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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, 2003
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
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(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
8.50 % Series C Senior Cumulative Preferred Stock 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
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes x No
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of April 30, 2003: Common Shares, par value $.01 per share
$42,656,295; Class A Common Shares, par value $.01 per share $215,921,188.
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock and Class A Common Stock, as of January 9, 2004 (latest
date practicable): 6,993,271 Common Shares, par value $.01 per share, and
18,607,078 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 10,
2004 (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 7
3. Legal Proceedings 10
4. Submission of Matters to a Vote of Security Holders 10
PART II
5. Market for the Registrant's Common Equity and Related
Shareholder Matters 11
6. Selected Financial Data 13
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
7A. Quantitative and Qualitative Disclosures about Market Risk 20
8. Financial Statements and Supplementary Data 21
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 21
9A. Controls and Procedures 21
PART III
10. Directors and Executive Officers of the Registrant 22
11. Executive Compensation 22
12. Security Ownership of Certain Beneficial Owners and Management 22
13. Certain Relationships and Related Transactions 22
14. Principal Accountant Fees and Services 22
PART IV
15. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K 23
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
affected 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.
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.
3
At October 31, 2003, the Company owned or had an equity interest in thirty
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 3.4 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. The Company 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 certain of 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.
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
thirty properties in the Company's portfolio, twenty-six properties are
considered core properties consisting of twenty-one retail properties and five
office buildings (including the Company's executive headquarters). At October
31, 2003, these properties contained in the aggregate 2.7 million square feet of
gross leaseable area ("GLA"). The Company's core properties collectively had 449
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, 2003, the core properties
were 97% 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.
4
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 the Company's 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, 2003, 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 6 tenants and were 92%
leased at October 31, 2003.
The office property consists of two tenants which offer engineering services.
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, 2003, the Company also holds two fixed rate mortgage notes with a
total book value of $2,184,000. The mortgages are secured by retail properties
that were previously owned and sold by the Company.
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.
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.
5
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, and physical quality of the property
and availability of space.
Since the Company's industrial properties are net leased under long-term lease
arrangements that 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. An independent property management
company manages the Company's remaining property. 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 26 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.
6
Item 2. Properties.
Core Properties
The Company considers those properties that 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
thirty properties in the Company's portfolio, twenty-six properties are
considered core properties consisting of twenty-one retail properties and five
office buildings (including the Company's executive headquarters). At October
31, 2003, these properties contained in the aggregate 2.7 million square feet of
gross leaseable area ("GLA"). The Company's core properties collectively had 449
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, 2003, the core properties
were 97% leased. The Company believes the core properties are adequately covered
by insurance.
The Company's single largest real estate investment is its 90% interest in the
Ridgeway Shopping Center ("Ridgeway"). Ridgeway is located in Stamford,
Connecticut and was developed in the 1950's and redeveloped in the mid 1990's.
The property contains 360,000 square feet of leasable 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,
2003, Ridgeway revenues represented approximately 16.4% of the Company's total
revenues and approximately 23.1% of the Company's total assets at October 31,
2003. 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, 2003, Ridgeway was 89% leased. The property's largest tenants
are: The Stop & Shop Company (a division of Ahold), occupying 60,000 square feet
of space of the property, and Bed, Bath and Beyond, a retailer occupying 47,000
square feet of space. 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 Ridgeway's annual base rents.
