Urstadt Biddle Properties Inc. Reports First Quarter Operating Results For Fiscal 2023
Urstadt Biddle Properties reported strong Q1 fiscal 2023 results, with net income of $6.8 million ($0.18 per diluted Class A share) and funds from operations (FFO) of $15.6 million ($0.42 per diluted Class A share). Leasing activity increased, achieving a 94.1% portfolio occupancy, up 1.1% from the previous year. Average rental rates rose by 4.6% for renewals and 10.3% for new leases. The company maintained a solid balance sheet, with $14.1 million in cash and no mortgage debt maturing until 2024. A quarterly dividend of $0.25 per Class A share was declared, reinforcing its commitment to shareholder returns.
- Net income rose to $6.8 million, up from $5.4 million year-over-year.
- Funds from operations (FFO) increased to $15.6 million from $12.9 million year-over-year.
- Portfolio occupancy improved to 94.1%, a notable increase.
- Average rental rates increased by 10.3% for new leases and 4.6% for renewals.
- The company has $14.1 million in cash and $87 million available on its credit facility.
- None.
FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER FISCAL 2023
-
We repurchased in the first quarter of fiscal 2023 in open market transactions 116,016 shares of our Class A Common stock at an average price per share of
and 287 shares of our Common stock at an average price per share of$18.39 .$18.40 -
net income attributable to Common and Class A Common stockholders ($6.8 million per diluted Class A Common share).$0.18 -
of funds from operations (“FFO”) ($15.6 million per diluted Class A Common share).(1)$0.42 -
94.1% of our consolidated portfolio gross leasable area (“GLA”) was leased atJanuary 31, 2023 , an increase of1.1% from the end of fiscal 2022. -
4.6% average increase in base rental rates on 84,400 square feet of lease renewals signed in the first quarter of fiscal 2023. -
10.3% average increase in base rental rates on 73,800 square feet of new leases signed in the first quarter of fiscal 2023. -
On
January 13, 2023 , the company paid a per share quarterly cash dividend on our Class A Common stock and a$0.25 per share quarterly cash dividend on our Common stock.$0.22 5 -
of cash and cash equivalents currently on our balance sheet.$14.1 million -
currently available on our unsecured revolving credit facility.$87 million - No mortgage debt maturing until 2024.
(1) A reconciliation of GAAP net income to FFO is provided at the end of this press release.
Dividend Declarations
-
On
December 14, 2022 , the company’s Board of Directors declared a quarterly dividend of per Class A Common share and$0.25 per Common share that was paid on$0.22 5January 13, 2023 to holders of record onJanuary 6, 2023 . This dividend level represents an increase of per share per annum on the Class A Common stock and$0.05 per share per annum on the Common stock. The Board determined that this level of dividend is appropriate after taking into account, among other things, the continued strength of the company’s liquidity and financial position. Also, as a REIT, the company is required to distribute at least$0.04 290% 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, will satisfy that REIT requirement (excluding any gains on sales of property). The Board will continue to monitor the operating results of the company, and make future dividend decisions, including at our next scheduled meeting onMarch 22, 2023 , based on this and other information available to it.
-
In addition, in
December 2022 , 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 was paid onJanuary 31, 2023 to shareholders of record onJanuary 13, 2023 .
