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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year
ended October 31, 2002
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 1-12803
URSTADT BIDDLE PROPERTIES INC.
(Exact name of registrant as specified in its charter)
MARYLAND 04-2458042
-------- -------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
321 RAILROAD AVENUE
GREENWICH, CONNECTICUT 06830
---------------------- ---------------
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code: (203) 863-8200
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, par value $.01 per share New York Stock Exchange
Class A Common Stock, par value $.01 per share New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of January 10, 2003: Common Shares, par value $.01 per share-
$41,421,486; Class A Common Shares, par value $.01 per share - $196,835,514.
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock and Class A Common Stock, as of January 10, 2003 (latest
date practicable): 6,738,072 Common Shares, par value $.01 per share, and
18,505,672 Class A Common Shares, par value $.01 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Stockholders to be held on March 12,
2003 (certain parts as indicated herein) (Part III).
1
TABLE OF CONTENTS
Form 10-K
Item No. Report Page
PART I
1. Business 3
2. Properties 8
3. Legal Proceedings 11
4. Submission of Matters to a Vote of Security Holders 11
PART II
5. Market for the Registrant's Common Equity and Related
Shareholder Matters 11
6. Selected Financial Data 14
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
7.A Quantitative and Qualitative Disclosures about Market Risk 22
8. Consolidated Financial Statements and Supplementary Data 22
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 22
PART III
10. Directors and Executive Officers of the Registrant 23
11. Executive Compensation 23
12. Security Ownership of Certain Beneficial Owners and
Management 23
13. Certain Relationships and Related Transactions 24
PART IV
14. Exhibits, Financial Statements, Schedules and Reports
on Form 8-K 24
Signatures
2
PART I
Forward-Looking Statements
This Annual Report on Form 10-K, together with other statements and information
publicly disseminated by Urstadt Biddle Properties Inc. (the "Company"),
contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such statements are based on assumptions and expectations which may not be
realized and are inherently subject to risks, uncertainties and other factors,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, performance or achievements,
financial and otherwise, may differ materially from the results, performance or
achievements expressed or implied by the forward-looking statements. Risk,
uncertainties and other factors that might cause such differences, some of which
could be material, include, but are not limited to economic and other market
conditions; financing risks, such as the inability to obtain debt or equity
financing on favorable terms; the level and volatility of interest rates;
financial stability of tenants; the inability of the Company's properties to
generate revenue increases to offset expense increases; governmental approvals,
actions and initiatives; environmental/safety requirements; risks of real estate
acquisitions (including the failure of acquisitions to close); risks of
disposition strategies; as well as other risks identified in this Annual Report
on Form 10-K and in the other reports filed by the Company with the Securities
and Exchange Commission (the "SEC") or otherwise publicly disseminated by the
Company.
Item 1. Business.
Organization
Urstadt Biddle Properties Inc., a Maryland Corporation (the "Company"), is a
real estate investment trust engaged in the acquisition, ownership and
management of commercial real estate. The Company was organized as an
unincorporated business trust (the "Trust") under the laws of the Commonwealth
of Massachusetts on July 7, 1969. In 1997, the shareholders of the Trust
approved a plan of reorganization of the Trust from a Massachusetts business
Trust to a corporation organized in Maryland. The plan of reorganization was
effected by means of a merger of the Trust into the Company. As a result of the
plan of reorganization, the Trust was merged with and into the Company, the
separate existence of the Trust ceased, the Company was the surviving entity in
the merger and each issued and outstanding common share of beneficial interest
of the Trust was converted into one share of Common Stock, par value $.01 per
share, of the Company.
Tax Status - Qualification as a Real Estate Investment Trust
The Company elected to be taxed as a real estate investment trust ("REIT") under
Sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code")
beginning with its taxable year ended October 31, 1970. Pursuant to such
provisions of the Code, a REIT which distributes at least 90% of its real estate
investment trust taxable income to its shareholders each year and which meets
certain other conditions regarding the nature of its income and assets will not
be taxed on that portion of its taxable income which is distributed to its
shareholders. Although the Company believes that it qualifies as a real estate
investment trust for federal income tax purposes no assurance can be given that
the Company will continue to qualify as a REIT.
Description of Business
The Company's sole business is the ownership of real estate investments which
consist principally of investments in income-producing properties, with primary
emphasis on properties in the northeastern part of the United States with a
concentration in Fairfield County, Connecticut and Westchester and Putnam
Counties, New York. The Company's core properties consist principally of
neighborhood and community shopping centers. The remaining properties include
office and retail buildings and industrial properties. The Company seeks to
identify desirable properties for acquisition which it acquires in the normal
course of business. In addition, the Company regularly reviews its portfolio and
from time to time may sell certain of its properties.
3
The Company intends to continue to invest substantially all of its assets in
income producing real estate, with an emphasis on neighborhood and community
shopping centers, although the Company will retain the flexibility to invest in
other types of real property. While the Company is not limited to any
geographical location, the Company's current strategy is to invest primarily in
properties located in the northeastern region of the United States with a
concentration in Fairfield County, Connecticut and Westchester and Putnam
Counties, New York.
At October 31, 2002, the Company owned or had an equity interest in twenty six
properties comprised of neighborhood and community shopping centers, office and
retail buildings and service and distribution facilities located in nine states
throughout the United States, containing a total of 3.0 million square feet of
gross leasable area ("GLA"). For a description of the Company's individual
investments, see Item 2.
Investment and Operating Strategy
The Company's investment objective is to increase the cash flow and consequently
the value of its properties, and seeks growth through (i) the strategic
re-tenanting, renovation and expansion of its existing properties, and (ii) the
selective acquisition of income-producing properties, primarily neighborhood and
community shopping centers, in its targeted geographic region. The Company may
also invest in other types of real estate in the targeted geographic region.
The Company invests in properties where cost effective renovation and expansion
programs combined with effective leasing and operating strategies, can improve
the properties' values and economic returns. Retail properties are typically
adaptable for varied tenant layouts and can be reconfigured to accommodate new
tenants or the changing space needs of existing tenants. In determining whether
to proceed with a renovation or expansion, the Company considers both the cost
of such expansion or renovation and the increase in rent attributable to such
expansion or renovation. The Company believes that its properties provide
opportunities for future renovation and expansion.
When evaluating potential acquisitions, the Company will consider such factors
as (i) economic, demographic, and regulatory conditions in the property's local
and regional market; (ii) the location, construction quality, and design of the
property; (iii) the current and projected cash flow of the property and the
potential to increase cash flow; (iv) the potential for capital appreciation of
the property; (v) the terms of tenant leases, including the relationship between
the property's current rents and market rents and the ability to increase rents
upon lease rollover; (vi) the occupancy and demand by tenants for properties of
a similar type in the market area; (vii) the potential to complete a strategic
renovation, expansion or re-tenanting of the property; (viii) the property's
current expense structure and the potential to increase operating margins; and
(ix) competition from comparable properties in the market area.
The Company may from time to time enter into arrangements for the acquisition of
properties with unaffiliated property owners through the issuance of units of
limited partnership interests in entities that the Company controls. These units
may be redeemable for cash or for shares of the Company's Common stock or Class
A Common stock. The Company believes that this acquisition method may permit the
Company to acquire properties at attractive prices from property owners wishing
to enter into tax-deferred transactions.
4
Core Properties
The Company considers those properties which are directly managed by the
Company, concentrated in the retail sector and located close to the Company's
headquarters in Fairfield County, Connecticut, to be core properties. Of the
twenty six properties in the Company's portfolio, twenty two properties are
considered core properties consisting of seventeen retail properties and five
office buildings (including the Company's executive headquarters). At October
31, 2002, these properties contained in the aggregate 2,216,000 square feet of
gross leaseable area ("GLA"). The Company's core properties collectively had 398
tenants providing a wide range of products and services. Tenants include
regional supermarkets, national and regional discount department stores, other
local retailers and office tenants. At October 31, 2002, the core properties
were 96% leased.
Three of the core properties in the Company's portfolio are owned by
partnerships in which the Company is the sole general partner.
A substantial portion of the Company's operating lease income is derived from
tenants under leases with terms greater than one year. Certain of the leases
provide for the payment of fixed base rentals monthly in advance and for the
payment of a pro-rata share of the real estate taxes, insurance, utilities and
common area maintenance expenses incurred in operating the properties.
Non-Core Properties
In a prior year, the Board of Directors of the Company expanded and refined the
strategic objectives of the Company to concentrate the real estate portfolio
into one of primarily retail properties located in the Northeast and authorized
a plan to sell its non-core properties in the normal course of business over a
period of several years given prevailing market conditions and the
characteristics of each property.
Through this strategy, the Company seeks to update its core property portfolio
by disposing of properties which have limited growth potential and redeploying
capital into properties in its target geographic region and product type where
the Company's management skills may enhance property values. The Company may
engage from time to time in like-kind property exchanges which allow the Company
to dispose of properties and redeploy proceeds in a tax efficient manner.
At October 31, 2002, the Company's non-core properties consisted of one office
building, containing 202,000 square feet of GLA, one retail property totaling
126,000 square feet and two industrial facilities with a total of 447,000 square
feet of GLA. The non-core properties collectively had 7 tenants and were 92%
leased at October 31, 2002.
The office property has three tenants which offer a range of services, including
engineering, management and administrative.
The retail property, located in Tempe, Arizona, is leased to two tenants under
long term leases. The leases obligate these tenants to pay all taxes, insurance,
maintenance and other operating costs on their portion of the property leased
during the term of the lease.
The two industrial facilities are 100% occupied and consist of automobile and
truck parts distribution warehouses. The facilities are net leased to
DaimlerChrysler Corporation under long-term lease arrangements whereby the
tenant pays all taxes, insurance, maintenance and other operating costs of the
property during the term of the lease.
At October 31, 2002, the Company also holds two fixed rate mortgage notes and a
promissory note with a total book value of $3,447,000. The mortgages are secured
by retail properties that were previously owned and sold by the Company. The
promissory note is secured by a security interest in the ownership of the entity
that acquired a property previously owned by the Company.
5
Financing Strategy
The Company intends to finance future acquisitions with the most advantageous
sources of capital which it believes are available to the Company at the time,
and which may include the sale of common equity through public offerings or
private placements, the incurrence of additional indebtedness through secured or
unsecured borrowings, and the reinvestment of proceeds from the disposition of
assets. The Company's financing strategy is to maintain a strong and flexible
financial position by (i) maintaining a prudent level of leverage, and (ii)
minimizing its exposure to interest rate risk represented by floating rate debt.
Recent Developments
In December 2002, the Company acquired in separate transactions, two shopping
center properties totaling 263,186 square feet of leasable area for an aggregate
purchase price of $51 million. The purchase price was financed from available
short-term investments and cash. The properties which are located in the
Company's preferred geographic region of New York and Connecticut contain a
total of 15 national, regional and local retailers.
One of the properties was acquired at a cost of $39.9 million. The property
acquired contains 173,569 square feet of leasable space and approximately 12,000
square feet of developable space, is located in Westchester County, New York and
is situated on 3.6 acres of land. The shopping center contains 8 retail tenants.
Tenants, who lease more than 10% of the property's leasable area, consist of
Toys `R Us (46,850 sf), The Sports Authority (43,000 sf), Borders Books (35,000
sf), and OfficeMax (25,750 sf). The property is currently 100% leased.
The Company, in separate transactions, has contracted to purchase two additional
retail properties for an aggregate purchase price of $33 million. The properties
are located in the Company's preferred geographic region and contain
approximately 169,000 square feet of leasable area. The acquisitions are
expected to be financed with available cash and borrowings.
Matters Relating to the Real Estate Business
The Company is subject to certain business risks arising in connection with
owning real estate which include, among others, (1) the bankruptcy or insolvency
of, or a downturn in the business of, any of its major tenants, (2) the
possibility that such tenants will not renew their leases as they expire, (3)
vacated anchor space affecting the entire shopping center because of the loss of
the departed anchor tenant's customer drawing power, (4) risks relating to
leverage, including uncertainty that the Company will be able to refinance its
indebtedness, and the risk of higher interest rates, (5) potential liability for
unknown or future environmental matters, and (6) the risk of uninsured losses.
Unfavorable economic conditions could also result in the inability of tenants in
certain retail sectors to meet their lease obligations and otherwise could
adversely affect the Company's ability to attract and retain desirable tenants.
The Company believes that its shopping centers are relatively well positioned to
withstand adverse economic conditions since they typically are anchored by
grocery stores, drug stores and discount department stores that offer day-to-day
necessities rather than luxury goods.
Compliance with Governmental Regulations
The Company, like others in the commercial real estate industry, is subject to
numerous environmental laws and regulations. Although potential liability could
exist for unknown or future environmental matters, the Company believes that its
tenants are operating in accordance with current laws and regulations and has
established procedures to monitor these operations.
6
Competition
The real estate investment business is highly competitive. The Company competes
for real estate investments with investors of all types, including domestic and
foreign corporations, financial institutions, other real estate investment
trusts and individuals. In addition, the Company's properties are subject to
local competitors from the surrounding areas. The Company does not consider its
real estate business to be seasonal in nature. The Company's shopping centers
compete for tenants with other regional, community or neighborhood shopping
centers in the respective areas where Company retail properties are located. The
Company's office buildings compete for tenants principally with office buildings
throughout the respective areas in which they are located. In most areas where
the Company's office buildings are located, competition for tenants is intense.
Leasing space to prospective tenants is generally determined on the basis of,
among other things, rental rates, location, physical quality of the property and
availability of space.
Since the Company's industrial properties are net leased under long-term lease
arrangements which are not due to expire in the near future, the Company does
not currently face any immediate competitive re-leasing pressures with respect
to such properties.
Property Management
The Company actively manages and supervises the operations and leasing at all of
its core properties. Three of the Company's non-core properties are net leased
to tenants under long-term lease arrangements, in which case, property
management is provided by the tenants. The Company's remaining property is
managed by an independent property management company. The Company supervises
the property management company that manages the property.
Employees
The Company's executive offices are located at 321 Railroad Avenue, Greenwich,
Connecticut. It occupies approximately 5,000 square feet in a two story office
building owned by the Company. The Company has 22 employees. The Company
believes that its relationship with its employees is good.
Financial Information About Industry Segments
The Company operates in one industry segment, ownership of commercial real
estate properties which are located principally in the northeastern United
States. Management reviews operating and financial data for each property
separately and independently from all other properties when making resource
allocation decisions and measuring performance.
7
Item 2. Properties.
Core Properties
The Company considers those properties which are directly managed by the
Company, concentrated in the retail sector and located close to the Company's
headquarters in Fairfield County, Connecticut, to be core properties. Of the
twenty six properties in the Company's portfolio, twenty two properties are
considered core properties consisting of seventeen retail properties and five
office buildings (including the Company's executive headquarters). At October
31, 2002, these properties contained in the aggregate 2,216,000 square feet of
gross leaseable area ("GLA"). The Company's core properties collectively had 398
tenants providing a wide range of products and services. Tenants include
regional supermarkets, national and regional discount department stores, other
local retailers and office tenants. At October 31, 2002, the core properties
were 96% leased. The Company believes the core properties are adequately covered
by insurance.
In June 2002, the Company acquired a 90% interest in the Ridgeway Shopping
Center (Ridgeway) located in Stamford, Connecticut. Ridgeway was developed in
the 1950's and redeveloped in the mid-1990's. Ridgeway contains 331,000 square
feet of leasable space and 29,000 square feet of office space. It is the
dominant grocery anchored center and the largest non-mall shopping center
located in the City of Stamford, Fairfield County, Connecticut. For the year
ended October 31, 2002, Ridgeway revenues represented approximately 9% of the
Company's total revenues and approximately 25% of the Company's total assets at
October 31, 2002. The loss of this center or a material decrease in revenues
from the center for any reason might have a material adverse effect on the
Company.
As of October 31, 2002, Ridgeway retail space was 96% leased. The Property's
largest tenants are: The Stop & Shop Company, a division of the Dutch food
conglomerate, Ahold, occupying 60,000 square feet of sales floor area of the
Property (approximately 17% of the Ridgeway's gross leasable area (GLA)) and
Bed, Bath and Beyond, a retailer who leases 47,000 square feet of sales floor
area (approximately 13% of GLA). Other than The Stop & Shop Company (22%), Bed
Bath & Beyond (16%) and Marshall's Inc, a division of the TJX Companies (11%),
no tenant accounts for more than 10% of the Ridgeway's annual base rents.
The following table sets out a schedule of the annual lease expirations for
retail leases at Ridgeway executed as of October 31, 2002 with respect to each
of the next ten years and thereafter (assuming that no tenants exercise renewal
or cancellation options and that there are no tenant bankruptcies or other
tenant defaults):
Year of Lease Number of Square Footage of Expiring Minimum Annual Base Percentage of
Expiration Expiring Leases Leases Rentals Base Rent (%)
- ---------- --------------- ------ ------- -------------
2003 3 1,775 $ 56,172 0.7%
2004 1 235 5,640 0.1%
2005 1 2,375 120,246 1.5%
2006 1 1,400 49,000 0.6%
2007 4 9,400 333,300 4.3%
2008 10 69,071 1,655,351 21.2%
2009 2 2,209 101,553 1.3%
2010 4 42,240 641,833 8.2%
2011 1 3,040 98,678 1.3%
2012 4 21,567 653,654 8.4%
Thereafter 4 145,156 4,098,030 52.4%
--- ------- --------- ------
35 298,468 7,813,457 100.0%
== ======= ========= ======
8
The following table sets forth information concerning each core property at
October 31, 2002. Except as otherwise noted, all core properties are 100% owned
by the Company.