The following table sets out a schedule of the annual lease expirations for
retail leases at Ridgeway as of October 31, 2003 for 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 Minimum Annual Percentage of
Expiration Expiring Leases Expiring Leases Base Rentals Base Rent (%)
- ---------- --------------- --------------- ------------- -------------
2004 -- -- $ -- --
2005 1 2,375 120,000 1.5%
2006 2 4,642 146,000 1.8%
2007 4 9,400 333,000 4.1%
2008 12 70,216 1,872,000 23.1%
2009 2 2,209 103,000 1.3%
2010 4 42,240 647,000 8.0%
2011 1 3,040 99,000 1.2%
2012 4 21,567 654,000 8.1%
2013 3 60,676 1,491,000 18.4%
Thereafter 2 105,810 2,629,000 32.5%
-- -------- ---------- --------
35 322,175 8,094,000 100.0%
== ======= ========== ========
7
The following table sets forth information concerning each core property at
October 31, 2003. 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 89% Stop & Shop Supermarket
Springfield, MA 1996 1970 1970 323,000 26.0 30 97% Big Y
Meriden, CT 2001 1989 1993 313,000 29.2 26 100% Shop Rite Supermarket
Danbury, CT - 1989 1995 194,000 19.3 20 98% Christmas Tree Shops
White Plains, NY 1994 1958 2003 185,000 3.5 9 100% Toys "R" Us
Briarcliff Manor, NY (1) 2000 1978 1998 161,000 11.4 31 99% Stop & Shop Supermarket
Somers, NY - 2002 2003 135,000 26.0 25 95% Home Goods
Carmel, NY 1999 1983 1995 126,000 19.0 17 99% Shop Rite Supermarket
Wayne, NJ 1992 1959 1992 102,000 9.0 45 99% A&P Supermarket
Newington, NH 1994 1975 1979 102,000 14.3 8 97% Linens `N Things
Darien, CT 1992 1955 1998 95,000 9.5 20 100% Shaw's Supermarket
Somers, NY - 1991 1999 78,000 10.8 34 99% Gristede's Supermarket
Orange, CT - 1990 2003 78,000 10.0 8 96% Seaman's Furniture
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 51 90% Chico's
Westport, CT - 1986 2003 38,000 3.0 9 100% Pier One Imports
Briarcliff Manor, NY - 1975 2001 38,000 1.0 19 100% Dress Barn
Danbury, CT - 1988 2002 33,000 2.7 6 100% Boston Billiards
Briarcliff Manor, NY 2001 1981 1999 29,000 4.0 3 100% Party Plus Warehouse
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 3 76% Glenville Medical Center
Greenwich, CT - 1983 1993 10,000 0.2 3 100% Urstadt Biddle Properties
Greenwich, CT 1983 1953 1994 10,000 0.2 3 86% Prescott Investors
Greenwich, CT - 1978 2000 9,000 1.0 4 100% Insurance Center of
----- ---
Greenwich
2,659,000 449
========= =====
(1) The Company has a general partnership interest in this property.
8
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 the Company's 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, 2003, the Company's non-core properties consisted of one office
building, containing 202,000 square feet of GLA, one retail property containing
126,000 square feet and two industrial facilities with a total of 447,000 square
feet of GLA. The non-core properties collectively had 6 tenants and were 92%
leased at October 31, 2003.
The following table sets forth information concerning each non-core property in
which the Company owned an equity interest at October 31, 2003. 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 2 70% Arcadis
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 6
======= =
Total Portfolio 3,434,000 455
========= ===
9
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, 2003, 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
Expiration Expiring Expiring Leases Occupied Square Feet
- ---------- -------- --------------- --------------------
2004 (1) 80 126,046 3.84%
2005 44 240,094 7.31%
2006 46 151,394 4.61%
2007 44 361,087 11.00%
2008 53 452,435 13.78%
2009 38 417,448 12.71%
2010 22 187,253 5.70%
2011 31 382,476 11.65%
2012 42 267,722 8.15%
2013 24 128,291 3.91%
2014 11 61,267 1.87%
Thereafter 20 508,303 15.47%
-- ------- ------
455 3,283,816 100.00%
=== ========= =======
(1) Represents lease expirations from November 1, 2003 to October 31, 2004
and month-to-month leases.
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, 2003.
10
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 "UBA", 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, 2003 and 2002 as reported on the New York Stock Exchange:
Fiscal Year Ended Fiscal Year Ended
Common shares: October 31, 2003 October 31, 2002
- -------------- ---------------- ------------------------
Low High Low High
--- ---- --- ----
First Quarter $11.00 $12.70 $ 8.60 $10.65
Second Quarter $11.95 $13.03 $10.25 $12.28
Third Quarter $12.70 $13.80 $ 9.95 $12.80
Fourth Quarter $12.60 $13.40 $10.77 $11.60
Fiscal Year Ended Fiscal Year Ended
Class A Common shares: October 31, 2003 October 31, 2002
- ---------------------- ---------------- ------------------------------
Low High
--- ----
First Quarter $10.85 $11.72 $ 9.35 $10.28
Second Quarter $11.00 $12.54 $ 9.88 $12.00
Third Quarter $12.15 $13.80 $10.60 $12.00
Fourth Quarter $13.10 $14.30 $10.80 $11.97
(b) Approximate Number of Equity Security Holders
At January 9, 2004 (latest date available), there were 1,381 shareholders of
record of the Company's Common stock and 1,393 shareholders of record of the
Class A Common stock.
