Urstadt Biddle Properties Inc. Reports Second Quarter Operating Results For Fiscal 2021

GREENWICH, Conn.–(BUSINESS WIRE)–$uba #earnings—Urstadt Biddle Properties Inc. (NYSE: UBA and UBP), a real estate investment trust, today reported financial and operating results for the three and six months ended April 30, 2021, and provided information regarding financial and operational activities in light of the ongoing COVID-19 pandemic.

The following are statistics about our portfolio that are useful in assessing the impact of Covid-19 on our business:

COVID-19 UPDATE (as of May 22, 2021)

• Of our 80 properties, 67 are shopping centers, 3 are free-standing, net-leased retail bank branches and 3 are restaurant properties. The remaining properties are 6 small suburban office buildings in Greenwich, CT and Bronxville, NY and a childcare center in Chester, NJ.
• All 73 of our shopping centers, free-standing, net-leased retail bank branches and restaurant properties are open and operating, with 99.6% of our total tenants open and operating based on Annualized Base Rent (“ABR”).
• All of our shopping centers include necessity-based tenants, with approximately 71.1% of our tenants, based on ABR, either designated “essential businesses” during the early stay-at-home period of the pandemic in the tri-state area or otherwise permitted to operate through curbside pick-up and other modified operating procedures in accordance with state guidelines. These businesses are 99.6% open.
• Of the 863 tenants in our consolidated portfolio, we have received rent relief requests from 401 tenants, with most requests received during the early days of the pandemic when stay-at-home orders were in place and many businesses were required to close. Subsequently, 118 of such 401 tenants withdrew their requests for rent relief or paid rent in full. We continue to receive a small number of new requests, and, in some cases, follow-on requests from tenants to which we had previously provided temporary rent relief, but these requests are tapering off and no new requests from tenants who had not previously requested rent relief were received during the quarter ended April 30, 2021. We have evaluated each request on a case-by-case basis to determine the best course of action, recognizing that in many cases some type of concession may be appropriate and beneficial to our long-term interests. Each negotiation has been specific to the individual tenant. Some concessions have been granted in the form of deferred rent and some have been in the form of rent abatements, in each case for some portion of rents due during calendar 2020 and/or 2021-2023. From the beginning of the pandemic through April 30, 2021, we have completed 274 lease modifications, consisting of base rent deferrals totaling $3.8 million, or 3.9% of our ABR, and rent abatements totaling $3.7 million, or 3.8% of our ABR. Included in these amounts were 8 rent deferrals and abatements completed in the three months ended April 30, 2021, which deferred $26,000 of base rents, or 0.03% of our ABR, and abated $287,000 of base rents, or 0.3% of our ABR. Included in the $287,000 aforementioned amount is $84,000 of base rents for periods subsequent to April 30, 2021.

RENTAL COLLECTIONS UPDATE (as of June 1, 2021)

