FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For Quarter Ended July 31, 1998 Commission File Number 1-6309
URSTADT BIDDLE PROPERTIES INC.
(Exact Name of Registrant as Specified in Charter)
MARYLAND 04-2458042
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
321 RAILROAD AVENUE, GREENWICH, CT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 863-8200
The number of shares of Registrant's common shares outstanding as of the close
of period covered by this report: 5,226,991. (Common Shares outstanding giving
effect to a special stock dividend of a new issue of Class A Common Stock
declared on June 16, 1998 for shareholders as of July 31, 1998 are: 5,226,991
shares of Class A Common Stock and 5,226,991 shares of Common Stock).
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
THE SEC FORM 10-Q, FILED HEREWITH, CONTAINS 13 PAGES, NUMBERED CONSECUTIVELY
FROM 1 TO 13 INCLUSIVE, OF WHICH THIS PAGE IS 1.
1
<PAGE>
INDEX
URSTADT BIDDLE PROPERTIES INC.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER
THE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information contained herein, this Form 10-Q contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 which involve certain risks and uncertainties. The
Company's actual results or outcomes may differ materially from those
anticipated. Important factors that the company believes might cause such
differences are discussed in the cautionary statements accompanying the
forward-looking statements on this Form 10-Q. In assessing forward-looking
statements contained herein, readers are urged to carefully read those
statements. When used on this Form 10-Q, the words "estimate", "anticipate",
"expect", "believe", and similar expressions are intended to identify
forward-looking statements.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Income--Three months ended July 31, 1998 and
1997, Nine months ended July 31, 1998 and 1997
Consolidated Balance Sheets--July 31, 1998 and October 31, 1997.
Consolidated Statements of Cash Flows--Nine months ended July 31, 1998
and 1997.
Consolidated Statements of Stockholders' Equity--Nine months ended July
31, 1998 and 1997.
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
<PAGE>
URSTADT BIDDLE PROPERTIES INC..
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
JULY 31 October 31
ASSETS 1998 1997
------- ----------
(unaudited)
<S> <C> <C>
Real Estate Investments:
Properties owned-- at cost, net of accumulated depreciation $102,267 $94,489
Properties available for sale - at cost, net of accumulated
depreciation and recoveries 20,854 22,327
Investment in unconsolidated joint venture 9,100 8,920
Mortgage notes receivable 2,632 3,605
-------- -------
134,853 129,341
Cash and cash equivalents 5,877 1,922
Interest and rent receivable 2,154 2,649
Deferred charges, net of accumulated amortization 2,191 2,468
Other assets 1,202 1,050
-------- -------
$146,277 $137,430
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $19,440 $43,687
Dividends payable 1,881 -
Accounts payable and accrued expenses 1,133 1,603
Deferred directors' fees and officers' compensation 615 550
Other liabilities 1,613 1,175
-------- -------
24,682 47,015
-------- -------
Minority Interest 2,125 2,125
Preferred Stock, par value $.01 per share; 20,000,000 shares authorized:
8.99% Series B Senior Cumulative Preferred stock, (liquidation
preference of $100 per share); 350,000 shares issued and outstanding 33,462 -
Stockholders' Equity:
Excess stock, par value $.01 per share; 10,000,000 shares authorized;
none issued and outstanding - -
Common stock, par value $.01 per share; 30,000,000 shares authorized;
5,226,991 and 5,167,495 outstanding shares in 1998 and 1997, respectively 52 51
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
5,226,991 outstanding shares 52 -
Additional paid in capital 118,895 117,763
Cumulative distributions in excess of net income (31,246) (28,530)
Unamortized restricted stock compensation and notes receivable
from officers/stockholders (1,745) (994)
-------- -------
86,008 88,290
-------- -------
$146,277 $137,430
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
3
<PAGE>
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
July 31 July 31
----------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Operating leases $17,055 $18,404 $5,819 $5,452
Financing leases 275 347 98 110
Interest and other 1,084 848 239 202
Equity in income of unconsolidated joint venture 94 77 33 41
------ ------ ----- -----