(c) Dividends Declared on Common stock and Class A Common stock and Tax Status
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, 2003 and 2002:
Dividends Paid Per: Common Share Class A Common Share
------------ --------------------
Gross Ordinary Gross Ordinary
Dividend Payment Dividend Paid Income Dividend Paid Income
Date Per Share Distribution Per Share Distribution
- ---------------- ------------- ------------ ------------- ------------
January 17, 2003 $0.19 $0.19 $0.21 $0.21
April 18, 2003 $0.19 $0.19 $0.21 $0.21
July 18, 2003 $0.19 $0.19 $0.21 $0.21
October 17, 2003 $0.19 $0.19 $0.21 $0.21
------ ------ ------ -----
$0.76 $0.76 $0.84 $0.84
====== ====== ====== =====
11
Dividends Paid Per: Common Share Class A Common Share
------------ --------------------
Gross Ordinary Gross Ordinary
Dividend Payment Dividend Paid Income Capital Gain Dividend Paid Income Capital Gain
Date Per Share Distribution Distribution 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
======== ======= ====== ======= ====== ======
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, 2003, the Company made distributions to stockholders
aggregating $.76 per Common share and $.84 per Class A Common share. On December
10, 2003, the Company's Board of Directors approved the payment of a quarterly
dividend payable January 16, 2004 to stockholders of record on January 5, 2004.
The dividends were declared in the amounts of $.195 per Common share and $.215
per Class A Common share.
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 new issue 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
receives not less than 110% of the regular quarterly dividends paid on each
share of Common Stock.
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.
The Company has a Dividend Reinvestment and Share Purchase Plan that 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
On May 28, 203, the Company entered into a Stock Purchase Agreement with Ferris,
Baker Watts Incorporated and Stifel, Nicolaus & Company Incorporated (the
"Initial Purchasers") pursuant to which the Initial Purchasers purchased 400,000
shares of the Company's 8.5% Series C Senior Cumulative Preferred Stock (the
"Shares") in a private placement pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"). The Initial Purchasers sold the
Shares to qualified institutional buyers pursuant to Rule 144A of the Securities
Act at an aggregate offering price of $40,000,000. The Initial Purchasers'
discount was $3.00 per share or $1,200,000 in the aggregate. In connection with
the transaction, the Company entered into a Registration Rights Agreement with
the Initial Purchasers, on behalf of the buyers, pursuant to which the Company
(i) agreed to use reasonable efforts to file and cause to become effective with
the SEC a registration statement covering re-sales of the Shares; and (ii) upon
the SEC declaring effective such registration statement, agreed to use
reasonable efforts to cause the listing of the Shares on the NYSE.
On September 9, 2003, the Company filed a registration statement with the SEC to
register the Shares pursuant to Section 12 of the Securities Exchange Act of
1934 which registration statement was declared effective on September 23, 2003.
The Shares were listed on the NYSE, effective September 23, 2003.
12
Item 6. Selected Financial Data.