Gross
Year Year Year Leasable Number of
Location Renovated Completed Acquired Square Feet Acres Tenants Leased Principal Tenant
-------- --------- --------- -------- ----------- ----- ------- ------ ----------------
Retail Properties:
Stamford, CT (1) 1997 1950 2002 360,000 13.6 35 88% Stop & Shop Supermarket
Springfield, MA 1996 1970 1970 316,000 26.0 27 94% A&P Supermarket
Meriden, CT 2001 1989 1993 313,000 29.2 25 99% ShopRite Supermarket
Danbury, CT - 1989 1995 194,000 19.3 21 100% Christmas Tree Shops
Briarcliff Manor, NY (1) 2000 1978 1998 161,000 11.4 29 93% Stop & Shop Supermarket
Carmel, NY 1999 1983 1995 126,000 19.0 18 100% ShopRite Supermarket
Wayne, NJ 1992 1959 1992 102,000 9.0 46 100% A&P Supermarket
Newington, NH - 1975 1979 102,000 14.3 10 99% Linens `N Things
Darien, CT 1992 1955 1998 95,000 9.5 19 100% Shaw's Supermarket
Somers, NY - 1991 1999 78,000 10.8 35 98% Gristede's Supermarket
Farmingdale, NY 1993 1981 1993 70,000 5.6 15 100% King Kullen Supermarket
Eastchester, NY (1) 2002 1978 1997 70,000 4.0 11 100% Food Emporium
(Division of A&P)
Ridgefield, CT 1999 1930 1998 51,000 2.1 52 89% Chico's
Briarcliff Manor, NY - 1975 2001 38,000 1.0 18 94% Dress Barn
Danbury, CT - 1988 2002 33,000 2.7 6 100% Gateway
Briarcliff Manor, NY 2001 1981 1999 29,000 4.0 3 100% Westchester
Community College
Somers, NY - 1987 1992 19,000 4.9 12 100% Putnam County Savings Bank
Office Properties:
Greenwich, CT - 1983 1998 19,000 1.0 2 100% Greenwich Hospital
Greenwich, CT - 1977 2001 11,000 0.4 4 100% Glenville Medical Center
Greenwich, CT - 1983 1993 10,000 0.2 3 100% Urstadt Biddle
Properties Inc.
Greenwich, CT 1983 1953 1994 10,000 0.2 3 87% Prescott Investors
Greenwich, CT - 1978 2000 9,000 1.0 4 100% Insurance Center of
Greenwich
--------- ---
2,216,000 398
========= ===
(1) The Company has a general partnership interest in this property.
9
Non-Core Properties
In a prior year, the Board of Directors of the Company expanded and refined the
strategic objectives of the Company to concentrate the real estate portfolio
into one of primarily retail properties located in the Northeast and authorized
a plan to sell its non-core properties in the normal course of business over a
period of several years given prevailing market conditions and the
characteristics of each property.
At October 31, 2002, the Company's non-core properties consisted of one office
building, containing 202,000 square feet of GLA, one retail property totaling
126,000 square feet and two industrial facilities with a total of 447,000 square
feet of GLA. The non-core properties collectively had 7 tenants and were 92%
leased at October 31, 2002.
The following table sets forth information concerning each non-core property in
which the Company owned an equity interest at October 31, 2002. The non-core
properties are 100% owned by the Company.
Year Year Year Rentable Number of
Location Renovated Completed Acquired Square Feet Acres Tenants Leased Principal Tenant
-------- --------- --------- -------- ----------- ----- ------- ------ ----------------
Southfield, MI - 1973 1983 202,000 7.8 3 70% Arcadis Giffels
Tempe, AZ 2000 1970 1970 126,000 8.6 2 100% Mervyn's, Inc.
Dallas, TX 1989 1970 1970 255,000 14.5 1 100% DaimlerChrysler Corporation
St. Louis, MO 2000 1970 1970 192,000 16.0 1 100% DaimlerChrysler Corporation
------- -
775,000 7
======= =
Lease Expirations - Total Portfolio
The following table sets forth a summary schedule of the annual lease
expirations for the core and non-core properties for the leases in place as of
October 31, 2002, assuming that none of the tenants exercise renewal or
cancellation options, if any, at or prior to the scheduled expirations.
Year of Lease Number of Leases Square Footage of Percentage of Total Occupied
Expiration Expiring Expiring Leases Square Feet
- ---------- -------- --------------- -----------
2003 (1) 72 105,935 3.73%
2004 56 132,959 4.68%
2005 42 212,980 7.50%
2006 39 132,862 4.68%
2007 34 342,935 12.07%
2008 34 408,378 14.37%
2009 33 339,903 11.96%
2010 20 158,741 5.59%
2011 29 361,142 12.71%
2012 26 166,694 5.87%
2013 5 62,489 2.20%
Thereafter 15 415,879 14.64%
-- ------- ------
405 2,840,897 100.00%
=== ========= =======
(1)Represents lease expirations from November 1, 2002 to October 31, 2003 and
month-to-month leases.
10
Item 3. Legal Proceedings.
In the ordinary course of business, the Company is involved in legal
proceedings. However, there are no material legal proceedings presently pending
against the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year ended October 31, 2002.
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters.
(a) Price Range of Common Shares
Shares of Common stock and Class A Common stock of the Company are traded on the
New York Stock Exchange under the symbols "UBP" and "UBP.A", respectively. The
following table sets forth the high and low closing sales prices for the
Company's Common Stock and Class A Common Stock during the fiscal years ended
October 31, 2002 and 2001 as reported on the New York Stock Exchange:
Fiscal Year Ended Fiscal Year Ended
Common shares: October 31, 2002 October 31, 2001
- -------------- ---------------- ----------------
Low High Low High
--- ---- --- ----
First Quarter $ 8.60 $10.65 $6.35 $7.27
Second Quarter $10.25 $12.28 $6.99 $7.85
Third Quarter $ 9.95 $12.80 $7.64 $8.66
Fourth Quarter $10.77 $11.60 $8.02 $8.93
Fiscal Year Ended Fiscal Year Ended
Class A Common shares: October 31, 2002 October 31, 2001
- ---------------------- ---------------- ----------------
Low High Low High
--- ---- --- ----
First Quarter $ 9.35 $10.28 $6.39 $7.64
Second Quarter $ 9.88 $12.00 $7.35 $8.54
Third Quarter $10.60 $12.00 $8.12 $9.28
Fourth Quarter $10.80 $11.97 $8.55 $9.75
(b) Approximate Number of Equity Security Holders
At January 10, 2003 (latest date available), there were 1,453 shareholders of
record of the Company's Common stock and 1,459 shareholders of record of the
Class A Common stock.
(c) Dividends Declared on Common stock and Class A Common stock and Tax Status
11
The following table sets forth the dividends declared per Common share and Class
A Common share and tax status for Federal income tax purposes of the dividends
paid during the fiscal years ended October 31, 2002 and 2001:
Dividends Paid Per: Common Share Class A Common Share
- ------------------ ------------------------------- ---------------------------------
Ordinary Ordinary
Gross Dividend Income Capital Gain Gross Dividend Income Capital Gain
Divident Payment Date: Paid Per Share Distribution Distribution Paid Per Share Distribution Distribution
- --------------------- -------------- ------------ ------------ -------------- ------------ ------------
January 18, 2002 $0.185 $0.135 $0.05 $0.205 $0.15 $0.055
April 19, 2002 $0.185 $0.135 $0.05 $0.205 $0.15 $0.055
July 21, 2002 $0.185 $0.135 $0.05 $0.205 $0.15 $0.055
October 18, 2002 $0.185 $0.135 $0.05 $0.205 $0.15 $0.055
------- ------- ------ ------- ------ ------
$0.740 $0.540 $0.20 $0.820 $0.60 $0.220
======== ======= ====== ======= ====== ======
Dividends Paid Per: Common Share Class A Common Share
- ------------------ ------------------------------- ---------------------------------
Ordinary Ordinary
Gross Dividend Income Capital Gain Gross Dividend Income Capital Gain
Divident Payment Date: Paid Per Share Distribution Distribution Paid Per Share Distribution Distribution
- --------------------- -------------- ------------ ------------ -------------- ------------ ------------
January 21, 2001 $0.18 $0.18 $0.00 $0.20 $0.20 $0.00
April 21, 2001 $0.18 $0.18 $0.00 $0.20 $0.20 $0.00
July 21, 2001 $0.18 $0.18 $0.00 $0.20 $0.20 $0.00
October 19, 2001 $0.18 $0.18 $0.00 $0.20 $0.20 $0.00
------ ------ ------ ------ ------ -----
$0.72 $0.72 $0.00 $0.80 $0.80 $0.00
====== ====== ====== ====== ====== =====
The Company has paid uninterrupted quarterly dividends since it commenced
operations as a real estate investment trust in 1969. During the fiscal year
ended October 31, 2002, the Company made distributions to stockholders
aggregating $.74 per Common share and $.82 per Class A Common share. On December
12, 2002, the Board of Directors approved the payment of a quarterly dividend
payable January 17, 2003 to stockholders of record on January 3, 2003. The
dividends were declared in the amounts of $.19 per Common share and $.21 per
Class A Common share.
On June 16, 1998, the Board of Directors declared a special stock dividend on
the Company's Common stock consisting of one share of a newly created class of
Class A Common Stock, par value $.01 per share, for each share of the Company's
Common Stock. The Class A Common Stock entitles the holder to 1/20 of one vote
per share. Each share of Common Stock and Class A Common Stock has identical
rights with respect to dividends except that each share of Class A Common Stock
will receive not less than 110% of the regular quarterly dividends paid on each
share of Common Stock. The stock dividend was paid on August 14, 1998.
Although the Company intends to continue to declare quarterly dividends on its
Common shares and Class A Common shares, no assurances can be made as to the
amounts of any future dividends. The declaration of any future dividends by the
Company is within the discretion of the Board of Directors and will be dependent
upon, among other things, the earnings, financial condition and capital
requirements of the Company, as well as any other factors deemed relevant by the
Board of Directors. Two principal factors in determining the amounts of
dividends are (i) the requirement of the Internal Revenue Code that a real
estate investment trust distribute to shareholders at least 90% of its real
estate investment trust taxable income, and (ii) the amount of the Company's
funds from operations, as defined.
12
The Company has a Dividend Reinvestment and Share Purchase Plan which allows
shareholders to acquire additional shares of Common Stock and Class A Common
Stock by automatically reinvesting dividends. Shares are acquired pursuant to
the Plan at a price equal to the higher of 95% of the market price of such
shares on the dividend payment date or 100% of the average of the daily high and
low sales prices for the five trading days ending on the day of purchase without
payment of any brokerage commission or service charge.
(d) Recent Sales of Unregistered Securities - None.
13
Item 6. Selected Financial Data.
(In thousands, except per share data)
Year Ended October 31, 2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Balance Sheet Data:
Total Assets $353,633 $218,352 $180,792 $183,774 $ 165,039
======== ======== ======== ======== =========
Mortgage Notes Payable $106,429 $47,115 $51,903 $51,263 $32,900
======== ======= ======= ======= =======
Preferred Stock $14,341 $33,462 $33,462 $33,462 $33,462
======= ======= ======= ======= =======
Operating Data:
Total Revenues $44,340 $36,093 $31,009 $29,430 $ 25,385
======= ======= ======= ======= ========
Total Operating Expenses $29,438 $26,154 $23,281 $21,596 $17,252
======= ======= ======= ======= =======
Net Income Applicable to Common and Class A
Common Stockholders $16,080 $10,540 $ 5,442 $ 6,043 $ 5,615
======= ======= ======= ======= =======
Other Data :
Funds from Operations (Note 1) $21,073 $14,611 $11,914 $11,878 $ 11,782
======= ======= ======= ======= ========
Net Cash Provided by Operating Activities $18,532 $21,308 $14,262 $14,423 $13,901
======= ======= ======= ======= =======
Net Cash (Used in) Investing Activities $(64,960) $(11,394) $ (3,713) $(10,556) $(31,130)
========= ========= ========= ========= =========
Net Cash Provided by (Used in)
Financing Activities $59,023 $22,040 $ (11,436) $ (5,009) $19,207
======= ======= ========== ========= =======
Per Share Data (Note 2):
Net Income-Basic
Class A Common Stock $.89 $1.01 $.55 $.62 $.57
Common Stock $.80 $.91 $.50 $.55 $.52
Net Income - Diluted:
Class A Common Stock $.87 $.97 $.55 $.61 $.57
Common Stock $.78 $.88 $.49 $.54 $.52
Cash Dividends on:
Class A Common Stock $.82 $.80 $.78 $.76 $.19
Common Stock $.74 $.72 $.70 $.68 $1.13
---- ---- ---- ---- -----
Total $1.56 $1.52 $1.48 $1.44 $1.32
===== ===== ===== ===== =====
Note 1: The Company has adopted the definition of Funds from Operations (FFO)
suggested by the National Association of Real Estate Investment Trusts (NAREIT)
and defines FFO as net income (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from sales of properties,
plus depreciation, amortization and after adjustments for unconsolidated joint
ventures. FFO does not represent net cash from operating activities in
accordance with generally accepted accounting principles and should not be
considered an alternative to net income as an indicator of the Company's
operating performance, or for cash flows as a measure of liquidity or ability to
make distributions. The Company considers FFO an appropriate supplemental
measure of operating performance because it primarily excludes the assumption
that the value of real estate assets diminishes predictably over time, and
because industry analysts recognize it as a performance measure. Comparison of
the Company's presentation of FFO, using the NAREIT definition, to similarly
titled measures for other REITs may not necessarily be meaningful due to
possible differences in the application of the NAREIT definition used by such
REITs. For a further discussion of FFO, see Management's Discussion and Analysis
on page 15.
Note 2: Per share data for 1998 has been restated to reflect the effect of the
one-for-one stock dividend in the form of a new issue of Class A Common Stock
distributed in August 1998, however, the cash dividends are presented based on
actual amounts paid.
14
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
General
Urstadt Biddle Properties Inc. (Company), a real estate investment trust (REIT),
is engaged in the acquisition, ownership and management of commercial real
estate, primarily neighborhood and community shopping centers in the
northeastern part of the United States. Other assets include office and retail
buildings and industrial properties. The Company's major tenants include
supermarket chains and other retailers who sell basic necessities. At October
31, 2002, the Company owned or had interest in 26 properties containing a total
of 3.0 million square feet of leasable area.
This report includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements, other than statements of historical facts, included
in this report that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future, including such
matters as future capital expenditures, dividends and acquisitions (including
the amount and nature thereof), expansion and other development trends of the
real estate industry, business strategies, expansion and growth of the Company's
operations and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by the Company in
light of its experience and its perception of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate. Such statements are subject to a number of assumptions, risks and
uncertainties, general economic and business conditions, the business
opportunities that may be presented to and pursued by the Company, changes in
laws or regulations and other factors, many of which are beyond the control of
the Company. Any such statements are not guarantees of future performance and
actual results or developments may differ materially from those anticipated in
the forward-looking statements.
Liquidity and Capital Resources
Sources of Capital
The Company's sources of liquidity and capital resources include its cash and
cash equivalents, proceeds from bank borrowings and long-term mortgage debt,
capital financings and sales of real estate investments. Payments of expenses
related to real estate operations, debt service, management and professional
fees, and dividend requirements place demands on the Company's short-term
liquidity. The Company expects to meet its short-term liquidity requirements
primarily by generating net cash from the operations of its properties. The
Company believes that its net cash provided by operations will be sufficient to
fund its short-term liquidity requirements for fiscal 2003 and to meet its
dividend requirements necessary to maintain its REIT status. In fiscal 2002,
2001 and 2000, net cash provided by operations amounted to $18.5 million, $21.3
million and $14.3 million, respectively. Dividends paid to stockholders of the
Company in fiscal 2002, 2001 and 2000 amounted to $16.4 million, $11.9 million
and $10.9 million, respectively. The Company derives substantially all of its
revenues from tenants under existing leases at its properties. The Company's
operating cash flow therefore depends on the rents that it is able to charge to
its tenants, and the ability of its tenants to make rental payments. The Company
believes that the nature of the properties in which it typically invests -
primarily grocery-anchored neighborhood and community shopping centers -
provides a more stable revenue flow in uncertain economic times, in that
consumers still need to purchase basic staples and convenience items. However,
even in the geographic areas in which the Company owns properties, general
economic downturns may adversely impact the ability of the Company's tenants to
make lease payments and the Company's ability to re-lease space as leases
expire. In either of these cases, the Company's cash flow could be adversely
affected.
15
The Company expects to fund its long-term liquidity requirements such as
property acquisitions, repayment of indebtedness and capital expenditures
through other long-term indebtedness (including indebtedness assumed in
acquisitions), proceeds from sales of non-core properties and/or the issuance of
equity securities. The Company believes that these sources of capital will
continue to be available to it in the future to fund its long-term capital
needs; however, there are certain factors that may have a material adverse
effect on its access to capital sources. The Company's ability to incur
additional debt is dependent upon its existing leverage, the value of its
unencumbered assets and borrowing limitations imposed by existing lenders. The
Company's ability to raise funds through sales of equity securities is dependent
on, among other things, general market conditions for REITs, market perceptions
about the Company and its stock price in the market. The Company's ability to
sell properties in the future to raise cash will be dependent upon market
conditions at the time of sale.
At October 31, 2002, the Company had cash and cash equivalents of $46.3 million
compared to $33.7 million in 2001. The Company also had $25.1 million in liquid
short-term investments as of October 31, 2002. The Company's cash positions and
short-term investments reflect the temporary investment of the net proceeds
received from the sales of the Company's Class A Common shares during fiscal
2002 and 2001.
Financings
In fiscal 2002, the Company completed an underwritten public offering of
8,050,000 shares of its Class A Common stock. The net proceeds to the Company
(after deducting underwriting fees and expenses) was $81.9 million. A portion of
the proceeds was used to repay $16 million of outstanding revolving credit line
indebtedness. The balance of the net proceeds of the offering is expected to be
used to acquire properties. In December 2002, the Company acquired two
properties utilizing approximately $51 million in cash. In November 2001, the
Company also sold 699,222 shares to its underwriters to cover over allotments in
connection with the Company's stock offering of 4,800,000 shares in fiscal 2001.
Net proceeds to the Company amounted to $6,069,000.
In fiscal 2001, the Company completed an underwritten public offering of
4,800,000 shares of its Class A Common stock. The net proceeds to the Company
(after deducting underwriting fees and expenses) was $41.1 million. The Company
also sold 200,000 shares of Common stock and 5,000 shares of Class A Common
stock in a private placement for total proceeds of $1,435,000. The Company used
the proceeds of these offerings to complete the acquisitions of two properties,
repay outstanding credit line borrowings and repurchase 200,000 shares of its
Series B preferred stock at a cost of $16.1 million.
At October 31, 2002, the Company had a $18.75 million secured revolving credit
facility with a bank which expires in fiscal 2005 and a conditional $20 million
unsecured revolving line of credit with the same bank which expires in fiscal
2003. The revolving credit lines are available to finance the acquisition,
management and/or development of commercial real estate, refinance indebtedness
and for working capital purposes. Extensions of credit under the unsecured
credit line are at the bank's discretion and subject to the bank's satisfaction
of certain conditions. During 2002, the Company borrowed $16 million on the
secured credit line to complete the acquisition of the Ridgeway Shopping Center,
Stamford, Connecticut (see below). Borrowings were fully repaid from the
proceeds of the sale of equity securities in fiscal 2002. There were no
borrowings during the year under the unsecured credit line and there were no
outstanding borrowings on either line of credit at October 31, 2002.
