(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
Large accelerated filer ☐ |
|
Non-accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
|
Urstadt Biddle Properties Inc. |
||
Part I. Financial Information |
||
Item 1. |
Financial Statements (Unaudited) |
|
1 |
||
2 |
||
3 |
||
4 |
||
5 |
||
9 |
||
Item 2. |
23 |
|
Item 3. |
32 |
|
Item 4. |
33 |
|
Part II. Other Information |
||
Item 1. |
34 |
|
Item 2. |
35 |
|
Item 6. |
36 |
|
37 |
April 30, 2022 |
October 31, 2021 |
|||||||
(Unaudited) |
||||||||
Assets |
||||||||
Real Estate Investments: |
||||||||
Real Estate– at cost |
$ |
$ |
||||||
Less: Accumulated depreciation |
( |
) |
( |
) |
||||
Investments in and advances to unconsolidated joint ventures |
||||||||
Cash and cash equivalents |
||||||||
Tenant receivables-net |
||||||||
Prepaid expenses and other assets |
||||||||
Deferred charges, net of accumulated amortization |
||||||||
Total Assets |
$ |
$ |
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Liabilities: |
||||||||
Revolving credit line |
$ |
$ |
||||||
Mortgage notes payable and other loans |
||||||||
Accounts payable and accrued expenses |
||||||||
Deferred compensation – officers |
||||||||
Other liabilities |
||||||||
Total Liabilities |
||||||||
Redeemable Noncontrolling Interests |
||||||||
Commitments and Contingencies |
||||||||
Stockholders’ Equity: |
||||||||
Excess Stock, par value $ |
||||||||
Common Stock, par value $ |
||||||||
Class A Common Stock, par value $ |
||||||||
Additional paid in capital |
||||||||
Cumulative distributions in excess of net income |
( |
) |
( |
) |
||||
Accumulated other comprehensive income (loss) |
( |
) |
||||||
Total Stockholders' Equity |
||||||||
Total Liabilities and Stockholders' Equity |
$ |
$ |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Revenues |
||||||||||||||||
Lease income |
$ |
$ |
$ |
$ |
||||||||||||
Lease termination |
||||||||||||||||
Other |
||||||||||||||||
Total Revenues |
||||||||||||||||
Expenses |
||||||||||||||||
Property operating |
||||||||||||||||
Property taxes |
||||||||||||||||
Depreciation and amortization |
||||||||||||||||
General and administrative |
||||||||||||||||
Directors' fees and expenses |
||||||||||||||||
Total Operating Expenses |
||||||||||||||||
Operating Income |
||||||||||||||||
Non-Operating Income (Expense): |
||||||||||||||||
Interest expense |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Equity in net income from unconsolidated joint ventures |
||||||||||||||||
Gain (loss) on sale of property |
||||||||||||||||
Interest, dividends and other investment income |
||||||||||||||||
Net Income |
||||||||||||||||
Noncontrolling interests: |
||||||||||||||||
Net income attributable to noncontrolling interests |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Net income attributable to Urstadt Biddle Properties Inc. |
||||||||||||||||
Preferred stock dividends |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Net Income Applicable to Common and Class A Common Stockholders |
$ |
$ |
$ |
$ |
||||||||||||
Basic Earnings Per Share: |
||||||||||||||||
Per Common Share: |
$ |
$ |
$ |
$ |
||||||||||||
Per Class A Common Share: |
$ |
$ |
$ |
$ |
||||||||||||
Diluted Earnings Per Share: |
||||||||||||||||
Per Common Share: |
$ |
$ |
$ |
$ |
||||||||||||
Per Class A Common Share: |
$ |
$ |
$ |
$ |
||||||||||||
Dividends Per Share: |
||||||||||||||||
Common |
$ |
$ |
$ |
$ |
||||||||||||
Class A Common |
$ |
$ |
$ |
$ |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Net Income |
$ |
$ |
$ |
$ |
||||||||||||
Other comprehensive income (loss): |
||||||||||||||||
Change in unrealized gains on interest rate swaps |
||||||||||||||||
Change in unrealized gains on interest rate swaps-equity investees |
||||||||||||||||
Total comprehensive income (loss) |
||||||||||||||||
Comprehensive income attributable to noncontrolling interests |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Total comprehensive income (loss) attributable to Urstadt Biddle Properties Inc. |
||||||||||||||||
Preferred stock dividends |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Total comprehensive income (loss) applicable to Common and Class A Common Stockholders |
$ |
$ |
$ |
$ |
Six Months Ended April 30, |
||||||||
2022 |
2021 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net income |
$ |
$ |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
||||||||
Straight-line rent adjustment |
||||||||
Provision for tenant credit losses |
||||||||
(Gain)/loss on sale of property |
( |
) |
( |
) |
||||
Restricted stock compensation expense and other adjustments |
||||||||
Deferred compensation arrangement |
( |
) |
||||||
Equity in net (income) of unconsolidated joint ventures |
( |
) |
( |
) |
||||
Distributions of operating income from unconsolidated joint ventures |
||||||||
Changes in operating assets and liabilities: |
||||||||
Tenant receivables |
( |
) |
||||||
Accounts payable and accrued expenses |
||||||||
Other assets and other liabilities, net |
( |
) |
( |
) |
||||
Net Cash Flow Provided by Operating Activities |
||||||||
Cash Flows from Investing Activities: |
||||||||
Acquisitions of real estate investments |
( |
) |
||||||
Proceeds from sale of property |
||||||||
Improvements to properties and deferred charges |
( |
) |
( |
) |
||||
Investment in note receivable |
( |
) |
||||||
Return of capital from unconsolidated affiliates |
||||||||
Net Cash Flow (Used in) Investing Activities |
( |
) |
( |
) |
||||
Cash Flows from Financing Activities: |
||||||||
Dividends paid -- Common and Class A Common Stock |
( |
) |
( |
) |
||||
Dividends paid -- Preferred Stock |
( |
) |
( |
) |
||||
Principal amortization repayments on mortgage notes payable |
( |
) |
( |
) |
||||
Repayment of mortgage note payable |
( |
) |
||||||
Proceeds from mortgage note payable |
||||||||
Proceeds from revolving credit facility |
||||||||
Repayment of revolving credit facility |
( |
) |
||||||
Acquisitions of noncontrolling interests |
( |
) |
( |
) |
||||
Distributions to noncontrolling interests |
( |
) |
( |
) |
||||
Payment of taxes on shares withheld for employee taxes |
( |
) |
( |
) |
||||
Net proceeds from the issuance of Common and Class A Common Stock |
||||||||
Net Cash Flow (Used in) Financing Activities |
( |
) |
( |
) |
||||
Net Increase/(Decrease) In Cash and Cash Equivalents |
( |
) |
( |
) |
||||
Cash and Cash Equivalents at Beginning of Period |
||||||||
Cash and Cash Equivalents at End of Period |
$ |
$ |
||||||
Supplemental Cash Flow Disclosures: |
||||||||
Interest Paid |
$ |
$ |
Series H Preferred Stock Issued |
Series H Preferred Stock Amount |
Series K Preferred Stock Issued |
Series K Preferred Stock Amount |
Common Stock Issued |
Common Stock Amount |
Class A Common Stock Issued |
Class A Common Stock Amount |
Additional Paid In Capital |
Cumulative Distributions In Excess of Net Income |
Accumulated Other Comprehensive Income (loss) |
Total Stockholders’ Equity |
|||||||||||||||||||||||||||||||||||||
Balances - October 31, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||||||||||||||||||||||||||||||
Net income applicable to Common and Class A common stockholders |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Change in unrealized losses on interest rate swap |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Cash dividends paid : |
||||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Class A common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Issuance of shares under dividend reinvestment plan |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||||||
Shares issued under restricted stock plan |
- |
- |
- |
- |
( |
) |
- |
- |
||||||||||||||||||||||||||||||||||||||||
Shares withheld for employee taxes |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
- |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock |
- |
- |
- |
- |
- |
- |
( |
) |
- |
- |
- |
|||||||||||||||||||||||||||||||||||||
Restricted stock compensation and other adjustments |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Adjustments to redeemable noncontrolling interests |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Balances - April 30, 2022 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
Series H Preferred Stock Issued |
Series H Preferred Stock Amount |
Series K Preferred Stock Issued |
Series K Preferred Stock Amount |
Common Stock Issued |
Common Stock Amount |
Class A Common Stock Issued |
Class A Common Stock Amount |
Additional Paid In Capital |
Cumulative Distributions In Excess of Net Income |
Accumulated Other Comprehensive Income |
Total Stockholders’ Equity |
|||||||||||||||||||||||||||||||||||||
Balances - October 31, 2020 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||||||||||||||||||||||||||||||
Net income applicable to Common and Class A common stockholders |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Change in unrealized losses on interest rate swap |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Cash dividends paid : |
||||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Class A common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Issuance of shares under dividend reinvestment plan |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||||||
Shares issued under restricted stock plan |
- |
- |
- |
- |
( |
) |
- |
- |
||||||||||||||||||||||||||||||||||||||||
Shares withheld for employee taxes |
- |
- |
- |
- |
- |
- |
( |
) |
( |
) |
- |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock |
- |
- |
- |
- |
- |
- |
( |
) |
- |
- |
- |
|||||||||||||||||||||||||||||||||||||
Restricted stock compensation and other adjustments |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Adjustments to redeemable noncontrolling interests |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Balances - April 30, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
Series H Preferred Stock Issued |
Series H Preferred Stock Amount |
Series K Preferred Stock Issued |
Series K Preferred Stock Amount |
Common Stock Issued |
Common Stock Amount |
Class A Common Stock Issued |
Class A Common Stock Amount |
Additional Paid In Capital |
Cumulative Distributions In Excess of Net Income |
Accumulated Other Comprehensive Income (loss) |
Total Stockholders’ Equity |
|||||||||||||||||||||||||||||||||||||
Balances - January 31, 2022 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||||||||||||||||||||||||||||||
Net income applicable to Common and Class A common stockholders |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Change in unrealized losses on interest rate swap |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Cash dividends paid : |
||||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Class A common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Issuance of shares under dividend reinvestment plan |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock |
- |
- |
- |
- |
- |
- |
( |
) |
- |
- |
- |
|||||||||||||||||||||||||||||||||||||
Repurchase of Common and Class A Common stock |
||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock compensation and other adjustments |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Adjustments to redeemable noncontrolling interests |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Balances - April 30, 2022 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
Series H Preferred Stock Issued |
Series H Preferred Stock Amount |
Series K Preferred Stock Issued |
Series K Preferred Stock Amount |
Common Stock Issued |
Common Stock Amount |
Class A Common Stock Issued |
Class A Common Stock Amount |
Additional Paid In Capital |
Cumulative Distributions In Excess of Net Income |
Accumulated Other Comprehensive Income |
Total Stockholders’ Equity |
|||||||||||||||||||||||||||||||||||||
Balances - January 31, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||||||||||||||||||||||||||||||
Net income applicable to Common and Class A common stockholders |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Change in unrealized losses on interest rate swap |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Cash dividends paid : |
||||||||||||||||||||||||||||||||||||||||||||||||
Common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Class A common stock ($ |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Issuance of shares under dividend reinvestment plan |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||||||
Shares withheld for employee taxes |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock |
- |
- |
- |
- |
- |
- |
( |
) |
- |
- |
||||||||||||||||||||||||||||||||||||||
Restricted stock compensation and other adjustments |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||
Adjustments to redeemable noncontrolling interests |
- |
- |
- |
- |
- |
- |
- |
- |
- |
( |
) |
- |
( |
) |
||||||||||||||||||||||||||||||||||
Balances - April 30, 2021 |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
• | Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or |
• | The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e. revenue generated before and after the transaction). |
• | The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce), that is skilled, knowledgeable, and experienced in performing the process; |
• | The process cannot be replaced without significant cost, effort, or delay; or |
• | The process is considered unique or scarce. |
Buildings |
|
Property Improvements |
|
Furniture/Fixtures |
|
Tenant Improvements |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Revenues |
$ |
$ |
$ |
$ |
||||||||||||
Property operating expense |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Depreciation and amortization |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Net Income (Loss) |
$ |
$ |
$ |
( |
) |
$ |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Numerator |
||||||||||||||||
Net income applicable to common stockholders – basic |
$ |
$ |
$ |
$ |
||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Restricted stock awards |
||||||||||||||||
Net income applicable to common stockholders – diluted |
$ |
$ |
$ |
$ |
||||||||||||
Denominator |
||||||||||||||||
Denominator for basic EPS – weighted average common shares |
||||||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Restricted stock awards |
||||||||||||||||
Denominator for diluted EPS – weighted average common equivalent shares |
||||||||||||||||
Numerator |
||||||||||||||||
Net income applicable to Class A common stockholders-basic |
$ |
$ |
$ |
$ |
||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Restricted stock awards |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
Net income applicable to Class A common stockholders – diluted |
$ |
$ |
$ |
$ |
||||||||||||
Denominator |
||||||||||||||||
Denominator for basic EPS – weighted average Class A common shares |
||||||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Restricted stock awards |
||||||||||||||||
Denominator for diluted EPS – weighted average Class A common equivalent shares |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Ridgeway Revenues |
% |
% |
% |
% |
||||||||||||
All Other Property Revenues |
% |
% |
% |
% |
||||||||||||
Consolidated Revenue |
% |
% |
% |
% |
April 30, 2022 |
October 31, 2021 |
|||||||
Ridgeway Assets |
% |
% |
||||||
All Other Property Assets |
% |
% |
||||||
Consolidated Assets (Note 1) |
% |
% |
April 30, 2022 |
October 31, 2021 |
|||||||
Ridgeway Percent Leased |
% |
% |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
The Stop & Shop Supermarket Company |
% |
% |
% |
% |
||||||||||||
Bed, Bath & Beyond |
% |
% |
% |
% |
||||||||||||