(In thousands, except per share data)
Year Ended October 31, 2003 2002 2001 2000 1999
---- ---- ---- ---- ----
Balance Sheet Data:
Total Assets $392,718 $353,633 $218,352 $180,792 $183,774
======== ======== ======== ======== ========
Mortgage Notes Payable $104,588 $106,429 $47,115 $51,903 $51,263
======== ======== ======= ======= =======
Preferred Stock $52,747 $14,341 $33,462 $33,462 $33,462
======= ======= ======= ======= =======
Operating Data:
Total Revenues $ 60,361 $44,340 $36,093 $31,009 $29,430
======== ======= ======= ======= =======
Total Operating Expenses $ 39,626 $29,438 $26,154 $23,281 $21,596
======== ======= ======= ======= =======
Net Income Applicable to Common and Class A
Common Stockholders $ 17,576 $16,080 $10,540 $ 5,442 $ 6,043
======== ======= ======= ======= =======
Other Data :
Net Cash Provided by Operating Activities $ 31,176 $18,532 $21,308 $14,262 $14,423
======== ======= ======= ======= =======
Net Cash (Used in) Investing Activities $(69,818) $(64,960) $(11,394) $ (3,713) $(10,556)
========= ========= ========= ========= =========
Net Cash Provided by (Used in)
Financing Activities $ 14,749 $59,023 $22,040 $ (11,436) $ (5,009)
======== ======= ======= ========== =========
Per Share Data:
Net Income-Basic
Class A Common Stock $.74 $.89 $1.01 $.55 $.62
Common Stock $.67 $.80 $.91 $.50 $.55
Net Income - Diluted:
Class A Common Stock $.73 $.87 $.97 $.55 $.61
Common Stock $.66 $.78 $.88 $.49 $.54
Cash Dividends on:
Class A Common Stock $.84 $.82 $.80 $.78 $.76
Common Stock $.76 $.74 $.72 $.70 $.68
---- ---- ---- ---- ----
Total $1.60 $1.56 $1.52 $1.48 $1.44
===== ===== ===== ===== =====
Funds from Operations (Note 1) $ 27,964 $24,144 $14,611 $11,914 $11,878
======== ======= ======= ======= =======
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 and
debt restructuring, plus depreciation, amortization and after adjustments for
unconsolidated joint ventures. For a reconciliation of net income and FFO, see
Management's Discussion and Analysis on page 14. 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 dividend paying capacity. 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. FFO for 2002 has been adjusted to conform
with the revised guidance provided by NAREIT. For a further discussion of FFO,
see Management's Discussion and Analysis on page 14.
13
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the consolidated
financial statements of the Company and the notes thereto included elsewhere in
this report.
Overview
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 real estate 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, 2003, the Company owned or had controlling interests in 30
properties containing a total of 3.4 million square feet of leasable area.
The Company focuses on increasing cash flow and, consequently, the value of its
properties and seeks continued growth through strategic re-leasing, renovations
and expansion of its existing properties and selective acquisition of income
producing properties, primarily neighborhood and community shopping centers in
the northeastern part of the United States.
Forward Looking Statements
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.
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. Set forth
below is a summary of the accounting policies that management believes are
critical to the preparation of the consolidated financial statements. This
summary should be read in conjunction with the more complete discussion of the
Company's accounting policies included in Note 1 to the consolidated financial
statements of the Company.
Revenue Recognition
The Company records base rents on a straight-line basis over the term of each
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. Most leases contain provisions that require tenants to reimburse
a pro-rata share of real estate taxes and certain common area expenses. These
amounts are recognized in the period the related expenses are incurred. Expense
reimbursement payments generally are made monthly based on an estimated amount
determined at the beginning of the year. The difference between the actual
amount due and the estimated amounts paid by the tenant throughout the year is
billed or credited to the tenant.
14
Allowance for Doubtful Accounts
The allowance for doubtful accounts and mortgage notes receivable is established
based on a 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. It is the Company's
policy to maintain an allowance for future tenant credit losses of approximately
10% of the deferred straight-line rents receivable balance.
Real Estate
Land, buildings, property improvements, furniture/fixtures and tenant
improvements are recorded at cost. Expenditures for maintenance and repairs are
charged to operations as incurred. Renovations and/or replacements, which
improve or extend the life of the asset, are capitalized and depreciated over
their estimated useful lives.
Properties are depreciated using the straight-line method over the estimated
useful lives of the assets. The estimated useful lives are as follows:
Buildings 30-40 years
Property Improvements 10-20 years
Furniture/Fixtures 3-10 years
Tenant Improvements Lease term
The Company is required to make subjective assessments as to the useful life of
its properties for purposes of determining the amount of depreciation. These
assessments have a direct impact on the Company's net income.