• 91.2% of the total base rent, common area maintenance charges (“CAM”) and real estate taxes payable for the period of April 2020 through April 2021 has been paid. This percentage is based on collections of pre-pandemic contractual lease amounts billed, exclusive of the application of any security deposits.
• 92.4% of the total base rent, CAM and real estate taxes payable for the second quarter of 2021 has been paid. This percentage is based on collections of pre-pandemic contractual lease amounts billed, exclusive of the application of any security deposits.
• 85.7% of the total base rent, CAM and real estate taxes payable for May 2021 has been paid to date. This percentage is based on collections of pre-pandemic contractual lease amounts billed, exclusive of the application of any security deposits.
• We increased our provision for uncollectable tenant accounts receivable by $725,000 and $1.4 million for the three and six month periods ended April 30, 2021, respectively ($0.02 per Class A Common share in the three month period and $0.04 per Class A share in the six month period), primarily as a result of uncertainty regarding the ongoing COVID-19 pandemic. This figure represents a financial reporting charge to earnings and Funds From Operations (“FFO”) ⁽¹⁾, but the company intends to collect all unpaid rents from its tenants to the extent feasible.
• In accordance with generally accepted accounting principles (“GAAP”), if the company determines that the collection of a tenant’s future lease payments is not probable, the company must change the revenue recognition for that tenant to cash-basis from accrual basis. In light of the financial pressure that COVID-19 has been placing on many of our tenants, we have re-evaluated all of the tenants in our consolidated portfolio, and, as a result of this assessment, we have switched 89 tenants (9 tenants converted for the three months ended April 30, 2021 and 25 tenants converted for the six months ended April 30, 2021), or 10.3% of the approximately 863 tenants in our consolidated portfolio, to cash-basis accounting. This assessment required the company to write-off an additional $893,000 and $1.9 million in billed but uncollected rents related to these 89 tenants, for the three and six month periods ended April 30, 2021, respectively, and an additional $814,000 and $1.3 million in straight-line rent receivables in the three and six month periods ended April 30, 2021, respectively, related to the 9 tenants converted to cash-basis accounting for the three months ended April 30, 2021 and the 25 tenants converted to cash-basis accounting for the six months ended April 30, 2021 (combined representing $0.04 per Class A Common share for the three month period and $0.08 per Class A Common share for the six month period). There were no such write-offs in the corresponding periods of fiscal 2020. These figures represent a financial reporting charge to earnings and FFO, but the company intends to collect all unpaid rents from its tenants to the extent feasible.
• We have $38.4 million of cash and cash equivalents currently on our balance sheet.
• We have $89 million available on our unsecured revolving credit facility.
• We have no material mortgage debt maturing until January 31, 2022.
• We have one ongoing construction project with approximately $300,000 remaining to complete the project. Otherwise, only minimal construction is underway, although other projects are under consideration or in the early planning stages.

SECOND QUARTER 2021

• $4.6 million net income attributable to common stockholders ($0.12 income per diluted Class A Common share).
• $11.7 million of FFO ($0.31 per diluted Class A Common share).
• FFO was reduced by $2.4 million ($0.06 per Class A share) as a result of the above-noted increases in the COVID-19 related tenant accounts receivable reserves and write-offs in the quarter.
• 90.1% of our consolidated portfolio Gross Leasable Area (“GLA”) was leased at April 30, 2021.
• 13.5% average decrease in base rental rates on new leases over the last two quarters
• 2.2% average decrease in base rental rates on lease renewals over the last two quarters.
• On April 16, 2021, we paid a $0.14 per share quarterly cash dividend on our Class A Common Stock and a $0.125 per share quarterly cash dividend on our Common Stock.
• On June 4, 2021, our Board of Directors increased the dividend level (see below).

⁽¹⁾ A reconciliation of GAAP net income to FFO is provided at the end of this press release.

Dividend Declarations

• On June 4, 2021, the company’s Board of Directors declared a quarterly dividend of $0.207 per Common share and $0.23 per Class A Common share that will be paid on July 16, 2021 to holders of record on July 2, 2021. The Board determined that the increased level is appropriate, after taking into account the improved liquidity position of the Company, the significant progress made in vaccinating the U.S. public, the resulting decline in COVID-19 cases, and the early signs of business improvement as operating restrictions are relaxed and individuals begin returning to pre-pandemic activities. Also, as a REIT, the company is required to distribute at least 90% of the company’s taxable income to its stockholders. Based on the company’s estimates, this level of Common Stock dividend, when combined with the company’s preferred stock dividends, based on the company’s estimates, will satisfy that requirement (excluding any gains on sales of property). The Board will continue to monitor the on-going COVID-19 situation going forward and its continued effect on the company, and the Board will make future dividend decisions based on this and other information available to them.
• In addition, in June 2021, the Board declared the regular contractual quarterly dividend with respect to each of the company’s Series H and Series K cumulative redeemable preferred stock that will be paid on July 30, 2021 to shareholders of record on July 16, 2021.

