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 31,2000 Commission File Number 1-12803
------------ -------
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 Stock and Class A Common Stock
outstanding as of the close of period covered by this report were: 5,517,007
Common Shares, par value $.01 per share and 5,217,480 Class A Common Shares, par
value $.01 per share
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 16 PAGES, NUMBERED CONSECUTIVELY
FROM 1 TO 16 INCLUSIVE, OF WHICH THIS PAGE IS 1.
1
<PAGE>
INDEX
URSTADT BIDDLE PROPERTIES INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets--July 31,2000 and October 31, 1999.
Consolidated Statements of Income--Three months ended July 31, 2000
and 1999; Nine months ended July 31,2000 and 1999.
Consolidated Statements of Cash Flows--Nine months ended July 31,
2000 and 1999.
Consolidated Statements of Stockholders' Equity--Nine months ended
July 31, 2000 and 1999.
Notes to Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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>
ASSETS July 31, October 31,
-------- -----------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Real Estate Investments:
Properties owned-- at cost, net of accumulated depreciation $144,031 $144,522
Properties available for sale - at cost, net of accumulated
depreciation and recoveries 12,525 16,966
Investment in unconsolidated joint venture 9,279 9,889
Mortgage notes receivable 2,399 2,500
----- -----
168,234 173,877
Cash and cash equivalents 4,053 2,758
Interest and rent receivable 3,663 3,370
Deferred charges, net of accumulated amortization 2,653 2,418
Other assets 2,183 1,351
----- -----
$180,786 $183,774
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Bank loans $ -- $ 2,000
Mortgage notes payable 52,101 51,263
Accounts payable and accrued expenses 1,559 1,907
Deferred officers' compensation 136 155
Other liabilities 1,905 1,810
----- -----
55,701 57,135
------ ------
Minority Interests 5,140 5,140
----- -----
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 in 2000 and 1999 33,462 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;
5,517,007 and 5,531,845 outstanding shares in 2000 and 1999, respectively 55 55
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
5,217,480 and 5,184,039 outstanding shares in 2000 and 1999, respectively 52 52
Additional paid in capital 121,124 120,964
Cumulative distributions in excess of net income (32,604) (31,127)
Unamortized restricted stock compensation and notes receivable
from officers/stockholders (2,144) (1,907)
------- -------
86,483 88,037
------ ------
$180,786 $183,774
======= =======
</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
--------------------------- -------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Operating leases $22,455 $21,026 $7,353 $7,016
Financing leases 86 185 20 53
Interest and other 519 414 222 134
Equity in income of unconsolidated joint venture 223 225 11 63
----- ------ ----- -----
23,283 21,850 7,606 7,266
------ ------ ----- -----
Operating Expenses:
Property expenses 7,548 6,768 2,554 2,270
Interest 3,183 2,809 1,062 989
Depreciation and amortization 4,569 4,369 1,491 1,512
General and administrative expenses 1,921 1,872 541 541
Directors' fees and expenses 125 137 34 34
----- ----- ----- -----
17,346 15,955 5,682 5,346
------ ------ ----- -----
Operating Income before Minority Interests 5,937 5,895 1,924 1,920
Minority Interests in Results of Consolidated Joint Ventures 338 303 113 111
--- --- --- ---
Operating Income 5,599 5,592 1,811 1,809
Gains on Sales of Real Estate Investments 1,067 0 0 0
----- ------ ------- ------
Net Income 6,666 5,592 1,811 1,809
Preferred Stock Dividends 2,360 2,360 787 787
----- ----- --- ---
Net Income Applicable to Common and Class A Common
Stockholders $4,306 $3,232 $1,024 $1,022
====== ====== ====== ======
Basic Earnings per Share:
Common $.39 $.30 $.09 $.09
==== ==== ==== ====
Class A Common $.44 $.32 $.10 $.11
==== ==== ==== ====
Weighted Average Number of Shares Outstanding:
Common 5,342 5,184 5,326 5,387
===== ===== ===== =====
Class A Common 5,054 5,160 5,028 5,028
===== ===== ===== =====