Assessments by the Company of certain other lease related costs are made when
the Company has a reason to believe that the tenant may not be able to perform
under the terms of the lease as originally expected. This requires management to
make estimates as to the recoverability of such assets.
Asset Impairment
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. A property value is considered impaired only if management's estimate
of current and projected operating cash flows (undiscounted and without interest
charges) of the property over its remaining useful life is less than the net
carrying value of the property. Such cash flow projections consider factors such
as expected future operating income, trend and prospects, as well as the effects
of demand, competition and other factors. To the extent impairment has occurred,
the loss is measured as the excess of the net carrying amount of the property
over the fair value of the asset. Management does not believe that the value of
any of its rental properties or mortgage notes receivable is impaired at October
31, 2003.
Liquidity and Capital Resources
At October 31, 2003, the Company had unrestricted cash and cash equivalents of
$22.4 million compared to $46.3 million in 2002. The Company also had $9.5
million and $25.1 million in short-term investments as of October 31, 2003 and
2002, respectively. The Company's cash positions and short-term investments
include the remaining proceeds from the sales of equity securities of the
Company during fiscal 2003 and 2002.
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 2004 and to meet its
dividend requirements necessary to maintain its REIT status. In fiscal 2003,
15
2002 and 2001, net cash provided by operations amounted to $31.2 million, $18.5
million and $21.3 million, respectively. The increase in net cash from operating
activities in fiscal 2003 reflects the additional operating income from a
greater number of properties in the year. Cash dividends paid increased to $23.5
million in 2003 compared to $16.4 million in 2002 and $11.9 million in 2001. The
Company expects to continue paying regular dividends to its stockholders. These
dividends will be paid from operating cash flows which are expected to increase
due to property acquisitions and growth in operating income in the existing
portfolio and from other sources. 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.
Capital Resources
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 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.
In May 2003, the Company sold 400,000 shares of a new issue of Series C
Cumulative Preferred Stock (Series C Preferred Stock) for proceeds of $38.4
million. The preferred shares are redeemable at the option of the Company after
ten years. The Series C Preferred Stock issue entitles the holders to a 8.5%
cumulative dividend. The Company used a portion of the proceeds to purchase a
shopping center in June 2003. The Company intends to use the balance of the
proceeds for property acquisitions.
In fiscal 2002, the Company sold 8,050,000 shares of its Class A Common stock
for net proceeds to the Company of $81.9 million. The net proceeds were used to
repay $16 million of outstanding revolving credit line indebtedness and the
acquisitions of three properties.
In fiscal 2001, the Company sold 5,499,222 shares of its Class A Common stock
for net proceeds of $47.2 million of which $6.1 million was received in fiscal
2002. The Company also sold 200,000 shares of Common stock and 5,000 shares of
Class A Common stock in a private placement for proceeds of $1.4 million. The
proceeds of these equity sales were used to complete the acquisitions of two
properties, repay outstanding credit line borrowings and repurchase 200,000
shares of Series B Preferred Stock at a cost of $16.1 million.
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, 2003, the Company's contractual obligations for borrowings are as
follows:
Payments Due by Period Amount
Less than 1 year $ 1,985,000
1 to 3 years $11,066,000
4 to 5 years $64,486,000
After 5 years $27,051,000
Borrowings consist of $104,588,000 of fixed rate mortgage loan indebtedness with
a weighted average interest rate of 7.53% at October 31, 2003. The mortgage
loans are secured by fourteen properties and have fixed rates of interest
ranging from 6.29% to 8.375%. The Company may 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
refinancing can be achieved.
At October 31, 2003, the Company had a secured revolving credit facility with a
bank which expires in fiscal 2005 and allows for borrowings up to $18.125
million. The secured line is collateralized by two properties having a net book
value of $29.4 million at October 31, 2003. The terms of the credit facility
require a permanent reduction in the credit loan amount of $625,000 annually.
The Company also has a $20 million unsecured revolving line of credit with the
same bank which expires in fiscal 2004. 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. There were no borrowings
during the year on either credit line and there were no outstanding borrowings
at October 31, 2003.
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 2003, the Company incurred $2.8 million for capital
expenditures including $1.9 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 expects to incur an additional $4.3
million for known capital improvements and leasing costs in fiscal 2004. These
expenditures are generally funded from operating cash flows or borrowings on its
credit facilities.