Marshall’s Inc. |
% |
% |
% |
% |
||||||||||||
All Other Tenants at Ridgeway (Note 2) |
% |
% |
% |
% |
||||||||||||
Total |
% |
% |
% |
% |
Income Statements (In Thousands): |
Six Months Ended April 30, 2022 |
Three Months Ended April 30, 2022 |
||||||||||||||||||||||
Ridgeway |
All Other Operating Segments |
Total Consolidated |
Ridgeway |
All Other Operating Segments |
Total Consolidated |
|||||||||||||||||||
Revenues |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Property Operating Expenses |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Interest Expense |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Depreciation and Amortization |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Net Income |
$ |
$ |
$ |
$ |
$ |
$ |
Income Statements (In Thousands): |
Six Months Ended April 30, 2021 |
Three Months Ended April 30, 2021 |
||||||||||||||||||||||
Ridgeway |
All Other Operating Segments |
Total Consolidated |
Ridgeway |
All Other Operating Segments |
Total Consolidated |
|||||||||||||||||||
Revenues |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Property Operating Expenses |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Interest Expense |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Depreciation and Amortization |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Net Income |
$ |
$ |
$ |
$ |
$ |
$ |
Shelton |
||||
Assets: |
||||
Land |
$ |
|||
Building and improvements |
$ |
|||
In-place leases |
$ |
|||
Above market leases |
$ |
|||
Liabilities: |
||||
In-place leases |
$ |
|||
Below Market Leases |
$ |
April 30, 2022 |
October 31, 2021 |
|||||||
Beginning Balance |
$ |
$ |
||||||
Change in Redemption Value |
( |
) |
||||||
Partial Redemption of High Ridge Noncontrolling Interest |
( |
) |
( |
) |
||||
Redemption of New City Noncontrolling Interest |
( |
) |
||||||
Ending Balance |
$ |
$ |
April 30, 2022 |
October 31, 2021 |
|||||||
Chestnut Ridge Shopping Center ( |
$ |
$ |
||||||
Gateway Plaza ( |
||||||||
Putnam Plaza Shopping Center ( |
||||||||
Midway Shopping Center, L.P. ( |
||||||||
Applebee's at Riverhead ( |
||||||||
81 Pondfield Road Company ( |
||||||||
Total |
$ |
$ |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Operating lease income: |
||||||||||||||||
Fixed lease income (Base Rent) |
$ |
$ |
$ |
$ |
||||||||||||
Variable lease income (Recoverable Costs) |
||||||||||||||||
Other lease related income, net: |
||||||||||||||||
Above/below market rent amortization |
||||||||||||||||
Uncollectible amounts in lease income |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||
ASC Topic 842 cash basis lease income reversal |
( |
) |
( |
) |
( |
) |
||||||||||
Total lease income |
$ |
$ |
$ |
$ |
Fiscal Year Ending |
||||
2022 (a) |
$ |
|||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
Total |
$ |
Common Shares |
Class A Common Shares |
|||||||||||||||
Non-vested Shares |
Shares |
Weighted-Average Grant-Date Fair Value |
Shares |
Weighted-Average Grant-Date Fair Value |
||||||||||||
Non-vested at October 31, 2021 |
$ |
$ |
||||||||||||||
Granted |
$ |
$ |
||||||||||||||
Vested |
( |
) |
$ |
( |
) |
$ |
||||||||||
Forfeited |
$ |
( |
) |
$ |
||||||||||||
Non-vested at April 30, 2022 |
$ |
$ |
• | Level 1- Quoted prices for identical instruments in active markets |
• | Level 2- Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in |
• | Level 3- Valuations derived from valuation techniques in which significant value drivers are unobservable |
Fair Value Measurements at Reporting Date Using |
||||||||||||||||
Total |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
April 30, 2022 |
||||||||||||||||
Assets: |
||||||||||||||||
Interest Rate Swap Agreement |
$ |
$ |
$ |
$ |
||||||||||||
Liabilities: |
||||||||||||||||
Interest Rate Swap Agreement |
$ |
$ |
$ |
$ |
||||||||||||
Redeemable noncontrolling interests |
$ |
$ |
$ |
$ |
||||||||||||
October 31, 2021 |
||||||||||||||||
Assets: |
||||||||||||||||
Interest Rate Swap Agreement |
$ |
$ |
$ |
$ |
||||||||||||
Liabilities: |
||||||||||||||||
Interest Rate Swap Agreement |
$ |
$ |
$ |
$ |
||||||||||||
Redeemable noncontrolling interests |
$ |
$ |
$ |
$ |
• |
negative impacts from the continued spread of COVID-19 or from the emergence of a new strain of novel corona virus, including on the U.S. or global economy or on our business, financial position or results of operations; |
• |
economic and other market conditions, including real estate and market conditions, as well as inflationary pressures, that could impact us, our properties or the financial stability of our tenants; |
• |
consumer spending and confidence trends, as well as our ability to anticipate changes in consumer buying practices and the space needs of tenants; |
• |
our relationships with our tenants and their financial condition and liquidity; |
• |
any difficulties in renewing leases, filling vacancies or negotiating improved lease terms; |
• |
the inability of our properties to generate increased, or even sufficient, revenues to offset expenses, including amounts we are required to pay to municipalities for real estate taxes, payments for common area maintenance expenses at our properties and salaries for our management team and other employees; |
• |
the market value of our assets and the supply of, and demand for, retail real estate in which we invest; |
• |
risks of real estate acquisitions and dispositions, including our ability to identify and acquire retail real estate that meet our investment standards in our markets, as well as the potential failure of transactions to close; |
• |
risks of operating properties through joint ventures that we do not fully control; |
• |
financing risks, such as the inability to obtain debt or equity financing on favorable terms or the inability to comply with various financial covenants included in our Unsecured Revolving Credit Facility (the "Facility") or other debt instruments we currently have or may subsequently obtain, as well as the level and volatility of interest rates, which could impact the market price of our common stock and the cost of our borrowings; |
• |
environmental risk and regulatory requirements; |
• |
risks related to our status as a real estate investment trust, including the application of complex federal income tax regulations that are subject to change; |
• |
legislative and regulatory changes generally that may impact us or our tenants; |
• |
as well as other risks identified in this Annual Report on Form 10-K under Item 1A. Risk Factors for the fiscal year ended October 31, 2021 and in the other reports filed by the Company with the Securities and Exchange Commission (the “SEC”). |
• |
As of April 30, 2022, all of our 71 retail shopping centers, stand-alone restaurants and stand-alone bank branches are open and operating. |
• |
As of April 30, 2022, approximately 87% of our GLA is located in properties anchored by grocery stores, pharmacies or wholesale clubs, 4% of our GLA is located in outdoor retail shopping centers adjacent to regional malls, and 8% of our GLA is located in outdoor neighborhood convenience retail, with the remaining 1% of our GLA consisting of six suburban office buildings located in Greenwich, Connecticut and Bronxville, New York and three retail bank branches. All six suburban office buildings are open and all of the retail bank branches are open. |
• |
maintain our focus on community and neighborhood shopping centers, anchored principally by regional supermarkets, pharmacy chains or wholesale clubs, which we believe can provide a more stable revenue flow even during difficult economic times, given the focus on food and other types of staple goods; |
• |
acquire quality neighborhood and community shopping centers in the northeastern part of the United States with a concentration on properties in the metropolitan tri-state area outside of the City of New York, and unlock further value in these properties with selective enhancements to both the property and tenant mix, as well as improvements to management and leasing fundamentals, with the hope of growing our assets through acquisitions, subject to the availability of acquisitions that meet our investment parameters; |
• |
selectively dispose of underperforming properties and re-deploy the proceeds into potentially higher performing properties that meet our acquisition criteria; |
• |
invest in our properties for the long term through regular maintenance, periodic renovations and capital improvements, enhancing their attractiveness to tenants and customers (e.g. curbside pick-up), as well as increasing their value; |
• |
leverage opportunities to increase GLA at existing properties, through development of pad sites and reconfiguring of existing square footage, to meet the needs of existing or new tenants; |
• |
proactively manage our leasing strategy by aggressively marketing available GLA, renewing existing leases with strong tenants, anticipating tenant weakness when necessary by pre-leasing their spaces and replacing below-market-rent leases with increased market rents, with an eye towards securing leases that include regular or fixed contractual increases to minimum rents; |
• |
improve and refine the quality of our tenant mix at our shopping centers; |
• |
maintain strong working relationships with our tenants, particularly our anchor tenants; |
• |
maintain a conservative capital structure with low debt levels; and |
• |
control property operating and administrative costs. |
• |
In September 2021, we entered into a purchase and sale agreement to sell our property located in Chester, NJ to an unrelated third party for a sale price of $1.96 million, as that property no longer met our investment objectives. In accordance with ASC Topic 360-10-45, the property met all the criteria to be classified as held for sale in the fourth quarter of fiscal 2021, and accordingly we recorded a loss on property held for sale of $342,000, which loss was included in continuing operations in the consolidated statement of income for the year ended October 31, 2021. This loss has been added back to our FFO as discussed below in this Item 2. The amount of the loss represented the net carrying amount of the property over the fair value of the asset, less estimated cost to sell. In December 2021, the Chester sale was completed and we realized an additional loss on sale of property of $8,000, which loss is included in continuing operations in the consolidated statement of income for the six months ended April 30, 2022. |
• |
In November 2021, we redeemed 59,819 units of UB High Ridge, LLC from noncontrolling members. The total cash price paid for the redemptions was $1.4 million. As a result of the redemptions, our ownership percentage of High Ridge increased to 26.9% from 24.6% at October 31, 2021. |
• |
In December 2021, we refinanced our existing $6.5 million first mortgage payable secured by our Boonton, NJ property. The new mortgage has a principal balance of $11 million and requires payments of principal and interest at a fixed interest rate of 3.45%. The new mortgage matures in November 2031. |
• |
In February 2022, we sold one-free standing restaurant retail property located in Bloomfield, NJ, as that property no longer met our investment objectives. The property was sold for $1.8 million and we recorded a gain on sale of property in our second quarter of fiscal 2022 in the amount of $543,000. |
• |
In February 2022, we refinanced our existing $22.8 million first mortgage secured by our Stratford, CT property. The new mortgage has a principal balance of $35.0 million, a term of 10 years, and requires payments of principal and interest at a variable rate based on the Secured Overnight Financing Rate (“SOFR”), plus an applicable spread. Concurrent with entering into the mortgage, we entered into an interest rate swap agreement with the lender as the counterparty, which converts the variable rate based on SOFR to a fixed rate of interest totaling 3.0525% per annum. |
• |
In February 2022, we purchased, for $33.6 million, a 186,000 square foot grocery-anchored shopping center located in Shelton, CT. We funded the purchase price with available cash and a $20 million borrowing on our Facility. |
• |
In March 2022, we sold one-free standing restaurant retail property located in Unionville, CT, as that property no longer met our investment objectives. The property was sold for $950,000 and we recorded a gain on sale of property in our second quarter of fiscal 2022 in the approximate amount of $203,000. |
• |
In March 2022, we redeemed the remaining units of UB New City, LLC from the noncontrolling member. The total cash price paid for the redemption was $502,000. As a result of the redemption, we now own 100% of the entity. |
• |
In March 2022, we repaid our first mortgage secured by our Passaic, NJ property in the amount of $3.1 million with available cash. |
• |
Valuation of investment properties |
• |
Revenue recognition |
• |
Determining the amount of our allowance for doubtful accounts |
• |
unsecured indebtedness may not exceed $400 million; |
• |
secured indebtedness may not exceed 40% of gross asset value, as determined under the Facility; |
• |
total secured and unsecured indebtedness, excluding preferred stock, may not be more than 60% of gross asset value; |
• |
total secured and unsecured indebtedness, plus preferred stock, may not be more than 70% of gross asset value; |
• |
unsecured indebtedness may not exceed 60% of the eligible real asset value of unencumbered properties in the unencumbered asset pool as defined under the Facility; |
• |
earnings before interest, taxes, depreciation and amortization must be at least 175% of fixed charges, which exclude preferred stock dividends; |
• |
the net operating income from unencumbered properties must be 200% of unsecured interest expenses; |
• |
not more than 25% of the gross asset value and unencumbered asset pool may be attributable to the Company's pro rata share of the value of unencumbered properties owned by non-wholly owned subsidiaries or unconsolidated joint ventures; and |
• |
the number of un-mortgaged properties in the unencumbered asset pool must be at least 10 and at least 10 properties must be owned by the Company or a wholly owned subsidiary. |
• | a 66.67% equity interest in the Putnam Plaza Shopping Center, |
• | an 11.792% equity interest in Midway Shopping Center, L.P., |
• | a 50% equity interest in Chestnut Ridge Shopping Center, |
• | a 50% equity interest in Gateway Plaza shopping center and Applebee’s Plaza, and |
• | a 20% interest in a suburban office building with ground level retail. |
Principal Balance |
Fixed Interest |
||||||||||||
Joint Venture Description |
Location |
Original Balance |
At April 30, 2022 |
Rate Per Annum |
Maturity Date |
||||||||
Midway Shopping Center |
Scarsdale, NY |
$ |
32,000 |
$ |
24,200 |
4.80% |
Dec-2027 |
||||||
Putnam Plaza Shopping Center |
Carmel, NY |
$ |
18,900 |
$ |
17,900 |
4.81% |
Oct-2028 |
||||||
Gateway Plaza |
Riverhead, NY |
$ |
14,000 |
$ |
10,900 |
4.18% |
Feb-2024 |
||||||
Applebee's Plaza |
Riverhead, NY |
$ |
2,300 |
$ |
1,800 |
3.38% |
Aug-2026 |
Six Months Ended |
Change Attributable to |
|||||||||||||||||||||||
April 30, |
Increase |
Property |
Properties Held In |
|||||||||||||||||||||
Revenues |
2022 |
2021 |
(Decrease) |
% Change |
Acquisitions/Sales |
Both Periods (Note 1) |
||||||||||||||||||
Base rents |
$ |
51,246 |
$ |
48,757 |
$ |
2,489 |
5.1 |
% |
$ |
160 |
$ |
2,329 |
||||||||||||
Recoveries from tenants |
17,657 |
18,792 |
(1,135 |
) |
(6.0 |
)% |
47 |
(1,182 |
) |
|||||||||||||||
Uncollectable amounts in lease income |