Diluted Earnings Per Share:
Common $.39 $.30 $.09 $.09
==== ==== ==== ====
Class A Common $.43 $.32 $.10 $.10
==== ==== ==== ====
Weighted Average Number of Shares Outstanding:
Common and Common Equivalent 5,416 5,255 5,393 5,469
===== ===== ===== =====
Class A Common and Class A Common Equivalent 5,519 5,544 5,485 5,513
===== ===== ===== =====
</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,
2000 1999
---- ----
<S> <C> <C>
Operating Activities:
Net income $6,666 $5,592
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 4,569 4,369
Compensation expense relating to restricted stock 465 360
Recovery of investment in properties owned subject to financing leases 1,024 925
Equity in income of unconsolidated joint venture (223) (225)
Gains on sales of real estate investments (1,067) 0
(Increase) in interest and rent receivable (293) (128)
(Decrease) increase in accounts payable and accrued expenses (348) 166
(Increase) in other assets and other liabilities, net (679) (1,061)
----- -------
Net Cash Provided by Operating Activities 10,114 9,998
------ -----
Investing Activities:
Acquisitions of properties 0 (4,592)
Deposits on acquisitions (100) (450)
Improvements to properties and deferred charges (3,728) (2,178)
Investment in unconsolidated joint venture (366) (510)
Distributions received from unconsolidated joint venture 1,200 600
Payments received on mortgage notes receivable 101 79
Net proceed from sales of properties 3,921 0
Miscellaneous 0 339
----- -----
Net Cash Provided by (Used in) Investing Activities 1,028 (6,712)
----- -------
Financing Activities:
Sales of additional Common and Class A Common shares 1,387 2,160
Payments on mortgage notes payable and bank loans (7,662) (14,878)
Proceeds from mortgage notes payable and bank loans 6,500 17,000
Dividends paid - Common and Class A Common shares (5,783) (5,604)
Dividends paid - Preferred Stock (2,360) (2,360)
Purchases of Common and Class A Common shares (1,929) (534)
------- -----
Net Cash Used in Financing Activities (9,847) (4,216)
------- -------
Net Increase (Decrease) In Cash and Cash Equivalents 1,295 (930)
Cash and Cash Equivalents at Beginning of Period 2,758 3,900
----- -----
Cash and Cash Equivalents at End of Period $4,053 $2,970
====== ======
</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 Distributions Compensation
Number of Par Number of Par Paid In In Excess of and Notes
Shares Value Shares Value Capital Net Income) Receivable Total
------ ----- ------ ----- ------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances - October 31, 1998 5,221,602 $52 5,193,650 $52 $118,558 $(29,699) $(1,634) $87,329
Net Income Applicable to Common
and Class A Common stockholders - - - - - 3,232 - 3,232
Cash dividends paid :
Common Stock ($.51 per share) - - - - - (2,586) - (2,586)
Class A Common Stock ($.57
per share) - - - - - (3,018) - (3,018)
Deemed repurchase of Class A
Common Stock and reissuance of
Common Stock 272,727 - (272,727) - - - - -
Sale of additional shares 32,000 - 212,000 2 1,943 - - 1,945
Sale of additional shares
under dividend reinvestment plan 12,988 - 13,615 - 215 - - 215
Shares issued under restricted
stock plan 46,500 1 46,500 1 759 - (761) -
Amortization of restricted stock
compensation - - - - - - 360 360
Purchases of Common and Class A
Common shares (52,300) (1) (14,000) - (533) - - (534)
-------- --- -------- --- ----- --------- -------- -------
Balances - July 31,1999 5,533,517 $52 5,179,038 $55 $120,942 $(32,071) $(2,035) $86,943
========= === ========= === ======== ========= ======== =======
Balances - October 31, 1999 5,531,845 $55 5,184,039 $52 $120,964 $(31,127) $(1,907) $88,037
Net Income Applicable to Common
and Class A Common stockholders - - - - - 4,306 - 4,306
Cash dividends paid :
Common Stock ($.525 per share) - - - - - (2,818) - (2,818)
Class A Common Stock ($.585
per share) - - - - - (2,965) - (2,965)
Sale of additional shares 29,400 - 123,400 1 1,159 - - 1,160
Sale of additional shares
under dividend reinvestment plan 15,987 - 16,266 - 227 - - 227
Shares issued under restricted
stock plan 48,375 1 48,375 1 700 - (702) -
Amortization of restricted stock