Acquisitions and Sales
The company seeks to acquire properties which are primarily shopping centers
located in the northeastern part of the United States.
In fiscal 2003, the Company acquired four properties totaling 436,000 square
feet in separate transactions for approximately $83 million. The properties were
purchased with cash raised from sales of equity securities and consisted of: the
Westchester Pavilion in White Plains, New York, a 185,000 square foot property
for $39.9 million, the Orange Meadows Shopping Center in Orange, Connecticut, a
78,000 square foot property for $11.3 million, the Greens Farms Plaza in
Westport, Connecticut, a 38,000 square foot property for $10.1 million and seven
retail building units totaling 135,000 square feet in Somers Commons for $21.65
million.
In fiscal 2002, the Company acquired a 90% general partner interest in a
shopping center in Stamford, Connecticut for $86.8 million. The property was
acquired subject to a $57.4 million first mortgage loan. 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
an office building that it did not own for a purchase price of $1.25 million.
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.
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 Company's non-core properties in the normal course of business
over a period of several years. The non-core properties 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).
The Company intends to sell its non-core properties as opportunities become
available. 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. There were no sales of properties during fiscal 2003.
At October 31, 2003, the non-core properties total four properties with a net
book value of approximately $11 million.
Funds from Operations
The Company considers Funds from Operations ("FFO") as defined by The National
Association of Real Estate Investment Trusts ("NAREIT") 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 real estate related depreciation and amortization,
excluding gains (or losses) from sales of property and debt restructuring and
after adjustments for unconsolidated joint ventures. 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 might 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 three years in the
period ended October 31, 2003 (amounts in thousands).
2003 2002 2001
---- ---- ----
Net Income Applicable to Common and Class A Common Stockholders $17,576 $16,080 $10,540
Plus: Real property depreciation 7,831 5,459 4,463
Amortization of tenant improvements and allowances 2,088 2,088 2,325
Amortization of deferred leasing cost 469 517 851
Less: Adjustments for unconsolidated joint venture - - (3,252)
Gains on sales of real estate investments - - (316)
------- ------- -------
Funds from Operations Applicable to Common and Class A Common Stockholders (1) $27,964 $24,144 $14,611
======= ======= =======
Net Cash Provided by (Used in):
Operating Activities $31,176 $18,532 $21,308
======= ======= =======
Investing Activities $(69,818) $(64,960) $(11,394)
========= ========= =========
Financing Activities $14,749 $59,023 $22,040
========= ======= =======
(1) Funds from Operations for 2002 has been adjusted to conform with
revised guidance provided by NAREIT regarding the calculation for FFO.
This revised guidance provides that amounts associated with preferred
stock that has been redeemed or repurchased should be factored into the
calculation of FFO. As a result, the Company has adjusted its fiscal
2002 FFO to include a $3,071,000 adjustment to record the excess of the
carrying value over the cost to repurchase $20 million of its Series B
Preferred shares in that year in accordance with NAREIT's revised
guidance. The adjustment to fiscal 2002 FFO did not affect net income
applicable to Common and Class A Common stockholders in that year.
18
Results of Operations
Fiscal 2003 vs. Fiscal 2002
Revenues
Revenues from operating rents increased 40.4% to $59.2 million in fiscal 2003
compared to $42.2 million in fiscal 2002. The net increase in rents resulted
primarily from (i) the acquisition of four properties in fiscal 2003 containing
436,000 square feet of leasable space, providing revenues of $8.3 million in the
year (ii) the full year impact related to two operating properties acquired in
2002, providing incremental revenues of $6.5 million in fiscal 2003 (iii) an
increase in recoveries of property operating expenses and property taxes from
tenants of $700,000 in fiscal 2003 and (iv) an overall increase in the leasing
levels at the Company's properties.
At October 31, 2003, the Company's total portfolio was 96% leased compared to
95% leased in fiscal 2002. During fiscal 2003, the Company renewed or signed new
leases totaling 375,000 square feet of space. The Company has leases totaling
126,000 square feet of leasable space or 3.8% of total GLA expiring in fiscal
2004.