The Company is exposed to interest rate risk primarily through its borrowing
activities. There is inherent rollover risk for borrowings as they mature and
are renewed at current market rates. The extent of this risk is not quantifiable
or predictable because of the variability of future interest rates and the
Company's future financing requirements.
16
At October 31, 2002, the Company's contractual obligations for borrowings are as
follows:
Payments Due by Period Amount
Less than 1 year $ 1,840,000
1 to 3 years $ 4,124,000
4 to 5 years $20,153,000
After 5 years $80,312,000
Borrowings consist of $106,429,000 of fixed rate mortgage loan indebtedness with
a weighted average interest rate of 7.53% at October 31, 2002. The mortgage
loans are secured by fourteen properties and have fixed rates of interest
ranging from 6.29% to 8.375%. The Company expects to refinance certain of these
borrowings, at or prior to maturity, through new mortgage loans on real estate.
The ability to do so, however, is dependent upon various factors, including the
income level of the properties, interest rates and credit conditions within the
commercial real estate market. Accordingly, there can be no assurance that such
refinancings can be achieved.
Capital Expenditures
The Company invests in its existing properties and regularly incurs capital
expenditures in the ordinary course of business to maintain its properties. The
Company believes that such expenditures enhance the competitiveness of its
properties. In fiscal 2002, the Company spent approximately $2.8 million for
capital expenditures including $1.5 million related to tenant allowances and
commissions in connection with the Company's leasing activities. The amounts of
these expenditures can vary significantly depending on tenant negotiations,
market conditions and rental rates. The Company has budgeted an additional $3.3
million for known capital improvements and leasing costs in fiscal 2003. These
expenditures are generally funded from operating cash flows or borrowings on its
credit facilities.
Acquisitions and Sales
During fiscal 2002, the Company acquired a 90% general partner interest in a
shopping center in Stamford, Connecticut for $86.8 million (including
transaction costs of $708,000). The property was acquired subject to a $57.4
million first mortgage loan, utilizing available cash of approximately $13.4
million and revolving credit line borrowings of $16 million. The Company also
purchased a shopping center in Danbury, Connecticut for $7.0 million subject to
a first mortgage loan of $2.0 million and acquired the remaining 15% interest in
the Giffels Building in Southfield, Michigan that it did not own for a purchase
price of $1.25 million.
In December 2002, the Company acquired two properties in separate transactions
for an aggregate purchase price of approximately $51 million. The acquisitions
were funded from available cash.
As of October 31, 2002, the Company had contracted to purchase two additional
shopping center properties for an aggregate purchase price of approximately $33
million. The properties are located in the Company's preferred geographic area
of Westchester County, New York and Fairfield County, Connecticut. The
transactions are expected to close during the first half of fiscal 2003.
In fiscal 2001, the Company acquired two properties for $9.5 million. One
property was acquired subject to a first mortgage loan of $4.2 million. The
purchases were financed from available cash and borrowings under the Company's
revolving credit lines.
17
In a prior year, the Company's Board of Directors expanded and refined the
strategic objectives of the Company to refocus its real estate portfolio into
one of self-managed retail properties located in the northeast and authorized a
plan to sell the non-core properties of the Company in the normal course of
business over a period of several years. The Company intends to sell the
non-core properties as opportunities become available. The Company has
selectively effected asset sales to generate cash proceeds over the last several
years. The Company's ability to generate cash from asset sales is dependent upon
market conditions and will necessarily be limited if market conditions make
such sales unattractive. In fiscal 2001, the Company sold two non-core
properties for $1.2 million and a shopping center for $16 million. At October
31, 2002, the remaining non-core properties total four properties with a net
book value of approximately $12 million and consist of two distribution service
facilities, one office building and one retail property (all of which are
located outside of the northeast region of the United States).
Funds from Operations
The Company considers Funds from Operations ("FFO") to be one supplemental
financial measure of an equity REIT's operating performance. FFO is calculated
as net income (computed in accordance with generally accepted accounting
principles (GAAP)), plus depreciation and amortization, excluding gains (or
losses) from sales of property and debt restructuring and after adjustments for
unconsolidated joint ventures. The Company considers recoveries of investments
in properties subject to finance leases to be analogous to amortization for
purposes of calculating FFO. FFO does not represent cash flows from operations
as defined by GAAP and should not be considered an alternative to net income as
an indication of the Company's operating performance or for cash flows as a
measure of liquidity or its dividend paying capacity. Furthermore, FFO as
disclosed by other REITs may not be comparable to the Company's calculation of
FFO. The table below provides a reconciliation of net income in accordance with
GAAP to FFO for each of the years ended October 31, 2002, 2001 and 2000 (amounts
in thousands).
2002 2001 2000
---- ---- ----
Net Income Applicable to Common and Class A Common Stockholders $16,080 $10,540 $5,442
Plus: Real property depreciation 5,459 4,463 4,571
Amortization of tenant improvements and
Allowances 2,088 2,234 1,067
Amortization of deferred leasing costs 517 851 545
Recoveries of investments in properties subject to
finance leases - 91 822
Adjustments for unconsolidated joint venture - (3,252) 534
Less: Excess of carrying value over cost to repurchase preferred shares (3,071) - -
Gains on sales of real estate investments - (316) (1,067)
------ ------- -------
Funds from Operations $21,073 $14,611 $11,914
======= ======= =======
Net Cash Provided by Operating Activities $18,532 $21,308 $14,262
======= ======= =======
Net Cash Used in Investing Activities $(64,960) $(11,394) $(3,713)
======== ========= ========
Net Cash Provided by (Used in) Financing Activities $59,023 $22,040 $(11,436)
======= ======= =========
18
Results of Operations
Fiscal 2002 vs. Fiscal 2001
Revenues
Revenues from operating leases increased 23.4% to $42.2 million in fiscal 2002
compared to $34.2 million in fiscal 2001. The increase in operating lease
revenues resulted from additional rental revenues from new properties acquired
during both years and leasing of previously vacant space at the Company's core
properties. During fiscal 2002 and 2001, the Company acquired four properties
containing 442,000 square feet of space. Rents from recently acquired properties
increased operating lease income by approximately $5.5 million in fiscal 2002.
In the current year the Company renewed or signed new leases totaling 236,000
square feet of space at its core properties. In fiscal 2002, the overall leasing
levels at the Company's properties decreased to 95% compared to 98% leased in
the year ago period. Additionally, the Company's total property occupancy levels
decreased to 92% in fiscal 2002 from 98% in fiscal 2001. The decrease in leasing
and occupancy levels was principally caused by the loss of a tenant occupying
115,390 square feet at the Company's Five Town Plaza shopping center and a
tenant occupying 94,000 square feet at the Company's office property in
Southfield, Michigan who re-leased 32,400 square feet of its previously occupied
space. The balance of the space remains vacant at October 31, 2002. The Company
re-leased the 115,390 square feet of space at Five Town Plaza.
Lease termination income of $765,000 in fiscal 2002 represents lease
cancellation payments from tenants who terminated two leases early during the
year. One of the vacant spaces was re-leased during the year. Interest income
increased in fiscal 2002 from the investment of cash proceeds during the year
into short-term investments at generally lower yields and the addition of a new
$1.2 million promissory note receivable (interest at 12.5% per annum).
Expenses
Total expenses increased to $29.4 million from $26.2 million in fiscal 2001.
Property expenses increased 11.1% to $12.8 million from $11.5 million
principally from the incremental expense of recently acquired properties, which
increased property expenses by $1.4 million in fiscal 2002. Property expenses
for properties owned during 2002 and 2001 were generally unchanged. Snow removal
costs decreased by approximately $250,000 which was largely offset by increases
in property taxes and insurance costs.
Interest expense increased principally from new mortgage loans totaling $59.4
million assumed in connection with recent acquisitions. The increase in interest
expense was partially offset by the repayments of outstanding bank credit line
borrowings. The Company also repaid approximately $6 million in mortgage notes
payable which matured during fiscal 2001.
Depreciation expense increased by $850,000 principally due to the additional
expense incurred from current year property acquisitions. Amortization expense
decreased by $354,000 principally from the write-off in fiscal 2001 of
unamortized leasing commissions related to tenants who vacated during the year.
General and administrative expenses increased to $2.8 million or 14.2% in fiscal
2002 as compared to $2.5 million in fiscal 2001. The increase is due primarily
to increased compensation costs.
In fiscal 2002, the Company repurchased 200,000 shares of its Series B Preferred
Stock for a purchase price of $16,050,000 in a negotiated transaction with a
holder of the preferred shares. The Company has recorded the excess of the
carrying value over the cost to repurchase the preferred shares of $3,071,000 as
an increase in net income applicable to Common and Class A Common stockholders.
19
Fiscal 2001 vs. Fiscal 2000
Revenues
Property occupancy levels increased to 98% from 97% in fiscal 2000. Operating
lease revenues increased 13.1% to $34.2 million in fiscal 2001 compared to $30.2
million in fiscal 2000. The increase in operating lease revenues resulted from
leasing of previously vacant space, higher tenant base rent renewal rates at
certain of the Company's properties and higher recoveries of property operating,
property tax and other recoverable costs. Operating lease income also increased
by $682,000 from the reclassification of three net leases previously accounted
for as direct finance leases in accordance with generally accepted accounting
principles. During the year, one of the properties was sold and the net leases
of the remaining two properties expired. The new leases were classified as
operating leases.
Lease termination income of $1,137,000 represents a settlement of the Company's
claims against a former tenant arising from the tenant's bankruptcy and
rejection of its lease at one of the Company's properties.
The Company had an investment in an unconsolidated joint venture which was
accounted for under the equity method. The joint venture owned the Countryside
Square shopping center in Clearwater, Florida. In fiscal 2001, the property was
sold and the Company recorded $3,864,000 as its proportionate share of the
income of the joint venture including its earnings from the sale of the property
as compared to earnings of $245,000 in fiscal 2000.
In 2001, the Company sold two non-core properties for net gains of $316,000 as
compared to net gains on sales of $1,067,000 in fiscal 2000.
Expenses
Total expenses increased to $26.2 million from $23.3 million in fiscal 2000.
Property expenses increased by 10.5% in fiscal 2001 principally from higher snow
removal costs, maintenance and repairs and property taxes. These items increased
property expenses by $1,046,000 in fiscal 2001 and resulted from higher than
normal snowfall amounts during the period and increased property tax assessments
at the Company's core properties.
Interest expense increased from borrowings of $16.5 million on the Company's
revolving credit lines during the year. The increase in interest expense was
partially offset by mortgage loans repaid during the year.
Depreciation and amortization expense increased to $7.6 million from $6.3
million in fiscal 2000 from the expenditure of $11.7 million for property
improvements, tenant allowances and leasing costs during the year. The Company
also wrote off $287,000 of unamortized tenant allowances related to former
tenants who vacated space during the year.
Application of Critical Accounting Policies
Critical accounting policies are those that are both important to the
presentation of the Company's financial condition and results of operations and
require management's most difficult, complex or subjective judgments. The
Company's critical accounting policies are those applicable to the evaluation of
the collectibility of accounts and notes receivable and the evaluation of
impairment of long-term assets.
The allowance for doubtful accounts and notes receivable is established based on
quarterly analysis of the risk of loss on specific accounts. The analysis places
particular emphasis on past-due accounts and considers information such as the
nature and age of the receivables, the payment history of the tenants or other
debtors, the financial condition of the tenants and management's assessment of
their ability to meet their lease obligations, the basis for any disputes and
the status of related negotiations, among other things. Management's estimates
of the required allowance is subject to revision as these factors change and is
sensitive to the effects of economic and market conditions on tenants,
particularly those at retail centers.
20
Rental revenue is recognized on a straight-line basis over the term of the
lease. The excess of rents recognized over amounts contractually due pursuant to
the underlying leases is included in tenant receivables on the accompanying
balance sheets. It is the Company's policy to maintain an allowance for future
tenant credit losses of approximately 10% of the deferred straight line rent
receivable balance.
On a periodic basis, management assesses whether there are any indicators that
the value of the real estate properties and mortgage notes receivable may be
impaired. To the extent impairment has occurred, the loss is measured as the
excess of the carrying amount of the property over the fair value of the asset.
Management does not believe that the value of any of its rental properties or
mortgage notes receivable is impaired at October 31, 2002.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued SFAS No. 144
"Accounting for the Impairment or Disposal of Long Lived Assets" which updates
and clarifies the accounting and reporting for impairment of assets held in use
and to be disposed of. The Statement, among other things, will require the
Company to classify the operations and cash flow of properties to be disposed of
as discontinued operations. The Company will adopt the provisions of the
Statement in fiscal 2003, and does not expect the Statement to have a material
impact on the Company's financial position or results from operations. In
December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure." This statement amends SFAS No. 123 to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation and
amends the disclosure requirements of SFAS No. 123. Adoption of the provisions
of the Statement in fiscal 2003 will not have any impact since the Company will
continue to use the intrinsic value method as set forth in APB # 25.
Inflation
The Company's long-term leases contain provisions to mitigate the adverse impact
of inflation on its operating results. Such provisions include clauses entitling
the Company to receive (i) scheduled base rent increases and (ii) percentage
rents based upon tenants' gross sales, which generally increase as prices rise.
In addition, many of the Company's non-anchor leases are for terms of less than
ten years, which permits the Company to seek increases in rents upon renewal at
then current market rates if rents provided in the expiring leases are below
then existing market rates. Most of the Company's leases require tenants to pay
a share of operating expenses, including common area maintenance, real estate
taxes, insurance and utilities, thereby reducing the Company's expose to
increases in costs and operating expenses resulting from inflation.
Environmental Matters
Based upon management's ongoing review of its Properties, management is not
aware of any environmental condition with respect to any of the Company's
properties which would be reasonably likely to have a material adverse effect on
the Company. There can be no assurance, however, that (i) the discovery of
environmental conditions, which were previously unknown, (ii) changes in law,
(iii) the conduct of tenants or (iv) activities relating to properties in the
vicinity of the Company's properties, will not expose the Company to material
liability in the future. Changes in laws increasing the potential liability for
environmental conditions existing on properties or increasing the restrictions
on discharges or other conditions may result in significant unanticipated
expenditures or may otherwise adversely affect the operations of the Company's
tenants, which would adversely affect the Company's financial condition and
results of operations.
21
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to interest rate risk primarily through its borrowing
activities. There is inherent rollover risk for borrowings as they mature and
are renewed at current market rates. The extent of this risk is not quantifiable
or predictable because of the variability of future interest rates and the
Company's future financing requirements.
As of October 31, 2002, the Company had no outstanding borrowings under its
secured and unsecured line of credit arrangements. During the twelve month
periods ended October 31, 2002 and 2001, the average variable rate indebtedness
outstanding during such periods had a combined weighted average interest rate of
3.38% and 6.9%. Had the weighted average interest rate been 100 basis points
higher, the Company's net income would have been lower by approximately $12,000
and $145,000 in fiscal 2002 and 2001, respectively.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements required by this Item, together with the
report of the Company's independent public accountants thereon and the
supplementary financial information required by this Item are included under
Item 14 of this Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
a) The following sets forth the information required by Item 304(a)(1) of
Regulation S-K:
(i) On May 13, 2002, Arthur Andersen LLP was dismissed as the Company's
independent public accountant.
(ii) The reports of Arthur Andersen LLP on the Company's financial
statements for the years ended October 31, 2001 and October 31, 2000
did not contain an adverse opinion or a disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope or accounting
principles.
(iii) The decision to change accountants was recommended by the
Company's Audit Committee and approved by the Registrant's Board of
Directors.
(iv) During the years ended October 31, 2001 and October 31, 2000 and
through May 13, 2002, there were no disagreements with Arthur Andersen
LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Arthur Andersen
LLP, would have caused it to make reference thereto in its reports on
the financial statements for such periods.
(v) During the years ended October 31, 2001 and October 31, 2000 and
through May 13, 2002, there have occurred none of the "reportable
events" listed in Item 304(a)(1) (v) of Regulation S-K.
(b) The Company requested that Arthur Andersen LLP furnish a letter
addressed to the Securities and Exchange Commission stating whether or not it
agrees with the above statements. A copy of such letter, dated May 20, 2002, is
filed as Exhibit 10.23 to this Form 10-K.
(c) On May 21, 2002 the Company engaged Ernst & Young LLP to serve as its
independent public accountant. During the Company's two most recent fiscal
years, and during any subsequent period through May 21, 2002, the Company did
not consult with Ernst & Young LLP on any accounting or auditing issues.
22
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Company has filed with the Securities and Exchange Commission its
definitive Proxy Statement for its Annual Meeting of Stockholders to be held on
March 12, 2003. The additional information required by this Item is included
under the captions "ELECTION OF DIRECTORS" and "COMPENSATION AND TRANSACTIONS
WITH MANAGEMENT AND OTHERS' of such Proxy Statement and is incorporated herein
by reference.
Executive Officers of the Registrant.
------------------------------------
The following sets forth certain information regarding the executive officers of
the Company:
Name Age Offices Held
Charles J. Urstadt 74 Chairman and Chief Executive Officer (since September 1989)
Mr. Urstadt has been the Chairman of the Board of Directors since 1986, and a
Director since 1975. Mr. Urstadt also serves as the Chairman of Urstadt
Property Company, Inc. (formerly Pearce, Urstadt, Mayer & Greer Inc.) and has
served in such capacity for more than five years.
Willing L. Biddle 41 President and Chief Operating Officer (since December, 1996); Executive Vice
President (March, 1996 to December 1996); Senior Vice President - Management
(June, 1995 to March 1996); Vice President - Retail (April 1993 to June, 1995);
Vice President - Asset Management (April 1993 to June 1994).
James R. Moore 54 Executive Vice President and Chief Financial Officer (since March, 1996); Senior
Vice President and Chief Financial Officer (1989 to 1996); Treasurer (December
1987); Secretary (1987-1999) Vice President-Finance and Administration (1987 to
1989).
Raymond P. Argila 54 Senior Vice President and Chief Legal Officer (since June 1990); formerly Senior
Counsel, Cushman & Wakefield, Inc. (1987 to 1990).
Officers of the Company are elected annually by the Directors.
Item 11. Executive Compensation.