Compensation - - - - - - 465 465
Purchases of Common and Class A
Common Shares (108,600) (1) (154,600) (2) (1,926) - - (1,929)
--------- --- --------- --- ------- --------- -------- -------
Balances - July 31, 2000 5,517,007 $55 5,217,480 $52 $121,124 $(32,604) $(2,144) $86,483
========= === ========= === ======== ========= ======== =======
</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)
JULY 31, 2000
Business
Urstadt Biddle Properties Inc., (the "Company") is a Maryland corporation that
has qualified as a real estate investment trust (REIT) under the Internal
Revenue Code, as amended. The Company is 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. As of July 31, 2000, the Company owned 23 properties containing a
total of 3.1 million gross leasable square feet.
Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of the Company, its wholly-owned subsidiaries, 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 three- and nine-month periods ended July 31, 2000
are not necessarily indicative of the results that may be expected for the year
ending October 31, 2000. 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 on Form 10-K for the fiscal year ended October 31, 1999.
The preparation of financial statements requires management to make use of
estimates and assumptions that affect amounts reported in the financial
statements as well as certain disclosures. Actual results could differ from
those estimates.
Earnings Per Share
Basic EPS excludes the impact of dilutive shares and is computed by dividing net
income applicable to Common and Class A Common stockholders by the weighted
number of Common shares and Class A Common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if securities or
other contracts to issue Common shares or Class A Common shares were exercised
or converted into Common shares or Class A Common shares and then shared in the
earnings of the Company. Since the cash dividends declared on the Company's
Class A Common stock are higher than the dividends declared on the Common Stock,
basic and diluted EPS have been calculated using the "two-class" method. The
two-class method is an earnings allocation formula that determines earnings per
share for each class of common stock according to the weighted average of the
dividends declared, outstanding shares per class and participation rights in
undistributed earnings.
7
<PAGE>
The following table sets forth the reconciliation between basic and diluted EPS
(in thousands):
<TABLE>
<CAPTION>
Nine Months Three Months
July 31, July 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator
Net income applicable to Common stockholders - basic $2,099 $1,573 $499 $500
Effect of dilutive securities:
Operating partnership units 14 28 13 12
------ ------ ---- ----
Net income applicable to Common Stockholders - diluted $2,113 $1,601 $512 $512
====== ====== ==== ====
Denominator
Denominator for basic EPS-weighted average Common shares 5,342 5,184 5,326 5,387
Effect of dilutive securities:
Stock options and awards 74 71 67 82
---- ----- ---- -----
Denominator for diluted EPS - weighted average Common equivalent shares 5,416 5,255 5,393 5,469
===== ===== ===== =====
Numerator
Net income applicable to Class A Common stockholders - basic $2,207 $1,659 $ 525 $522
Effect of dilutive securities:
Operating partnership units 192 145 55 56
----- ----- ---- ----
Net income applicable to Class A Common stockholders - diluted $2,399 $1,804 $580 $578
====== ====== ==== ====
Denominator
Denominator for basic EPS - weighted average Class A Common shares 5,054 5,160 5,028 5,028
Effect of dilutive securities:
Stock options and awards 82 92 74 102
Operating partnership units 383 292 383 383
----- ----- ----- ----
Denominator for diluted EPS - weighted average Class A Common equivalent shares
5,519 5,544 5,485 5,513
===== ===== ===== =====
</TABLE>
The weighted average Common equivalent shares and Class A Common equivalent
shares for the nine months and three months ended July 31, 2000 and 1999 each
exclude 54,553 shares. These shares were not included in the calculation of
diluted EPS because the effect would be anti-dilutive.