(151 |
) |
(1,379 |
) |
1,228 |
(89.1 |
)% |
- |
1,228 |
|||||||||||||||
ASC Topic 842 cash basis lease income reversal (including straight-line rent) |
(9 |
) |
(1,892 |
) |
1,883 |
(99.5 |
)% |
- |
1,883 |
|||||||||||||||
Total lease income |
68,743 |
64,278 |
||||||||||||||||||||||
Lease termination |
60 |
705 |
(645 |
) |
(91.5 |
)% |
- |
(645 |
) |
|||||||||||||||
Other income |
2,752 |
2,220 |
532 |
24.0 |
% |
4 |
528 |
|||||||||||||||||
Operating Expenses |
||||||||||||||||||||||||
Property operating |
13,449 |
12,449 |
1,000 |
8.0 |
% |
(26 |
) |
1,026 |
||||||||||||||||
Property taxes |
11,811 |
11,776 |
35 |
0.3 |
% |
51 |
(16 |
) |
||||||||||||||||
Depreciation and amortization |
14,716 |
14,710 |
6 |
- |
232 |
(226 |
) |
|||||||||||||||||
General and administrative |
5,188 |
4,737 |
451 |
9.5 |
% |
n/a |
n/a |
|||||||||||||||||
Non-Operating Income/Expense |
||||||||||||||||||||||||
Interest expense |
6,564 |
6,733 |
(169 |
) |
(2.5 |
)% |
- |
(169 |
) |
|||||||||||||||
Interest, dividends, and other investment income |
161 |
96 |
65 |
67.7 |
% |
n/a |
n/a |
Three Months Ended |
Change Attributable to |
|||||||||||||||||||||||
April 30, |
Increase |
Property |
Properties Held In |
|||||||||||||||||||||
Revenues |
2022 |
2021 |
(Decrease) |
% Change |
Acquisitions/Sales |
Both Periods (Note 1) |
||||||||||||||||||
Base rents |
$ |
26,233 |
$ |
24,598 |
$ |
1,635 |
$ |
6.6 |
% |
$ |
501 |
$ |
1,134 |
|||||||||||
Recoveries from tenants |
8,383 |
8,814 |
(431 |
) |
(4.9 |
)% |
174 |
(605 |
) |
|||||||||||||||
Uncollectable amounts in lease income |
(38 |
) |
(724 |
) |
686 |
(94.8 |
)% |
- |
686 |
|||||||||||||||
ASC Topic 842 cash basis lease income reversal (including straight-line rent) |
78 |
(893 |
) |
971 |
(108.7 |
)% |
- |
971 |
||||||||||||||||
Total lease income |
34,656 |
31,795 |
||||||||||||||||||||||
Lease termination |
32 |
- |
32 |
100.0 |
% |
- |
32 |
|||||||||||||||||
Other income |
1,312 |
1,131 |
181 |
16.0 |
% |
11 |
170 |
|||||||||||||||||
Operating Expenses |
||||||||||||||||||||||||
Property operating |
6,447 |
6,135 |
312 |
5.1 |
% |
58 |
254 |
|||||||||||||||||
Property taxes |
5,888 |
5,915 |
(27 |
) |
(0.5 |
)% |
76 |
(103 |
) |
|||||||||||||||
Depreciation and amortization |
7,573 |
7,192 |
381 |
5.3 |
% |
266 |
115 |
|||||||||||||||||
General and administrative |
2,508 |
2,093 |
415 |
19.8 |
% |
n/a |
n/a |
|||||||||||||||||
Non-Operating Income/Expense |
||||||||||||||||||||||||
Interest expense |
3,262 |
3,341 |
(79 |
) |
(2.4 |
)% |
- |
(79 |
) |
|||||||||||||||
Interest, dividends, and other investment income |
106 |
53 |
53 |
100.0 |
% |
n/a |
n/a |
• | 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. |
Reconciliation of Net Income Available to Common and Class A Common Stockholders To Funds From Operations: |
Six Months Ended |
Three Months Ended |
||||||||||||||
April 30, |
April 30, |
|||||||||||||||
2022 |
2021 |
2022 |
2021 |
|||||||||||||
Net Income Applicable to Common and Class A Common Stockholders |
$ |
12,506 |
$ |
9,100 |
$ |
7,109 |
$ |
4,621 |
||||||||
Real property depreciation |
11,622 |
11,461 |
5,884 |
5,759 |
||||||||||||
Amortization of tenant improvements and allowances |
2,123 |
2,352 |
1,132 |
1,037 |
||||||||||||
Amortization of deferred leasing costs |
936 |
846 |
539 |
370 |
||||||||||||
Depreciation and amortization on unconsolidated joint ventures |
746 |
750 |
371 |
375 |
||||||||||||
((Gain)/loss on sale of property |
(768 |
) |
(406 |
) |
(766 |
) |
(434 |
) |
||||||||
Funds from Operations Applicable to Common and Class A Common Stockholders |
$ |
27,165 |
$ |
24,103 |
$ |
14,269 |
$ |
11,728 |
• |
An increase in base rent for new leasing in the portfolio after the first quarter of fiscal 2021. |
• |
A decrease in uncollectable amounts in lease income of $1.2 million in the six months ended April 30, 2022, when compared with the corresponding prior period. We significantly increased our uncollectable amounts in lease income based on our assessment of the collectability of existing non-credit small shop tenants' receivables given the onset of the COVID-19 pandemic in March 2020. A number of non-credit small shop tenants' businesses were deemed non-essential by the states in which they operate and forced to close for a portion of the second and third quarters of fiscal 2020. This placed stress on our small shop tenants and made it difficult for many of them to pay their rents when due. This stress continued through our first quarter of fiscal 2021. Our assessment was that any billed but unpaid rents would likely be uncollectable. During the six months ended April 30, 2022, many of our tenants continued to see signs of business improvement as regulatory restrictions continued to ease and individuals continued to return to pre-pandemic activities. As a result, the uncollectable amounts in lease income declined during such period, when compared with the corresponding period of the prior year. |
• |
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 April 30, 2022, 32 of these 89 tenants are no longer tenants in the Company's properties. As a result, of converting these tenants to cash-basis accounting we reversed straight-line rent receivables in the amount of $1.9 million and $893,000 in the six and three month periods ended April 30, 2021. |
• |
A $645,000 decrease in lease termination income in the first quarter of fiscal 2022, when compared with the corresponding prior period, primarily as a result of a multi-site lease buyout in the first quarter of fiscal 2021 from one tenant that had occupied multiple spaces in our portfolio. |
• |
A decrease in variable lease income (cost recovery income) related to an under-accrual adjustment in recoveries from tenants for real estate taxes and common area maintenance in the first quarter of fiscal 2021, which increased revenue in the first quarter of fiscal 2021 and caused a negative variance in the first half of fiscal 2022. |
• |
A $374,000 increase in employee compensation and professional fees in the first half of fiscal 2022, when compared to the corresponding prior period. |
• |
An increase in base rent for new leasing in the portfolio after the first quarter of fiscal 2021. |
• |
A decrease in uncollectable amounts in lease income of $686,000 in the three months ended April 30, 2022, when compared with the corresponding prior period. We significantly increased our uncollectable amounts in lease income based on our assessment of the collectability of existing non-credit small shop tenants' receivables given the onset of the COVID-19 pandemic in March 2020. A number of non-credit small shop tenants' businesses were deemed non-essential by the states in which they operate and forced to close for a portion of the second and third quarters of fiscal 2020. This placed stress on our small shop tenants and made it difficult for many of them to pay their rents when due. This stress continued through our first quarter of fiscal 2021. Our assessment was that any billed but unpaid rents would likely be uncollectable. During the three months ended April 30, 2022, many of our tenants continued to see signs of business improvement as regulatory restrictions continued to ease and individuals continued to return to pre-pandemic activities. As a result, the uncollectable amounts in lease income declined during such period, when compared with the corresponding period of the prior year. |
• |
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 April 30, 2022, 32 of these 89 tenants are no longer tenants in the Company's properties. As a result, of converting these tenants to cash-basis accounting we reversed straight-line rent receivables in the amount of $893,000 in the three month periods ended April 30, 2021. |
• |
A decrease in variable lease income (cost recovery income) related to an under-accrual adjustment in recoveries from tenants for real estate taxes and common area maintenance in the first half of fiscal 2021, which increased revenue in the first half of fiscal 2021 and caused a negative variance in the second quarter of fiscal 2022. |
• |
A $323,000 increase in employee compensation and professional fees in the first half of fiscal 2022, when compared to the corresponding prior period. |
Six Months Ended April 30, |
Three Months Ended April 30, |
|||||||
2022 |
2021 |
% Change |
2022 |
2021 |
% Change |
|||
Same Property Operating Results: |
||||||||
Number of Properties (Note 1) |
72 |
72 |
||||||
Revenue (Note 2) |
||||||||
Base Rent (Note 3) |
$49,601 |
$49,924 |
(0.6)% |
$25,053 |
$25,759 |
(2.7)% |
||
Uncollectable amounts in lease income-same property |
(152) |
(1,379) |
(89.0)% |
(39) |
(725) |
(94.6)% |
||
ASC Topic 842 cash-basis lease income reversal-same property |
(10) |
(1,855) |
(99.5)% |
49 |
(856) |
(105.7)% |
||
Recoveries from tenants |
17,429 |
18,612 |
(6.4)% |
8,158 |
8,767 |
(6.9)% |
||
Other property income |
1,130 |
226 |
400.0% |
794 |
178 |
346.1% |
||
67,998 |
65,528 |
3.8% |
34,015 |
33,123 |
2.7% |
|||
Expenses |
||||||||
Property operating |
7,802 |
7,720 |
1.1% |
3,997 |
3,920 |
2.0% |
||
Property taxes |
11,677 |
11,698 |
(0.2)% |
5,768 |
5,872 |
(1.8)% |
||
Other non-recoverable operating expenses |
962 |
1,016 |
(5.3)% |
466 |
618 |
(24.6)% |
||
20,441 |
20,434 |
- |
10,231 |
10,410 |
(1.7)% |
|||
Same Property Net Operating Income |
$47,557 |
$45,094 |
5.5% |
$23,784 |
$22,713 |
4.7% |
||
Reconciliation of Same Property NOI to Most Directly Comparable GAAP Measure: |
||||||||
Other reconciling items: |
||||||||
Other non same-property net operating income |
750 |
750 |
754 |
351 |
||||
Other Interest income |
286 |
231 |
161 |
123 |
||||
Other Dividend Income |
- |
- |
- |
- |
||||
Consolidated lease termination income |
60 |
704 |
32 |
- |
||||
Consolidated amortization of above and below market leases |
396 |
289 |
222 |
179 |
||||
Consolidated straight line rent income |
(55) |
(2,331) |
(60) |
(1,763) |
||||
Equity in net income of unconsolidated joint ventures |
590 |
660 |
323 |
310 |
||||
Taxable REIT subsidiary income/(loss) |
(135) |
254 |
(321) |
(126) |
||||
Solar income/(loss) |
(292) |
(247) |
(81) |
(93) |
||||
Storage income/(loss) |
1,001 |
445 |
475 |
192 |
||||
Unrealized holding gains arising during the periods |
- |
- |
- |
- |
||||
Gain on marketable securities |
- |
- |
- |
- |
||||
Interest expense |
(6,564) |
(6,733) |
(3,262) |
(3,341) |
||||
General and administrative expenses |
(5,188) |
(4,737) |
(2,508) |
(2,093) |
||||
Uncollectable amounts in lease income |
(152) |
(1,379) |
(39) |
(725) |
||||
Uncollectable amounts in lease income-same property |
152 |
1,379 |
39 |
725 |
||||
ASC Topic 842 cash-basis lease income reversal |
(10) |
(1,892) |
77 |
(893) |
||||
ASC Topic 842 cash-basis lease income reversal-same property |
10 |
1,855 |
(49) |
856 |
||||
Directors fees and expenses |
(201) |
(198) |
(94) |
(89) |
||||
Depreciation and amortization |
(14,716) |
(14,710) |
(7,572) |
(7,192) |
||||
Adjustment for intercompany expenses and other |
(3,112) |
(2,078) |
(1,223) |
(610) |
||||
Total other -net |
(27,180) |
(27,738) |
(13,126) |
(14,189) |
||||
Income from continuing operations |
20,377 |
17,356 |
17.4% |
10,658 |
8,524 |
25.0% |
||
Gain (loss) on sale of real estate |
768 |
406 |
766 |
434 |
||||
Net income |
21,145 |
17,762 |
19.0% |
11,424 |
8,958 |
27.5% |
||
Net income attributable to noncontrolling interests |
(1,814) |
(1,837) |
(903) |
(925) |
||||
Net income attributable to Urstadt Biddle Properties Inc. |
$19,331 |
$15,925 |
21.4% |
$10,521 |
$8,033 |
31.0% |
||
Same Property Operating Expense Ratio (Note 4) |
89.5% |
95.8% |
(6.4)% |
83.5% |
89.5% |
(6.0)% |
101.INS |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document. |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | Furnished herewith. |
URSTADT BIDDLE PROPERTIES INC. |
||
(Registrant) |
||
By: /s/ Willing L. Biddle |
||
Willing L. Biddle |
||
Chief Executive Officer |
||
(Principal Executive Officer) |
||
By: /s/ John T. Hayes |
||
John T. Hayes |
||
Senior Vice President & |
||
Chief Financial Officer |
||
(Principal Financial Officer |
||
Dated: June 8, 2022 |
and Principal Accounting Officer |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended April 30, 2022 of Urstadt Biddle Properties Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on our evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: June 8, 2022 | /s/ Willing L. Biddle |
Willing L. Biddle | |
President and | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended April 30, 2022 of Urstadt Biddle Properties Inc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on our evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: June 8, 2022 | /s/ John T. Hayes |
John T. Hayes | |
Senior Vice President and | |
Chief Financial Officer |
1. | The Company's Quarterly Report on Form 10-Q for the quarter ended April 30, 2022 (the "Form 10-Q") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and |
2. | Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | June 8, 2022 | /s/ Willing L. Biddle |
Willing L. Biddle | ||
President and | ||
Chief Executive Officer | ||
Dated: | June 8, 2022 | /s/ John T. Hayes |
John T. Hayes | ||
Senior Vice President and | ||
Chief Financial Officer |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2022 |
Apr. 30, 2021 |
Apr. 30, 2022 |
Apr. 30, 2021 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||||
Net Income | $ 11,424 | $ 8,958 | $ 21,145 | $ 17,762 |
Other comprehensive income: | ||||
Change in unrealized losses on interest rate swaps | 10,220 | 3,507 | 13,691 | 5,006 |
Change in unrealized gain (loss) on interest rate swaps-equity investees | 1,151 | 470 | 1,503 | 728 |
Total comprehensive income | 22,795 | 12,935 | 36,339 | 23,496 |
Comprehensive income attributable to noncontrolling interests | (903) | (925) | (1,814) | (1,837) |
Total Comprehensive income attributable to Urstadt Biddle Properties Inc. | 21,892 | 12,010 | 34,525 | 21,659 |
Preferred Stock Dividends | (3,412) | (3,412) | (6,825) | (6,825) |
Total comprehensive income applicable to Common and Class A Stockholders | $ 18,480 | $ 8,598 | $ 27,700 | $ 14,834 |
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2022 |
Apr. 30, 2021 |
Apr. 30, 2022 |
Apr. 30, 2021 |
|
Common Stock [Member] | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends per share declared (in dollars per share) | $ 0.2145 | $ 0.125 | $ 0.429 | $ 0.25 |
Class A Common Stock [Member] | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends per share declared (in dollars per share) | 0.2375 | 0.14 | 0.475 | 0.28 |
Common Stock [Member] | Common Stock [Member] | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends per share declared (in dollars per share) | 0.2145 | 0.125 | 0.429 | 0.25 |
Common Stock [Member] | Class A Common Stock [Member] | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock, dividends per share declared (in dollars per share) | $ 0.2375 | $ 0.14 | $ 0.475 | $ 0.28 |
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
(1) ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Urstadt Biddle Properties Inc. (“Company”), a Maryland Corporation, is a real estate investment trust ("REIT"), engaged in the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers in the metropolitan tri-state area outside of the City of New York. The Company's major tenants include supermarket chains and other retailers who sell basic necessities. At April 30, 2022, the Company owned or had equity interests in 77 properties containing a total of 5.3 million square feet of Gross Leasable Area (“GLA”).