The Company has filed with the Securities and Exchange Commission its definitive
Proxy Statement for its Annual Meeting of Stockholders to be held on March 12,
2003. The information required by this Item is included under the caption
"ELECTION OF DIRECTORS" and "COMPENSATION AND TRANSACTIONS WITH MANAGEMENT AND
OTHERS" of such Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The Company has filed with the Securities and Exchange Commission its definitive
Proxy Statement for its Annual Meeting of Stockholders to be held on March 12,
2003. The information required by this Item is included under the caption
"ELECTION OF DIRECTORS - Security Ownership of Certain Beneficial Owners and
Management" of such Proxy Statement and is incorporated herein by reference.
23
Item 13. Certain Relationships and Related Transactions.
The Company has filed with the Securities and Exchange Commission its definitive
Proxy Statement for its Annual Meeting of Stockholders to be held on March 12,
2003. The information required by this Item is included under the caption
"ELECTION OF DIRECTORS" and "COMPENSATION AND TRANSACTIONS WITH MANAGEMENT AND
OTHERS" of such Proxy Statement and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
A. Financial Statements and Financial Statement Schedules
1. Financial Statements --
The consolidated financial statements listed in the accompanying index to
financial statements on Page 29 are filed as part of this Annual Report.
2. Financial Statement Schedules --
The financial statement schedules required by this Item are filed with
this report and are listed in the accompanying index to financial
statements on Page 29. All other financial statement schedules are
inapplicable.
B. Reports on Form 8-K
The Registrant filed the following Reports on Form 8-K with
the Commission:
1. A Current Report on Form 8-K dated September 13, 2002. Such report
referred under Item 9 to the written statements and certifications of the
Registrant's principal executive officer and principal financial officer
in response to Section 906 of the Sarbanes-Oxley Act of 2002 and Rule
13a-14(b) under the Securities Exchange Act of 1934 with respect to the
Registrant's Quarterly Report on Form 10-Q for the Quarter ended July 31,
2002.
2. A Current Report on Form 8-K dated October 17, 2002. Such report
referred under Item 5. to a press release published by the Company on
October 17, 2002 announcing agreements to acquire two properties for $33
million.
C. Controls and Procedures
1. Evaluation of disclosure controls and procedures. Based on their
evaluation as of a date within 90 days of the filing date of this Annual
Report on Form 10-K, the Company's principal executive officer and principal
financial officer have concluded that its disclosure and controls
procedures (as defined in Rules 13a-14 (c) and 15d-14 (c) under the Exchange
Act) are effective to ensure that information required to be disclosed by us
in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in SEC
rules and forms.
2. Changes in internal controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly
affect those controls subsequent to the date of their evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
24
D. Exhibits.
Listed below are all Exhibits filed as part of this report. Certain Exhibits
are incorporated by reference to documents previously filed by the Company
with the Securities and Exchange Commission pursuant to Rule 12b-32 under
the Securities Exchange Act of 1934, as amended.
Exhibit
(3) Articles of Incorporation and By-laws.
-------------------------------------
3.1 (a) Amended Articles of Incorporation of the Company,
(incorporated by reference to Exhibit C of Amendment No.1 to
Registrant's Statement on Form S-4 (No. 333-19113).
(b) Articles Supplementary of the Company (incorporated by
reference to Annex A of Exhibit 4.1 of the Registrant's
Current Report on Form 8-K dated August 3, 1998).
(c) Articles Supplementary of the Company (incorporated by
reference to Exhibit 4.1 of the Registrant's Current Report on
Form 8-K dated January 8, 1998).
(d) Articles Supplementary of the Company (incorporated by
reference to Exhibit A of Exhibit 4.1 of the Registrant's
Current Report on Form 8-K dated March 12, 1998).
3.2 By-laws of the Company, (incorporated by reference to
Exhibit D of Amendment No. 1 to Registrant's Registration
Statement on Form S-4 (No. 333-19113).
(4) Instruments Defining the Rights of
----------------------------------
Security Holders, Including Indentures.
--------------------------------------
4.1 Common Stock: See Exhibits 3.1 (a)-(d) hereto.
------------
4.2 Series B Preferred Shares: See Exhibits 3.1 (a)-(d), 10.13
-------------------------
- 10.15, 10.17 and 10.22.
4.3 Series A Preferred Share Purchase Rights: See Exhibits 3.1
----------------------------------------
(a)-(d) and 10.3 hereto.
(10) Material Contracts.
------------------
10.1 Form of Indemnification Agreement entered into between the
Registrant and each of its Directors and for future use with
Directors and officers of the Company (incorporated herein by
reference to Exhibit 10.1 of the Registrant's Annual Report on
Form 10-K for the year ended October 31, 1989).1
10.2 Amended and Restated Change of Control Agreement between the
Registrant and James R. Moore dated November 15, 1990
(incorporated herein by reference to Exhibit 10.3 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1990).1
10.3 Amended and Restated Rights Agreement between the Company and
The Bank of New York, as Rights Agent, dated as of July 31,
1998 (incorporated herein by reference to Exhibit 10-1 of the
Registrant's Current Report on Form 8-K dated November 5,
1998).
25
10.4 Agreement dated December 19, 1991 between the Registrant and
Raymond P. Argila amending the Change of Control Agreement
dated as of June 12, 1990 between the Registrant and Raymond
P. Argila (incorporated herein by reference to Exhibit 10.6.1
of the Registrant's Annual Report on Form 10-K for the year
ended October 31, 1991). 1
10.5 Change of Control Agreement dated as of December 20,
1990 between the Registrant and Charles J. Urstadt
(incorporated herein by reference to Exhibit 10.8 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1990). 1
10.6 Amended and Restated HRE Properties Stock Option Plan
(incorporated herein by reference to Exhibit 10.8 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1991).1
10.6.1 Amendments to HRE Properties Stock Option Plan dated June 9,
1993 (incorporated by reference to Exhibit 10.6.1 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1995). 1
10.6.2 Form of Supplemental Agreement with Stock Option Plan
Participants (non-statutory options). (incorporated by
reference to Exhibit 10.6.2 of the Registrant's Annual Report
on Form 10-K for the year ended October 31, 1998). 1
10.6.3 Form of Supplemental Agreement with Stock Option Plan
Participants (statutory options). (incorporated by reference
to Exhibit 10.6.2 of the Registrant's Annual Report on Form
10-K for the year ended October 31, 1998). 1
10.7 Amended and Restated Dividend Reinvestment and Share
Purchase Plan (incorporated herein by reference to the
Registrant's Registration Statement on Form S-3
(No. 333-64381).
10.8 Amended and Restated Change of Control Agreement dated as
of November 6, 1996 between the Registrant and Willing L.
Biddle (incorporated by reference to Exhibit 10.7 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1996). 1
10.10 Restricted Stock Plan (incorporated by reference to
Exhibit B of Amendment No. 1 to Registrant's Registration
Statement on Form S-4 (No. 333-19113)). 1
10.10.1 Form of Supplemental Agreement with Restricted
Stockholders (incorporated by reference to Exhibit 10.6.2
of the Registrant's Annual Report on Form 10-K for the year
ended October 31, 1998). 1
10.11 Excess Benefit and Deferred Compensation Plan (incorporated
by reference to Exhibit 10.10 of the Registrant's Annual
Report on Form 10-K for the year ended October 31, 1998). 1
10.12 Purchase and Sale Agreement, dated September 9, 1998 by and
between Goodwives Center Limited Partnership, as seller, and
UB Darien, Inc., a wholly owned subsidiary of the Registrant,
as purchaser (incorporated by reference to Exhibit 10 of the
Registrant's Current Report on Form 8-K dated September 23,
1998).
1 Management contract, compensatory plan or arrangement required to be filed as
an exhibit to this Annual Report on Form 10-K pursuant to Item 14(c).
26
10.13 Subscription Agreement, dated January 8, 1998, by and among
the Company and the Initial Purchasers (incorporated by
reference to Exhibit 4.2 of the Registrant's Current Report on
Form 8-K dated January 8, 1998).
10.14 Registration Rights Agreement, dated January 8, 1998, by and
among the Company and the Initial Purchasers (incorporated by
reference to Exhibit 4.3 of the Registrant's Current Report on
Form 8-K dated January 8, 1998).
10.15 Waiver and Amendment of Registration Rights Agreement dated as
of April 16, 1999, by and among the Company and the Initial
Purchasers (incorporated by reference to Exhibit 10.15 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1999).
10.16 Amendment to Shareholder Rights Agreement dated as of
September 22, 1999 between the Company and the Rights Agent
(incorporated by reference to Exhibit 10.18 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 1999).
10.17 Waiver and Amendment of Registration Rights Agreement dated as
of September 14, 2001 by and among the Company and the Initial
Purchasers (incorporated by reference to Exhibit 10.17 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 2001).
10.18 Amended and Restated Restricted Stock Award Plan effective
December 9, 1999 (incorporated by reference to Exhibit 10.18
of the Registrant's Annual Report on Form 10-K for the year
ended October 31, 2000).
10.19 Amended and Restated Stock Option Plan adopted June 28, 2000
(incorporated by reference to Exhibit 10.19 of the
Registrant's Annual Report on Form 10-K for the year ended
October 31, 2000).
10.20 Promissory Note and Stock Pledge Agreement dated July 3, 2002
by Willing L. Biddle in favor of the Registrant.1
10.21 Amended and Restated Restricted Stock Award Plan effective
December 12, 2001 as approved by the Registrant's
stockholders on March 13, 2002. 1
10.22 Amendment to Registration Rights Agreement dated as of
December 31, 2001 by and among the Company and the Remaining
Initial Purchasers.
27
10.23 Letter from Arthur Andersen LLP dated May 20, 2002 regarding a
change in Registrant's Certifying Accountants (incorporated by
reference to Exhibit 16.1 of the Registrant's Current Report
on Form 8-K/A dated May 23, 2002).
(21) Subsidiaries.
------------
21.1 List of Company's subsidiaries
(23) Consents of Experts.
--------------------
23.1 The consent of Ernst & Young LLP to the incorporation by
reference of its report included herein in the Company's
Registration Statements is filed herewith as part of this
report.
28
URSTADT BIDDLE PROPERTIES INC.
Item 14a INDEX TO FINANCIAL STATEMENTS AND
- -------- ----------------------------------
FINANCIAL STATEMENT SCHEDULES
Page
Consolidated Balance Sheets at October 31, 2002 and 2001 30
Consolidated Statements of Income for each of the
three years in the period ended October 31, 2002 31
Consolidated Statements of Cash Flows for each of the
three years in the period ended October 31, 2002 32
Consolidated Statements of Stockholders' Equity
for each of the three years in the period ended October 31, 2002 33
Notes to Consolidated Financial Statements 34-44
Report of Independent Auditors 45
Schedule.
- --------
The following consolidated financial statement schedules of Urstadt Biddle
Properties Inc. are included in Item 14(d):
III Real Estate and Accumulated Depreciation - October 31, 2002 46
IV Mortgage Loans on Real Estate - October 31, 2002 47
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
29
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 31,
--------------- -----------------
ASSETS 2002 2001
---- ----
Real Estate Investments:
Core properties-- at cost, net of accumulated depreciation $252,711 $160,152
Non-core properties - at cost, net of accumulated depreciation 11,944 11,039
Mortgage notes and other receivable 3,447 3,507
----- -----
268,102 174,698
Cash and cash equivalents 46,342 33,747
Restricted cash 514 333
Short-term investments 25,145 -
Tenant receivables, net of allowances 5,695 3,826
Deferred charges, net of accumulated amortization 3,294 3,477
Prepaid expenses and other assets 4,541 2,271
----- -----
Total Assets $353,633 $218,352
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $106,429 $47,115
Accounts payable and accrued expenses 1,021 2,670
Deferred officers' compensation 287 230
Other liabilities 4,218 4,142
----- -----
Total Liabilities 111,955 54,157
------- ------
Minority Interests 7,320 4,365
----- -----
Preferred Stock, par value $.01 per share; 20,000,000 shares authorized; 8.99%
Series B Senior Cumulative Preferred stock, (liquidation preference of
$100 per share); 150,000 and 350,000 shares issued and outstanding in 2002
and 2001, respectively
14,341 33,462
------ ------
Commitments and Contingencies
Stockholders' Equity:
Excess stock, par value $.01 per share; 10,000,000 shares authorized;
none issued and outstanding - -
Common stock, par value $.01 per share; 30,000,000 shares authorized;
6,578,572 and 6,242,139 issued and outstanding shares in 2002 and 2001, respectively 66 62
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
18,449,472 and 9,600,019 issued and outstanding shares in 2002 and 2001, respectively 185 96
Additional paid in capital 254,266 162,763
Cumulative distributions in excess of net income (30,487) (31,654)
Unamortized restricted stock compensation and notes receivable
from officers/stockholders (4,013) (4,899)
------- -------
Total Stockholders' Equity 220,017 126,368
------- -------
Total Liabilities and Stockholders' Equity $353,633 $218,352
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
30
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended October 31,
---------------- --------------- ----------------
2002 2001 2000
---- ---- ----
Revenues
Operating leases $42,206 $34,209 $30,242
Lease termination income 765 1,137 -
Interest and other 1,369 747 767
----- ------ ------
44,340 36,093 31,009
------ ------ ------
Operating Expenses
Property expenses 12,781 11,502 10,413
Interest 5,584 4,456 4,245
Depreciation 7,547 6,697 5,638
Amortization 517 871 669
General and administrative expenses 2,836 2,484 2,152
Directors' fees and expenses 173 144 164
------ ------ ------
29,438 26,154 23,281
------ ------ ------
Operating Income 14,902 9,939 7,728
Equity in Earnings of Unconsolidated Joint Venture - 3,864 245
Minority Interests in Results of Consolidated Joint Ventures (395) (432) (451)
Gains on Sales of Real Estate Investments - 316 1,067
----- ------ -----
Net Income 14,507 13,687 8,589
Preferred Stock Dividends (1,498) (3,147) (3,147)
Excess of Carrying Value Over Cost to Repurchase Preferred Shares 3,071 - -
----- ------- -------
Net Income Applicable to Common and Class A Common Stockholders
$16,080 $10,540 $5,442
======= ======= ======
Basic Earnings per Share:
Common $.80 $.91 $.50
==== ==== ====
Class A Common $.89 $1.01 $.55
==== ===== ====
Weighted Average Number of Shares Outstanding:
Common 6,089 5,881 5,351
===== ===== =====
Class A Common 12,615 5,182 5,059
====== ===== =====
Diluted Earnings Per Share:
Common $.78 $.88 $.49
==== ==== ====
Class A Common $.87 $.97 $.55
==== ==== ====
Weighted Average Number of Shares Outstanding:
Common and Common Equivalent 6,432 6,038 5,433
===== ===== =====
Class A Common and Class A Common Equivalent 13,136 5,606 5,532
====== ===== =====
Dividends Per Share:
Common $.74 $.72 $.70
==== ==== ====
Class A Common $.82 $.80 $.78
==== ==== ====
The accompanying notes to consolidated financial statements are an
integral part of these statements.
31
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended October 31,
---------------- ---------------- ----------------
2002 2001 2000
---- ---- ----
Operating Activities:
Net income $14,507 $13,687 $8,589
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 8,064 7,568 6,307
Restricted stock compensation 942 769 630
Recovery of investment in properties owned
subject to financing leases - 191 1,214
Equity in income of unconsolidated joint venture - (3,864) (245)
Minority interests in results of consolidated joint ventures 395 432 451
Gains on sales of real estate investments - (316) (1,067)
Increase in restricted cash (181) (174) (81)
(Increase) decrease in tenant receivables (1,871) 98 (481)
(Decrease) increase in accounts payable and accrued expenses (1,649) 1,448 (684)
(Increase) decrease in other assets and other liabilities, net (1,675) 1,469 (371)
------- ----- -----
Net Cash Provided by Operating Activities 18,532 21,308 14,262
------ ------ ------
Investing Activities:
Purchase of short term investments (25,145) - -
Acquisitions of properties (34,785) (5,606) (1,627)
Acquisition of minority interests (1,258) (1,013) -
Improvements to properties and deferred charges (2,814) (11,695) (6,642)
Investment in unconsolidated joint venture - (480) (535)
Net proceeds from sales of properties 275 1,216 3,921
Distributions to limited partners of consolidated joint venture (395) (432) (451)
Distributions received from unconsolidated joint venture - 6,544 1,500
Payments to limited partners of unconsolidated joint venture (600) - -
Payments received on mortgage notes and other receivables 62 72 121
Deposits on acquisitions of properties (300) - -
------- ------- ------
Net Cash Used in Investing Activities (64,960) (11,394) (3,713)
-------- -------- -------
Financing Activities:
Sales of additional Common and Class A Common shares 88,523 42,959 2,713
Proceeds from mortgage notes payable and bank loans 17,200 26,250 6,500
Payments on mortgage notes payable and bank loans (17,256) (35,190) (7,861)
Dividends paid - Common and Class A Common shares (14,913) (8,797) (7,712)
Dividends paid - Preferred Stock (1,498) (3,147) (3,147)
Purchases of Common and Class A Common shares - (35) (1,929)
Repurchase of preferred shares (16,050) - -
Repayments of notes from officers 3,017 - -
------ ------ --------
Net Cash Provided by (Used in) Financing Activities 59,023 22,040 (11,436)
------ ------ --------
Net Increase (Decrease) In Cash and Cash Equivalents 12,595 31,954 (887)
Cash and Cash Equivalents at Beginning of Year 33,747 1,793 2,680
------ ----- -----
Cash and Cash Equivalents at End of Year $46,342 $33,747 $1,793
======= ======= ======
The accompanying notes to consolidated financial statements are an
integral part of these statements.