18,508 19,676 6,189 5,805
------ ------ ----- -----
OPERATING EXPENSES:
Property expenses 5,632 5,515 1,842 1,743
Interest 1,798 2,500 451 841
Depreciation and amortization 3,440 3,029 1,178 1,050
General and administrative expenses 1,504 986 518 308
Directors' fees and expenses 159 135 53 42
------ ------ ----- -----
12,533 12,165 4,042 3,984
------ ------ ----- -----
OPERATING INCOME 5,975 7,511 2,147 1,821
Minority Interest in Results of Consolidated
Joint Venture 118 - 48
------ ------ ----- -----
-
NET INCOME 5,857 7,511 2,099 1,821
Preferred stock dividends 1,775 - 787 -
------ ------ ----- -----
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS $4,082 $7,511 $1,312 $1,821
====== ====== ====== ======
Earnings per common share:
Basic: $.40 $.73 $.13 $.18
---- ---- ---- ----
Diluted: $.39 $.72 $.12 $.17
====== ====== ====== ======
WEIGHTED AVERAGE NUMBER OF CLASS A COMMON
SHARES AND COMMON SHARES OUTSTANDING 10,247 10,230 10,250 10,217
------ ------ ------ ------
WEIGHTED AVERAGE NUMBER OF CLASS A, COMMON
SHARES AND COMMON EQUIVALENT SHARES OUTSTANDING 10,543 10,375 10,534 10,362
====== ====== ====== ======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
4
<PAGE>
URSTADT BIDDLE PROPERTIES INC..
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended July 31,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $5,857 $7,511
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 3,440 3,029
Compensation recognized relating to restricted stock 220 ---
Recovery of investment in properties owned
subject to financing leases 835 745
Equity in income of unconsolidated joint venture (94) (77)
(Increase) decrease in interest and rent receivable 495 (158)
(Decrease) increase in accounts payable and accrued expenses (470) 649
(Increase) decrease in other assets and other liabilities, net 286 (48)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,569 11,651
-------- --------
INVESTING ACTIVITIES:
Acquisitions of properties (8,277) (293)
Improvements to properties and deferred charges (2,133) (3,224)
Investment in unconsolidated joint venture 86 (553)
Payments received on mortgage notes receivable 973 76
-------- --------
NET CASH (USED IN) INVESTING ACTIVITIES (9,351) (3,994)
-------- --------
FINANCING ACTIVITIES:
Common dividends paid (4,917) (4,827)
Preferred dividends paid (1,775) ---
Proceeds from sales of additional common shares 214 541
Net proceeds from sale of preferred stock 33,462 ---
Purchases of common shares --- (15)
Payments on mortgage notes payable (24,247) (941)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,737 (5,242)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,955 2,415
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,922 1,819
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $5,877 $4,234
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
5
<PAGE>
URSTADT BIDDLE PROPERTIES INC..
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
(In thousands, except shares and per share data)
<TABLE>
<CAPTION>
Unamortized
Common Stock Class A Common Stock Restricted
------------ -------------------- (Cumulative Stock
Outstanding Outstanding Additional Treasury Distributions Compensation
Number of Par Number of Par Paid In Shares at In Excess of and Notes
Shares Value Shares Value Capital Cost (Net Income) Receivable
------ ----- ------ ----- ------- ---- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES - OCTOBER 31, 1996 5,346,081 $ 53 -- -- $ 124,073 $ (3,492) $ (30,668) --
Net Income -- -- -- -- -- -- 7,511 --
Cash dividends paid ($.94 per
share) -- -- -- -- -- -- (4,827) --
Sale of additional common
shares under dividend
reinvestment plan 12,437 -- -- -- 220 -- -- --
Exercise of stock options 27,332 -- -- -- 321 -- -- --
Common Shares issued under
restricted stock plan 49,000 -- -- -- 838 -- -- --
Deemed purchase of common
stock in connection with
organization of unconsolidated
joint venture (272,727) (2) -- -- (4,293) -- -- --
Purchase and retirement of
common shares (1,000) -- -- -- -- (15) -- --
Reduction in treasury shares -- -- -- -- (3,507) 3,507 -- --
Unamortized restricted stock
awards and notes from
officers for purchases of
common stock -- -- -- -- -- -- -- (1,035)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCES - JULY 31, 1997 5,161,123 $ 51 -- -- $ 117,652 $- $ (27,984) ($ 1,035)
========== ========== ========== ========== ========== ========== ========== ==========
Balances - October 31, 1997 5,167,495 $ 51 -- -- $ 117,763 -- $ (28,530) $ (994)