Lease termination income of $80,000 represents a lease cancellation payment from
a tenant who terminated its lease early. This space was re-leased during the
year.
Interest income in fiscal 2003 decreased due to the utilization of cash from the
Company's sale of 8,050,000 shares of Class A common stock in fiscal 2002. The
cash was used to acquire properties in fiscal 2003.
Expenses
Operating expenses, including depreciation and amortization increased to $39.6
million in fiscal 2003 from $29.4 million in fiscal 2002. Property expenses
increased $5.0 million from the incremental expense of recently acquired
properties, which increased property expenses by $4.6 million. Property expenses
for properties owed during both periods increased 4.0% from higher snow removal
and property tax costs, which increased $475,000 and $171,000, respectively in
fiscal 2003.
Interest expense increased to $8.1 million from $5.6 million principally from
the full year impact of approximately $60 million in first mortgage loans
assumed in connection with property acquisitions in fiscal 2002.
Depreciation expense increased by $2.4 million in fiscal 2003 from the
additional depreciation on recent property acquisitions.
General and administrative expenses increased to $3.2 million in fiscal 2003 as
compared to $2.8 million in fiscal 2002 due to increased compensation costs.
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 revenues resulted from
the addition of new rents from properties acquired and leasing of previously
vacant space at properties owned in both years. During fiscal 2002 and 2001, the
Company acquired four properties which increased operating lease income by
approximately $5.5 million in fiscal 2002. In 2002 the Company renewed or signed
new leases totaling 236,000 square feet of space, however the overall leasing
levels at the Company's properties decreased to 95% by the end of fiscal 2002
compared to 98% leased at the end of fiscal 2001. The decrease in leasing levels
reflected 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.
Lease termination income of $765,000 in fiscal 2002 represents lease
cancellation payments from tenants who terminated leases in 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 $1.2 million note receivable.
19
Expenses
Total expenses increased to $29.4 million in fiscal 2002 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 new 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 from new mortgage loans totaling $59.4 million
assumed in connection with property acquisitions. The increase in interest
expense was partially offset by lower outstanding bank credit line borrowings
during the year.
Depreciation expense increased $850,000 from the additional expense related to
property acquisitions in that year. Amortization expense decreased by $354,000
principally from the write-off in fiscal 2001 of unamortized leasing commissions
for tenants who vacated during the year.
General and administrative expenses increased to $2.8 million in fiscal 2002 as
compared to $2.5 million in fiscal 2001. The increase was due primarily to
increased compensation costs.
The Company repurchased 200,000 shares of its Series B Preferred Stock for
$16,050,000 in a negotiated transaction with a holder of the preferred shares.
The Company 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.
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, the majority 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
exposure 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.
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, 2003 and for the year then ended, the Company had no
outstanding borrowings under its bank line of credit arrangements. During the
year ended October 31, 2002, the average variable rate indebtedness during such
period had a combined weighted average interest rate of 3.38%. Had the weighted
average interest rate been 100 basis points higher, the Company's net income
would have been lower by approximately $12,000 in fiscal 2002.
20
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.
There were no changes in, nor any disagreements with the Company's independent
accountants on accounting principles and practices or financial disclosure,
during the year ended October 31, 2003.
Item 9A. Controls and Procedures.
At the end of the period covered by this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e).
Based upon that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective. During the fourth quarter of 2003, there were no changes in the
Company's internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
21
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Company will file its definitive Proxy Statement for its Annual
Meeting of Stockholders to be held on March 10, 2004 within the period required
under the applicable rules of the Securities and Exchange Commission. 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 75 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. and has served in such
capacity for more than five years.
Willing L. Biddle 42 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 55 Executive Vice President and Chief Financial Officer (since March 1996); Senior
Vice President and Chief Financial Officer (1989 to 1996); Treasurer ( since December
1987). Secretary (1987-1999) Vice President-Finance and Administration (1987 to
1989).
Raymond P. Argila 55 Senior Vice President and Chief Legal Officer (since June 1990); formerly Senior
Counsel, Cushman & Wakefield, Inc. (1987 to 1990).
The Directors elect officers of the Company annually.