“Like everyone else in our nation, we are excited to see rising vaccination rates, a population on the verge of reaching a relatively safe level of immunity, swelling, pent-up consumer demand, and an overriding sense of optimism that we in the U.S. are largely through the pandemic. Our thoughts and prayers continue to go out to all of those impacted by the pandemic, along with great appreciation and respect for those who have led the fight against the virus on the front lines. The past 12 months have been very difficult and have validated our policy of maintaining a strong balance sheet and liquidity as underpinnings of our company’s success. Well-located, grocery-anchored community and neighborhood shopping centers have held up relatively well compared to most property types,” said Willing L. Biddle, President and Chief Executive Officer. Mr. Biddle continued…. “Certain categories of tenants such as health and fitness, day care, dry-cleaning, buffet restaurants, sit-down restaurants without outdoor seating and certain hair and nail salons have been slower to emerge from the crisis, partly as a result of government restrictions on their businesses and partly as a result of the public’s fears. Thankfully, due to our long-term strategy, 84% of our properties, measured by square footage, are anchored by grocery stores, wholesale clubs or pharmacies, and these businesses have remained open throughout the pandemic. Today, all of our shopping centers are open, functioning and generally bustling with customers. Like nearly all our retail REIT peers, however, our earnings have been negatively impacted as a result of pandemic-induced reductions in tenant collections. Rent collections were relatively solid in the first two quarters of fiscal 2021, averaging 93.2% for the first quarter and 92.4% for the second quarter versus 92.7% in the fourth quarter of fiscal 2020, and we anticipate that our collections are likely to improve each month. While our monthly collection rate is important, what is most important is that our tenants have businesses that are rebounding and will once again produce profitable enterprises operating in locations in our properties that are so important to their success. Our anchor grocery stores, drug stores, and wholesale clubs continue to experience strong sales, and we are very encouraged to see increased leasing activity across our portfolio. We renewed 373,000 square feet of space and signed 51,000 square feet of new leases in the first half of fiscal 2021, which increased the percentage of our portfolio leased to over 90%. A couple of specifically noteworthy items are that the previously-announced new Lidl supermarket at our Pompton Lakes, NJ property is under construction with a projected fall 2021 opening and that a development we completed in Stratford, CT, which includes a 130,000 square foot self-storage facility, is leasing up quickly. Over 25% of the self-storage space has been leased in just the first three months of operations. In addition, this quarter we completed the refinancing of our revolving credit facility, increasing the capacity to $125 million from $100 million and extending the maturity three years, with a one-year extension option. We are also in contract to sell our last non-core shopping center located in Newington, NH for a sale price of $13.4 million, which will result in a substantial gain. This sale is consistent with our long-standing strategy of focusing on high quality, grocery-anchored neighborhood and community shopping centers in the metropolitan tri-state area outside of the City of New York. As a result of the increasing stability of our tenants, and the positive economic news within our region, our Board of Directors approved an increased dividend payable in July, which restores our dividend to a level that we consider appropriate given the company’s earnings and the overall economic trajectory of our region and of the nation as a whole. In summary, we are very much looking forward to the remaining months of the year, when we expect to see an increase in business for our tenants and to realize the rewards of working hard to fill our remaining vacant space. While we are unsure when market equilibrium will be achieved and rents strengthen, we do see increasing demand for space.”

Net income applicable to Class A Common and Common stockholders for the second quarter of fiscal 2021 was $4,621,000 or $0.12 per diluted Class A Common share and $0.11 per diluted Common share, compared to $2,799,000 or $0.07 per diluted Class A Common share and $0.07 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 2021 was $9,100,000 or $0.24 per diluted Class A Common share and $0.21 per diluted Common share, compared to $7,870,000 or $0.21 per diluted Class A Common share and $0.18 per diluted Common share in the first six months of fiscal 2020.

