $0.26 per diluted Common share in last year’s second quarter. For the first six months of fiscal 2018, FFO amounted to $29,200,000 or $0.78 per diluted Class A Common share and $0.69 per diluted Common share, compared to $21,569,000 or $0.58 per diluted Class A Common share and $0.51 per diluted Common share in the corresponding period of fiscal 2017. FFO in the three and six months ended April 30, 2018 includes lease termination income in the amount of $3.7 million.
At April 30, 2018, the company’s consolidated properties were 92.5% leased (versus 92.7% at the end of fiscal 2017) and 91.6% occupied (versus 91.0% at the end of fiscal 2017). The small drop in the company’s leased rate in the first half of the year was predominantly related to the company absorbing 6,800 square feet of vacancies when the company purchased 470 Main Street in Ridgefield, CT. The company is marketing this space for lease.
Both the percentage of property leased and the percentage of property occupied referenced in the preceding paragraph exclude the company’s unconsolidated joint ventures. At April 30, 2018, the company had equity interests in seven unconsolidated joint ventures (751,000 square feet), which were 97.7% leased, unchanged from the end of fiscal 2017.
Commenting on the quarter’s operating results, Willing L. Biddle, President and CEO of Urstadt Biddle Properties Inc., said, “We are pleased to report that we had a very good quarter. Our FFO increased by 51.3% on a dollar value basis and 51.0% on a Class A Common per share basis, inclusive of the $3.7 million lease termination revenue recorded this quarter relating to a tenant space at our Ferry Plaza property discussed below, when compared with our operating results in last year’s second quarter. This increase was the result of a number of positive transactions completed by the company in fiscal 2017 as well as positive events this quarter. We completed the sale of our vacant Westchester Pavilion property in March of fiscal 2017 for $57 million and re-invested those proceeds in several new properties and other investments, and we are continuing to see earnings improvement in our operating results as that capital is now fully deployed. In addition, we were able to complete two accretive financing transactions in fiscal 2017, which increased our operating results this quarter, and will continue to have a positive impact going forward. In July 2017, the company refinanced its largest mortgage, reducing the interest rate from 5.52% to 3.398%, which is now saving the company over $1 million in interest expense per annum. Also, in October 2017, we redeemed all $129 million of our 7.125% Series F Cumulative Preferred Stock using proceeds from the sale of the Pavilion and the issuance of $115 million of 6.25% Series H Cumulative Preferred Stock. This reduced preferred stock outstanding, along with the lower coupon, is now saving the company over $2 million per annum in preferred stock dividends. This quarter, we reached an agreement with Acme, at our Ferry Plaza property located in Newark, NJ, to terminate its lease several years early, for which we received a $3.7 million lease termination payment. We are very pleased our FFO payout ratio continues to improve as we know our investors greatly value the safety and consistent growth of our dividend through all types of economic cycles.”
Mr. Biddle continued……“This quarter we completed the purchase of the Tanglewood Shopping Center, located in Yonkers, NY. Tanglewood is a 27,000 square foot shopping center consisting of two retail buildings. The primary building, which fronts Central Park Avenue, one of the premier retail corridors in Westchester County, NY, consists of approximately 22,300 square feet, is anchored by an AutoZone and contains other national and regional service and food tenants. The secondary building consists of approximately 4,700 SF and is leased to CKO Kickboxing (a 70+ unit chain), a nail salon and a market. The property is currently 100% leased. On the leasing front, we are pleased to report that this quarter we signed leases for two vacant grocery stores in our portfolio. The first was a lease with Whole Foods Market for a 40,000 square foot store, formerly occupied by A&P at our Valley Ridge Shopping Center in Wayne, NJ. This twenty-year lease is contingent upon our ability to obtain a small expansion of our property to accommodate Whole Foods space requirements, and we have started this process with the town. Assuming the approvals are obtained, we expect to deliver the space to Whole Foods in January 2019 with the store to be open and paying rent later in 2019. We will not include this lease in our new leasing metrics until municipal approval is obtained. We are also planning to upgrade the façade of the property to be complementary with the Whole Foods store and to enable us to attract the kind of co-tenants that a Whole Foods anchored-center traditionally has been able to attract. This is one of the first leases Whole Foods has signed since its acquisition by Amazon, and it will be Whole Foods first store in Passaic County, NJ. The second major lease is with Seabra Foods, the premier Portuguese/Spanish specialty supermarket, for a 62,000 square foot store at our Ferry Plaza Shopping Center in the Ironbound area of Newark, NJ. Seabra is replacing Acme, which closed its store in this location in 2017. Acme struggled to merchandise the store in a manner that met the preferences of the local community, so we reached an agreement with Acme for an early termination of its lease and re-leased the store to Seabra. Seabra intends to open a flagship supermarket and wholesale club at this location which is within a half mile of Seabra’s corporate headquarters. Seabra operates 12 supermarkets in New Jersey, Massachusetts, Rhode Island and Florida. Seabra also has a substantial business importing specialty foods from Portugal, Spain and Brazil and has a very loyal customer base. The Ironbound area of Newark where our shopping center is located is populated by a very high concentration of people of Portuguese and Brazilian descent, and we can think of no better supermarket to anchor our shopping center. Seabra took occupancy of the store in May and expects to be open for business by year-end. These are our first leases with Whole Foods and Seabra, and we consider each to be a substantial improvement for the properties they will occupy.”
Urstadt Biddle Properties Inc. is a self-administered equity real estate investment trust which owns or has equity interests in 83 properties containing approximately 5.1 million square feet of space. Listed on the New York Stock Exchange since 1970, it provides investors with a means of participating in ownership of income-producing properties. It has paid 193 consecutive quarters of uninterrupted dividends to its shareholders since its inception and has raised total dividends to its shareholders for the last 24 consecutive years.
Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, risks associated with the timing of and costs associated with property improvements, financing commitments and general competitive factors.
Results of Operations
The following information summarizes our results of operations for the six months and three months ended April 30, 2018 and 2017 (amounts in thousands):
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