Net Income -- -- -- -- -- -- 5,857 --
Cash dividends declared:
Common Stock ($1.13 per share) -- -- -- -- -- -- (5,805) --
Class A Common Stock ($.19
per share) -- -- -- -- -- -- (993) --
Preferred Stock ($5.07
per share) -- -- -- -- -- -- (1,775) --
Sale of additional common
shares under dividend
reinvestment plan 10,872 -- -- -- 202 -- -- --
Exercise of stock options 874 -- -- -- 12 -- -- --
Common shares issued under
restricted stock plan-net 47,750 1 -- -- 970 -- -- (971)
Amortization of restricted stock
awards -- -- -- -- -- -- -- 220
One-for-one stock split-up
effected in the form of a
dividend of a new issue of
Class A Common Stock -- -- 5,226,991 52 (52) -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Balances - July 31, 1998 5,226,991 $ 52 5,226,991 $ 52 $ 118,895 -- $ (31,246) $ (1,745)
========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Total
-----
<S> <C>
BALANCES - OCTOBER 31, 1996 $ 89,966
Net Income 7,511
Cash dividends paid ($.94 per
share) (4,827)
Sale of additional common
shares under dividend
reinvestment plan 220
Exercise of stock options 321
Common Shares issued under
restricted stock plan 838
Deemed purchase of common
stock in connection with
organization of unconsolidated
joint venture (4,295)
Purchase and retirement of
common shares (15)
Reduction in treasury shares --
Unamortized restricted stock
awards and notes from
officers for purchases of
common stock (1,035)
----------
BALANCES - JULY 31, 1997 $ 88,684
==========
Balances - October 31, 1997 $ 88,290
Net Income 5,857
Cash dividends declared :
Common Stock ($1.13 per share) (5,805)
Class A Common Stock ($.19
per share) (993)
Preferred Stock ($5.07
per share) (1,775)
Sale of additional common
shares under dividend
reinvestment plan 202
Exercise of stock options 12
Common shares issued under
restricted stock plan-net --
Amortization of restricted stock
awards 220
One-for-one stock split-up
effected in the form of a
dividend of a new issue of
Class A Common Stock --
----------
Balances - July 31, 1998 $ 86,008
==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
6
<PAGE>
URSTADT BIDDLE PROPERTIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Business and Organization
Urstadt Biddle Properties Inc.(formerly HRE Properties, Inc.), (the "Company")
is a real estate investment trust engaged in the acquisition, ownership and
management of commercial real estate, primarily neighborhood and community
shopping centers in the northeastern part of the United States. Other assets
include office and retail buildings and industrial properties. The Company's
major tenants include supermarket chains and other retailers who sell basic
necessities.
On March 11 1998, the stockholders of the Company approved an amendment to the
Articles of Incorporation of the Company to change the name of the Company from
HRE Properties, Inc. to Urstadt Biddle Properties Inc. effective March 12, 1998.
Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of the Company, its wholly-owned subsidiary, and joint ventures in
which the Company has the ability to control the affairs of the venture. All
significant intercompany transactions and balances have been eliminated. The
Company's investment in an unconsolidated joint venture in which it does not
exercise control is accounted for by the equity method of accounting. The
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Results of operations for the nine-month period ended July 31, 1998 are not
necessarily indicative of the results that may be expected for the year ending
October 31, 1998. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's annual report for the fiscal year ended October 31, 1997.
Real Estate Investments
In March 1998, the Company purchased a 19,000 square foot mixed use property for
a purchase price of $3,100,000, all cash.
In June 1998, the Company acquired a 58,000 square foot retail/office property
for a purchase price of $4,665,000, all cash.
The Company had a contract to sell one of its retail properties. In August 1998,
the contract was terminated by the buyer.
7
<PAGE>
Mortgage Notes Payable and Lines of Credit
During fiscal 1998, the Company fully repaid three mortgage notes payable
totaling approximately $24,000,000.
In June 1998, the Company amended its $5 million unsecured revolving credit
facility with a major commercial bank to increase the facility to $15 million
and extend the maturity date to September 1999.