Real Estate Investments
In fiscal 2000, the Company sold two of its non-core properties comprising
146,875 square feet of gross leaseable area (GLA) for aggregate proceeds of
approximately $4,000,000 and realized net gains on the sales of the properties
of $1,067,000.
Mortgage Notes Payable and Unsecured Line of Credit
In February 2000, the Company closed a $6.5 million non-recourse first mortgage
loan secured by one of its retail properties having a net book value of $9
million at July 31, 2000. The mortgage loan has a term of 10 years and bears
interest at a fixed rate of 7.78%. Proceeds from the mortgage loan were used to
repay a $4.1 million mortgage note and to repay outstanding short-term bank
loans.
In March 2000, the Company entered into an unsecured line of credit arrangement
for $10 million with a major commercial bank. The line of credit expires in 2001
and is available, among other things, to acquire real estate, refinance
indebtedness and for working capital needs. Extensions of credit under the
arrangement are at the bank's discretion and subject to the bank's satisfaction
of certain conditions. Outstanding borrowings bear interest at the prime rate
plus 1/2% or LIBOR plus 2 1/2%. The Company pays an annual fee of 1/4% on unused
amounts. There were no borrowings outstanding under this line of credit at July
31, 2000.
Stockholders' Equity
On January 7, 2000, the Company sold 29,400 Common Shares and 123,400 Class A
Common shares of the Company for aggregate proceeds of $1.16 million in a
private placement which included all of the senior officers and directors of the
Company.
8
<PAGE>
The Company has a Restricted Stock Plan (Plan) which provides for the grant of
restricted stock awards to key employees and directors of the Company. The Plan,
as amended, allows for restricted stock awards of up to 350,000 shares of Class
A Common stock and Common stock. During the nine months ended July 31, 2000, the
Company awarded 48,375 Common shares and 48,375 Class A Common shares (46,500
Common shares and 46,500 Class A Common shares in 1999) to participants in the
Plan as an incentive for future services. The shares vest generally after five
years. Dividends on vested and non-vested shares are paid as declared. The
market value of shares awarded has been recorded as unamortized restricted stock
compensation and is shown as a separate component of stockholder's equity.
Unamortized restricted stock compensation is being amortized to expense over the
vesting periods.
The Company's Board of Directors authorized a program to purchase up to one
million of the Company's Class A Common and Common shares periodically. During
the nine months ended July 31, 2000, the Company purchased 108,600 Common shares
and 154,600 Class A Common shares at an aggregate cost of $1,929,000 under this
program.
In June, 2000, an officer of the Company was awarded stock options to purchase
593,000 shares of Common Stock or Class A Common Stock or a combination of both
classes of such stock of the Company as shall total the number of shares
subject to the options. The exercise price of the options granted was equal
to the fair market value of the Common and Class A Common shares on the date of
grant. Options to purchase 294,500 shares of Common Stock and Class A Common
Stock previously granted to another officer of the Company were cancelled.
Segment Reporting
For financial reporting purposes, the Company has grouped its real estate
investments into two segments: equity investments and mortgage loans. Equity
investments are managed separately from mortgage loans as they require a
different operating strategy and management approach. The Company assesses and
measures operating results for each of its segments, based on net operating
income. For equity investments, net operating income is calculated as rental
revenues of the property less its rental expenses (such as common area expenses,
property taxes, insurance, etc.) and, for mortgage loans, net operating income
consists of interest income less direct expenses, if any.
The revenues, net operating income and assets for each of the reportable
segments are summarized in the following tables for the nine month periods ended
July 31, 2000 and 1999. Non-segment assets include cash and cash equivalents,
interest receivable and other assets. The non-segment revenues consist
principally of interest income on temporary investments.
