-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AH+vF40lzEnv4C3RW53MkJIwH32fHDW+u3NvrbFit2ljKLxT8986u877UoXGGkxm UiUSDfNMr8fh/TZCHxJKAg== 0001005150-98-000933.txt : 19980916 0001005150-98-000933.hdr.sgml : 19980916 ACCESSION NUMBER: 0001005150-98-000933 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19980915 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: URSTADT BIDDLE PROPERTIES INC CENTRAL INDEX KEY: 0001029800 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 042458042 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12803 FILM NUMBER: 98709279 BUSINESS ADDRESS: STREET 1: C/O HRE PROPERTIES INC STREET 2: 321 RAILROAD AVENUE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2038638200 FORMER COMPANY: FORMER CONFORMED NAME: HRE PROPERTIES INC DATE OF NAME CHANGE: 19961230 10-Q 1 FORM 10-Q 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 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 URSTADT BIDDLE PROPERTIES INC.. CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
JULY 31 October 31 ASSETS 1998 1997 ------- ---------- (unaudited) 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 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. 3 URSTADT BIDDLE PROPERTIES INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share data)
Nine Months Ended Three Months Ended July 31 July 31 ----------------- ------------------ 1998 1997 1998 1997 ---- ---- ---- ---- 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 ====== ====== ====== ======
The accompanying notes to consolidated financial statements are an integral part of these statements. 4 URSTADT BIDDLE PROPERTIES INC.. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Nine Months Ended July 31, 1998 1997 ---- ---- 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 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. 5 URSTADT BIDDLE PROPERTIES INC.. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) (In thousands, except shares and per share data)
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 ------ ----- ------ ----- ------- ---- ------------ ---------- 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) ========== ========== ========== ========== ========== ========== ========== ==========
Total ----- 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 ==========
The accompanying notes to consolidated financial statements are an integral part of these statements. 6 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 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 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 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 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:
NINE MONTHS ENDED JULY 31, 1998 1997 - -------------------------- ---- ---- (amounts in thousands) 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 ====== ======
*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 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 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 EX-27 2 ART 5 FDS FOR 3RD QUARTER 10-Q
5 1 US DOLLARS 3-MOS OCT-31-1998 NOV-01-1997 JUL-31-1998 1 5,877,000 0 2,154,000 0 0 0 149,744,000 126,624,000 146,277,000 3,014,000 19,440,000 33,462,000 0 118,999,000 (31,246,000) 146,277,000 0 18,508,000 0 5,632,000 5,221,000 0 1,798,000 5,857,000 0 5,857,000 0 0 0 4,082,000 .40 .39
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