Commenting on the operating results,
Net income applicable to Class A Common and Common stockholders for the first quarter of fiscal 2023 was
FFO for the first quarter of fiscal 2023 was
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) |
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Three Months Ended |
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(in thousands, except per share data) |
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Three Months Ended
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|
2023 |
|
2022 |
|
|
|
|
||
Revenues |
|
|
||
Lease income |
|
|
||
Lease termination |
1,557 |
28 |
||
Other |
1,001 |
1,440 |
||
Total Revenues |
38,297 |
35,555 |
||
|
|
|
||
Expenses |
|
|
||
Property operating |
6,965 |
7,002 |
||
Property taxes |
5,918 |
5,923 |
||
Depreciation and amortization |
8,404 |
7,144 |
||
General and administrative |
2,726 |
2,680 |
||
Directors' fees and expenses |
119 |
107 |
||
Total Operating Expenses |
24,132 |
22,856 |
||
|
|
|
||
Operating Income |
14,165 |
12,699 |
||
|
|
|
||
Non-Operating Income (Expense): |
|
|
||
Interest expense |
(3,647) |
(3,302) |
||
Equity in net income from unconsolidated joint ventures |
420 |
267 |
||
Gain (loss) on sale of property |
(4) |
2 |
||
Interest, dividends and other investment income |
134 |
55 |
||
Net Income |
11,068 |
9,721 |
||
|
|
|
||
Noncontrolling interests: |
|
|
||
Net income attributable to noncontrolling interests |
(853) |
(911) |
||
Net income attributable to |
10,215 |
8,810 |
||
Preferred stock dividends |
(3,413) |
(3,413) |
||
|
|
|
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Net Income Applicable to Common and Class A Common Stockholders |
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|
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|
|
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Basic Earnings Per Share: |
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Per Common Share: |
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Per Class A Common Share: |
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Diluted Earnings Per Share: |
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|
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Per Common Share: |
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|
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Per Class A Common Share: |
|
|
||
|
|
|
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Weighted Average Number of Shares Outstanding – (Diluted): |
|
|
||
Class A Common and Class A Common Equivalent |
28,528 |
29,768 |
||
Common and Common Equivalent |
9,798 |
9,710 |
||
|
|
|
Results of Operations
The following information summarizes our results of operations for the three months ended
Three Months Ended |
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|
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Change Attributable to |
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Increase |
|
|
|
Property |
|
Properties Held In |
|||
Revenues |
2023 |
|
2022 |
|
(Decrease) |
|
% Change |
|
Acquisitions/Sales |
|
Both Periods (Note 1) |
|
Base rents |
|
|
|
|
|
|
||||||
Recoveries from tenants |
8,886 |
9,274 |
(388) |
(4.2)% |
194 |
(582) |
||||||
Uncollectable amounts in lease income |
(104) |
(113) |
9 |
(8.0)% |
- |
9 |
||||||
ASC Topic 842 cash basis lease income reversal (including straight-line rent) |
124 |
(63) |
187 |
(296.8)% |
- |
187 |
||||||
Total lease income |
35,739 |
34,087 |
||||||||||
Lease termination |
1,557 |
28 |
1,529 |
5, |
- |
1,529 |
||||||
Other income |
1,001 |
1,440 |
(439) |
(30.5)% |
(10) |
(429) |
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|
|
|
|
|
|
|
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Operating Expenses |
|
|
|
|
|
|
||||||
Property operating |
6,965 |
7,002 |
(37) |
(0.5)% |
158 |
(195) |
||||||
Property taxes |
5,918 |
5,923 |
(5) |
(0.1)% |
65 |
(70) |
||||||
Depreciation and amortization |
8,404 |
7,144 |
1,260 |
|
282 |
978 |
||||||
General and administrative |
2,726 |
2,680 |
46 |
|
n/a |
n/a |
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|
|
|
|
|
|
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Non-Operating Income/Expense |
|
|
|
|
|
|||||||
Interest expense |
3,647 |
3,302 |
345 |
|
- |
345 |
||||||
Interest, dividends, and other investment income |
134 |
55 |
79 |
|
n/a |
n/a |
Note 1 – Properties held in both periods includes only properties owned for the entire periods of 2023 and 2022 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 increased by
Property Acquisitions and Properties Sold:
In fiscal 2022, we acquired one property totaling 188,000 square feet and sold three properties totaling 14,300 square feet. These properties accounted for all of the revenue and expense changes attributable to property acquisitions and sales in the three months ended
Properties Held in Both Periods:
Revenues
Base Rent
For properties held in both periods, base rent for the three months ended
In the first three months of fiscal 2023, we leased or renewed approximately 158,200 square feet (or approximately
Tenant Recoveries
In the three months ended
Lease Termination Income
In the three months ended
Uncollectable Amounts in Lease Income
In the three months ended
ASC Topic 842 Cash Basis Lease Income Reversals
We adopted ASC Topic 842 "Leases" at the beginning of fiscal 2020. ASC Topic 842 requires, among other things, that if the collectability of a specific tenant’s future lease payments as contracted are not probable of collection, revenue recognition for that tenant must be converted to cash-basis accounting and be limited to the lesser of the amount billed or collected from that tenant. In addition, any straight-line rental receivables would need to be reversed in the period that the collectability assessment changed to not probable. As a result of continuing to analyze our entire tenant base, we determined that as a result of the COVID-19 pandemic, 89 tenants' future lease payments were no longer probable of collection. All such tenants were converted to cash basis after our second quarter of fiscal 2020 and prior to our third quarter of fiscal 2021. As of
Expenses
Property Operating
In the three months ended
Property Taxes
In the three months ended
Interest
In the three months ended
Depreciation and Amortization
In the three months ended
General and Administrative Expenses
In the three months ended
Non-GAAP Financial Measure
Funds from Operations (“FFO”)
We consider FFO to be an additional measure of our operating performance. We report FFO in addition to net income applicable to common stockholders and net cash provided by operating activities. Management has adopted the definition suggested by
Management considers FFO to be a meaningful, additional measure of operating performance because it primarily excludes the assumption that the value of the company’s real estate assets diminishes predictably over time, and industry analysts have accepted FFO as a performance measure. FFO is presented to assist investors in analyzing the performance of the company. It is helpful as it excludes various items included in net income that are not indicative of our operating performance, such as gains (or losses) from sales of property and depreciation and amortization. However, FFO:
- does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income); and
- should not be considered an alternative to net income as an indication of our performance.