Preferred Stock
The Company is authorized to issue up to 20,000,000 shares of preferred stock.
In January 1998, the Company completed a private placement of 350,000 shares of
8.99% Series B Senior Cumulative Preferred Stock, par value $.01 per share, with
a liquidation preference of $100 per share ("Series B Preferred Stock"). Holders
of the Series B Preferred Stock are entitled to receive cumulative preferential
cash dividends equal to 8.99% per annum, payable quarterly in arrears and
subject to adjustment under certain circumstances.
The Series B Preferred Stock has no stated maturity, will not be subject to any
sinking fund or mandatory redemption and will not be convertible into other
securities or property of the Company. On or after January 8, 2008, the Series B
Preferred Stock may be redeemed by the Company at its option, in whole or in
part, at a redemption price of $100 per share, plus all accrued but unpaid
dividends. Upon a Change in Control of the Company (as defined), (i) each holder
of Series B Preferred Stock shall have the right, at such holder's option, to
require the Company to repurchase all or any part of such holder's Series B
Preferred Stock for cash at a repurchase price of $100 per share, plus all
accrued and unpaid dividends, and (ii) the Company shall have the right, at the
Company's option, to redeem all or any part of the Series B Preferred Stock at
(a) prior to January 8, 2008, the Make-Whole Price (as defined) and (b) on or
subsequent to January 8, 2008, the redemption price of $100 per share, plus all
accrued and unpaid dividends.
The Series B Preferred Stock also contains covenants which require the Company
to maintain certain financial coverages relating to fixed charge and
capitalization ratios. Shares of the Series B Preferred Stock are non-voting;
however, under certain circumstances (relating to non-payment of dividends or
failure to comply with the financial covenants) the preferred stockholders will
be entitled to elect two directors.
Stockholders Equity
Stock Dividend
On June 16, 1998, the Board of Directors declared a special stock dividend
on the Company's Common Stock consisting of one share of a newly created
class of Class A Common Stock, par value $.01 per share for each share of
the Company's Common Stock. held by stockholders of record at the close of
business on July 31, 1998. The Class A Common Stock entitles the holder to
1/20 of one vote per share. Each share of Common Stock and Class A Common
Stock have identical rights with respect to dividends except that each
Share of Class A Common Stock will receive not less than 110% of the
regular quarterly dividends paid on each share of Common Stock. The stock
dividend was payable on August 14, 1998. An amount equal to the par value
of the Class A Common shares to be issued was transferred from additional
paid in capital to Class A
8
<PAGE>
Common Stock. The effect of the stock dividend has been retroactively
reflected as of July 31, 1998 in the consolidated balance sheet and
statement of changes, in stockholders' equity. All references to the number
of common share except authorized shares and per share amounts elsewhere in
the consolidated financial statements have been adjusted as appropriate to
reflect the effect of this stock dividend for all periods presented.
Earning Per Share
-----------------
The following table sets forth the computations of basic and diluted
earnings per share (in thousands, except share amounts):
Nine months ended Three months ended
July 31 July 31
1998 1997 1998 1997
- --------------------------------------------------------------------------------
Numerator:
Net income $5,857 $7,511 $2,099 $1,821
Preferred stock dividends 1,775 - 787 -
----- ---
Numerator for basic and diluted
earnings per share - income
applicable to common stockholders 4,082 7,511 1,312 1,821
Denominator:
Basic earnings per share -
weighted average Class A Common
and common shares outstanding 10,247 10,230 10,250 10,217
Effect of dilutive securities:
Stock-based compensation plans 187 145 175 145
Operating partnership units 109 - 109 -
--- ---
Diluted earnings per common share -
weighted average Class A Common,
and common equivalent shares
outstanding 10,543 10,375 10,534 10,362
====== ====== ====== ======
Basic earnings per common share $.40 $.73 $.13 $.18
Diluted earnings per common share $.39 $.72 $.12 $.17
- --------------------------------------------------------------------------------
Restricted Stock Plan
The Company has a Restricted Stock Plan (Plan) providing for the grant of
restricted stock awards to key employees of the Company. The Plan allows
for restricted stock awards of up to 250,000 common shares of the Company.