COVID-19 Pandemic
On March 11, 2020, the novel coronavirus disease (“COVID-19”) was declared a pandemic (“COVID-19 pandemic”) by the World Health Organization as the disease spread throughout the world. During March 2020, measures to prevent the spread of COVID-19 were initiated, with federal, state and local government agencies issuing regulatory orders enforcing social distancing and limiting certain business operations and group gatherings in order to further prevent the spread of COVID-19. While these regulatory orders vary by state and have changed over time, as of April 30, 2022 all of our tenants’ businesses are operating normally. We have seen foot traffic, retail activity and general business conditions for most of our tenants essentially return to pre-pandemic levels. The pandemic is still ongoing, however, with existing and new variants making the situation difficult to predict.
Principles of Consolidation and Use of Estimates
The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures in which the Company meets certain criteria in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. The Company has determined that such joint ventures should be consolidated into the consolidated financial statements of the Company. In accordance with ASC Topic 970-323 “Real Estate-General-Equity Method and Joint Ventures,” joint ventures that the Company does not control but otherwise exercises significant influence over, are accounted for under the equity method of accounting. See Note 5 for further discussion of the unconsolidated joint ventures. All significant intercompany transactions and balances have been eliminated in consolidation.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 U.S. GAAP 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 six months ended April 30, 2022 are not necessarily indicative of the results that may be expected for the year ending October 31, 2022. These financial statements should 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, 2021.
The preparation of financial statements requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition, fair value estimates, and the collectability of tenant receivables and other assets and liabilities. Actual results could differ from these estimates. The consolidated balance sheet at October 31, 2021 has been derived from audited financial statements at that date.
Federal Income Taxes
The Company has elected to be treated as a REIT under Sections 856-860 of the Internal Revenue Code ("Code"). Under those sections, a REIT that, among other things, distributes at least 90% of real estate trust taxable income and meets certain other qualifications prescribed by the Code will not be taxed on that portion of its taxable income that is distributed. The Company believes it qualifies as a REIT and intends to distribute all of its taxable income for fiscal 2022 in accordance with the provisions of the Code. Accordingly, no provision has been made for Federal income taxes in the accompanying consolidated financial statements.
The Company follows the provisions of ASC Topic 740, “Income Taxes” that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on its evaluation, the Company determined that it has no uncertain tax positions and no unrecognized tax benefits as of April 30, 2022. As of April 30, 2022, the fiscal tax years 2018 through and including 2021 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenant receivables. The Company places its cash and cash equivalents with high quality financial institutions and the balances at times could exceed federally insured limits. The Company performs ongoing credit evaluations of its tenants and may require certain tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the terminal value of a tenant’s lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space. The Company has no dependency upon any single tenant.
Marketable Securities
Marketable equity securities are carried at fair value based upon quoted market prices in active markets with changes in fair value recognized in net income.
Derivative Financial Instruments
The Company occasionally utilizes derivative financial instruments, such as interest rate swaps, to manage its exposure to fluctuations in interest rates. The Company has established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. Derivative financial instruments must be effective in reducing the Company’s interest rate risk exposure in order to qualify for hedge accounting. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative instrument matures or is settled. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. The Company has not entered into, and does not plan to enter into, derivative financial instruments for trading or speculative purposes. Additionally, the Company has a policy of entering into derivative contracts only with major financial institutions.
As of April 30, 2022, the Company believes it has no significant risk associated with non-performance of the financial institutions that are the counterparties to its derivative contracts. At April 30, 2022, the Company had approximately $157.3 million in secured mortgage financings subject to interest rate swaps. Such interest rate swaps converted the LIBOR-based variable rates on the mortgage financings to a weighted-average fixed annual rate of 3.74% per annum. As of April 30, 2022 and October 31, 2021, the Company had a deferred liability of $637,000 and $6.7 million, respectively (included in accounts payable and accrued expenses on the consolidated balance sheets), relating to the fair value of the Company’s interest rate swaps applicable to secured mortgages. As of April 30, 2022 and October 31, 2021, the Company had deferred assets of $8.1 million and $515,000, respectively (included in other assets on the consolidated balance sheets), relating to the fair value of the Company’s interest rate swaps applicable to secured mortgages.
Charges and/or credits relating to the changes in fair values of such interest rate swaps are made to other comprehensive income/(loss) as the swaps are deemed effective and are classified as a cash flow hedge.
Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of net income applicable to Common and Class A Common stockholders and other comprehensive income (loss). Other comprehensive income (loss) includes items that are otherwise recorded directly in stockholders’ equity, such as unrealized gains and losses on interest rate swaps designated as cash flow hedges, including the Company's share from entities accounted for under the equity method of accounting. At April 30, 2022, accumulated other comprehensive income consisted of net unrealized gains on interest rate swap agreements of $7.4 million, inclusive of the Company's share of accumulated comprehensive income/losses from joint ventures accounted for by the equity method of accounting. At October 31, 2021, accumulated other comprehensive loss consisted of net unrealized losses on interest rate swap agreements of approximately $7.7 million, inclusive of the Company's share of accumulated comprehensive income/losses from joint ventures accounted for by the equity method of accounting. Unrealized gains and losses included in other comprehensive income/(loss) will be reclassified into earnings as gains and losses are realized.
Asset Impairment
On a periodic basis, management assesses whether there are any indicators that the value of its real estate investments may be impaired. A property value is considered impaired when management’s estimate of current and projected operating cash flows (undiscounted and without interest) of the property over its remaining useful life is less than the net carrying value of the property. Such cash flow projections consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the loss is measured as the excess of the net carrying amount of the property over the fair value of the asset. Changes in estimated future cash flows due to changes in the Company’s plans or market and economic conditions could result in recognition of impairment losses which could be substantial. As of April 30, 2022, management does not believe that the value of any of its real estate investments is impaired.
Acquisitions of Real Estate Investments, Capitalization Policy and Depreciation
Acquisition of Real Estate Investments:
The Company evaluates each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted for as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:
An acquired process is considered substantive if:
Generally, the Company expects that acquisitions of real estate or in-substance real estate will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.
Acquisitions of real estate and in-substance real estate that do not meet the definition of a business are accounted for as asset acquisitions. The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. As a result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. The relative fair values used to allocate the cost of an asset acquisition are determined using the same methodologies and assumptions as the Company utilizes to determine fair value in a business combination.
The value of tangible assets acquired is based upon our estimation of value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. We assess the fair value of tangible and intangible assets based on numerous factors, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property.
The values of acquired above and below-market leases, which are included in prepaid expenses and other assets and other liabilities, respectively, are amortized over the terms of the related leases and recognized as either an increase (for below-market leases) or a decrease (for above-market leases) to rental revenue. The values of acquired in-place leases are classified in other assets in the accompanying consolidated balance sheets and amortized over the remaining terms of the related leases.
Capitalization Policy:
Land, buildings, property improvements, furniture/fixtures and tenant improvements are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and/or replacements, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.
Depreciation:
The Company is required to make subjective assessments as to the useful life of its properties for purposes of determining the amount of depreciation. These assessments have a direct impact on the Company’s net income.
Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
Sale of Investment Property and Property Held for Sale
The Company reports properties that are either disposed of or are classified as held for sale in continuing operations in the consolidated statement of income if the removal, or anticipated removal, of the asset(s) from the reporting entity does not represent a strategic shift that has or will have a major effect on an entity's operations and financial results when disposed of.
In September 2021, the Company entered into a purchase and sale agreement to sell its property located in Chester, NJ (the "Chester Property"), to an unrelated third party for a sale price of $1.96 million as that property no longer met its investment objectives. In accordance with ASC Topic 360-10-45, the property met all the criteria to be classified as held for sale in the fourth quarter of fiscal 2021, and accordingly the Company recorded a loss on property held for sale of $342,000, which loss was included in continuing operations in the consolidated statement of income for the year ended October 31, 2021. The amount of the loss represented the net carrying amount of the property over the fair value of the asset less estimated cost to sell. The net book value of the Chester Property was insignificant to financial statement presentation and as a result the Company did not include the asset as held for sale on its consolidated balance sheet at October 31, 2021. In December 2021, the Chester Property sale was completed and the Company realized an additional loss on sale of property of $8,000, which loss is included in operations in the consolidated statement of income for the six months ended April 30, 2022.
In February 2022, the Company sold its property located in Bloomfield, NJ (the "Bloomfield Property") to an unrelated third party for a sale price of $1.8 million, as that property no longer met the Company's investment objectives. In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $544,000, which gain is included in continuing operations in its consolidated income statements for the three and six month periods ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.
In March 2022, the Company sold its property located in Unionville, CT (the "Unionville Property") to an unrelated third party for a sale price of $950,000, as that property no longer met the Company's investment objectives. In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $203,000, which gain is included in continuing operations in its consolidated income statements for the three and six month periods ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.
The operating results of the Chester Property, the Bloomfield Property and the Unionville Property, which are included in operations is as follows (amounts in thousands):
Lease Income, Revenue Recognition and Tenant Receivables
Lease Income:
The Company accounts for lease income in accordance with ASC Topic 842 "Leases".
The Company's existing leases are generally classified as operating leases. However, certain longer-term leases (both lessee and lessor leases) may be classified as direct financing or sales type leases, which may result in selling profit and an accelerated pattern of earnings recognition.
The Company leases space to tenants under agreements with varying terms that generally provide for fixed payments of base rent, with designated increases over the term of the lease. Some of the lease agreements contain provisions that provide for additional rents based on tenants' sales volume ("percentage rent"). Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. Additionally, most all lease agreements contain provisions for reimbursement of the tenants' share of actual real estate taxes, insurance and Common Area Maintenance ("CAM") costs (collectively, "Recoverable Costs") incurred.
Lease terms generally range from 1 to 5 years for tenant spaces under 10,000 square feet (“Shop Space”) and in excess of 5 years for spaces greater than 10,000 square feet (“Anchor Spaces”). Many leases also provide the option for the tenants to extend their lease beyond the initial term of the lease. If the tenants do not exercise renewal options and the leases mature, the tenants must relinquish their space so it can be leased to a new tenant, which generally involves some level of cost to prepare the space for re-leasing. These costs are capitalized and depreciated over the shorter of the life of the subsequent lease or the life of the improvement.
CAM is a non-lease component of the lease contract under ASC Topic 842, and therefore would be accounted for under ASC Topic 606, Revenue from Contracts with Customers, and presented separate from lease income in the accompanying consolidated statements of income, based on an allocation of the overall contract price, which is not necessarily the amount that would be billable to the tenants for CAM reimbursements per the terms of the lease contract. As the timing and pattern of providing the CAM service to the tenant is the same as the timing and pattern of the tenants' use of the underlying lease asset, the Company, in accordance with ASC Topic 842, combines CAM with the remaining lease components, along with tenants' reimbursement of real estate taxes and insurance, and recognize them together as lease income in the accompanying consolidated statements of income.
Lease income for operating leases with fixed payment terms is recognized on a straight-line basis over the expected term of the lease for all leases for which collectability is considered probable at the commencement date. At lease commencement, the Company expects that collectability is probable for all of its leases due to the Company’s credit checks on tenants and other creditworthiness analysis undertaken before entering into a new lease; therefore, income from all operating leases is initially recognized on a straight-line basis. Lease income each period is reduced by amounts considered uncollectable on a lease-by-lease basis, with any changes in collectability assessments recognized as a current period adjustment to lease income. For operating leases in which collectability of lease income is not considered probable, lease income is recognized on a cash basis and all previously recognized uncollected lease income, including straight-line rental income, is reversed in the period in which the lease income is determined not to be probable of collection.
The Company, as a lessor, may only defer as initial direct costs the incremental costs of a tenant operating lease that would not have been incurred if the lease had not been obtained. These costs generally include third party broker payments, which are capitalized to deferred costs in the accompanying consolidated balance sheets and amortized over the expected term of the lease to depreciation and amortization expense in the accompanying consolidated statements of income.
COVID-19 Pandemic
Beginning in March 2020, many of the Company's properties were negatively impacted by the COVID-19 pandemic, as state governments mandated restrictions on the operation of non-essential businesses to prevent the spread of COVID-19, forcing many of our tenants’ businesses to close or reduce operations. As public health and business conditions in the areas where our properties are located have generally improved, rent relief requests have greatly decreased and our properties have largely returned to normal operations. The primary strategy of the Company with respect to rent concession requests was to defer some portion of rents due for the months of April 2020 through the beginning of fiscal 2021 to be paid over a later part of the lease, preferably within a period of one year or less. In some instances, however, the Company determined that it was more appropriate to abate some portion of base rents. Most of the base rent deferrals or abatements entered into with tenants in the second half of fiscal 2021 and the first quarter of fiscal 2022 are additional deferrals or abatements for tenants who received prior rent concessions.
From the onset of COVID-19 through April 30, 2022, the Company completed 290 lease modifications, consisting of base rent deferrals totaling $4.0 million and rent abatements totaling $4.7 million. Included in the aforementioned amounts were 1 and 11 rent deferrals and 2 and 29 rent abatements, which deferred $87,000 and $426,000 and abated $156,000 and $2.3 million of base rents in the six months ended April 30, 2022 and 2021, respectively.