FFO as defined by us may not be comparable to similarly titled items reported by other real estate investment trusts due to possible differences in the application of the NAREIT definition used by such REITs. The table below provides a reconciliation of net income applicable to Common and Class A Common stockholders in accordance with GAAP to FFO for the three month period ended
(Table Follows) |
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Three Months Ended (in thousands, except per share data) |
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Reconciliation of Net Income Available to Common and Class A Common Stockholders To Funds From Operations: | Three Months Ended |
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|
2023 |
|
2022 |
|
Net Income Applicable to Common and Class A Common Stockholders |
|
|
||
|
|
|
||
Real property depreciation |
5,914 |
5,738 |
||
Amortization of tenant improvements and allowances |
1,998 |
991 |
||
Amortization of deferred leasing costs |
478 |
397 |
||
Depreciation and amortization on unconsolidated joint ventures |
371 |
375 |
||
(Gain)/loss on sale of property |
4 |
(2) |
||
|
|
|
||
Funds from Operations Applicable to Common and Class A Common Stockholders |
|
|
||
Funds from Operations (Diluted) Per Share: |
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|
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Common |
|
|
||
Class A Common |
|
|
||
|
|
|
||
Weighted Average Number of Shares Outstanding (Diluted): |
|
|
||
Common and Common Equivalent |
9,798 |
9,710 |
||
Class A Common and Class A Common Equivalent |
28,528 |
29,768 |
FFO amounted to
Increases:
-
A
increase in base rent for new leasing in the portfolio after the first quarter of fiscal 2022 predominantly at 10 properties.$1.8 million -
The net operating income from our
Shelton Square acquisition, which closed after the first quarter of fiscal 2022. -
An increase in lease termination income of
when compared with the corresponding prior period, related predominantly to three lease termination settlements reached with three different tenants in the first quarter of fiscal 2023. Those tenants had vacated their premises and reached agreement with the company to settle the remaining obligations under their leases.$1.5 million
Decreases:
-
An increase in interest expense of
when compared with the corresponding prior period. The increase was mainly the result of having higher amounts drawn on our Facility coupled with higher interest rates, as interest on the Facility is calculated on a variable rate.$345,000 -
A
net decrease in recoveries from tenants (which represent reimbursements from tenants for operating expenses and property taxes) when compared with the corresponding prior period, predominantly related to the recalculation of one tenant's real estate tax reimbursement calculations, which resulted in additional billings to that tenant in the first quarter of fiscal 2022, which creates negative variance in the first quarter of fiscal 2023.$388,000
Non-GAAP Financial Measure
Same Property Net Operating Income
We present Same Property Net Operating Income ("Same Property NOI"), which is a non-GAAP financial measure. Same Property NOI excludes from Net Operating Income (“NOI”) properties that have not been owned for the full periods presented. The most directly comparable GAAP financial measure to NOI is operating income. To calculate NOI, operating income is adjusted to add back depreciation and amortization, general and administrative expense, interest expense, amortization of above and below-market lease intangibles and to exclude straight-line rent adjustments, interest, dividends and other investment income, equity in net income of unconsolidated joint ventures, and gain/loss on sale of operating properties.