32
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share data)
Unamortized
Common Stock Class A Common Stock Restricted
------------ -------------------- (Cumulative Stock
Outstanding Outstanding Additional Distributions Compensation
Number of Par Number of Par Paid In In Excess Of and Notes
Shares Value Shares Value Capital Net(Income) Receivable Total
--------- ------ ------ ----- -------- ----------- ---------- -----
Balances - October 31, 1999 5,531,845 $55 5,184,039 $52 $120,964 $(31,127) $(1,907) $88,037
Net Income applicable to Common
and Class A common stockholders - - - - - 5,442 - 5,442
Cash dividends paid :
Common Stock ($.70 per share) - - - - - (3,748) - (3,748)
Class A common Stock ($.78
per share) - - - - - (3,964) - (3,964)
Sale of additional shares 64,400 - 256,400 3 2,406 - - 2,409
Sale of additional shares under
dividend reinvestment plan 21,367 - 22,035 - 304 - - 304
Shares issued under restricted
stock plan 48,375 1 48,375 1 700 - (702) -
Amortization of restricted stock
Compensation - - - - - - 630 630
Purchases of shares (108,600) (1) (154,600) (2) (1,926) - - (1,929)
--------- --- --------- --- ------- ------- ------- -------
Balances - October 31, 2000 5,557,387 55 5,356,249 54 122,448 (33,397) (1,979) 87,181
Net Income applicable to Common
and Class A common - - - - - 10,540 - 10,540
stockholders
Cash dividends paid :
Common stock ($.72 per share) - - - - - (4,487) - (4,487)
Class A common stock ($.80
per share) - - - - - (4,310) - (4,310)
Sale of additional shares 200,000 2 4,805,000 48 42,521 - - 42,571
Sale of additional shares under
dividend reinvestment plan 18,652 - 23,257 - 343 - - 343
Shares issued under restricted
stock plan 48,000 - 48,000 - 686 - (686) -
Amortization of restricted stock
Compensation - - - - - - 769 769
Purchases of shares (900) - (2,800) - (35) - (35)
-
Exercises of stock options 419,000 5 24,859 - 3,043 - - 3,048
Note from officer upon exercise
of stock options - - - - - - (3,003) (3,003)
Deemed repurchase of Class A
common Stock - - (654,546) (6) (6,243) - - (6,249)
--------- -- --------- -- ------- ------- ------ -------
Balances - October 31, 2001 6,242,139 62 9,600,019 96 162,763 (31,654) (4,899) 126,368
Net Income applicable to Common
and Class A common - - - - - 16,080 - 16,080
stockholders
Cash dividends paid :
Common stock ($.74 per share) - - - - - (4,750) - (4,750)
Class A common stock ($.82
per share) - - - - - (10,163) - (10,163)
Sales of Class A common shares - - 8,749,222 88 87,835 - - 87,923
Sales of additional shares under
dividend reinvestment plan 14,296 - 19,494 - 364 - - 364
Shares issued under restricted
stock plan 110,375 2 43,425 1 1,577 - (1,580) -
Amortization of restricted stock
compensation - - - - - - 942 942
Exercises of stock options 211,762 2 37,312 - 1,727 - - 1,729
Notes from officers upon exercises
of stock options - - - - - - (1,493) (1,493)
Repayments of notes receivable
from officers - - - - - - 3,017 3,017
--------- --- ---------- ---- -------- --------- -------- --------
Balances - October 31, 2002 6,578,572 $66 18,449,472 $185 $254,266 $(30,487) $(4,013) $220,017
========= === ========== ==== ======== ========= ======== ========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Urstadt Biddle Properties Inc. (Company), a real estate investment trust (REIT),
is engaged in the acquisition, ownership and management of commercial real
estate, primarily neighborhood and community shopping centers in the
northeastern part of the United States. Other assets include office and retail
buildings and industrial properties. The Company's major tenants include
supermarket chains and other retailers who sell basic necessities. At October
31, 2002, the Company owned or had interests in 26 properties containing a total
of 3.0 million square feet of leasable area.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its
wholly owned subsidiaries, and entities in which the Company has the
ability to control the affairs of the venture. Prior to September 2001, the
Company had an investment in an unconsolidated joint venture which was accounted
for by the equity method of accounting. Under the equity method, only the
Company's net investment and proportionate share of income or loss of the
unconsolidated joint venture is reflected in the financial statements. All
significant intercompany transactions and balances have been eliminated in
consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make use of
estimates and assumptions that affect amounts reported in the financial
statements as well as certain disclosures. Actual results could differ from
those estimates.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
Federal Income Taxes
The Company has elected to be treated as a real estate investment trust 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 which is distributed.
The Company believes it qualifies as a REIT and will distribute all of its
taxable income for the fiscal years through 2002 in accordance with the
provisions of the Code. Accordingly, no provision has been made for Federal
income taxes in the accompanying consolidated financial statements.
Depreciation and Amortization
The Company uses the straight-line method for depreciation and amortization.
Core and non-core properties are depreciated over the estimated useful lives of
the properties, which range from 30 to 40 years. Property improvements are
depreciated over the estimated useful lives which range from 10 to 20 years.
Tenant improvements are amortized over the life of the related leases.
Deferred Charges
Deferred charges consist principally of leasing commissions which are amortized
ratably over the life of the tenant leases and financing fees which are
amortized over the terms of the respective agreements. Deferred charges in the
accompanying consolidated balance sheets are shown at cost, net of accumulated
amortization of $1,437,000 and $1,786,000 as of October 31, 2002 and 2001,
respectively.
Real Estate Investment Impairment
The Company reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the asset to aggregate future net cash
flows, undiscounted and without interest, expected to be generated by the
asset. If such assets are considered impaired, the impairment to be recognized
is measured by the amount by which the carrying amount of the assets exceed the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. It is the Company's policy
to reclassify properties as assets to be disposed of upon determination that
such properties will be sold within one year.
34
Capitalization
Acquisition of real estate investments, including brokerage, legal and other
external costs incurred in acquiring new properties are capitalized as incurred.
Additions, renovations and improvements that enhance and/or extend the useful
life of a property are also capitalized. Expenditures for ordinary maintenance,
repairs and improvements that do not materially prolong the normal useful life
of an asset are charged to operations as incurred.
Revenue Recognition
Revenues from operating leases include revenues from core properties and
non-core properties. Rental income is generally recognized based on the terms of
leases entered into with tenants. Minimum rental income from leases with
scheduled rent increases is recognized on a straight-line basis over the lease
term. At October 31, 2002 and 2001, approximately $3,743,000 and $1,970,000 has
been recognized as straight-line rents receivable (representing the current net
cumulative rents recognized prior to when billed and collectible as provided by
the terms of the leases), all of which is included in tenant accounts receivable
in the accompanying consolidated financial statements. Percentage rent is
recognized when a specific tenant's sales breakpoint is achieved. Property
operating cost recoveries from tenants of common area maintenance, real estate
taxes, and other recoverable costs are recognized in the period the related
expenses are incurred. Lease termination fees received by the Company from its
tenants are recognized as income in the period received. Interest income is
recognized as it is earned. Gains and losses on sales of properties are recorded
when the criteria for recognizing such gains or losses under generally accepted
accounting principles have been met.
The Company provides an allowance for doubtful accounts against the portion of
tenant accounts receivable (including straight-line rents receivable) which is
estimated to be uncollectible. Such allowances are reviewed periodically. At
October 31, 2002 and 2001, tenant and other receivables in the accompanying
consolidated balance sheets are shown net of allowances for doubtful accounts of
$1,169,000 and $411,000, respectively.
Cash and Cash Equivalents
The Company considers highly liquid investments with original maturities of 90
days or less when purchased to be cash equivalents.
Restricted Cash
Restricted cash consists of those tenant security deposits which are required to
be held in separate bank accounts.
Short-Term Investments
Short-term investments consists of investments with original maturities of
greater than three months when purchased and are carried at cost plus accrued
interest (which approximates fair value). At October 31, 2002, short-term
investments consist principally of shares of a mutual fund which invests
primarily in fixed income securities with an average duration of between three
and thirteen months.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, short-term investments, rent
receivable, accounts payable, accrued expenses and other assets and liabilities
are reasonable estimates of their fair values because of the short maturities of
these instruments.
The estimated fair value of mortgage notes receivable collateralized by real
property is based on discounting the future cash flows at a year-end risk
adjusted lending rate that the Company would utilize for loans of similar risk
and duration. At October 31, 2002 and 2001, the estimated aggregate fair value
of the mortgage notes receivable was $3,542,000 and $3,594,000, respectively.
The estimated fair value of mortgage notes payable was $118,000,000 and
$49,000,000 at October 31, 2002 and 2001, respectively. The estimated fair value
of mortgage notes payable is based on discounting the future cash flows at a
year-end risk adjusted lending rate currently available to the Company for
issuance of debt with similar terms and remaining maturities.
Although management is not aware of any factors that would significantly affect
the estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and current
estimates of fair value may differ significantly from the amounts presented
herein.
35
Earnings Per Share
The Company calculates basic and diluted earnings per share in accordance with
SFAS No. 128 "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 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):
2002 2001 2000
---- ---- ----
Numerator
Net income applicable to common stockholders - basic $4,880 $5,326 $2,650
Effect of dilutive securities:
Operating partnership units 160 (32) 28
------ ------ ------
Net income applicable to common stockholders - diluted $5,040 $5,294 $2,678
====== ====== ======
Denominator
Denominator for basic EPS-weighted average common shares 6,089 5,881 5,351
Effect of dilutive securities:
Stock options and awards 288 157 82
Operating partnership units 55 - -
----- ----- -----
Denominator for diluted EPS - weighted average common
equivalent shares 6,432 6,038 5,433
===== ===== =====
Numerator
Net income applicable to Class A common stockholders-basic $11,200 $5,214 $2,792
Effect of dilutive securities
Operating partnership units 202 246 246
------- ------ ------
Net income applicable to Class A common stockholders - diluted $11,402 $5,460 $3,038
======= ====== ======
Denominator
Denominator for basic EPS - weighted average Class A common shares 12,615 5,182 5,059
Effect of dilutive securities:
Stock options and awards 211 135 90
Operating partnership units 310 289 383
------ ----- -----
Denominator for diluted EPS - weighted average Class A common
equivalent shares 13,136 5,606 5,532
====== ===== =====
The weighted average Common equivalent shares and Class A common equivalent
shares for the years ended October 31, 2001 and 2000 exclude 54,553 Common and
54,553 Class A Common partnership units which are exchangeable into shares.
These shares were not included in the calculation of diluted EPS because the
effect would be anti-dilutive.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued SFAS No. 144
"Accounting for the Impairment or Disposal of Long Lived Assets" which updates
and clarifies the accounting and reporting for impairment of assets held in use
and to be disposed of. The Statement, among other things, will require the
Company to classify the operations and cash flow of properties to be disposed of
as discontinued operations. The Company will adopt the provisions of the
Statement in fiscal 2003, and does not expect the Statement to have a material
impact on the Company's financial position or results from operations.
In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation-Transition and Disclosure." This statement amends SFAS No. 123 to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation and
amends the disclosure requirements of SFAS No. 123. Adoption of the provisions
of the Statement in fiscal 2003 will not have an impact since the Company will
continue to use the intrinsic value method as set forth in APB No. 25.
36
Segment Reporting
The Company operates in one industry segment, ownership of commercial real
estate properties which are located principally in the northeastern United
States. Management reviews operating and financial data for each property
separately and independently from all other properties when making resource
allocation decisions and measuring performance.
(2) REAL ESTATE INVESTMENTS
The Company's investments in real estate, net of depreciation, were composed of
the following at October 31, 2002 and 2001 (in thousands):
Mortgage Notes
Core Non-core and Other 2002 2001
Properties Properties Receivables Totals Totals
- ---------------------------------------------------------------------------------------------------------
Retail $244,384 $1,920 $3,447 $249,751 $145,289
Office 8,023 8,240 - 16,263 27,071
Industrial - 1,784 - 1,784 2,034
Undeveloped Land 304 - - 304 304
-------- ------- ------ -------- --------
$252,711 $11,944 $3,447 $268,102 $174,698
======== ======= ====== ======== ========
The Company's investments at October 31, 2002, consisted of equity interests in
26 properties, which are located in various regions throughout the United States
and mortgage notes. The Company's primary investment focus is neighborhood and
community shopping centers located in the northeastern United States. These
properties are considered core properties of the Company. The remaining
properties are located outside of the northeastern United States and are
considered non-core properties. As a significant concentration of the Company's
properties are in the northeast, market changes in this region could have an
effect on the Company's leasing efforts and ultimately its overall results of
operations. The following is a summary of the geographic locations of the
Company's investments at October 31, 2002 and 2001 (in thousands):
2002 2001
- -------------------------------------------------------------------- ------------------- ------------------
Northeast $253,432 $160,897
Southeast 1,196 1,200
Midwest 9,048 8,064
Southwest 4,426 4,537
-------- --------
$268,102 $174,698
======== ========
(3) CORE PROPERTIES
The components of core properties were as follows (in thousands):
2002 2001
- ---------------------------------------------------------- ----------------------------- -----------------
Land $53,021 $32,524
Buildings and improvements 236,362 159,650
------- -------
289,383 192,174
Accumulated depreciation (36,672) (32,022)
-------- --------
$252,711 $160,152
======== ========
Space at the Company's core properties is generally leased to various individual
tenants under short and intermediate term leases which are accounted for as
operating leases.
Minimum rental payments on non-cancelable operating leases of the core
properties become due as follows: 2003 - $31,861,000; 2004 - $30,677,000; 2005 -
$28,608,000; 2006 - $26,645,000; 2007 - $24,711,000 and thereafter -
$134,255,000.
Certain of the Company's leases provide for the payment of additional rent based
on a percentage of the tenant's revenues. Such additional percentage rents are
included in operating lease income and were approximately $47,000, $70,000, and
$148,000, in 2002, 2001 and 2000, respectively.
In fiscal 2002 and 2001, the Company received net proceeds of $765,000 and
$1,137,000, respectively, in satisfaction of all claims against former tenants
in negotiated settlements of the tenants lease obligations. The settlement
amounts are reflected in revenues in the accompanying consolidated statements of
income as lease termination income in the years ended October 31, 2002 and 2001.
37
The Company is the general partner in an entity that owns the Eastchester Mall
in Eastchester, New York. The limited partner is entitled to preferential
distributions of cash flow from the property and may put its interest in the
entity to the Company for a fixed number of shares of Common Stock and Class A
Common stock of the Company. The Company, at its option, may redeem the limited
partner's interest for cash. The Company also has an option to purchase the
limited partner's interest after a certain period.
The Company is also the general partner in an entity that owns the Arcadian
Shopping Center in Briarcliff Manor, New York. The limited partners contributed
the property, subject to a $6.3 million first mortgage, in exchange for
partnership units (OPU's) of the entity. The OPU's are exchangeable into an
equivalent number of shares of the Company's Class A Common Stock. The limited
partners are entitled to preferential distributions of cash flow from the
property and may put their partnership interests to the Company for cash or
Class A Common Stock of the Company at a unit price as defined in the
partnership agreement. The Company, at its option, may redeem the limited
partners' interest for cash. The Company also has the option to purchase the
limited partners' interest for cash after a certain period. In fiscal 2001, the
Company redeemed, at net book value, 127,548 OPU's for cash of $1.0 million. At
October 31, 2002 and 2001 there were 255,097 OPU's outstanding.
In June 2002, UB Stamford, LP, a newly formed limited partnership in which the
Company has a 90% general partner interest, acquired the Ridgeway shopping
center, a 360,000 square foot shopping center in Fairfield County, Connecticut
for a total purchase price of $89.99 million, including transaction costs of
$708,000 and the assumption of an existing first mortgage loan on the property
of $57,369,000 at a fixed interest rate of 7.54%. The partnership agreement
provides for the partners to receive an annual cash preference from available
cash of the partnership. Any unpaid preferences accumulate and are paid from
future available cash, if any. The limited partners' cash preferences are paid
after the general partner's preferences are satisfied. The balance of available
cash, if any, is distributed in accordance with the respective partners'
interests. Upon liquidation, proceeds from the sale of partnership assets are to
be distributed in accordance with the respective partners' interests. The
partners are not obligated to make any additional capital contributions to the
partnership. The Company has retained an affiliate of one of the limited
partners to provide management and leasing services to the property at an annual
fee of $125,000 for a period of five years ending in June 2007. The assumption
of the first mortgage loan represents a non-cash financing activity and is
therefore not included in the accompanying 2002 consolidated statement of cash
flows.
The limited partnership interests in the partnerships are reflected in the
accompanying consolidated financial statements as Minority Interests.
In March 2002, the Company acquired a shopping center in Danbury, Connecticut
for $7.0 million subject to a first mortgage loan of $2.0 million at a fixed
interest rate of 8.375%. The assumption of the first mortgage represents a
non-cash financing activity and is therefore not included in the accompanying
2002 consolidated statement of cash flows.
In fiscal 2001, the Company purchased an office property in Greenwich,
Connecticut and a 38,000 square foot shopping center in Westchester County, New
York in separate transactions for a total purchase price of $9.5 million. In
connection with the acquisition of the shopping center, the Company assumed a
first mortgage of $4.2 million. The assumption of the first mortgage represents
a non-cash financing activity and is therefore not included in the accompanying
2001 consolidated statement of cash flows.
In fiscal 2000, the Company purchased one office property for $1.65 million.
(4) NON-CORE PROPERTIES
The Board of Directors has authorized a plan to sell all of the non-core
properties of the Company over a period of several years. At October 31, 2002,
the non-core properties consist of two distribution and service properties, one
office building and one retail property located outside of the Northeast region
of the United States.
The components of non-core properties were as follows (in thousands):
2002 2001
- --------------------------------------------------------------- ---------------------- ---------------------
Land $1,943 $1,493
Buildings and improvements 19,321 17,970
------ ------
21,264 19,463
Accumulated depreciation (9,320) (8,424)
------- -------
$11,944 $11,039
======= =======
Minimum rental payments on non-cancelable operating leases of the non-core
properties become due as follows: 2003 - $4,822,000; 2004 - $4,956,000; 2005 -
$4,497,000; 2006 - $4,572,000; 2007 - $4,284,000 and thereafter $3,695,000.
38
Sales of Properties
In fiscal 2002, the Company sold undeveloped land for a net loss on sale of
$6,200.
In fiscal 2001, the Company sold a non-core property for $100,000. There was no
gain or loss on the sale. The Company also sold undeveloped land for a net gain
on the sale of the property of $316,000.
In fiscal 2000, the Company sold two of its non-core properties for net gains on
the sales of $1,067,000.
The operating income of the properties sold during each of the years ended
October 31, 2002, 2001 and 2000 was less than 1% of the consolidated operating
income in each of the years then ended.