Included in the aforementioned amounts were 1 and 2 rent deferrals and 1 and 6 rent abatements, which deferred $37,000 and $26,000 and abated $33,000 and $287,000 of base rents in the three months ended April 30, 2022 and 2021, respectively.
In April 2020, in response to the COVID-19 pandemic, the FASB staff issued guidance that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842, as if enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the lease contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each lease contract to determine whether enforceable rights and obligations for concessions exist in the lease contract and may elect to apply or not apply the lease modification guidance in Topic 842 to those contracts.
This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. For example, this election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. The FASB staff expects that reasonable judgment will be exercised in making those determinations.
Most concessions will provide a deferral of payments with no substantive changes to the consideration in the original lease contract. A deferral affects the timing, but the amount of the consideration is substantially the same as that required by the original lease contract. The FASB staff expects that there will be multiple ways to account for those deferrals, none of which the staff believes are preferable over others. The Company has made the election not to analyze each lease contract, and believes that, based on FASB guidance, the appropriate way to account for the concessions as described above is to account for such concessions as if no changes to the lease contracts were made. Under that accounting, a lessor would increase its lease receivable (straight-line rents receivable) and would continue to recognize income during the deferral period, assuming that the collectability of the future rents under the lease contract are considered collectable. If it is determined that the future rents of any lease contract are not collectable, the Company would treat that lease contract on a cash basis as defined in ASC Topic 842.
When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection of substantially all lease payments during a lease term requires significant judgment. This determination is impacted by numerous factors, including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in lease income.
Revenue Recognition
In those instances, in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition on operating leases will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin.
Lease termination amounts are recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with the Company. There is no way of predicting or forecasting the timing or amounts of future lease termination fees. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses under U.S. GAAP have been met.
Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved.
Tenant Receivables
During the early days of the pandemic, the actions taken by federal, state and local governments to mitigate the spread of COVID-19, initially by ordering closures of non-essential businesses and ordering residents to generally stay at home, and subsequent phased re-openings resulted in many of our tenants temporarily or even permanently closing their businesses, and for some, it has impacted their ability to pay rent.
As a result, in accordance with ASC Topic 842, we revised our collectability assumptions for many of our tenants that were most significantly impacted by COVID-19. This amount includes changes in our collectability assessments for certain tenants in our portfolio from probable to not probable, which requires that revenue recognition for those tenants be converted to cash-basis accounting, with previously uncollected billed rents reversed in the current period. From the beginning of the COVID-19 pandemic through the end of our second quarter of fiscal 2021, we converted 89 tenants to cash-basis accounting in accordance with ASC Topic 842.
We did not convert any additional tenants to cash-basis accounting in the second half of fiscal 2021 or the three and six months ended April 30, 2022. As of April 30, 2022, 32 of the 89 tenants are no longer tenants in the Company's properties. In addition, when one of the Company’s tenants is converted to cash-basis accounting in accordance with ASC Topic 842, all previously recorded straight-line rent receivables need to be reversed in the period that the tenant is converted to cash-basis revenue recognition. In the six and three month periods ended April 30, 2021, the Company reversed straight-line rent revenue in the amount of $1.3 million and $814,000, respectively, related to tenants converted to cash-basis revenue recognition.
During the six and three month periods ended April 30, 2022, we restored 8 and 5 of the original 89 tenants, respectively, to accrual-basis revenue recognition as those tenants paid all of their billed rents for six consecutive months and have no significant unpaid billings as of April 30, 2022. When a tenant is restored to accrual-basis revenue recognition, the Company records revenue on the straight-line basis. As such the Company restored straight-line rent revenue in the six and three month periods ended April 30, 2022 in the amounts of $50,098 and $26,000, respectively, for these tenants. The Company did not restore any tenants to accrual basis accounting in the six and three month periods ended April 30, 2021.
As of April 30, 2022, the Company is recording lease income on a cash basis for approximately 4.0% of our tenants in accordance with ASC Topic 842.
During the six and three month periods ended April 30, 2022, we recognized collectability adjustments totaling $160,000 and $(40,000), respectively. During the six and three month periods ended April 30, 2021, we recognized collectability adjustments totaling $4.5 million and $2.4 million, respectively.
At April 30, 2022 and October 31, 2021, $19,570,000 and $19,670,000, respectively, have been recognized as straight-line rents receivable (representing the current cumulative rents recognized prior to when billed and collectable as provided by the terms of the leases), all of which is included in tenant receivables in the accompanying consolidated financial statements.
The Company provides an allowance for doubtful accounts against the portion of tenant receivables that is estimated to be uncollectable. Such allowances are reviewed periodically. At April 30, 2022 and October 31, 2021, tenant receivables in the accompanying consolidated balance sheets are shown net of allowances for doubtful accounts of $6,886,000 and $7,469,000, respectively. Included in the aforementioned allowance for doubtful accounts is an amount for future tenant credit losses of approximately 10% of the deferred straight-line rents receivable which is estimated to be uncollectable.
Earnings Per Share
The Company calculates basic and diluted earnings per share in accordance with the provisions of ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“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 average 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.
The following table sets forth the reconciliation between basic and diluted EPS (in thousands):
Segment Reporting
The Company's primary business is the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers, anchored by supermarkets, pharmacy/drug-stores and wholesale clubs, with a concentration in the metropolitan tri-state area of the City of New York. The Company reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, which consists of base rental income and tenant reimbursement income, less rental expenses and real estate taxes. Only one of the Company’s properties, located in Stamford, CT (“Ridgeway”), is considered significant as its revenue is in excess of 10% (in fiscal 2021) of the Company’s consolidated total revenues and accordingly is a reportable segment. The Company has aggregated the remainder of its properties as they share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in the same major metropolitan area, and have similar tenant mixes.
Ridgeway is located in Stamford, Connecticut and was developed in the 1950’s and redeveloped in the mid-1990’s. The property contains approximately 374,000 square feet of GLA. It is the dominant grocery-anchored center and the largest non-mall shopping center located in the City of Stamford, Fairfield County, Connecticut.
Segment information about Ridgeway as required by ASC Topic 280 is included below:
Note 1 - Ridgeway did not have any significant expenditures for additions to long lived assets in the three and six months ended April 30, 2022 or the year ended October 31, 2021.
Ridgeway Significant Tenants (Percentage of Base Rent Billed):
Note 2 - No other tenant accounts for more than 10% of Ridgeway’s annual base rents in any of the periods presented. Percentages are calculated as a ratio of the tenants' base rent divided by total base rent of Ridgeway.
Stock-Based Compensation
The Company accounts for its stock-based compensation plans under the provisions of ASC Topic 718, “Stock Compensation”, which requires that compensation expense be recognized, based on the fair value of the stock awards less estimated forfeitures. The fair value of stock awards is equal to the fair value of the Company’s stock on the grant date. The Company recognizes compensation expense for its stock awards by amortizing the fair value of stock awards over the requisite service periods of such awards. In certain cases, as defined in the participant agreements, the vesting of stock awards can be accelerated, which will result in the Company charging to compensation expense the remaining unamortized restricted stock compensation related to those stock awards.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period’s presentation.
New Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848).” ASU No. 2020-04 contains practical expedients for reference rate-reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended April 30, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
The Company has evaluated all other new ASUs issued by FASB, and has concluded that these updates do not have a material effect on the Company's consolidated financial statements as of April 30, 2022.
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REAL ESTATE INVESTMENTS |
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REAL ESTATE INVESTMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
REAL ESTATE INVESTMENTS |
(2) REAL ESTATE INVESTMENTS
In February 2022, the Company purchased the Shelton Square Shopping Center ("Shelton") for $33.6 million (exclusive of closing costs). Shelton is a 186,000 square foot grocery-anchored Shopping Center located in Shelton, CT. The Company funded the purchase with available cash, borrowings on our unsecured revolving credit facility (the "Facility") and proceeds from mortgage borrowings.
The Company accounted for the purchase of Shelton as an asset acquisition and allocated the total consideration transferred for the acquisition, including transaction costs, to the individual assets and liabilities acquired on a relative fair value basis.
The financial information set forth below summarizes the Company’s purchase price allocation for the property acquired during the six months ended April 30, 2022 (in thousands).
The value of above and below market leases are amortized as a reduction/increase to base rental revenue over the term of the respective leases. The value of in-place leases described above are amortized as an expense over the terms of the respective leases.
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UNSECURED REVOLVING CREDIT FACILITY |
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MORTGAGE NOTES PAYABLE, BANK LINES OF CREDIT AND OTHER LOANS | |
UNSECURED REVOLVING CREDIT FACILITY |
(3) UNSECURED REVOLVING CREDIT FACILITY AND MORTGAGE NOTES PAYABLE
The Company has a $125 million unsecured revolving credit facility with a syndicate of three banks led by The Bank of New York Mellon, as administrative agent. The syndicate also includes Wells Fargo Bank N.A. and Bank of Montreal (co-syndication agents). The Facility gives the Company the option, under certain conditions, to increase the Facility's borrowing capacity to $175 million (subject to lender approval). The maturity date of the Facility is March 29, 2024, with a one year extension at the Company's option. Borrowings under the Facility can be used for general corporate purposes and the issuance of letters of credit (up to $10 million). Borrowings will bear interest at the Company's option of the Eurodollar rate plus 1.45% to 2.20% or The Bank of New York Mellon's prime lending rate plus 0.45% to 1.20% based on consolidated total indebtedness, as defined. The Company pays a quarterly commitment fee on the unused commitment amount of 0.15% to 0.25% based on outstanding borrowings during the year. The Company's ability to borrow under the Facility is subject to its compliance with the covenants and other restrictions on an ongoing basis. The principal financial covenants limit the Company's level of secured and unsecured indebtedness, including preferred stock, and additionally require the Company to maintain certain debt coverage ratios. The Company was in compliance with such covenants at April 30, 2022. The Facility includes market standard provisions for determining the benchmark replacement rate for LIBOR.
In December 2021, the Company refinanced its existing $6.5 million first mortgage secured by our Boonton, NJ property. The new mortgage has a principal balance of $11.0 million, a term of 10 years, and requires payments of principal and interest at a fixed rate of 3.45%.
In February 2022, the Company refinanced its existing $22.8 million first mortgage secured by The Dock Shopping Center in Stratford, CT. The new mortgage has a principal balance of $35.0 million, a term of 10 years, and requires payments of principal and interest at a variable rate based on the Secured Overnight Financing Rate (“SOFR”), plus an applicable spread. Concurrent with entering into the mortgage, the Company entered into an interest rate swap agreement with the lender as the counterparty, which converts the variable rate based on SOFR to a fixed rate of interest totaling 3.0525% per annum.
In March 2022, the Company repaid with available cash its existing $3.1 million first mortgage secured by the Van Houten Shopping Center in Passaic, NJ.
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CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS |
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CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS |
(4) CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS
The Company has an investment in four joint ventures, UB Orangeburg, LLC ("Orangeburg"), McLean Plaza Associates, LLC ("McLean") and UB Dumont I, LLC ("Dumont"), each of which owns a commercial retail property, and UB High Ridge, LLC ("High Ridge"), which owns three commercial real estate properties. The Company has evaluated its investment in these four joint ventures and has concluded that these joint ventures are fully controlled by the Company and that the presumption of control is not offset by any rights of any of the limited partners or non-controlling members in these ventures and that the joint ventures should be consolidated into the consolidated financial statements of the Company in accordance with ASC Topic 810 "Consolidation". The Company’s investment in these consolidated joint ventures is more fully described below:
Orangeburg
The Company, through a wholly-owned subsidiary, is the managing member and owns a 43.8% interest in Orangeburg, which owns a CVS-anchored shopping center. The other member (non-managing) of Orangeburg is the prior owner of the contributed property who, in exchange for contributing the net assets of the property, received units of Orangeburg equal to the value of the contributed property less the value of the assigned first mortgage payable. The Orangeburg operating agreement provides for the non-managing member to receive a quarterly cash distribution equal to the regular quarterly cash distribution declared by the Company for one share of the Company’s Class A Common stock, which amount is attributable to each unit of Orangeburg ownership. The quarterly cash distribution is paid from available cash, as defined, of Orangeburg. The balance of available cash, if any, is fully distributable to the Company. Upon liquidation, proceeds from the sale of Orangeburg assets are to be distributed in accordance with the operating agreement. The non-managing member is not obligated to make any additional capital contributions to the partnership. Orangeburg has a defined termination date of December 31, 2097. Since acquiring its initial interest in Orangeburg, the Company has made additional investments in the amount of $6.5 million in Orangeburg, and as a result, as of April 30, 2022 the Company's ownership percentage has increased to 43.8% from approximately 2.92% at inception.
McLean
The Company, through a wholly-owned subsidiary, is the managing member and owns a 53% interest in McLean, which owns an Acme grocery-anchored shopping center. The McLean operating agreement provides for the non-managing members to receive a fixed annual cash distribution equal to 5.05% of their invested capital. The annual cash distribution is paid from available cash, as defined, of McLean. The balance of available cash, if any, is fully distributable to the Company. Upon liquidation, proceeds from the sale of McLean assets are to be distributed in accordance with the operating agreement. The non-managing members are not obligated to make any additional capital contributions to the entity.
High Ridge
The Company is the managing member and owns a 26.9% interest in High Ridge. The Company's initial investment was $5.5 million, and the Company has purchased additional interests from non-managing members totaling $9.7 million and has contributed $1.5 million in additional equity to the venture through April 30, 2022. High Ridge, either directly or through a wholly-owned subsidiary, owns three commercial real estate properties, High Ridge Shopping Center, a grocery-anchored shopping center ("High Ridge Center"), and two single tenant commercial retail properties, one leased to JP Morgan Chase and one leased to CVS. Two properties are located in Stamford, CT and one property is located in Greenwich, CT. High Ridge Center is a shopping center anchored by a Trader Joe's grocery store. The properties were contributed to the new entities by the former owners who received units of ownership of High Ridge equal to the value of properties contributed less liabilities assumed. The High Ridge operating agreement provides for the non-managing members to receive an annual cash distribution, currently equal to 5.36% of their invested capital.