During the first quarter of fiscal 1998, the Company awarded 51,250
restricted shares to certain key employees as an incentive for future
services. The shares vest at the end of five years. Dividends are paid on
shares when declared. The market value of shares awarded has been recorded
as unamortized restricted stock compensation and is shown as a separate
component of stockholders' equity. Unearned restricted stock compensation
is being amortized to expense over the five year vesting period.
Subsequent Events
On June 16, 1998, the Board of Directors declared a dividend of $0.17 per share
on the Common Stock and $0.19 per share on the Class A Common Stock to
shareholders of record on September 30, 1998. The dividends are payable on
October 23, 1998.
In September 1998, the Company acquired a 95,000 square foot retail property for
a purchase price of approximately $21.2 million, all cash. The Company borrowed
$19.5 million under its existing bank credit lines to complete the acquisition
of the property.
In September 1998, the Company obtained a commitment from a major commercial
bank to establish a secured revolving credit facility for $20 million. The
credit facility is to be secured by two retail properties having an aggregate
net carrying amount of $30.3 million at July 31, 1998.
9
<PAGE>
PART I - FINANCIAL INFORMATION (continued)
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Company's liquidity and capital resources include its cash and cash
equivalents, funds available from bank borrowings and long-term mortgage debt,
capital financings and sales of real estate investments. The Company meets its
liquidity requirements primarily by generating cash from the operations of its
properties. Payments of expenses related to real estate operations, capital
improvement programs, debt service, management and professional fees, and
dividend requirements place demands on the Company's liquidity.
The Company believes that the financial resources currently available to it are
sufficient to meet all of its known obligations and commitments and to make
additional real estate investments when appropriate opportunities arise. At July
31, 1998, the Company had cash and cash equivalents of $5.9 million compared to
$1.9 million at October 31, 1997. The Company also has $25 million in unsecured
lines of credit with two major commercial banks. The credit lines are available
to finance the acquisition, management or development of commercial real estate
and for working capital purposes. The credit lines expire at various periods
through 1999 and outstanding borrowings, if any, may be repaid from proceeds of
debt refinancings or sales of properties. In June 1998, the Company increased
one of its bank credit lines from $5 million to $15 million to provide greater
financial flexibility in its property acquisition program. At July 31, 1998,
long-term debt consisted of four mortgage notes payable totaling $19.4 million,
of which $.5 million in principal payments are due in the next twelve months.
In September 1998 the Company borrowed $19.5 million under its bank credit
lines. The proceeds were used to complete the acquisition of a 95,000 square
foot retail property. Interest on credit line borrowings are at rates tied to
the prime rate or libor. The Company expects to repay credit line borrowings
from either proceeds of sales of assets, new mortgage loans or sale of
additional equity.
In January 1998, the Company sold a $35 million, 8.99% Series B Senior
Cumulative Preferred Stock issue in a private placement to institutional
investors, realizing net proceeds of $33.5 million (after deducting expenses of
the offering). The net proceeds of the offering were used to repay approximately
$24.0 million of mortgage notes payable and to complete two property
acquisitions totaling $7.8 million.
The Company makes real estate investments periodically. During the first nine
months of fiscal 1998, the Company acquired three properties for total
consideration of $8.3 million. The properties acquired consists of a retail
property located adjacent to the Company's Springfield, Massachusetts property
acquired for a purchase price of $.5 million, a 19,000 square foot mixed use
property located in Greenwich, Connecticut, acquired for a purchase price of
$3.1 million and a mixed use property located in Ridgefield, Connecticut
acquired for a purchase price of $4.7 million. The Company utilized proceeds of
the preferred stock offering and available cash resources to acquire the
properties.
10
<PAGE>
Funds from Operations
Funds from Operations (FFO) is defined as net income available to common
stockholders (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of
properties, plus depreciation and amortization, the elimination of significant
non-recurring items and after adjustments for unconsolidated joint ventures. The
Company believes the level of FFO to be an appropriate supplemental financial
measure of its operating performance. FFO does not represent cash flows from
operations as defined by generally accepted accounting principles, is not
indicative that cash flows are adequate to fund all cash needs and is not
considered to be an alternative to net income. Since FFO is a supplemental
measure of a real estate company's operating performance such measurement may
not be comparable with those of other companies. The Company considers
recoveries of investment in properties which are subject to financing leases to
be analogous to amortization for purposes of calculating FFO. In the nine-month
period ended July 31, 1998, Funds from Operations increased 5.6% to $7,993,000
from $7,570,000 in the year ago period. The improvement results from, among
other things, recent acquisitions and new leasing of space completed last year
at certain of the Company's properties, the effect of which is reflected this
year.