Prior to December 2001, the Company was the sole general partner in Countryside
Square Limited Partnership (the "Partnership"), which owned the Countryside
Square Shopping Center in Clearwater, Florida. Upon the formation of the
Partnership in 1997, the Company contributed the property and the limited
partners contributed 600,000 Common shares of the Company. In 1998, the
Partnership received 600,000 Class A Common shares pursuant to a stock dividend
and in 1999, exchanged 600,000 Common shares with an affiliate for an equivalent
number of Class A Common shares. After the exchange, the Partnership owned
1,200,000 shares of Class A Common stock of the Company. The Company accounted
for its proportionate interest in the Class A Common shares owned by the
Partnership as a deemed repurchase of 545,454 Class A Common shares and reduced
its investment in the unconsolidated joint venture and stockholders' equity in
an amount equal to the fair value of the shares repurchased.
In September 2001, the property was sold by the Partnership. Prior to the sale
of the property, the Company accounted for its interest in the Partnership under
the equity method. Accordingly, through the date of sale in fiscal 2001, the
Company recorded $3,864,000 as its proportionate share of the income of the
joint venture including earnings from the sale of the property. The Company's
equity in earnings of the Partnership was reflected after eliminating its
proportionate share of dividend income in the Class A Common shares of the
Company recorded by the Partnership.
Upon the Partnership's sale of the property, the Company effectively gained
control of the Partnership and as a result, the Partnership's accounts, which
included $1.2 million in notes issued by the purchaser of the property and
1,200,000 shares of the Company's Class A Common stock held by the Partnership,
were thereafter consolidated with the Company. Upon consolidation, the remaining
654,546 shares of Class A Common stock held by the Partnership were retired. In
December 2001, the Partnership was liquidated.
(5) MORTGAGE NOTES AND OTHER RECEIVABLES
The components of the mortgage notes receivable and other receivables at October
31, 2002 and 2001 were as follows (in thousands):
2002 2001
- -------------------------------------------------------------------------------------- ----------- -----------
Remaining principal balance $2,685 $2,786
Unamortized discounts to reflect market interest rates
at time of acceptance of notes (434) (479)
----- ------
$2,251 $2,307
Promissory note receivable 1,196 1,200
----- -----
$3,447 $3,507
Mortgage notes receivable consist of two fixed rate mortgages with contractual
interest rates of 9% and 12%. The promissory note is due in 2004, bears interest
at 12.5% and is collateralized by a security interest in the ownership interest
of the purchaser of the Clearwater, Florida property - See Note 4.
At October 31, 2002, principal payments on the mortgage notes receivable and
promissory note become due as follows: 2003 - $163,000; 2004 - $1,261,000; 2005
- - $130,000; 2006 - $142,000; 2007 - $156,000 and thereafter - $2,029,000.
(6) MORTGAGE NOTES PAYABLE AND LINES OF CREDIT
At October 31, 2002, the Company had ten non-recourse first mortgage notes
payable totaling $106,429,000 ($47,115,000 at October 31, 2001) due in
installments over various terms extending to fiscal year 2011 at fixed rates of
interest ranging from 6.29% to 8.375%. The mortgage notes payable are
collateralized by real estate investments having a net carrying value of
approximately $170,000,000 as of October 31, 2002.
39
Scheduled principal payments during the next five years and thereafter are as
follows: 2003 - $1,840,000; 2004 - $1,985,000; 2005 - $2,139,000; 2006 -
$8,928,000; 2007 - $11,225,000 and thereafter - $80,312,000.
At October 31, 2002, the Company had a secured revolving line of credit with a
bank which allows for borrowings up to $18.75 million. The agreement which
expires in October 2005 is secured by first mortgage liens on two properties.
Interest on outstanding borrowings is at a variable rate of prime + 1/2% or
LIBOR + 1.5%. The Company can elect a fixed rate option at any time prior to the
last year of the agreement. The agreement requires the Company to maintain
certain debt service coverage ratios during its term and provides for a
permanent reduction in the revolving credit loan amount of $625,000 annually. At
October 31, 2002 and 2001, the Company had no outstanding borrowings under this
revolving credit agreement. The Company pays annual fees of 1/4% on the unused
portion of this credit facility.
At October 31, 2002 and 2001, the Company had an outstanding letter of credit of
$139,295 which expires in fiscal 2003.
The Company also has a $20 million unsecured line of credit arrangement with the
same bank. The line of credit expires in fiscal 2003 and, is available to
acquire real estate, refinance indebtedness and for working capital needs.
Extensions of credit under the arrangement are at the bank's discretion and
subject to the bank's satisfaction of certain conditions. Outstanding borrowings
bear interest at the prime rate + 1/2% or LIBOR + 2 1/2%. The Company pays an
annual fee of 1/4% on unused amounts. There were no borrowings outstanding under
this line of credit at October 31, 2002 and 2001.
Interest paid for the years ended October 31, 2002, 2001, and 2000 was
$5,584,000, $4,456,000 and $4,245,000, respectively.
(7) PREFERRED STOCK
The Series B Preferred Stock has no stated maturity, is not subject to any
sinking fund or mandatory redemption and is not convertible into other
securities or property of the Company. On or after January 8, 2008, the Series B
Preferred Stock may be redeemed by the Company at its option, in whole or in
part, at a redemption price of $100 per share, plus all accrued dividends. Upon
a change in control of the Company (as defined), (i) each holder of Series B
Preferred Stock shall have the right, at such holder's option, to require the
Company to repurchase all or any part of such holder's Series B Preferred Stock
for cash at a repurchase price of $100 per share, plus all accrued and unpaid
dividends, and (ii) the Company shall have the right, at the Company's option,
to redeem all or any part of the Series B Preferred Stock at (a) prior to
January 8, 2008, the Make-Whole Price (as defined) and (b) on or subsequent to
January 8, 2008, the redemption price of $100 per share, plus all accrued and
unpaid dividends. Holders of the Series B Preferred Stock are entitled to
receive cumulative preferential cash dividends equal to 8.99% per annum, payable
quarterly in arrears and subject to adjustments under certain circumstances.
The Series B Preferred Stock contains covenants which require the Company to
maintain certain financial coverages relating to fixed charge and capitalization
ratios. Shares of the Series B Preferred Stock are non-voting; however, under
certain circumstances (relating to non-payment of dividends or failure to comply
with the financial covenants) the preferred stockholders will be entitled to
elect two directors. The Company was in compliance with such covenants at
October 31, 2002 and 2001.
In fiscal 2002, the Company repurchased 200,000 shares of its Series B Preferred
Stock for a purchase price of $16,050,000 in a negotiated transaction with a
holder of the preferred shares. The Company has recorded the excess of the
carrying value over the cost to repurchase the preferred shares as an increase
in net income applicable to Common and Class A Common stockholders.
(8) STOCKHOLDERS' EQUITY
In fiscal 2002, the Company completed a secondary offering of 8,050,000 shares
of its Class A Common Stock in an underwritten public offering. The net proceeds
to the Company (after deducting underwriting fees and expenses) were
$81,854,000. In November 2001, the Company also sold 699,222 shares to its
underwriters to cover over allotments in connection with the Company's secondary
stock offering of 4,800,000 shares in fiscal 2001. Net proceeds to the Company
amounted to $6,069,000.
In fiscal 2001, the Company sold 4,800,000 shares of its Class A Common Stock in
an underwritten public offering. The net proceeds to the Company (after
deducting underwriting fees and expenses) were $41,136,000. The Company also
sold 200,000 shares of Common Stock and 5,000 shares of Class A Common Stock for
total proceeds of $1,435,000 in a private placement offering with two entities
controlled by an officer of the Company.
40
Underwriting commissions and costs incurred in connection with the Company's
stock offerings are reflected as a reduction of additional paid in capital.
In fiscal 1998, the Board of Directors declared and paid a special stock
dividend on the Company's Common Stock consisting of one share of a newly
created class of Class A Common Stock, par value $.01 per share, for each share
of the Company's Common Stock. The Class A Common Stock entitles the holder to
1/20 of one vote per share. Each share of Common Stock and Class A Common Stock
have identical rights with respect to dividends except that each share of Class
A Common Stock will receive not less than 110% of the regular quarterly
dividends paid on each share of Common Stock.
The Company has a stockholders rights agreement, which expires on November 12,
2008. The rights are not currently exercisable. When they are exercisable, the
holder will be entitled to purchase from the Company one one-hundredth of a
share of a newly-established Series A Participating Preferred Stock at a price
of $65 per one one-hundredth of a preferred share, subject to certain
adjustments. The distribution date for the rights will occur 10 days after a
person or group either acquires or obtains the right to acquire 10% ("Acquiring
Person") or more of the combined voting power of the Company's Common Shares, or
announces an offer the consummation of which would result in such person or
group owning 30% or more of the then outstanding Common Shares. Thereafter,
shareholders other than the Acquiring Person will be entitled to purchase
original common shares of the Company having a value equal to two times the
exercise price of the right.
If the Company is involved in a merger or other business combination at any time
after the rights become exercisable, and the Company is not the surviving
corporation or 50% or more of the Company assets are sold or transferred, the
rights agreement provides that the holder other than the Acquiring Person will
be entitled to purchase a number of shares of common stock of the acquiring
company having a value equal to two times the exercise price of each right.
The Company's articles of incorporation provide that if any person acquires more
than 7.5% of the outstanding shares of any class of stock, except, among other
reasons, as approved by the Board of Directors, such shares in excess of this
limit shall automatically be exchanged for an equal number of shares of Excess
Stock. Excess Stock have limited rights, may not be voted and are not entitled
to any dividends.
In fiscal 1996, the Company's Board of Directors authorized a program to
purchase up to 500,000 shares each of the Company's Common Stock and Class A
Common Stock. As of October 31, 2002, the Company purchased and retired a total
of 224,500 Common shares and 214,100 Class A Common shares under this program
(none in 2002).
(9) STOCK OPTION AND OTHER BENEFIT PLANS
The Company has a stock option plan whereby 824,093 Common shares and 743,003
Class A Common shares were reserved for issuance to key employees and
non-employee Directors of the Company. Options are granted at fair market value
on the date of the grant, have a duration of ten years from the date of grant
and are generally exercisable in installments over a maximum period of four
years from the date of grant.
41
A summary of stock option transactions during the periods covered by these
financial statements is as follows:
Year ended October 31 2002 2001 2000
- --------------------- ----------------------- ------------------------- --------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Exercise of Exercise of Exercise
Common Stock: Shares Prices Shares Prices Shares Prices
- ------------- ------ ------ ------ ------ ------ ------
Balance at beginning of period 315,060 $7.00 739,958 $6.91 736,843 $7.04
Granted --- --- --- --- 593,000 $6.81
Exercised (211,762) $6.88 (419,000) $6.83 --- ---
Canceled/Forfeited (11,728) $7.03 (5,898) $7.54 (589,885) $6.91
-------- ------- ---------
Balance at end of period 91,570 $7.50 315,060 $7.00 739,958 $6.91
Exercisable 91,570 222,060 146,958
Class A Common Stock:
Balance at beginning of period 314,605 $7.50 739,464 $7.48 732,482 $7.10
Granted --- --- --- --- 593,000 $7.13
Exercised (37,312) $7.26 (24,859) $7.38 --- ---
Canceled/Forfeited (210,483) $7.16 (400,000) $7.13 (586,018) $6.96
--------- - --------- ---------
Balance at end of period 66,810 $7.71 314,605 $7.50 739,464 $7.48
Exercisable 66,810 221,605 146,464
Weighted average fair value per
share of an option granted
during the year --- --- $0.18
- Common Stock
- Class A Common Stock --- --- $0.12
At October 31, 2002, exercise prices of shares of Common Stock and Class A
Common Stock under option ranged from $6.60 to $9.03, for the Common Stock and
$6.65 to $9.09, for the Class A Common Stock. Option expiration dates range for
both classes of stock from April 2003 through April 1, 2009 and the weighted
average remaining contractual life of these options is 3.5 years.
As of October 31, 2002, outstanding options to acquire approximately 44,000
shares each of Common Stock and Class A Common stock permit the optionee to
elect to receive either shares of Common stock, Class A Common Stock or a
combination of both. Upon an election to exercise shares of a class of common
stock by the optionee, a comparable number of shares of the class of common
stock not elected by such optionee is deemed cancelled and no longer available
for future grants.
The fair value of the Company's stock options granted in fiscal 2000 were
estimated as of the date of grant using a Black-Scholes option pricing model
using the following assumptions (there were no grants in 2002 and 2001):
Year Ended October 31, 2000
- ------------------------------------------------------------- -----------------------------------------------------------
Risk-free interest rate 6.17%
Expected dividend yields 9.8%-10.9%
Expected volatility 15.1%
Weighted average option life 10 Years
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation" ("SFAS
123"). Accordingly, no compensation expense has been recognized for stock
options granted under the plan. Had compensation cost for stock options granted
been determined based on the fair value on the grant date consistent with the
provisions of SFAS 123, the effect on the Company's net income and earnings per
share in each of the three years ended October 31, 2002 would have been
immaterial.
42
Certain officers of the Company exercised stock options to purchase shares of
Common Stock and Class A Common Stock. In connection with the share exercises,
the officers executed full recourse promissory notes in favor of the Company for
the purchase price of the shares. In October 2002, an officer prepaid $3,017,000
in outstanding stock loans. At October 31, 2002, notes from officers totaled
$1,746,000 ($3,270,000 at October 31, 2001). The notes have 10 year terms and
bear fixed rates of interest ranging from 6.8% to 8%. The shares have been
pledged as additional collateral for the notes. Interest is payable quarterly.
The exercise of the stock options and the issuance of the notes from officers
represent non-cash financing activities and are therefore not included in the
accompanying consolidated statements of cash flows.
The Company has a restricted stock plan for key employees and directors of the
Company. The plan, which was amended in 2002, authorizes grants of restricted
stock of up to 1,050,000 shares (350,000 shares each of Common Stock and Class A
Common Stock and 350,000 shares which, at the discretion of the Company's
compensation committee, may be awarded in any combination of Common Stock or
Class A Stock). As of October 31, 2002, the Company has awarded 350,000 shares
of Common Stock and 186,300 shares of Class A Common Stock to participants as an
incentive for future services. The shares vest after five years (3,500 shares
each of Common Stock and Class A Common Stock were vested at October 31, 2002
(none at October 31, 2001)). Dividends on vested and non-vested shares are paid
as declared. The market value of shares awarded has been recorded as unamortized
restricted stock compensation and is shown as a separate component of
stockholders' equity. Unamortized restricted stock compensation is being
amortized to expense over the vesting period. For the years ended October 31,
2002, 2001 and 2000 amounts charged to expense totaled $942,000, $769,000 and
$630,000, respectively.
The Company has a profit sharing and savings plan (the "401K Plan") which
permits all eligible employees to defer a portion of their compensation in
accordance with the Internal Revenue Code. Under the 401K Plan, the Company may
make discretionary contributions on behalf of eligible employees. For the years
ended October 31, 2002, 2001 and 2000, the Company made contributions to the
401K Plan of $93,000, $88,000 and $95,000, respectively. The Company also has an
Excess Benefits and Deferred Compensation Plan which allows eligible employees
to defer benefits in excess of amounts provided under the Company's 401K Plan
and a portion of the employees current compensation.
(10) PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited pro forma financial information set forth below is based upon the
Company's historical consolidated statements of income for the year ended
October 31, 2002 and 2001 adjusted to give effect to the acquisition of the
Ridgeway shopping center (see Note 3) as though it was completed on November 1,
2000.
The unaudited pro forma financial information is presented for informational
purposes only and may not be indicative of what actual results of operations
would have been had the transaction occurred as of November 1, 2000. Unaudited
pro forma amounts in thousands are as follows (except per share data):
Year Ended October 31,
2002 2001
---- ----
Revenues: $50,066 $46,717
Net income applicable to Common and Class A Common Stockholders: $16,191 $9,843
Earnings per share:
Basic:
Common $.81 $.85
Class A Common $.89 $.94
Diluted:
Common $.79 $.82
Class A Common $.87 $.91
43
(11) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited quarterly results of operations for the years ended October 31,
2002 and 2001 are as follows (in thousands, except per share data):
Year Ended October 31, 2002 Year Ended October 31, 2001
--------------------------- ---------------------------
Quarter Ended Quarter Ended
------------- -------------
Jan 31 Apr 30 July 31 Oct 31 Jan 31 Apr 30 July 31 Oct 31
------ ------ ------- ------ ------ ------ ------- ------
Revenues $10,014 $9,971 $11,223 $13,132 $8,281 $8,702 $9,983 $9,127
======= ====== ======= ======= ====== ====== ====== ======
Net Income (1) $3,508 $3,368 $3,295 $4,336 $1,932 $2,276 $3,211 $6,268
Preferred Stock Dividends (487) (337) (337) (337) (786) (787) (787) (787)
Excess of Carrying Value over
cost of Preferred Shares
Repurchased 3,071 - - - - - - -
----- ------ ------ ------ ------ ------ ------ ------
Net Income Applicable to
Common and Class A
Common Stockholders $6,092 $3,031 $2,958 $3,999 $1,146 $1,489 $2,424 $5,481
====== ====== ====== ====== ====== ====== ====== ======
Basic Earnings per Share:
Common $.36 $.18 $.15 $.15 $.10 $.13 $.21 $.47
Class A Common $.40 $.20 $.17 $.17 $.11 $.14 $.24 $.52
Diluted Earnings per Share:
Common $.35 $.17 $.15 $.15 $.10 $.12 $.21 $.45
Class A Common $.38 $.19 $.16 $.17 $.11 $.14 $.23 $.49
(1) Quarter ended October 31, 2001 includes a gain on sale of real estate
investments of $316 and the Company's proportionate share of the earnings of
an unconsolidated joint venture of $3,884.
(12) SUBSEQUENT EVENTS, COMMITMENTS AND CONTINGENCIES
On December 23 2002, the Company acquired the Westchester Pavilion Shopping
Center in White Plains, New York, a 185,000 square foot shopping center for
$39.9 million in an all cash transaction.
On December 20 2002, the Company acquired the Orange Meadows Shopping Center in
Orange, Connecticut, a 78,000 square foot retail property for $11.2 million in
an all cash transaction.
The Company has also contracted to purchase two retail properties totaling
169,000 square feet under separate agreements for an aggregate purchase price of
approximately $33 million.
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.