9
<PAGE>
<TABLE>
<CAPTION>
Equity Mortgage Non
Three Months Ending July 31 Investments Loans Segment Total
--------------------------- ----------- ----- ------- -----
2000
<S> <C> <C> <C> <C>
Total Revenues $ 7,402 $ 119 $ 85 $ 7,606
========= ======== ======= ========
Net Operating Income $ 4,735 $ 119 $ 85 $ 4,939
========= ======== ======= ========
Total Assets $ 175,752 $ 2,399 $ 2,635 $ 180,786
========= ========= ======== =========
1999
Total Revenues $ 7,150 $ 80 $ 36 $ 7,266
========= ======= ======= ========
Net Operating Income $ 4,769 $ 80 $ 36 $ 4,885
========= ======= ======= ========
Total Assets $ 171,666 $ 2,528 $ 1,741 $ 175,935
========= ======== ======= =========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ending July 31,
2000
<S> <C> <C> <C> <C>
Total Revenues $ 22,782 $ 299 $ 202 $ 23,283
======== ======= ====== ========
Net Operating Income $ 14,896 $ 299 $ 202 $ 15,397
======== ======= ====== ========
Total Assets $ 175,752 $ 2,399 $ 2,635 $ 180,786
======== ======== ======= =========
1999
Total Revenues $21,454 $ 241 $ 155 $ 21,850
====== ======== ======= ========
Net Operating Income $ 14,383 $ 241 $ 155 $ 14,779
======== ======== ======= ========
Total Assets $ 171,666 $ 2,528 $ 1,741 $ 175,935
========== ========= ======= =========
</TABLE>
The reconciliation to net income for the combined reportable segments and for
the Company is as follows:
<TABLE>
<CAPTION>
Nine Months Three Months
Ended July 31, Ended July 31,
2000 1999 2000 1999
----- ----- ----- ----
<S> <C> <C> <C> <C>
Net operating income from reportable segments $ 15,397 $ 14,779 $ 4,939 $ 4,885
--------- --------- --------- --------
Additions:
Gain on sale of real estate 1,067 - - -
------ ---- ---- ----
Total Additions 1,067 - - -
------ ---- ---- ----
Deductions:
General and administrative expenses 2,046 2,009 575 575
Interest expense 3,183 2,809 1,062 989
Depreciation and amortization 4,569 4,369 1,491 1,512
------ ------ ------ -----
Total Deductions 9,798 9,187 3,128 3,076
------ ------ ------ -----
Net Income 6,666 5,592 1,811 1,809
Preferred Stock Dividends (2,360) (2,360) (787) (787)
------- ------ ----- -----
Net Income applicable to Common and Class A
Common Stockholders $4,306 $ 3,232 $ 1,024 $ 1,022
========= ======== ========= ========
</TABLE>
10
<PAGE>
Commitments and Contingencies
In April 2000, Countryside Square Limited Partnership, an unconsolidated joint
venture which owns the Countryside Square Shopping Center in Clearwater,
Florida, contracted to sell the shopping center for $17.2 million. In July 2000,
the contract expired and negotiations for the sale of the property were
terminated.
In July 2000, the Company contracted for the purchase of an office building
located in Greenwich, Connecticut at a purchase price of $1,650,000.
The Company has entered into an option agreement which permits the option-holder
to purchase land owned by the Company at a purchase price of $1,200,000. The
option agreement expires in December 2000.
Subsequent Event
On August 29, 2000, the Company sold 75,000 shares of Class A Common Stock for
$562,500 in a private placement with two individuals.
11
<PAGE>
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, proceeds from bank borrowings and long-term mortgage debt, capital
financings and sales of real estate investments. The Company expects to meet its
short-term liquidity requirements primarily by generating net cash from the
operations of its properties. Payments of expenses related to real estate
operations, debt service, management and professional fees, and dividend
requirements place demands on the Company's short-term liquidity. The Company
believes that its net cash provided by operations will be sufficient to fund its
short-term liquidity needs in the near term. The Company expects to meet its
long-term liquidity requirements such as property acquisitions, debt maturities
and capital improvements through long-term secured indebtedness and/or the
issuance of additional equity securities.