Dumont
The Company is the managing member and owns a 36.4% interest in Dumont. The Company's initial investment was $3.9 million, and the Company has purchased additional interests totaling $630,000 through April 30, 2022. Dumont owns a retail and residential real estate property, which retail portion is anchored by a Stop & Shop grocery store. The property is located in Dumont, NJ. The property was contributed to the new entity by the former owners who received units of ownership of Dumont equal to the value of contributed property less liabilities assumed. The Dumont operating agreement provides for the non-managing members to receive an annual cash distribution, currently equal to 5.1% of their invested capital.
New City
In March 2022, the Company redeemed the remaining noncontrolling interests in New City for $502,000. After the redemption the Company's ownership of New City increased from 84.3% to 100.0%. New City owns a single tenant retail real estate property located in New City, NY, which is leased to a savings bank. In addition, New City rents certain parking spaces on the property to the owner of an adjacent grocery-anchored shopping center.
Noncontrolling Interests
The Company accounts for noncontrolling interests in accordance with ASC Topic 810, “Consolidation.” Because the limited partners or noncontrolling members in Orangeburg, McLean, High Ridge and Dumont have the right to require the Company to redeem all or a part of their limited partnership or limited liability company units for cash, or at the option of the Company, shares of its Class A Common stock at prices as defined in the governing agreements, the Company reports the noncontrolling interests in the consolidated joint ventures in the mezzanine section, outside of permanent equity, of the consolidated balance sheets at redemption value which approximates fair value. The value of the Orangeburg, McLean, and a portion of the High Ridge and Dumont redemptions are based solely on the price of the Company’s Class A Common stock on the date of redemption. For the six months ended April 30, 2022 and 2021, the Company increased/(decreased) the carrying value of the noncontrolling interests by $(1.6) million and $8.6 million, respectively, with the corresponding adjustment recorded in stockholders’ equity.
The following table sets forth the details of the Company's redeemable non-controlling interests for the six months ended April 30, 2022 and the fiscal year ended October 31, 2021 (amounts in thousands):
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INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES |
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INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES |
(5) INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES
At April 30, 2022 and October 31, 2021 investments in and advances to unconsolidated joint ventures consisted of the following (with the Company’s ownership percentage in parentheses) (amounts in thousands):
Chestnut Ridge Shopping Center
The Company, through a wholly-owned subsidiary, owns a 50% undivided tenancy-in-common interest in the 76,000 square foot Chestnut Ridge Shopping Center located in Montvale, New Jersey (“Chestnut”), which is anchored by a Fresh Market grocery store.
Gateway Plaza and Applebee's at Riverhead
The Company, through two wholly-owned subsidiaries, owns a 50% undivided tenancy-in-common interest in Gateway Plaza Shopping Center ("Gateway") and Applebee's Plaza ("Applebee's"). Both properties are located in Riverhead, New York. Gateway, a 198,500 square foot shopping center, is anchored by a 168,000 square foot Walmart, which also has 27,000 square feet of in-line space that is leased and a 3,500 square foot outparcel that is leased. Applebee's has a 5,400 square foot free-standing Applebee’s restaurant and a 7,200 square foot pad site that is leased.
Gateway is subject to an $10.9 million non-recourse first mortgage. The mortgage matures on March 1, 2024 and requires payments of principal and interest at a fixed rate of interest of 4.2% per annum.
Midway Shopping Center, L.P.
The Company, through a wholly-owned subsidiary, owns an 11.79% equity interest in Midway Shopping Center L.P. (“Midway”), which owns a 247,000 square foot ShopRite-anchored shopping center in Westchester County, New York. Although the Company only has an approximate 12% equity interest in Midway, it controls 25% of the voting power of Midway and as such, has determined that it exercises significant influence over the financial and operating decisions of Midway and accounts for its investment in Midway under the equity method of accounting.
The Company has allocated the $7.4 million excess of the carrying amount of its investment in and advances to Midway over the Company’s share of Midway’s net book value to real property and is amortizing the difference over the property’s estimated useful life of 39 years.
Midway is subject to a non-recourse first mortgage in the amount of $24.2 million. The loan requires payments of principal and interest at the rate of 4.80% per annum and will mature in
.Putnam Plaza Shopping Center
The Company, through a wholly-owned subsidiary, owns a 66.67% (noncontrolling) undivided tenancy-in-common interest in the 189,000 square foot Tops-anchored Putnam Plaza Shopping Center (“Putnam Plaza”) located in Carmel, New York.
Putnam Plaza is subject to a non-recourse first mortgage payable in the amount of $17.9 million. The mortgage requires monthly payments of principal and interest at a fixed rate of 4.81% and will mature in
.81 Pondfield Road Company
The Company’s other investment in an unconsolidated joint venture is a 20% interest in a retail and office building in Westchester County, New York.
Equity Method of Accounting
The Company accounts for the above investments under the equity method of accounting since it exercises significant influence, but does not control the joint ventures. The other venturers in the joint ventures have substantial participation rights in the financial decisions and operation of the ventures or properties, which preclude the Company from consolidating the investments. The Company has evaluated its investment in the joint ventures and has concluded that the joint ventures are not VIE's. Under the equity method of accounting, the initial investment is recorded at cost as an investment in unconsolidated joint venture, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions from the venture. Any difference between the carrying amount of the investment on the Company’s balance sheet and the underlying equity in net assets of the venture is evaluated for impairment periodically.
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LEASES |
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LEASES |
(6) LEASES
Lessor Accounting
The Company's Lease income is comprised of both fixed and variable income, as follows:
Fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent. Income for these amounts is recognized on a straight-line basis.
Variable lease income includes recoveries from tenants, which represents amounts that tenants are contractually obligated to reimburse the Company for the tenants’ portion of Recoverable Costs. Generally, the Company’s leases provide for the tenants to reimburse the Company for Recoverable Costs based on the tenants’ share of the actual costs incurred in proportion to the tenants’ share of leased space in the property.
The following table provides a disaggregation of lease income recognized during the six and three month periods ended April 30, 2022 and 2021, under ASC Topic 842, Leases, as either fixed or variable lease income based on the criteria specified in ASC Topic 842 (In thousands):
Future minimum rents under non-cancelable operating leases for the next five years and thereafter, excluding variable lease payments, are as follows (In thousands):
(a) The future minimum rental income for fiscal 2022 includes amounts due between May 1, 2022 through October 31, 2022.
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STOCKHOLDERS' EQUITY |
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STOCKHOLDERS' EQUITY |
(7) STOCKHOLDERS’ EQUITY
Authorized Stock
The Company's Charter authorizes 200,000,000 shares of stock. The total number of shares of authorized stock consists of 100,000,000 shares of Class A Common Stock, 30,000,000 shares of Common Stock, 50,000,000 shares of Preferred Stock, and 20,000,000 shares of Excess Stock.
Restricted Stock Plan
The Company has a Restricted Stock Plan, as amended (the "Plan") that provides a form of equity compensation for employees of the Company. The Plan, which is administered by the Company's compensation committee, authorizes grants of up to an aggregate of 5,500,000 shares of the Company’s common equity consisting of 350,000 Common shares, 350,000 Class A Common shares and 4,800,000 shares, which at the discretion of the compensation committee, may be awarded in any combination of Class A Common shares or Common shares.
During the six months ended April 30, 2022, the Company awarded 109,500 shares of Common Stock and 149,000 shares of Class A Common Stock to participants in the Plan. The grant date fair value of restricted stock grants awarded to participants in 2022 was approximately $5.2 million.
A summary of the status of the Company’s non-vested Common and Class A Common shares as of April 30, 2022, and changes during the six months ended April 30, 2022 is presented below:
As of April 30, 2022, there was $14.5 million of unamortized restricted stock compensation related to non-vested restricted stock grants awarded under the Plan. The remaining unamortized expense is expected to be recognized over a weighted average period of 4.9 years. For the six months ended April 30, 2022 and 2021, amounts charged to compensation expense totaled $1,607,000 and $1,949,000, respectively. For the three months ended April 30, 2022 and 2021, amounts charged to compensation expense totaled $989,000 and $964,000, respectively.
Share Repurchase Program
The Board of Directors of the Company has approved a share repurchase program (“Current Repurchase Program”) for the repurchase of up to 2,000,000 shares, in the aggregate, of Common stock and Class A Common stock in open market transactions.
The Company has repurchased 224,567 shares of Class A Common Stock and 29,154 shares of Common Stock under the Current Repurchase Program. From the inception of all repurchase programs, the Company has repurchased 949,145 shares of Class A Common Stock and 33,754 shares of Common Stock.
Preferred Stock
The 6.25% Series H Senior Cumulative Preferred Stock ("Series H Preferred Stock") is non-voting, has no stated maturity and is redeemable for cash at $25.00 per share at the Company's option on or after September 18, 2022. The holders of our Series H Preferred Stock have general preference rights with respect to liquidation and quarterly distributions. Except under certain conditions, holders of the Series H Preferred Stock will not be entitled to vote on most matters. In the event of a cumulative arrearage equal to six quarterly dividends, holders of Series H Preferred Stock, together with all of the Company's other series of preferred stock (voting as a single class without regard to series) will have the right to elect two additional members to serve on the Company's Board of Directors until the arrearage has been cured. Upon the occurrence of a Change of Control, as defined in the Company's Articles of Incorporation, the holders of the Series H Preferred Stock will have the right to convert all or part of the shares of Series H Preferred Stock held by such holders on the applicable conversion date into a number of the Company's shares of Class A common stock. Underwriting commissions and costs incurred in connection with the sale of the Series H Preferred Stock are reflected as a reduction of additional paid in capital.
The 5.875% Series K Senior Cumulative Preferred Stock ("Series K Preferred Stock") is non-voting, has no stated maturity and is redeemable for cash at $25.00 per share at the Company's option on or after October 1, 2024. The holders of our Series K Preferred Stock have general preference rights with respect to liquidation and quarterly distributions. Except under certain conditions, holders of the Series K Preferred Stock will not be entitled to vote on most matters. In the event of a cumulative arrearage equal to six quarterly dividends, holders of Series K Preferred Stock, together with all of the Company's other series of preferred stock (voting as a single class without regard to series) will have the right to elect two additional members to serve on the Company's Board of Directors until the arrearage has been cured. Upon the occurrence of a Change of Control, as defined in the Company's Articles of Incorporation, the holders of the Series K Preferred Stock will have the right to convert all or part of the shares of Series K Preferred Stock held by such holders on the applicable conversion date into a number of the Company's shares of Class A common stock. Underwriting commissions and costs incurred in connection with the sale of the Series K Preferred Stock are reflected as a reduction of additional paid in capital.
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FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
(8) FAIR VALUE MEASUREMENTS
ASC Topic 820, “Fair Value Measurements and Disclosures” defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants.
ASC Topic 820’s valuation techniques are based on observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:
markets that are not active; and model-derived valuations in which significant value drivers are observable
The Company calculates the fair value of the redeemable noncontrolling interests based on either quoted market prices on national exchanges for those interests based on the Company's Class A Common stock (level 1), contractual redemption prices per share as stated in governing agreements (level 2) or unobservable inputs considering the assumptions that market participants would make in pricing the obligations (level 3). The level 3 inputs used include an estimate of the fair value of the cash flow generated by the limited partnership or limited liability company in which the investor owns the joint venture units capitalized at prevailing market rates for properties with similar characteristics or located in similar areas.
The fair values of interest rate swaps are determined using widely accepted valuation techniques, including discounted cash flow analysis, on the expected cash flows of each derivative. The analysis reflects the contractual terms of the swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves (“significant other observable inputs”). The fair value calculation also includes an amount for risk of non-performance using “significant unobservable inputs” such as estimates of current credit spreads to evaluate the likelihood of default. The Company has concluded, as of October 31, 2021 and April 30, 2022, that the fair value associated with the “significant unobservable inputs” relating to the Company’s risk of non-performance was insignificant to the overall fair value of the interest rate swap agreements and, as a result, the Company has determined that the relevant inputs for purposes of calculating the fair value of the interest rate swap agreements, in their entirety, were based upon “significant other observable inputs”.
The Company measures its redeemable noncontrolling interests and interest rate swap derivatives at fair value on a recurring basis. The fair value of these financial assets and liabilities was determined using the following inputs (amount in thousands):
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Apr. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
(9) COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, the Company is involved in legal actions relating to the ownership and operations of its properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company. At April 30, 2022, the Company had commitments of approximately $11.9 million for capital improvements to its properties and tenant-related obligations.
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SUBSEQUENT EVENTS |
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Apr. 30, 2022 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS |
(10) SUBSEQUENT EVENTS
On June 6, 2022, the Board of Directors of the Company declared cash dividends of $0.2145 for each share of Common Stock and $0.2375 for each share of Class A Common Stock. The dividends are payable on July 15, 2022 to stockholders of record on July 1, 2022.
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ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation |
The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures in which the Company meets certain criteria in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. The Company has determined that such joint ventures should be consolidated into the consolidated financial statements of the Company. In accordance with ASC Topic 970-323 “Real Estate-General-Equity Method and Joint Ventures,” joint ventures that the Company does not control but otherwise exercises significant influence over, are accounted for under the equity method of accounting. See Note 5 for further discussion of the unconsolidated joint ventures. All significant intercompany transactions and balances have been eliminated in consolidation.
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Basis of Accounting |
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 U.S. GAAP 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 six months ended April 30, 2022 are not necessarily indicative of the results that may be expected for the year ending October 31, 2022. These financial statements should 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, 2021.
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Use of Estimates |
The preparation of financial statements requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition, fair value estimates, and the collectability of tenant receivables and other assets and liabilities. Actual results could differ from these estimates. The consolidated balance sheet at October 31, 2021 has been derived from audited financial statements at that date.
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Federal Income Taxes |
Federal Income Taxes
The Company has elected to be treated as a REIT under Sections 856-860 of the Internal Revenue Code ("Code"). Under those sections, a REIT that, among other things, distributes at least 90% of real estate trust taxable income and meets certain other qualifications prescribed by the Code will not be taxed on that portion of its taxable income that is distributed. The Company believes it qualifies as a REIT and intends to distribute all of its taxable income for fiscal 2022 in accordance with the provisions of the Code. Accordingly, no provision has been made for Federal income taxes in the accompanying consolidated financial statements.
The Company follows the provisions of ASC Topic 740, “Income Taxes” that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on its evaluation, the Company determined that it has no uncertain tax positions and no unrecognized tax benefits as of April 30, 2022. As of April 30, 2022, the fiscal tax years 2018 through and including 2021 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.