44
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of Urstadt Biddle Properties Inc.:
We have audited the accompanying consolidated balance sheet of Urstadt Biddle
Properties Inc. (the "Company") as of October 31, 2002, and the related
consolidated statements of income, cash flows and stockholders' equity for the
year then ended. Our audits also included the financial statement schedules
listed in the Index at Item 14(a). These financial statements and schedules are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audit. The
financial statements of Urstadt Biddle Properties Inc. as of October 31, 2001
and for each of the two years in the period October 31, 2001, were audited by
other auditors who have ceased operations. Those auditors expressed an
unqualified opinion on those financial statements in their report dated December
12, 2001.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Urstadt Biddle
Properties Inc. at October 31, 2002 and the consolidated results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
New York, New York
December 11, 2002, except for the
first two paragraphs in Note 12
as to which the date is
December 23, 2002
45
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 2002
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(In thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F COL.G/H COL.I
- -----------------------------------------------------------------------------------------------------------------------------------
Cost Capitalized Life on which
Initial Subsequent depreciation
Cost to Company to Acquisition Carried at Close of Period in latest
--------------- --------------------- --------------------------------- income
Accumulated Date statement is
Description Building & Carrying Building & Building & Depreciation constructed computed
and Location Encumbrances Land Improvements Costs Improvements Land Improvements TOTAL (Note(b)) Acquired (Note(c))
-------------- ------------ ---- ------------ ----- ------------ ---- ------------ ----- --------- --------- -------
Real Estate Subject to Operating Leases (Note (a)):
Office Buildings:
Greenwich, CT ** - $708 $1,641 $ - $26 $708 $1,667 $2,375 $ 64 2001 31.5
Greenwich, CT ** - 488 1,139 - 31 488 1,170 1,658 69 2000 31.5
Greenwich, CT ** - 570 2,359 - 180 570 2,539 3,109 291 1998 31.5
Greenwich, CT ** - 199 795 - 63 199 858 1,057 148 1993 31.5
Greenwich, CT ** - 111 444 - 22 111 466 577 182
Southfield, MI** - 1,000 10,280 - 3,900 1,000 14,180 15,180 6,941 1983 35.0
----- ----- ------ --- ----- ----- ------ ------ -----
5,907 3,076 16,658 - 4,222 3,076 20,880 23,956 7,695
----- ----- ------ --- ----- ----- ------ ------ -----
Shopping Centers:
Stamford, CT 57,056 17,998 72,056 - - 17,998 72,056 90,054 769 2002 39.0
Danbury, CT 1,979 2,468 4,584 - - 2,468 4,584 7,052 78 2002 39.0
Briarcliff, NY 4,045 2,222 5,185 - 9 2,222 5,194 7,416 166 2001 40.0
Somers, NY 6,212 1,834 7,383 - 27 1,834 7,410 9,244 744 1999 31.5
Briarcliff, NY 5,705 2,300 9,708 - 1,322 2,300 11,030 13,330 1,128 1998 40.0
Ridgefield, CT - 900 3,793 - 588 900 4,381 5,281 611 1998 40.0
Darien, CT 14,189 4,260 17,192 - 530 4,260 17,722 21,982 1,959 1998 40.0
Eastchester, NY 4,603 1,500 6,128 - 664 1,500 6,792 8,292 775 1997 31.0
Tempe, AZ - 493 2,284 - 1,079 493 3,363 3,856 1,936 1996 40.0
Danbury, CT * - 3,850 15,811 - 4,091 3,850 19,902 23,752 3,615 1995 31.5
Carmel, NY 4,920 1,488 5,973 - 1,830 1,488 7,803 9,291 1,503 1995 31.5
Farmingdale, NY - 1,027 4,174 - 150 1,027 4,324 5,351 1,287 1993 31.5
Meriden, CT - 5,000 20,309 - 6,019 5,000 26,328 31,328 6,695 1993 31.5
Somers, NY 1,813 821 2,600 - 2 821 2,602 3,423 695 1992 31.5
Wayne, NJ * - 2,492 9,966 - 385 2,492 10,351 12,843 2,666 1992 31.0
Newington, NH - 728 1,997 - 4,278 728 6,275 7,003 3,316 1979 40.0
Springfield, MA - 1,372 3,655 307 15,531 1,679 19,186 20,865 9,358 1970 40.0
------ ----- ------ --- ----- ----- ------ ------ -----
100,522 50,753 192,798 307 36,505 51,060 229,303 280,363 37,301
------ ------ ------- --- ------ ------ ------- ------- ------
Industrial Distribution Center
Dallas, TX *** - 216 844 - - 216 844 1,060 253 1970 40.0
St.Louis,MO*** - 232 933 - - 232 933 1,165 192 1970 40.0
--- --- ----- --- --- --- ----- ----- ---
- 448 1,777 - - 448 1.777 2,225 445
--- --- ----- --- --- --- ----- ----- ---
Mixed Use Facility: Retail/Office:
Briarcliff, NY - 380 1,531 - 2,191 380 3,722 4,102 552 1999 40.0
--- --- ----- --- ----- --- ----- ----- -----
- 380 1,531 - 2,191 380 3,722 4,102 552
--- --- ----- --- ----- --- ----- ------ -----
Total $106,429 $54,657 $212,764 $307 $42,918 $54,964 $255,682 $310,646 $45,993
======= ======= ======== === ======= ======= ======== ======== =======
* Properties secure a $18.75 million credit line. At October 31, 2002 there were
no outstanding borrowings.
**Properties are cross collateralized for a mortgage in the amount of $5,907
at October 31, 2002.
46
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31, 2002
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(In thousands)
- ---------------------------------------------------------------------- ------------ ------------ ------------
NOTES: 2002 2001 2000
---- ---- ----
(a) RECONCILIATION OF REAL ESTATE -
OWNED SUBJECT TO OPERATING LEASES
Balance at beginning of year $211,636 $192,233 $188,467
Property improvements during the year 2,406 10,167 5,568
Property acquired during the year 98,867 9,758 1,627
Property sold during the year (275) (3,213)
(800)
Property reclassed from financing leases --- 2,252 ---
Property assets fully written off (1,988) (1,974) (216)
------- ------- -----
Balance at end of year $310,646 $211,636 $192,233
======== ======== ========
(b) RECONCILIATION OF ACCUMULATED DEPRECIATION
Balance at beginning of year $40,446 $35,768 $30,735
Provision during the year charged to income 7,547 6,698 5,638
Property sold during the year --- (358)
---
Property assets fully written off (2,000) (2,020) (247)
------- ------- -----
Balance at end of year $45,993 $40,446 $35,768
======= ======= =======
(c) Tenant improvement costs are depreciated over the life of the related
leases, which range from 5 to 20 years.
(d) The aggregate cost basis for Federal income tax purposes at October 31, 2002
is $324,406.
47
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 2002
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
(In thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E COL. F
- -----------------------------------------------------------------------------------------------------------------------------------
Remaining Face
Interest Rate Amount of Carrying Amount
------------- Final Mortgages of Mortgage
Maturity (Note (b)) (Note (a))
Description Coupon Effective Date Periodic Payment Terms (In Thousands) (In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
I. FIRST MORTGAGE LOANS ON BUSINESS PROPERTIES (Notes (c) and (d)):
- --------------------------------------------------------------------
Retail Store:
Erie, PA 9% 14% 1-Jul-13 Payable in monthly installments of
Principal and Interest of $10,787. $891 $720
Retail Store:
Riverside, CA 9% 12% 15-Jan-13 Payable in quarterly installments of
Principal and Interest of $54,313. 1,794 1,531
----------------------
Total First Mortgage Loans $2,685 $2,251
----------------------
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
URSTADT BIDDLE PROPERTIES INC.
By: /S/ Charles J Urstadt
----------------------------------
Charles J. Urstadt
Chairman and Chief Executive Officer
Dated: January 29, 2003
49
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
/S/ Charles J. Urstadt January 29, 2003
- ------------------------------
Charles J. Urstadt
Chairman and Director
(Principal Executive Officer)
/S/ Willing L. Biddle January 29, 2003
- ---------------------------
Willing L. Biddle
President and Director
/S/ James R. Moore January 29, 2003
- --------------------------
James R. Moore
Executive Vice President -
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
/S/ E. Virgil Conway January 29, 2003
- ---------------------------
E. Virgil Conway
Director
/S/ Robert R. Douglass January 29, 2003
- --------------------------
Robert R. Douglass
Director
/S/ Peter Herrick January 29, 2003
- -------------------------------
Peter Herrick
Director
/S/ George H.C. Lawrence January 29, 2003
- ------------------------
George H. C. Lawrence
Director
/S/ Charles D. Urstadt January 29, 2003
- -----------------------------
Charles D. Urstadt
Director
/S/ George J. Vojta January 29, 2003
- --------------------------------
George J. Vojta
Director
50
Certification
I, Charles J. Urstadt, certify that:
1. I have reviewed this annual report on Form 10-K of Urstadt Biddle Properties
Inc;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and
procedures 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 annual report is being prepared;
b) evaluated the effectiveness of the
registrant's disclosure controls and
procedures as of a date within 90 days
before the filing date of this annual report
(the "Evaluation Date"); and
c) presented in this annual report our
conclusions about the effectiveness of the
disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, 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 in the design
or operation of internal controls which
could adversely affect the registrant's
ability to record, process, summarize and
report financial data and have identified
for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that
involves management or other employees who
have a significant role in the registrant's
internal controls;
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: January 28, 2003
/s/ Charles J. Urstadt
-------------------------
Charles J. Urstadt
Chairman and
Chief Executive Officer
51
Certification
I, James R. Moore, certify that:
1. I have reviewed this annual report on Form 10-K of Urstadt Biddle Properties
Inc;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements and other financial
information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and
procedures 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 annual report is being prepared;
b) evaluated the effectiveness of the
registrant's disclosure controls and
procedures as of a date within 90 days
before the filing date of this annual report
(the "Evaluation Date"); and
c) presented in this annual report our
conclusions about the effectiveness of the
disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, 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 in the design
or operation of internal controls which
could adversely affect the registrant's
ability to record, process, summarize and
report financial data and have identified
for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that
involves management or other employees who
have a significant role in the registrant's
internal controls;
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: January 28, 2003
/s/ James R. Moore
-------------------------
James R. Moore
Executive Vice President and
Chief Financial Officer
52
EXHIBIT 10.20
PROMISSORY NOTE
$1,314,812.50 Dated: July 2, 2002
- -------------
FOR VALUE RECEIVED, the undersigned hereby promises to pay to Urstadt
Biddle Properties Inc., (the "Company") or order, on July 2, 2012 or upon
acceleration or extension of the maturity hereof as provided below, the sum of
One Million Three Hundred Fourteen Thousand Eight Hundred Twelve and 50/100
Dollars ($1,314,812.50) with interest from the date hereof, computed on the
basis of a 365-day year, on the principal amount hereof from time to time unpaid
at a per annum rate of six and 78/100 percent (6.78%); and with interest on
overdue principal and, to the extent permitted by applicable law, on overdue
installments of interest at a rate which shall at all times be equal to the
interest rate then applicable on this Note (as set forth above) plus 1/2% per
annum. Said interest shall be payable quarterly on March 31, June 30, September
30 and December 31 of each year, except that all accrued interest shall be paid
in full at the stated or accelerated or extended maturity hereof or upon
prepayment in full hereof.
All payments hereunder shall be made at the principal office of Urstadt
Biddle Properties Inc. in Greenwich, Connecticut or as otherwise directed from
time to time in writing by the Company.
The principal amount of this Note is prepayable at any time, in whole
or in part, without premium or penalty, provided that all prepayments hereof
shall be in amounts of not less than $10,000 or, if less, such amount as is
necessary to prepay in full the then outstanding principal amount of this Note.
Upon the occurrence of any of the following events ("Events of
Default"), the entire outstanding principal amount hereof and all interest
accrued thereon shall, except as provided in the following paragraph, become
immediately due and payable:
(i) Failure by the maker hereof to pay principal of or interest on this Note
when such payment is due, and for a period of five business days thereafter; or
(ii) The employment of the maker hereof by the Company is terminated for any
reason, voluntarily or involuntarily, by such maker or by the Company; or
53
(iii) The filing of a petition in bankruptcy (or commencement of a bankruptcy or
similar proceeding) by or against the maker hereof under any applicable
bankruptcy, insolvency, reorganization or similar law now or hereafter in
effect.
In the event that the employment of the maker hereof by the Company is
terminated by such maker or by the Company for any reason other than the maker's
dishonesty, the maturity of this Note shall be extended, subject to acceleration
as provided in subparagraphs (i) and (iii) above, to the date which is seven (7)
months after the date on which the maker's employment by the Company is
terminated; and if the employment of the maker hereof is so terminated within
one year following a Change of Control (as that term is defined in the Stock
Option Plan of the Company, as from time to time in effect), the maturity of
this Note shall be extended, subject to acceleration as provided in
subparagraphs (i) and (iii) above, to the earlier of (a) that date which is one
year and 31 days after the date of such termination or (b) the third anniversary
of the date of this Note.
This Note is entitled to the benefits and security of a certain Stock
Pledge Agreement of even date herewith, as from time to time in effect, between
the maker hereof and the Company.
This Note shall be governed by and construed in accordance with the
laws of The State of New York.
The parties hereto, including the undersigned maker and all guarantors
and endorsers, hereby waive presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance and
enforcement of this Note, and assent to extensions of time of payment or
forbearance or other indulgence without notice.
/S/Willing L. Biddle
-----------------------------
Willing L. Biddle
Witnessed: /s/Thomas D. Myers
----------------------------------
54
EXHIBIT 10.20
STOCK PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of July 2, 2002 (this "Agreement") by and between
Willing L. Biddle ("the Pledgor"), and Urstadt Biddle Properties Inc. as Pledgee
(the "Company").
WITNESSETH:
WHEREAS, the Pledgor is this day borrowing One Million Three Hundred Fourteen
Thousand Eight Hundred Twelve and 50/100 Dollars ($1,314,812.50) from the
Company for the purpose of funding the exercise price of the Pledgor's option(s)
to purchase One Hundred Ninety-three Thousand (193,000) Common Shares, par value
$.01 per share of the Company ("Common Shares"), in consideration for which the
Pledgor is delivering to the Company a promissory note of even date herewith, as
from time to time in effect, in the original principal amount of $1,314,812.50
(the "Note"); and
WHEREAS, as an inducement to the Company to accept the Note, the Pledgor has
agreed to secure the due and punctual performance of the Pledgor's obligations
under the Note by a pledge of 193,000 Common Shares of the Company (the "Pledged
Stock");
NOW, THEREFORE, the parties hereto in consideration of these premises, hereby
agree as follows:
1. Pledge. As security for the Secured Obligations described in Section 2 below,
the Pledgor hereby irrevocably mortgages, pledges and assigns to the Company and
creates in the Company a security interest in all the right, title and interest
which the Pledgor now has or may hereafter have in the Pledged Stock and the
proceeds and products thereof (all of which shall be hereinafter referred to as
the "Security"). Simultaneously herewith, the Pledgor is delivering to the
Company certificates representing the Pledged Stock, which certificates have
been duly endorsed in blank or accompanied by stock powers executed in blank.
2. Secured Obligations. This Agreement and the Security from time to time held
hereunder shall secure the due and punctual payment by the Pledgor of principal
of and interest on the Note; and the due and punctual payment and performance of
any and all other obligations of the Pledgor under the Note or any other
agreement or instrument executed and delivered pursuant thereto or in connection
therewith.
55
3. Stock Adjustments, Warrants, Etc. In the event that during the term of this
Agreement, any stock dividend, reclassification, stock split, readjustment,
warrant, option or right to acquire shares is issued by the Company or made with
respect to the Security or any part thereof, the Pledgor agrees that all such
new, substituted or additional Common Shares, Class A Common Shares or other
securities received by the Pledgor with respect to the Security shall be
promptly delivered to and held by the Company under the terms of this Agreement
in the same manner as the Security originally pledged hereunder and such shares
or other securities shall thereupon be included in the term "Security" as
defined herein.
4. Representations. The Pledgor hereby represents and warrants that (i) there
are no restrictions on the transfer of the Security; (ii) the Pledgor is the
sole owner of the Security and has the unqualified right to transfer, pledge and
assign the Security to the Company; and (iii) there are no outstanding liens,
encumbrances or claims to the Security.
5. Voting Rights, Dividends, Etc. Unless and until an Event of Default (as
defined in the Note) shall have occurred, the Pledgor shall have the right to
vote the Security on all questions for all purposes not inconsistent with the
terms of this Agreement or the Note, and the Company, if so requested, will
execute appropriate revocable proxies therefor. Unless and until such an Event
of Default shall have occurred, the Pledgor shall be entitled to receive and
retain for the Pledgor's own account any and all dividends (other than stock or
liquidating dividends) at any time and from time to time declared upon the
Security. Upon the occurrence of any Event of Default, the Company shall
thereafter be entitled to exercise all voting rights pertaining to the Security,
and all proxies theretofore executed by the Pledgor shall terminate and
thereafter be of no effect whatsoever, and the Company shall be entitled to
receive and retain any and all dividends at any time declared upon any of the
Security and to hold such dividends as part of the Security or apply them in its
sole discretion.
6. Default. Upon the occurrence of any Event of Default or at any time or times
thereafter, the Company shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code and shall have full power and authority
to sell or otherwise dispose of the Security or any part thereof. Any such sale
or other disposition, subject to the provisions of applicable law, may be by
public or private proceedings and may be made by one or more contracts, as a
unit or in parcels, at such time and place, by such method, in such manner and
on such terms as the Company may determine. Except as required by law, such sale
or other disposition may be made without advertisement or notice of any kind to
any person. Where reasonable notification of the time or place of such sale or
other disposition is required by law, such requirement shall be met if such
notice is mailed, postage prepaid, at least 7 days before the time of such sale
or other disposition to each person entitled thereto at each such person's last
address known to the Company. The Company or any holder of the obligations
secured hereby may buy any or all of the Security upon any public sale thereof.
After deducting all costs and expenses of collection, custody, sale or other
disposition or delivery (including legal costs and reasonable attorneys' fees)
and all other charges due against the Security, the residue of the proceeds of
any such sale or other disposition shall be applied to the payment of the Note
and any surplus shall be returned to the Pledgor.
56
7. Payment of Taxes, Charges, Etc. The Company may discharge any taxes, charges,
assessments, security interests, liens or other encumbrances upon the Security
or otherwise protect the value thereof, and all such expenditures incurred by
the Company shall become payable by the Pledgor to the Company upon demand and
shall be secured by the Security.
8. Duties with Respect to Security. Except as provided by applicable law which
may not be waived, the Company shall have no duty with respect to the Security
other than the duty to use reasonable care in the custody and physical
preservation of any certificates representing Pledged Stock in its possession.