FFO for the second quarter of fiscal 2021 was $11,728,000 or $0.31 per diluted Class A Common share and $0.27 per diluted Common share, compared with $10,287,000 or $0.27 per diluted Class A Common share and $0.24 per diluted Common share in last year’s second quarter. For the first six months of fiscal 2021, FFO amounted to $24,103,000 or $0.63 per diluted Class A Common share and $0.56 per diluted Common share, compared to $23,184,000 or $0.61 per diluted Class A Common share and $0.54 per diluted Common share in the corresponding period of fiscal 2020.

Both net income applicable to Class A Common and Common stockholders and FFO for the six and three months ended April 30, 2021 were reduced by a reversal of lease income, including straight-line rent lease income, in the amounts of $3.3 million and $1.6 million, respectively, related to 89 tenants in the portfolio who were converted to cash-basis accounting as required by GAAP accounting rules as their future lease payments were not probable of collection as these tenants were specifically negatively affected by the COVID-19 pandemic. These amounts represented a reduction of $0.08 per Class A share in the six month period and $0.04 per Class A share in the three month period ended April 30, 2021. There were no such adjustments in last year’s first or second quarters. In addition, both net income applicable to Class A Common and Common stockholders and FFO for the six and three months ended April 30, 2020 were reduced by $1.4 million (or $0.04 per share) relating to the acceleration of amortization of the grant value of restricted stock upon the death of our former Chairman Emeritus, Charles J. Urstadt, in March of 2020.

At April 30, 2021, the company’s consolidated properties were 90.1% leased (versus 90.4% at the end of fiscal 2020) and 88.2% occupied (versus 88.5% at the end of fiscal 2020). The company currently has 445,100 square feet of vacancy in its consolidated portfolio, 66,800 square feet of which is in the lease negotiation stage. In addition, the company is negotiating letters of intent with potential tenants on another 133,000 square feet of vacant space. Also, as previously discussed, at April 30, 2021, the leased percentage treats as leased, and the April 30, 2021 occupancy percentage treats as unoccupied, 65,700 square feet of retail space (1.5% of our consolidated square footage) formerly ground leased by Toys “R” Us and Babies “R” Us for $0 at the company’s Danbury Square shopping center in Danbury, CT. The owner of this ground lease, which acquired the lease out of the Toys “R” Us bankruptcy process, has opened and is operating an Ocean State Job Lot in 45,000 square feet of the 65,700 square feet.

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, 2021, the company had equity interests in six unconsolidated joint ventures (719,000 square feet), which were 94.2% leased (versus 91.1% at October 31, 2020).

Urstadt Biddle Properties Inc. is a self-administered equity real estate investment trust which owns or has equity interests in 80 properties containing approximately 5.2 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 205 consecutive quarters of uninterrupted dividends to its shareholders since its inception.

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.

(Table Follows)

Results of Operations

The following information summarizes our results of operations for the six months and three months ended April 30, 2021 and 2020 (amounts in thousands):

Note 1 – Properties held in both periods includes only properties owned for the entire periods of 2021 and 2020 and for interest expense the amount also includes parent company interest expense. All other properties are included in the property acquisition/sales column. There are no properties excluded from the analysis.

Base rents decreased by 4.2% to $48.8 million for the six month period ended April 30, 2021 as compared with $50.9 million in the comparable period of 2020. Base rents decreased by 3.9% to $24.6 million for the three months ended April 30, 2021 as compared with $25.6 million in the comparable period of 2020. The change in base rent and the changes in other income statement line items analyzed in the table above were attributable to:

Property Acquisitions and Properties Sold:

In the first six months of fiscal 2020, we sold two properties totaling 18,100 square feet. In the second quarter of fiscal 2021 we sold one property totaling 2,500 square feet. These properties accounted for all of the revenue and expense changes attributable to property acquisitions and sales in the six months ended April 30, 2021 when compared with fiscal 2020.

Contacts

Willing L. Biddle, CEO or

John T. Hayes, CFO

Urstadt Biddle Properties Inc.

(203) 863-8200

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