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Concentration of Credit Risk |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenant receivables. The Company places its cash and cash equivalents with high quality financial institutions and the balances at times could exceed federally insured limits. The Company performs ongoing credit evaluations of its tenants and may require certain tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the terminal value of a tenant’s lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space. The Company has no dependency upon any single tenant.
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Marketable Securities |
Marketable Securities
Marketable equity securities are carried at fair value based upon quoted market prices in active markets with changes in fair value recognized in net income.
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Derivative Financial Instruments |
Derivative Financial Instruments
The Company occasionally utilizes derivative financial instruments, such as interest rate swaps, to manage its exposure to fluctuations in interest rates. The Company has established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. Derivative financial instruments must be effective in reducing the Company’s interest rate risk exposure in order to qualify for hedge accounting. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative instrument matures or is settled. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. The Company has not entered into, and does not plan to enter into, derivative financial instruments for trading or speculative purposes. Additionally, the Company has a policy of entering into derivative contracts only with major financial institutions.
As of April 30, 2022, the Company believes it has no significant risk associated with non-performance of the financial institutions that are the counterparties to its derivative contracts. At April 30, 2022, the Company had approximately $157.3 million in secured mortgage financings subject to interest rate swaps. Such interest rate swaps converted the LIBOR-based variable rates on the mortgage financings to a weighted-average fixed annual rate of 3.74% per annum. As of April 30, 2022 and October 31, 2021, the Company had a deferred liability of $637,000 and $6.7 million, respectively (included in accounts payable and accrued expenses on the consolidated balance sheets), relating to the fair value of the Company’s interest rate swaps applicable to secured mortgages. As of April 30, 2022 and October 31, 2021, the Company had deferred assets of $8.1 million and $515,000, respectively (included in other assets on the consolidated balance sheets), relating to the fair value of the Company’s interest rate swaps applicable to secured mortgages.
Charges and/or credits relating to the changes in fair values of such interest rate swaps are made to other comprehensive income/(loss) as the swaps are deemed effective and are classified as a cash flow hedge.
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Comprehensive Income |
Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of net income applicable to Common and Class A Common stockholders and other comprehensive income (loss). Other comprehensive income (loss) includes items that are otherwise recorded directly in stockholders’ equity, such as unrealized gains and losses on interest rate swaps designated as cash flow hedges, including the Company's share from entities accounted for under the equity method of accounting. At April 30, 2022, accumulated other comprehensive income consisted of net unrealized gains on interest rate swap agreements of $7.4 million, inclusive of the Company's share of accumulated comprehensive income/losses from joint ventures accounted for by the equity method of accounting. At October 31, 2021, accumulated other comprehensive loss consisted of net unrealized losses on interest rate swap agreements of approximately $7.7 million, inclusive of the Company's share of accumulated comprehensive income/losses from joint ventures accounted for by the equity method of accounting. Unrealized gains and losses included in other comprehensive income/(loss) will be reclassified into earnings as gains and losses are realized.
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Asset Impairment |
Asset Impairment
On a periodic basis, management assesses whether there are any indicators that the value of its real estate investments may be impaired. A property value is considered impaired when management’s estimate of current and projected operating cash flows (undiscounted and without interest) of the property over its remaining useful life is less than the net carrying value of the property. Such cash flow projections consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the loss is measured as the excess of the net carrying amount of the property over the fair value of the asset. Changes in estimated future cash flows due to changes in the Company’s plans or market and economic conditions could result in recognition of impairment losses which could be substantial. As of April 30, 2022, management does not believe that the value of any of its real estate investments is impaired.
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Acquisition of Real Estate, Capitalization Policy and Depreciation |
Acquisitions of Real Estate Investments, Capitalization Policy and Depreciation
Acquisition of Real Estate Investments:
The Company evaluates each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted for as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:
An acquired process is considered substantive if:
Generally, the Company expects that acquisitions of real estate or in-substance real estate will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.
Acquisitions of real estate and in-substance real estate that do not meet the definition of a business are accounted for as asset acquisitions. The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. As a result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. The relative fair values used to allocate the cost of an asset acquisition are determined using the same methodologies and assumptions as the Company utilizes to determine fair value in a business combination.
The value of tangible assets acquired is based upon our estimation of value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. We assess the fair value of tangible and intangible assets based on numerous factors, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property.
The values of acquired above and below-market leases, which are included in prepaid expenses and other assets and other liabilities, respectively, are amortized over the terms of the related leases and recognized as either an increase (for below-market leases) or a decrease (for above-market leases) to rental revenue. The values of acquired in-place leases are classified in other assets in the accompanying consolidated balance sheets and amortized over the remaining terms of the related leases.
Capitalization Policy:
Land, buildings, property improvements, furniture/fixtures and tenant improvements are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and/or replacements, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.
Depreciation:
The Company is required to make subjective assessments as to the useful life of its properties for purposes of determining the amount of depreciation. These assessments have a direct impact on the Company’s net income.
Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
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Sale of Investment Property and Property Held for Sale |
Sale of Investment Property and Property Held for Sale
The Company reports properties that are either disposed of or are classified as held for sale in continuing operations in the consolidated statement of income if the removal, or anticipated removal, of the asset(s) from the reporting entity does not represent a strategic shift that has or will have a major effect on an entity's operations and financial results when disposed of.
In September 2021, the Company entered into a purchase and sale agreement to sell its property located in Chester, NJ (the "Chester Property"), to an unrelated third party for a sale price of $1.96 million as that property no longer met its investment objectives. In accordance with ASC Topic 360-10-45, the property met all the criteria to be classified as held for sale in the fourth quarter of fiscal 2021, and accordingly the Company recorded a loss on property held for sale of $342,000, which loss was included in continuing operations in the consolidated statement of income for the year ended October 31, 2021. The amount of the loss represented the net carrying amount of the property over the fair value of the asset less estimated cost to sell. The net book value of the Chester Property was insignificant to financial statement presentation and as a result the Company did not include the asset as held for sale on its consolidated balance sheet at October 31, 2021. In December 2021, the Chester Property sale was completed and the Company realized an additional loss on sale of property of $8,000, which loss is included in operations in the consolidated statement of income for the six months ended April 30, 2022.
In February 2022, the Company sold its property located in Bloomfield, NJ (the "Bloomfield Property") to an unrelated third party for a sale price of $1.8 million, as that property no longer met the Company's investment objectives. In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $544,000, which gain is included in continuing operations in its consolidated income statements for the three and six month periods ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.
In March 2022, the Company sold its property located in Unionville, CT (the "Unionville Property") to an unrelated third party for a sale price of $950,000, as that property no longer met the Company's investment objectives. In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $203,000, which gain is included in continuing operations in its consolidated income statements for the three and six month periods ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.
The operating results of the Chester Property, the Bloomfield Property and the Unionville Property, which are included in operations is as follows (amounts in thousands):
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Lease Income, Revenue Recognition and Tenant Receivables |
Lease Income, Revenue Recognition and Tenant Receivables
Lease Income:
The Company accounts for lease income in accordance with ASC Topic 842 "Leases".
The Company's existing leases are generally classified as operating leases. However, certain longer-term leases (both lessee and lessor leases) may be classified as direct financing or sales type leases, which may result in selling profit and an accelerated pattern of earnings recognition.
The Company leases space to tenants under agreements with varying terms that generally provide for fixed payments of base rent, with designated increases over the term of the lease. Some of the lease agreements contain provisions that provide for additional rents based on tenants' sales volume ("percentage rent"). Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. Additionally, most all lease agreements contain provisions for reimbursement of the tenants' share of actual real estate taxes, insurance and Common Area Maintenance ("CAM") costs (collectively, "Recoverable Costs") incurred.
Lease terms generally range from 1 to 5 years for tenant spaces under 10,000 square feet (“Shop Space”) and in excess of 5 years for spaces greater than 10,000 square feet (“Anchor Spaces”). Many leases also provide the option for the tenants to extend their lease beyond the initial term of the lease. If the tenants do not exercise renewal options and the leases mature, the tenants must relinquish their space so it can be leased to a new tenant, which generally involves some level of cost to prepare the space for re-leasing. These costs are capitalized and depreciated over the shorter of the life of the subsequent lease or the life of the improvement.
CAM is a non-lease component of the lease contract under ASC Topic 842, and therefore would be accounted for under ASC Topic 606, Revenue from Contracts with Customers, and presented separate from lease income in the accompanying consolidated statements of income, based on an allocation of the overall contract price, which is not necessarily the amount that would be billable to the tenants for CAM reimbursements per the terms of the lease contract. As the timing and pattern of providing the CAM service to the tenant is the same as the timing and pattern of the tenants' use of the underlying lease asset, the Company, in accordance with ASC Topic 842, combines CAM with the remaining lease components, along with tenants' reimbursement of real estate taxes and insurance, and recognize them together as lease income in the accompanying consolidated statements of income.
Lease income for operating leases with fixed payment terms is recognized on a straight-line basis over the expected term of the lease for all leases for which collectability is considered probable at the commencement date. At lease commencement, the Company expects that collectability is probable for all of its leases due to the Company’s credit checks on tenants and other creditworthiness analysis undertaken before entering into a new lease; therefore, income from all operating leases is initially recognized on a straight-line basis. Lease income each period is reduced by amounts considered uncollectable on a lease-by-lease basis, with any changes in collectability assessments recognized as a current period adjustment to lease income. For operating leases in which collectability of lease income is not considered probable, lease income is recognized on a cash basis and all previously recognized uncollected lease income, including straight-line rental income, is reversed in the period in which the lease income is determined not to be probable of collection.
The Company, as a lessor, may only defer as initial direct costs the incremental costs of a tenant operating lease that would not have been incurred if the lease had not been obtained. These costs generally include third party broker payments, which are capitalized to deferred costs in the accompanying consolidated balance sheets and amortized over the expected term of the lease to depreciation and amortization expense in the accompanying consolidated statements of income.
COVID-19 Pandemic
Beginning in March 2020, many of the Company's properties were negatively impacted by the COVID-19 pandemic, as state governments mandated restrictions on the operation of non-essential businesses to prevent the spread of COVID-19, forcing many of our tenants’ businesses to close or reduce operations. As public health and business conditions in the areas where our properties are located have generally improved, rent relief requests have greatly decreased and our properties have largely returned to normal operations. The primary strategy of the Company with respect to rent concession requests was to defer some portion of rents due for the months of April 2020 through the beginning of fiscal 2021 to be paid over a later part of the lease, preferably within a period of one year or less. In some instances, however, the Company determined that it was more appropriate to abate some portion of base rents. Most of the base rent deferrals or abatements entered into with tenants in the second half of fiscal 2021 and the first quarter of fiscal 2022 are additional deferrals or abatements for tenants who received prior rent concessions.
From the onset of COVID-19 through April 30, 2022, the Company completed 290 lease modifications, consisting of base rent deferrals totaling $4.0 million and rent abatements totaling $4.7 million. Included in the aforementioned amounts were 1 and 11 rent deferrals and 2 and 29 rent abatements, which deferred $87,000 and $426,000 and abated $156,000 and $2.3 million of base rents in the six months ended April 30, 2022 and 2021, respectively.
Included in the aforementioned amounts were 1 and 2 rent deferrals and 1 and 6 rent abatements, which deferred $37,000 and $26,000 and abated $33,000 and $287,000 of base rents in the three months ended April 30, 2022 and 2021, respectively.
In April 2020, in response to the COVID-19 pandemic, the FASB staff issued guidance that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842, as if enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the lease contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each lease contract to determine whether enforceable rights and obligations for concessions exist in the lease contract and may elect to apply or not apply the lease modification guidance in Topic 842 to those contracts.
This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. For example, this election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. The FASB staff expects that reasonable judgment will be exercised in making those determinations.
Most concessions will provide a deferral of payments with no substantive changes to the consideration in the original lease contract. A deferral affects the timing, but the amount of the consideration is substantially the same as that required by the original lease contract. The FASB staff expects that there will be multiple ways to account for those deferrals, none of which the staff believes are preferable over others. The Company has made the election not to analyze each lease contract, and believes that, based on FASB guidance, the appropriate way to account for the concessions as described above is to account for such concessions as if no changes to the lease contracts were made. Under that accounting, a lessor would increase its lease receivable (straight-line rents receivable) and would continue to recognize income during the deferral period, assuming that the collectability of the future rents under the lease contract are considered collectable. If it is determined that the future rents of any lease contract are not collectable, the Company would treat that lease contract on a cash basis as defined in ASC Topic 842.
When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection of substantially all lease payments during a lease term requires significant judgment. This determination is impacted by numerous factors, including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in lease income.
Revenue Recognition
In those instances, in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition on operating leases will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin.
Lease termination amounts are recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with the Company. There is no way of predicting or forecasting the timing or amounts of future lease termination fees. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses under U.S. GAAP have been met.
Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved.
Tenant Receivables
During the early days of the pandemic, the actions taken by federal, state and local governments to mitigate the spread of COVID-19, initially by ordering closures of non-essential businesses and ordering residents to generally stay at home, and subsequent phased re-openings resulted in many of our tenants temporarily or even permanently closing their businesses, and for some, it has impacted their ability to pay rent.
As a result, in accordance with ASC Topic 842, we revised our collectability assumptions for many of our tenants that were most significantly impacted by COVID-19. This amount includes changes in our collectability assessments for certain tenants in our portfolio from probable to not probable, which requires that revenue recognition for those tenants be converted to cash-basis accounting, with previously uncollected billed rents reversed in the current period. From the beginning of the COVID-19 pandemic through the end of our second quarter of fiscal 2021, we converted 89 tenants to cash-basis accounting in accordance with ASC Topic 842.
We did not convert any additional tenants to cash-basis accounting in the second half of fiscal 2021 or the three and six months ended April 30, 2022. As of April 30, 2022, 32 of the 89 tenants are no longer tenants in the Company's properties. In addition, when one of the Company’s tenants is converted to cash-basis accounting in accordance with ASC Topic 842, all previously recorded straight-line rent receivables need to be reversed in the period that the tenant is converted to cash-basis revenue recognition. In the six and three month periods ended April 30, 2021, the Company reversed straight-line rent revenue in the amount of $1.3 million and $814,000, respectively, related to tenants converted to cash-basis revenue recognition.