A reconciliation of net income applicable to common stockholders to Funds from
Operations is as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED JULY 31, 1998 1997
- -------------------------- ---- ----
(amounts in thousands)
<S> <C> <C>
Net income applicable to common stockholders $4,082 $7,511
Add: Depreciation and amortization of real estate assets 3,962 3,536
Adjustments for unconsolidated joint venture 526 458
Less: Non-recurring items* - net (577) (3,935)
------ ------
FUNDS FROM OPERATIONS $7,993 $7,570
====== ======
</TABLE>
*1997 amount includes $3.25 million settlement received from one of the
Company's tenants (see Results of Operations)
Results of Operations
Revenues
Operating lease income for the three month period ended July 31, 1998 increased
by 6.7% from the comparable period in fiscal 1997. The increase in lease
revenues is the result of, among other things, new leasing of space at certain
of the Company's properties last year, the effect of which is reflected this
year and rental income from three properties acquired in late fiscal 1997 and
1998. Operating lease income for properties owned during both fiscal 1998 and
1997 were generally unchanged compared to the same period last year. Fiscal 1997
lease revenues included a one-time settlement amount of $3,250,000 representing
additional percentage rent received in the first quarter from a tenant. In
accordance with the terms of its lease, the tenant was required to aggregate the
sales of all its stores within a specified radius when computing percentage rent
due the Company.
The Company's core properties were more than 95% leased at July 31, 1998. The
Company leased or renewed more than 136,000 square feet of space in fiscal 1998
10% of gross leaseable area.
11
<PAGE>
Interest income increased in fiscal 1998 from the reinvestment into short-term
investments of the net proceeds from the sale of a preferred stock issue.
A mortgage note receivable in the face amount of $1,176,000 (carrying amount of
$898,000) was repaid during the second quarter of fiscal 1998 resulting in
additional interest of $278,000, which amount is included in interest income.
Expenses
Total expenses amounted to $12,533,000 in the first nine-months of fiscal 1998
compared to $12,165,000 for the same period last year. The largest expense
category is property expenses of the Company's real estate operating properties.
Property expenses for properties owned in both fiscal 1998 and 1997 decreased by
3.5% in the first nine months of fiscal 1998 from lower repairs and maintenance
costs at several of the Company's retail properties. Property expenses for newly
acquired properties increased property expenses by approximately $350,000 in the
first nine months of fiscal 1998.
Interest expense decreased by $390,000 and $702,000 in the three month and nine
month periods ended July 31, 1998, respectively from the repayment of
approximately $24,000,000 of mortgage notes payable during fiscal 1998.
Depreciation and amortization expense increased in the first half of fiscal 1998
principally from depreciation on newly acquired properties.
General and administrative expenses increased in fiscal 1998 from higher
executive compensation costs in connection with the Company's stock-based
compensation programs and professional fees incurred in connection with the
Company's change of name.
Impact of Year 2000
The Company is continuing to assess the Year 2000 issue to determine the impact,
if any, on its operations. The Company has determined that it will not be
required to significantly modify or replace its software so that its computer
systems will properly process information beyond 1999.
The Company has also initiated formal communications with all of its significant
service providers and tenants to determine the extent to which the Company is
vulnerable to those parties failure to remediate their own Year 2000 issue. The
Company plans to complete the Year 2000 project during the first half of fiscal
1999. The estimated costs attributable to the purchase of new computer equipment
and software, third party modification plans, consulting fees, etc. are not
expected to have a material effect on the Company's results of operations.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the three
month period ended July 31, 1998.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
URSTADT BIDDLE PROPERTIES INC..
(Registrant)
By /s/ Charles J. Urstadt
---------------------------------
Charles J. Urstadt
Chairman and
Chief Executive Officer
By: /s/ James R. Moore
---------------------------------
James R. Moore
Executive Vice President/
Chief Financial Officer
(Principal Financial Officer
Dated: September 14, 1998 and Principal Accounting Officer)
13
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