We use Same Property NOI internally as a performance measure, and we believe Same Property NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Our management also uses Same Property NOI to evaluate property level performance and to make decisions about resource allocations. Further, we believe Same Property NOI is useful to investors as a performance measure because, when compared across periods, Same Property NOI reflects the impact on operations from trends in occupancy rates, rental rates and operating costs on an unleveraged basis, providing perspective not immediately apparent from income from continuing operations. Same Property NOI excludes certain components from net income attributable to
Table Follows:
Same Property Net Operating Income (In thousands, except for number of properties and percentages) |
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Three Months Ended |
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2023 |
|
2022 |
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% Change |
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Same Property Operating Results: |
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|
|
|
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Number of Properties (Note 1) |
72 |
|||||
Revenue (Note 2) |
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Base Rent (Note 3) |
|
|
|
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Uncollectable amounts in lease income-same property |
|
(104) |
(113) |
(8.0)% |
||
ASC Topic 842 cash-basis lease income reversal-same property |
|
124 |
(87) |
(242.5)% |
||
Recoveries from tenants |
8,688 |
9,270 |
(6.3)% |
|||
Other property income |
137 |
336 |
(59.2)% |
|||
34,811 |
34,651 |
|
||||
|
|
|
||||
Expenses |
|
|
|
|||
Property operating |
4,098 |
3,906 |
|
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Property taxes |
5,893 |
5,913 |
(0.3)% |
|||
Other non-recoverable operating expenses |
647 |
549 |
|
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10,638 |
10,368 |
|
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|
|
|
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Same Property Net Operating Income |
|
|
(0.5)% |
|||
|
|
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Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: |
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|
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|
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Other reconciling items: |
|
|
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Other non same-property net operating income |
746 |
30 |
||||
Other Interest income |
180 |
125 |
||||
Other Dividend Income |
8 |
8 |
||||
Consolidated lease termination income |
1,557 |
28 |
||||
Consolidated amortization of above and below market leases |
183 |
174 |
||||
Consolidated straight line rent income |
372 |
5 |
||||
Equity in net income of unconsolidated joint ventures |
420 |
267 |
||||
Taxable REIT subsidiary income/(loss) |
(3) |
186 |
||||
Solar income/(loss) |
2 |
(211) |
||||
Unrealized holding gains arising during the periods |
- |
- |
||||
Gain on marketable securities |
- |
- |
||||
Interest expense |
(3,647) |
(3,302) |
||||
General and administrative expenses |
(2,726) |
(2,680) |
||||
Uncollectable amounts in lease income |
(104) |
(113) |
||||
Uncollectable amounts in lease income-same property |
|
104 |
113 |
|
||
ASC Topic 842 cash-basis lease income reversal |
|
124 |
(87) |
|
||
ASC Topic 842 cash-basis lease income reversal-same property |
|
(124) |
87 |
|
||
Directors fees and expenses |
(119) |
(107) |
||||
Depreciation and amortization |
(8,404) |
(7,144) |
||||
Adjustment for intercompany expenses and other |
(1,670) |
(1,943) |
||||
|
|
|||||
Total other -net |
(13,101) |
(14,564) |
||||
Income from continuing operations |
11,072 |
9,719 |
|
|||
Gain (loss) on sale of real estate |
|
(4) |
2 |
|
||
Net income |
11,068 |
9,721 |
|
|||
Net income attributable to noncontrolling interests |
(853) |
(911) |
|
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Net income attributable to |
|
|
|
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|
|
|
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Same Property Operating Expense Ratio (Note 4) |
|
|
(7.5)% |
Note 1 - Includes only properties owned for the entire period of both periods presented.
Note 2 - Excludes straight line rent, above/below market lease rent, lease termination income.
Note 3 - Base rents for the three month period ended
Base rents for the three month period ended
Note 4 -Represents the percentage of property operating expense and real estate tax.
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Balance Sheet Highlights |
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(in thousands) |
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2023 |
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2022 |
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(Unaudited) |
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Assets |
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Cash and Cash Equivalents |
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Real Estate investments before accumulated depreciation |
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Investments in and advances to unconsolidated joint ventures |
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Total Assets |
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Liabilities |
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Revolving credit line |
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Mortgage notes payable and other loans |
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Total Liabilities |
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Redeemable Noncontrolling Interests |
|
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Preferred Stock |
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Total Stockholders’ Equity |
|
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FAQ
What are the Q1 fiscal 2023 results for UBA and UBP?
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