9. Waivers. The Pledgor hereby waives notice of the acceptance of this Agreement
as well as presentment, demand, payment, notice of dishonor or protest and all
other notices of any kind in connection with the obligations secured hereby. The
Company may extend the terms of the obligations secured hereby, without giving
the Pledgor notice of the same hereunder and the Pledgor hereby agrees that no
consent thereto shall be required hereunder. In addition, the Company may
release, supersede, exchange or modify any other collateral security it may from
time to time hold and release, surrender or modify the liability of any third
party, without giving notice hereunder to the Pledgor. Such modifications,
changes, renewals, releases or other actions shall in no way affect the
Pledgor's obligations hereunder. The Pledgor hereby further waives and releases
(i) any right of subrogation or other similar right which the Pledgor might have
against the Security by reason of any action or actions taken by the Company
hereunder, (ii) any right which the Pledgor might have to require the Company to
proceed against the Security or any other collateral security for the
obligations secured hereby, and (iii) any requirement of diligence or promptness
on the part of the Company in the enforcement of any of its rights hereunder or
under the Note.
10. Transfer Expenses, Etc.. The Pledgor agrees to pay, and to indemnify and
hold harmless the Company from and against, all costs and expenses (including
taxes, if any) arising out of or incurred in connection with any transfer of
Security into or out of the name of the Company arising out of or incurred in
connection with the performance by the Company of its rights hereunder.
11. Statement as to Default. The Pledgor acknowledges to and agrees with any
purchaser of Security at a foreclosure sale that any written statement by the
Company or any person representing the Company asserting the occurrence of an
Event of Default as the authorization for the exercise of the rights of the
Company hereunder shall be conclusively presumed to be true.
12. Modification. This Agreement represents the entire understanding of the
parties with respect to the security interests created hereby and may not be
modified or amended without the prior written consent of the parties hereto.
57
13. Rights. Each and every right granted to the Company hereunder or by law
shall be cumulative and may be exercised from time to time. No failure on the
part of the Company to exercise or any delay in exercising any right shall
operate as a waiver thereof, nor shall a single or partial exercise by the
Company of any right preclude any other exercise thereof or the exercise of any
other right. No course of conduct or dealing shall constitute a waiver of any of
the Company's rights hereunder or otherwise.
14. Termination. Provided that no Event of Default shall have occurred and be
continuing, the Company's security interest in the Security shall terminate and
the Company shall deliver the Security to, or as designated by, the Pledgor upon
payment in full of the principal and interest on the Note and all other amounts
due under the Note.
15. Binding Effect, Etc. This Agreement shall be binding upon the Pledgor and
the Pledgor's executors, administrators and assigns and shall be governed as to
its validity, interpretation and effect by the laws of the State of New York.
This Agreement may be executed in any number of counterparts, and by different
parties on separate counterparts all of which together shall constitute one
instrument.
16. Defined Terms. Terms not otherwise defined herein shall have the meanings
set forth in the Note.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
/s/ Willing L. Biddle
- --------------------------------------
Willing L. Biddle, as Pledgor
Urstadt Biddle Properties Inc., as Pledgee
By: /s/ James R. Moore
- ---------------------------------------
James R. Moore
Executive Vice President
58
E>
EXHIBIT 10.21
URSTADT BIDDLE PROPERTIES INC.
AMENDED AND RESTATED RESTRICTED STOCK AWARD PLAN
1. Purposes
This Amended and Restated Restricted Stock Award Plan (the "Plan") amends
and restates the Urstadt Biddle Properties Inc. Amended and Restated
Restricted Stock Award Plan dated December 9, 1999 (the "First Amended
Plan") which amended the Urstadt Biddle Properties Inc. Restricted Stock
Award Plan, dated March 12, 1997 (the "Original Plan"). The purposes of the
Plan are to promote the long-term growth of Urstadt Biddle Properties Inc.
(the "Company") by attracting, retaining and motivating executive management
and non-employee directors possessing outstanding ability and to further the
identity of Participants' interest with those of the shareholders of the
Company through stock ownership opportunities.
2. Definitions
The following terms shall have the following meanings:
|_| "Award" means an award of Restricted Stock granted under the provisions of
the Plan.
|_| "Board" means the Board of Directors of Urstadt Biddle Properties Inc.
|_| "Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
|_| "Committee" means the Compensation Committee of the Board of Directors
appointed to administer the Plan.
|_| "Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
|_| "Company" means Urstadt Biddle Properties Inc.
|_| "Disability" means total and permanent disability.
|_| "Participant" means an employee or non-employee Director of the Company who
is selected by the Committee to participate in the Plan.
|_| "Restricted Period" means the period of time during which an Award to
Participant(s) remains subject to the Restrictions imposed on the Shares as
determined by the Committee.
|_| "Restrictions" mean the restrictions and conditions imposed on an Award as
determined by the Committee, which must be satisfied in order for a
Participant to become vested in an Award.
|_| "Restricted Stock" means an award of Shares on which is imposed a
Restriction Period.
|_| "Restricted Stock Award Date" means the date on which the Committee awarded
Restricted Stock to a Participant.
|_| "Retirement" means, with respect to employee Participants, termination from
active employment with the Company at any time after attaining the age of
sixty-five (65) years and, with respect to non-employee Director
Participants, expiration of the term of service on the Board by reason of
the Participant's failure to be elected to the Board pursuant to a regular
election or his or her decision not to stand for re-election to the Board.
|_| "Share" means a share of Common Stock or Class A Common Stock, as determined
by the Committee.
59
3. Effective Date Of The Plan
The effective date of the Original Plan was March 12, 1997, and the
effective date of the First Amended Plan was December 9, 1999; provided,
however, that the provisions of Section 5 of the First Amended Plan which
increased the number of Shares which may be issued or transferred under the
Plan from the number of Shares which may be issued or transferred under the
Original Plan became effective on March 15, 2000.
4. Administration Of The Plan
The Plan shall be administered by the Compensation Committee of the Board,
comprised of persons who are "Non-Employee Directors" as defined in Rule
16b-3 of the Securities and Exchange Commission. If no such Committee shall
be in office, the Plan shall be administered by the Board.
The Committee shall have complete and discretionary authority to (a) select
Participants, (b) determine the Award to be granted to a selected
Participant, (c) determine the time or times when Awards will be granted,
(d) determine the time or times and the conditions subject to which Awards
may become vested or Restrictions will lapse, (e) interpret and construe the
Plan and the rights of a Participant to an Award and make determinations,
subject to the provisions of the Plan, in the best interests of the Company
and its shareholders.
The Committee may delegate nondiscretionary administrative duties under the
Plan to one or more agents (e.g. attorneys, consultants, etc.) or
officers as it deems necessary and advisable at the expense of the Company.
Any power which may be exercised by the Committee may also be exercised by
the Board. No member of the Committee or the Board shall be personally
liable for any action taken or determination made in good faith with respect
to the Plan or its administration. All decisions made by the Committee as
administrators of the Plan shall be conclusive and binding upon all persons
and the Company.
5. Shares Subject To Plan
The maximum number of shares of Restricted Stock which may be issued or
transferred under the Plan is 1,050,000, of which 350,000 shares shall be
Common Stock, 350,000 shares shall be Class A Common Stock and 350,000
shares, at the discretion of the Committee, shall be any combination of
Common Stock or Class A Common Stock. Any shares of Restricted Stock which
have been awarded, but are later forfeited to the Company, will again be
available for Awards under the Plan.
The Stock which may be issued or transferred under the Plan may be
authorized but unissued Shares or Shares acquired by the Company and held in
its Treasury as determined by the Committee.
6. Grant Of Restricted Stock Awards
The Committee shall from time to time, in its discretion, (i) select
Participants from (a) management personnel who have significant
responsibility for the growth and profitability of the Company and (b)
non-employee Directors of the Company, including members of the Committee,
(ii) determine the number and class of Shares to be granted by each Award
and (iii) establish the applicable terms of each such Award. An Award
granted to a non-employee Director of the Company shall be held by such
non-employee Director for a period of at least six (6) months following the
date of grant.
7. Award Agreement
Each Restricted Stock Award shall be evidenced by a written agreement,
executed by the Participant and the Company, which shall contain the terms
and conditions established by the Committee.
60
8. Terms Of Restricted Stock Awards
Subject to the provisions of the Plan, the Committee shall determine:
|_| The terms and conditions of the Award Agreement, including whether an Award
shall consist of Common Stock, Class A Common Stock, or both;
|_| The Restricted Period of the Award; and
|_| The Restrictions applicable to an Award, including, but not limited to
employment status and director tenure rules governing forfeitures and
limitations on the sale, assignment, pledge or other encumbrances during the
Restricted Period.
The Committee may, in its discretion, determine that the issuance of stock
certificates representing the Restricted Stock Awards be held in custody by
the Company until the Restrictions lapse.
The Participant may, in the discretion of the Committee, receive any
dividends, taxable at that time as ordinary income, and other distributions
paid with respect to any Award(s), as declared and paid to shareholders
during the Restricted Periods.
Upon the lapse of Restrictions, the value of the Restricted Stock will be
taxable as ordinary income. At the Committee's discretion, an arrangement
may be made by the Company to assist the Participant in meeting the
withholding taxes required by federal, state and local authorities.
9. Termination Of Employment During Restricted Period
In the event that during the term of the Restricted Period a Participant's
status as an employee or non-employee Director of the Company terminates:
|_| for any reason other than death, Disability or Retirement, such Participant
shall forfeit any and all Restricted Stock Awards whose Restrictions have
not lapsed; or,
|_| by reason of death or Disability, the Restrictions on any and all Awards
shall lapse on the date of such termination; or,
|_| by reason of Retirement, all Awards continue to vest as if Retirement had
not occurred until such time as the Restrictions lapse; provided, however,
that if any such retired Participant, prior to the completion of any or all
Restricted Periods, accepts employment or provides services to any
organization other than the Company that is engaged in the ownership and/or
management or brokerage of shopping centers in The New York - Northern New
Jersey - Long Island, NY-NJ-CT-PA, Metropolitan Statistical Area as defined
by the Bureau of Labor Statistics, the Participant will forfeit any and all
Restricted Stock Awards whose Restrictions have not lapsed.
10. Change-Of-Control
The Committee shall have the authority to accelerate the time at which the
Restrictions will lapse or to remove any such restriction upon the
occurrence of a "change-of-control" as defined by any one of the following
events:
(a) any Person who becomes the owner of 10% or more of the Company's total
combined voting power of the total amount of outstanding Shares and,
thereafter, individuals who were not Directors of the Company prior to the
date such Person became such a 10% owner are elected as Directors pursuant
to an arrangement or understanding with, or upon the request of or
nomination by, such Person and constitute at least two of the Directors; or
61
(b) there occurs a change-of-control of the Company of a nature that would
be required to be reported in response to Item la of Form 8-K pursuant to
Section 13 or 15 under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or in any other filing by the Company with the Securities
and Exchange Commission (the "Commission"); or
(c) there occurs any solicitation of proxies by or on behalf of any Person
other than the Directors of the Company and thereafter individuals who were
not Directors prior to the commencement of such solicitation are elected as
Directors pursuant to an arrangement or understanding with, or upon the
request of or nomination by, such Person and constitute at least two of the
Directors; or
(d) the Company executes an agreement of acquisition, merger or
consolidation which contemplates that:
(i) after the effective date provided for in the agreement, all or
substantially all of the business and/or assets of the Company shall be
owned, leased or otherwise controlled by another corporation or other
entity; and
(ii) individuals who are Directors of the Company when such agreement
is executed shall not constitute a majority of the Directors or board of
directors of the survivor or successor entity immediately after the
effective date provided for in such agreement; provided, however, for
purposes of this paragraph (d), that if such agreement requires as a
condition precedent approval by the Company's shareholders of the agreement
or transaction, a Change-of-Control shall not be deemed to have taken place
unless and until such approval is secured.
11. Compliance With Securities And Exchange Commission Requirements
No certificate for Shares distributed under the terms of the Plan shall be
executed and delivered to the Participant until the Company shall have taken
any action then required to comply with the provisions of the Securities Act
of 1933, as amended, the Exchange Act or any other applicable laws and
requirements.
12. Amendment And Termination
The Committee and/or Board may, at any time or from time to time, modify or
amend the Plan in any respect, except that without shareholder approval
(subject to Section 13 hereof), the Committee and/or Board may not increase
the maximum number of shares of Restricted Stock which may be Awarded under
this Plan. Any modification, amendment or termination of the Plan shall not,
without the consent of a Participant, affect his/her rights under an Award
previously granted to a Participant.
13. Adjustments.
If the Company subdivides its outstanding Shares into a greater number of
Shares (by stock dividend, stock split, reclassification or otherwise) or
combines its outstanding Shares into a smaller number of Shares (by reverse
stock split, reclassification or otherwise), or if the Committee determines
that any stock dividend, extraordinary cash dividend, reclassification,
recapitalization, reorganization, merger, business combination,
consolidation, split-up, spin-off, combination, exchange of shares, warrants
or rights offering to purchase Shares, or other similar corporate event
affects the Shares such that an adjustment is required in order to preserve
the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in its sole discretion and in such manner as
the Committee may deem equitable and appropriate, make such adjustments to
any or all of (i) the number and class of Shares which thereafter may be
awarded under the Plan, and (ii) the number and class of Shares subject to
outstanding Awards, provided, however, that the number of Shares subject to
any Award shall always be a whole number. The Committee may, if deemed
appropriate, provide for a cash payment to any Participant in connection
with any adjustment made pursuant to this Section 13.
62
EXHIBIT 10.22
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT (the "Amendment") dated as of December 31, 2001 (the
"Effective Date") to the Registration Rights Agreement dated as of January 8,
1998 (as modified by Waiver and Amendment dated September 14, 2001, the
"Registration Rights Agreement"), is made by and among Urstadt Biddle Properties
Inc. (formerly "HRE Properties, Inc." and hereinafter referred to as the
"Company") and Wells Fargo & Company and Retirement Plan of The Bank of New York
Company, Inc. (each individually a "Remaining Initial Purchaser" and
collectively, the "Remaining Initial Purchasers").
W I T N E S S E T H
WHEREAS, Borrower, Cobalt Capital LLC ("Cobalt" and previously also an
Initial Purchaser), together with the Remaining Initial Purchasers, entered into
the Registration Rights Agreement; and
WHEREAS, in November, 2001, at the request of Cobalt, the Company
repurchased all of Cobalt's shares of the Preferred Stock and retired such stock
so that as of the Effective Date all of the shares of Preferred Stock are owned
by the Remaining Initial Purchasers; and
WHEREAS, the Company and the Remaining Initial Purchasers wish to amend
the Registration Rights Agreement.
NOW THEREFORE, for good and valuable consideration, the parties hereto
agree as follows:
1. Capitalized terms used but not defined herein shall have the meanings given
to them in the Registration Rights Agreement. As used in the Registration Rights
Agreement, the terms "Purchasers" and "Initial Purchasers" hereafter shall
include the "Remaining Initial Purchasers", but shall no longer include Cobalt.
2. Registration of the Preferred Stock. Upon the Effective Date, Section 2(a) of
the Registration Rights Agreement is deleted in its entirety and is replaced
with the following:
"(a) Upon receipt of a written request from either of the Remaining
Initial Purchasers that the Company register the Preferred Stock, the
Company shall prepare and file with the Commission a Registration
Statement under the Securities Act relating to the offer and sale of
the Registrable Securities and shall use its reasonable best efforts to
cause the Commission to declare such Registration Statement to be
effective under the Securities Act within ninety (90) days after
receipt of such written request, all in accordance with the terms of
this Agreement."
63
3. Listing of the Preferred Stock. Upon the Effective Date, Section 3(g) of the
Registration Rights Agreement is deleted in its entirety and is replaced with
the following:
"(g) upon the Commission declaring effective any Registration Statement
relating to the offer and sale of the Registrable Securities, use its
reasonable best efforts to cause the listing of the Preferred Stock on
the New York Stock Exchange, Inc. (the "NYSE") or, if the Preferred
Stock shall not then be eligible for listing on the NYSE, to apply for
listing of the Preferred Stock on the American Stock Exchange, Inc.
(the "AMEX") or, if the Preferred Stock shall not then be eligible for
listing on the AMEX, to apply for quotation of the Preferred Stock
through the National Association of Securities Dealers, Inc. Automated
Quotation System (the date of any such listing, the "Listing Date");"
4. Miscellaneous. (a) The Registration Rights Agreement, as amended by this
Amendment, is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed. On and after the Effective Date, each
reference in the Registration Rights Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Registration Rights Agreement
shall be a reference to the Registration Rights Agreement as amended by this
Amendment.
(b) This Amendment may be executed in any number of
counterparts, each of which shall be and shall be taken to be an original, and
all such counterparts shall together constitute one and the same instrument.
(c) This amendment shall be construed in accordance with and
governed by the law of the State of New York without giving effect to the
conflict of laws principles thereof.
THIS SPACE LEFT BLANK
INTENTIONALLY
64
IN WITNESS WHEREOF, the Company and the Remaining Initial Purchasers
have caused this Amendment to be executed as of the date first above written.
URSTADT BIDDLE PROPERTIES INC.
By: /S/ James R. Moore
- ------------------------------------------
Name: James R. Moore
Title: Executive Vice President
WELLS FARGO & COMPANY
By: /S/ Roger Wittlin
- ------------------------------------------
Name: Roger Wittlin
Title: Senior Vice President
RETIREMENT PLAN OF THE BANK OF NEW YORK
COMPANY, INC.
By: The Bank of New York, as Trustee
By: /S/ Marak A. Hemenetz
- -----------------------------------------
Name: Mark A. Hemenetz
Title: Executive Vice President
65
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
323 Railroad Corporation, a Connecticut Corporation
UB Darien, Inc., a Connecticut Corporation
UB Danbury, Inc., a Connecticut Corporation
66
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements ((i)
Form S-2 No. 333-69858; (ii) Forms S-3 No. 33-57119, No. 333-64381 and No.
333-84774; (iii) Form S-4 No. 333-19113 and (iv) Forms S-8 No. 2-93146, No.
333-61765, No. 333-61767 and No. 33-41408) of Urstadt Biddle Properties Inc. and
in the related Prospectus of our report dated December 11, 2002 (except for the
first two paragraphs in Note 12, as to which the date is December 23, 2002),
with respect to the consolidated financial statements and schedules of Urstadt
Biddle Properties Inc. included in this Annual Report (Form 10-K) for the year
ended October 31, 2002.
/s/ Ernst & Young LLP
New York, New York
January 28, 2003
67