At July 31, 2000, the Company had cash and cash equivalents of $4.1 million
compared to $2.8 million at October 31, 1999. The Company has a $20 million
secured revolving credit facility with a bank which expires in 2005 and a $10
million unsecured line of credit which expires in 2001. The credit lines are
available to finance the acquisition, management or development of commercial
real estate, refinance indebtedness and for working capital purposes. Extensions
of credit under the unsecured credit line are at the bank's discretion and
subject to the bank's satisfaction of certain conditions. There were no
borrowings outstanding under the unsecured credit line at July 31, 2000.
Long-term debt consists of mortgage notes payable totaling $40.2 million and
outstanding borrowings of $11.9 million under the secured revolving credit
facility.
In February 2000, the Company obtained a mortgage note payable in the amount of
$6.5 million secured by one of its core retail properties having a net book
value of $9 million. Proceeds from the financing were used to repay a $4.1
million mortgage note payable and outstanding short-term bank loans.
Earlier in the year, the Company completed the sale of approximately $1,160,000
of additional Common and Class A Common shares in a private placement
transaction that included all of the Company's directors and senior officers.
The Company's Board of Directors has authorized the purchase of up to one
million of the Company's Common and Class A Common shares periodically. The
repurchase program is subject to termination at any time for, among other
reasons, prevailing market prices, availability of cash resources and
alternative investment opportunities. In the first nine months of fiscal 2000,
the Company repurchased 108,600 Common shares and 154,600 Class A Common shares
at an aggregate cost of $1,929,000 from available cash. The Company expects to
fund the cost of future share purchases, if any, from available cash.
The Company expects to make real estate investments from time to time and
invests in its existing properties in connection with its leasing activities and
property improvement requirements. As of July 31, 2000 the Company had
contracted to purchase an office building property at a cost of $1.7 million.
As of July 31, 2000, the Company was committed to spend $5 million in connection
with certain new tenant lease obligations. For the first nine months of fiscal
2000, the Company spent $3.7 million from available cash for capital
improvements and leasing costs.
The Board of Directors has expanded and refined the strategic objectives of the
Company to refocus its real estate portfolio into one of self-managed retail
properties located in the Northeast and authorized a plan to sell the non-core
properties of the Company in the normal course of business over a period of
several years. The non-core properties comprise all of the Company's
distribution and service facilities, and certain of its office and retail
properties and undeveloped land located outside of the Northeast region of the
United States. In fiscal 2000, the Company sold two non-core properties totaling
146,875 square feet of gross leasable space for approximately $4 million and
realized gains on the sales of these properties totaling $1.1 million.
12
<PAGE>
Funds from Operations
The Company considers Funds From Operations (FFO) to be an appropriate
supplemental financial measure of an equity REIT's operating performance since
such measure does not recognize depreciation and amortization of real estate
assets as reductions of income from operations.