During the six and three month periods ended April 30, 2022, we restored 8 and 5 of the original 89 tenants, respectively, to accrual-basis revenue recognition as those tenants paid all of their billed rents for six consecutive months and have no significant unpaid billings as of April 30, 2022. When a tenant is restored to accrual-basis revenue recognition, the Company records revenue on the straight-line basis. As such the Company restored straight-line rent revenue in the six and three month periods ended April 30, 2022 in the amounts of $50,098 and $26,000, respectively, for these tenants. The Company did not restore any tenants to accrual basis accounting in the six and three month periods ended April 30, 2021.
As of April 30, 2022, the Company is recording lease income on a cash basis for approximately 4.0% of our tenants in accordance with ASC Topic 842.
During the six and three month periods ended April 30, 2022, we recognized collectability adjustments totaling $160,000 and $(40,000), respectively. During the six and three month periods ended April 30, 2021, we recognized collectability adjustments totaling $4.5 million and $2.4 million, respectively.
At April 30, 2022 and October 31, 2021, $19,570,000 and $19,670,000, respectively, have been recognized as straight-line rents receivable (representing the current cumulative rents recognized prior to when billed and collectable as provided by the terms of the leases), all of which is included in tenant receivables in the accompanying consolidated financial statements.
The Company provides an allowance for doubtful accounts against the portion of tenant receivables that is estimated to be uncollectable. Such allowances are reviewed periodically. At April 30, 2022 and October 31, 2021, tenant receivables in the accompanying consolidated balance sheets are shown net of allowances for doubtful accounts of $6,886,000 and $7,469,000, respectively. Included in the aforementioned allowance for doubtful accounts is an amount for future tenant credit losses of approximately 10% of the deferred straight-line rents receivable which is estimated to be uncollectable.
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Earnings Per Share |
Earnings Per Share
The Company calculates basic and diluted earnings per share in accordance with the provisions of ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“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 average 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.
The following table sets forth the reconciliation between basic and diluted EPS (in thousands):
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Segment Reporting |
Segment Reporting
The Company's primary business is the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers, anchored by supermarkets, pharmacy/drug-stores and wholesale clubs, with a concentration in the metropolitan tri-state area of the City of New York. The Company reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, which consists of base rental income and tenant reimbursement income, less rental expenses and real estate taxes. Only one of the Company’s properties, located in Stamford, CT (“Ridgeway”), is considered significant as its revenue is in excess of 10% (in fiscal 2021) of the Company’s consolidated total revenues and accordingly is a reportable segment. The Company has aggregated the remainder of its properties as they share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in the same major metropolitan area, and have similar tenant mixes.
Ridgeway is located in Stamford, Connecticut and was developed in the 1950’s and redeveloped in the mid-1990’s. The property contains approximately 374,000 square feet of GLA. It is the dominant grocery-anchored center and the largest non-mall shopping center located in the City of Stamford, Fairfield County, Connecticut.
Segment information about Ridgeway as required by ASC Topic 280 is included below:
Note 1 - Ridgeway did not have any significant expenditures for additions to long lived assets in the three and six months ended April 30, 2022 or the year ended October 31, 2021.
Ridgeway Significant Tenants (Percentage of Base Rent Billed):
Note 2 - No other tenant accounts for more than 10% of Ridgeway’s annual base rents in any of the periods presented. Percentages are calculated as a ratio of the tenants' base rent divided by total base rent of Ridgeway.
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Stock-Based Compensation |
Stock-Based Compensation
The Company accounts for its stock-based compensation plans under the provisions of ASC Topic 718, “Stock Compensation”, which requires that compensation expense be recognized, based on the fair value of the stock awards less estimated forfeitures. The fair value of stock awards is equal to the fair value of the Company’s stock on the grant date. The Company recognizes compensation expense for its stock awards by amortizing the fair value of stock awards over the requisite service periods of such awards. In certain cases, as defined in the participant agreements, the vesting of stock awards can be accelerated, which will result in the Company charging to compensation expense the remaining unamortized restricted stock compensation related to those stock awards.
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Reclassification |
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period’s presentation.
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New Accounting Standards |
New Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848).” ASU No. 2020-04 contains practical expedients for reference rate-reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended April 30, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
The Company has evaluated all other new ASUs issued by FASB, and has concluded that these updates do not have a material effect on the Company's consolidated financial statements as of April 30, 2022.
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CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS (Policies) |
6 Months Ended |
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Apr. 30, 2022 | |
CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS [Abstract] | |
Noncontrolling Interests |
Noncontrolling Interests
The Company accounts for noncontrolling interests in accordance with ASC Topic 810, “Consolidation.” Because the limited partners or noncontrolling members in Orangeburg, McLean, High Ridge and Dumont have the right to require the Company to redeem all or a part of their limited partnership or limited liability company units for cash, or at the option of the Company, shares of its Class A Common stock at prices as defined in the governing agreements, the Company reports the noncontrolling interests in the consolidated joint ventures in the mezzanine section, outside of permanent equity, of the consolidated balance sheets at redemption value which approximates fair value. The value of the Orangeburg, McLean, and a portion of the High Ridge and Dumont redemptions are based solely on the price of the Company’s Class A Common stock on the date of redemption. For the six months ended April 30, 2022 and 2021, the Company increased/(decreased) the carrying value of the noncontrolling interests by $(1.6) million and $8.6 million, respectively, with the corresponding adjustment recorded in stockholders’ equity.
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ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Estimated Useful Lives |
Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
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Disposal Groups, Including Discontinued Operations [Table Text Block] |
The operating results of the Chester Property, the Bloomfield Property and the Unionville Property, which are included in operations is as follows (amounts in thousands):
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Reconciliation between Basic and Diluted EPS |
The following table sets forth the reconciliation between basic and diluted EPS (in thousands):
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Major Customers by Reporting Segments |
Segment information about Ridgeway as required by ASC Topic 280 is included below:
Note 1 - Ridgeway did not have any significant expenditures for additions to long lived assets in the three and six months ended April 30, 2022 or the year ended October 31, 2021.
Ridgeway Significant Tenants (Percentage of Base Rent Billed):
Note 2 - No other tenant accounts for more than 10% of Ridgeway’s annual base rents in any of the periods presented. Percentages are calculated as a ratio of the tenants' base rent divided by total base rent of Ridgeway.
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Segment Reporting Information by Segment |
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REAL ESTATE INVESTMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
REAL ESTATE INVESTMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price Adjustments for Properties Acquired |
The financial information set forth below summarizes the Company’s purchase price allocation for the property acquired during the six months ended April 30, 2022 (in thousands).
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CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Non-controlling Interests |
The following table sets forth the details of the Company's redeemable non-controlling interests for the six months ended April 30, 2022 and the fiscal year ended October 31, 2021 (amounts in thousands):
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INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in and Advances to Unconsolidated Joint Ventures |
At April 30, 2022 and October 31, 2021 investments in and advances to unconsolidated joint ventures consisted of the following (with the Company’s ownership percentage in parentheses) (amounts in thousands):
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LEASES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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LEASES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Lease Income Recognized |
The following table provides a disaggregation of lease income recognized during the six and three month periods ended April 30, 2022 and 2021, under ASC Topic 842, Leases, as either fixed or variable lease income based on the criteria specified in ASC Topic 842 (In thousands):
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Future Minimum Rents under Non-Cancelable Operating Leases |
Future minimum rents under non-cancelable operating leases for the next five years and thereafter, excluding variable lease payments, are as follows (In thousands):
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STOCKHOLDERS' EQUITY (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-vested Common and Class A Common Shares |
A summary of the status of the Company’s non-vested Common and Class A Common shares as of April 30, 2022, and changes during the six months ended April 30, 2022 is presented below:
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities |
The Company measures its redeemable noncontrolling interests and interest rate swap derivatives at fair value on a recurring basis. The fair value of these financial assets and liabilities was determined using the following inputs (amount in thousands):
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ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Business (Details) ft² in Millions |
Apr. 30, 2022
ft²
Property
|
---|---|
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Number of properties the Company owned or had equity interest in | Property | 77 |
Gross leasable area of properties the Company owned or had equity interest in | ft² | 5.3 |
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Federal Income Taxes (Details) |
6 Months Ended |
---|---|
Apr. 30, 2022 | |
Federal Income Taxes [Abstract] | |
Minimum real estate trust taxable income required to be distributed for REIT to be nontaxable | 90.00% |
Minimum [Member] | |
Federal Income Taxes [Abstract] | |
Tax years remaining open to examination by Internal Revenue Service | 2018 |
Maximum [Member] | |
Federal Income Taxes [Abstract] | |
Tax years remaining open to examination by Internal Revenue Service | 2021 |
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Derivative Financial Instruments (Details) - Interest Rate Swap [Member] - Mortgage Loan [Member] - USD ($) |
Apr. 30, 2022 |
Oct. 31, 2021 |
---|---|---|
Derivative Financial Instruments [Abstract] | ||
Mortgage loans subject to interest rate swap | $ 157,300,000 | |
Average fixed annual rate on interest rate swap | 3.74% | |
Deferred liabilities relating to fair value of interest rate swap | $ 637,000 | $ 6,700,000 |
Deferred assets relating to fair value of interest rate swap | $ 8,100,000 | $ 515,000 |
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Comprehensive Income (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Apr. 30, 2022 |
Oct. 31, 2021 |
|
Comprehensive Income [Abstract] | ||
Net unrealized gains (losses) on interest rate swap agreements included in accumulated other comprehensive income | $ 7.4 | $ (7.7) |
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Depreciation (Details) |
6 Months Ended |
---|---|
Apr. 30, 2022 | |
Buildings [Member] | Minimum [Member] | |
Depreciation [Abstract] | |
Estimated useful life | 30 years |
Buildings [Member] | Maximum [Member] | |
Depreciation [Abstract] | |
Estimated useful life | 40 years |
Property Improvements [Member] | Minimum [Member] | |
Depreciation [Abstract] | |
Estimated useful life | 10 years |
Property Improvements [Member] | Maximum [Member] | |
Depreciation [Abstract] | |
Estimated useful life | 20 years |
Furniture/Fixtures [Member] | Minimum [Member] | |
Depreciation [Abstract] | |
Estimated useful life | 3 years |
Furniture/Fixtures [Member] | Maximum [Member] | |
Depreciation [Abstract] | |
Estimated useful life | 10 years |
Tenant Improvements [Member] | |
Depreciation [Abstract] | |
Estimated useful life | Shorter of lease term or their useful life |
ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Segment Reporting - Income Statements (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2022 |
Apr. 30, 2021 |
Apr. 30, 2022 |
Apr. 30, 2021 |
|
Income Statements [Abstract] | ||||
Revenues | $ 36,000 | $ 32,926 | $ 71,555 | $ 67,203 |
Property Operating Expenses | 12,335 | 12,050 | 25,260 | 24,225 |
Interest Expense | 3,262 | 3,341 | 6,564 | 6,733 |
Depreciation and Amortization | 7,572 | 7,192 | 14,716 | 14,710 |
Net Income | 11,424 | 8,958 | 21,145 | 17,762 |
Ridgeway [Member] | ||||
Income Statements [Abstract] | ||||
Revenues | 3,475 | 3,528 | 7,114 | 6,989 |
Property Operating Expenses | 1,126 | 1,147 | 2,269 | 2,301 |
Interest Expense | 382 | 391 | 800 | 819 |
Depreciation and Amortization | 624 | 592 | 1,145 | 1,172 |
Net Income | 1,343 | 1,398 | 2,900 | 2,697 |
All Other Operating Segments [Member] | ||||
Income Statements [Abstract] | ||||
Revenues | 32,525 | 29,398 | 64,441 | 60,214 |
Property Operating Expenses | 11,209 | 10,903 | 22,991 | 21,924 |
Interest Expense | 2,880 | 2,950 | 5,764 | 5,914 |
Depreciation and Amortization | 6,948 | 6,600 | 13,571 | 13,538 |
Net Income | $ 10,081 | $ 7,560 | $ 18,245 | $ 15,065 |
REAL ESTATE INVESTMENTS (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2022
USD ($)
ft²
|
Apr. 30, 2021
USD ($)
|
Apr. 30, 2022
USD ($)
ft²
|
Apr. 30, 2021
USD ($)
|
|
Business Acquisition [Line Items] | ||||
Amortization of above-market and below-market leases | $ (222) | $ (194) | $ (396) | $ (289) |
Shelton, CT [Member] | ||||
Business Acquisition [Line Items] | ||||
Purchase price of property acquired | $ 33,600 | |||
Area of Real Estate Property | ft² | 186,000 | 186,000 | ||
Land | $ 9,568 | $ 9,568 | ||
Building and improvements | 21,803 | 21,803 | ||
Shelton, CT [Member] | In-Place Leases [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | 2,190 | 2,190 | ||
Intangible liabilities | 0 | 0 | ||
Shelton, CT [Member] | Above/Below-Market Leases [Member] | ||||
Business Acquisition [Line Items] | ||||
Intangible assets | 1,179 | 1,179 | ||
Intangible liabilities | $ 1,081 | $ 1,081 |
LEASES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 30, 2022 |
Apr. 30, 2021 |
Apr. 30, 2022 |
Apr. 30, 2021 |
|||
Operating lease income [Abstract] | ||||||
Fixed lease income (Base Rent) | $ 26,011 | $ 24,404 | $ 50,850 | $ 48,468 | ||
Variable lease income (Recoverable Costs) | 8,383 | 8,814 | 17,657 | 18,792 | ||
Other lease related income, net [Abstract] | ||||||
Above/below market rent amortization | 222 | 194 | 396 | 289 | ||
Uncollectable amounts in lease income | (38) | (724) | (151) | (1,379) | ||
Reduction in lease income for ASC Topic 842 cash-basis conversion | 78 | (893) | (9) | (1,892) | ||
Total lease income | 34,656 | $ 31,795 | 68,743 | $ 64,278 | ||
Future Minimum Rents under Non-Cancelable Operating Leases [Abstract] | ||||||
2022 (a) | [1] | 48,464 | 48,464 | |||
2023 | 88,489 | 88,489 | ||||
2024 | 77,717 | 77,717 | ||||
2025 | 66,021 | 66,021 | ||||
2026 | 57,564 | 57,564 | ||||
Thereafter | 246,137 | 246,137 | ||||
Total | $ 584,392 | $ 584,392 | ||||
|
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions |
6 Months Ended |
---|---|
Apr. 30, 2022
USD ($)
| |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Commitments for capital improvements to properties and tenant related obligations | $ 11.9 |
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