The National Association of Real Estate Investment Trusts (NAREIT) defines FFO
as net income (computed in accordance with generally accepted accounting
principles (GAAP)) excluding gains (or losses) from sales of property, plus
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. The Company considers recoveries of investments
in properties subject to finance leases to be analogous to amortization for
purposes of calculating FFO. FFO does not represent cash flows from operations
as defined by GAAP and should not be considered a substitute for net income as
an indicator of the Company's operating performance, or for cash flows as a
measure of liquidity or of its dividend paying capacity. Furthermore, FFO as
disclosed by other REITs may not be comparable to the Company's calculation of
FFO. Effective January 1, 2000, NAREIT clarified the definition of FFO to
include non-recurring events except for those that are treated as extraordinary
items under GAAP. The table below provides a reconciliation of net income in
accordance with GAAP to FFO as calculated under the current NAREIT guidelines
for the nine month periods ended July 31, 2000 and 1999 (amounts in thousands):
<TABLE>
<CAPTION>
Nine months ended July 31,
2000 1999
---- ----
<S> <C> <C>
Net Income Applicable to Common and Class A Common Stockholders $4,306 $3,232
Plus: Real property depreciation, amortization of tenant improvements and
amortization of lease acquisition costs and recoveries of investments
in properties subject to finance leases 5,210 4,849
Adjustments for unconsolidated joint venture 370 490
Less: Gains on sales of real estate investments (1,067) -
------- ------
Funds from Operations $8,819 $8,571
====== ======
</TABLE>
RESULTS OF OPERATIONS
Revenues
Revenues from operating leases increased $1,429,000 or 6.8% to $22,455,000 in
the first nine months of fiscal 2000 as compared with $21,026,000 for the
corresponding period in 1999. The increase in operating lease revenues results
principally from additional rental income earned from properties acquired in
fiscal 1999. The incremental increase in revenues derived from properties
acquired in fiscal 1999 amounted to $1,675,000 in the nine months ended July 31,
2000. In the nine-month and three-month periods ended July 31,2000, operating
lease revenue for properties owned during both fiscal 2000 and 1999 decreased by
1.9% and 4.6%, respectively, when compared to the same periods in the year ago
period. The decreases result principally from the effect of the loss of rental
income from three tenants at one of the Company's shopping centers, occupying a
total of 32,000 square feet of gross leasable area (GLA), that filed for
bankruptcy protection and vacated their respective premises in the first
quarter of fiscal 2000. The Company has signed leases with new tenants to
re-lease the vacant space.
13
<PAGE>
The Company's core properties, consisting of 1.7 million square feet of GLA,
were 96% leased at July 31, 2000, an increase of 1% from the end of the last
fiscal quarter. The Company leased or renewed 262,000 square feet of GLA during
the first nine months of fiscal 2000 compared to 228,000 square feet of GLA in
the comparable nine month period a year ago.
Expenses
Total expenses amounted to $17,346,000 in the first nine months of fiscal 2000
compared to $15,955,000 for the same period last year. The largest expense
category is property expenses of the real estate operating properties. The
increases in property expenses in the nine-month and three-month periods ended
July 31, 2000 result principally from the additional property expenses for
properties acquired during fiscal 1999. The incremental increase in property
expenses attributable to new properties in the nine-month and three-month
periods ended July 31, 2000, was $609,000 and $136,000 respectively. Property
expenses for all other properties in the nine-month and three-month periods
ended July 31, 2000 increased by 6.3% and 5.8%, respectively compared to the
same periods in fiscal 1999. The increases were principally attributable to
higher repair and maintenance expenses and real estate taxes at certain of the
Company's core properties.
Interest expense increased from additional borrowings utilized to complete the
acquisition of properties in fiscal 1999 and $25.4 million in new first mortgage
loans financed last year.
Depreciation and amortization expense increased principally from the additional
depreciation expenses on $23 million of properties acquired during fiscal 1999.
14
<PAGE>
Item 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate risk primarily through its borrowing
activities. There is inherent rollover risk for borrowings as they mature and
are renewed at current market rates. The extent of this risk is not quantifiable
or predictable because of the variability of future interest rates and the
Company's future financing requirements.
As of July 31, 2000, the Company had approximately $11.9 million of variable
rate debt outstanding under its secured line of credit agreement. The interest
rate risk of such debt can be mitigated by electing a fixed rate interest option
at any time prior to the last year of the agreement as provided for in the
agreement. The Company believes the interest rate risk represented by
variable-rate debt is not material to the Company or its overall capitalization.
The Company has not, and does not plan to, enter into any derivative financial
instruments for trading or speculative purposes. As of July 31, 2000 the Company
had no other material exposure to market risk.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
The Company is not presently involved in any litigation, nor
to its knowledge is any litigation threatened against the
Company or its subsidiaries, that in management's option,
would result in any material adverse effect on the
Company's ownership, management or operation of its
properties, or which is not covered by the
Company's liability insurance.
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K
There were no reports on Form 8-K with the Securities and
Exchange Commission during the Registrant's fiscal quarter
ended July 31, 2000.
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, 2000 and Principal Accounting Officer)