The Company has adopted a code of ethics that applies to the chief executive
officer and senior financial officers. A copy of this code of ethics can be
found as Exhibit 14 to this Form 10-K. In the event of any amendment to, or
waiver from, the code of ethics, the Company will promptly disclose the
amendment or waiver as required by law or regulation of the SEC.
Item 11. Executive Compensation.
The Company will file its definitive Proxy Statement for its Annual
Meeting of Stockholders to be held on March 10, 2004 within the period required
under the applicable rules of the Securities and Exchange Commission. 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 will file its definitive Proxy Statement for its Annual
Meeting of Stockholders to be held on March 10, 2004 within the period required
under the applicable rules of the Securities and Exchange Commission . The
information required by this Item is included under the caption "ELECTION OF
DIRECTORS - Security Ownership of Certain Beneficial Owners and Management" and
"COMPENSATION AND TRANSACTIONS WITH MANAGEMENT AND OTHERS - Equity
Compensation Plan Information" of such Proxy Statement and is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
The Company will file its definitive Proxy Statement for its Annual
Meeting of Stockholders to be held on March 10, 2004 within the period required
under the applicable rules of the Securities and Exchange Commission. 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 14. Principal Accountant Fees and Services.
The Company will file its definitive Proxy Statement for its Annual
meeting of Stockholders to be held on March 10, 2004 within the period required
under the applicable rules of the Securities and Exchange Commission. The
information required by this Item is included under the caption "Fees Billed
by Independent Auditors" of such Proxy Statement and is incorporated herein
by reference.
22
PART IV
Item 15. 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 23 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 27. All other financial statement schedules are
inapplicable.
B. Reports on Form 8-K
During the Company's fourth quarter, the Registrant filed the following
Reports on Form 8-K with the Commission:
A Current Report on Form 8-K dated September 10, 2003. Such report
furnished under Item 12 a press release published by the Company on
September 10, 2003 announcing its earnings for the third quarter of
fiscal 2003.
C. 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 SEC 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 (SEC File 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 (SEC File No.
001-12803)).
(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 (SEC File No. 001-12803)).
(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 (SEC File No.
001-12803)).
(e) Articles Supplementary of the Company (incorporated by
reference to Exhibit 4.2 of the Registrant's Registration
Statement on Form S-3 (SEC File No. 333-107803)).
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 (SEC File No. 333-19113).
(4) Instruments Defining the Rights of Security Holders, Including
Indentures.
4.1 Common Stock: See Exhibits 3.1 (a)-(e) hereto.
4.2 Series B Preferred Shares: See Exhibits 3.1 (a)-(e), 10.13
- 10.15, 10.17 and 10.22 hereto.
4.3 Series C Preferred Shares: See Exhibits 3.1 (a)-(e) and 10.23
hereto.
23
4.4 Series A Preferred Share Purchase Rights: See Exhibits 3.1
(a)-(d), 10.3 and 10.16 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 (SEC File No.
001-12803)). (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 (SEC File No. 001-12803)). (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
(SEC File No. 001-12803)).
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 (SEC File No. 001-12803)). (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 (SEC File No. 001-12803)). (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 (SEC File No. 001-12803)). (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 (SEC File No. 001-12803)). (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 (SEC
File No. 001-12803)). (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 (SEC File No.
001-12803)). (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 (See File No.
333-64381).
24
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 (SEC File No. 001-12803)). (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 (SEC File 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 (SEC File No. 001-12803)). (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
(SEC File No. 001-12803)). (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 (SEC File No. 001-12803)).
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 (SEC File No. 001-12803)).
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 (SEC File No. 001-12803)).
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 (SEC File No. 001-12803)).
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 (SEC File No. 001-12803)).
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 (SEC File No. 001-12803)).
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 (SEC File No. 001-12803)). (1)
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 (SEC File No. 001-12803)). (1)
25
10.20 Promissory Note and Stock Pledge Agreement dated July 3, 2002
by Willing L. Biddle in favor of the Registrant (incorporated
by reference to Exhibit 10.20 of the Registrant's Annual
Report on Form 10-K for the year ended October 31, 2002
(SEC File No. 001-12803)). (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 (incorporated by reference
to Exhibit 10.21 of the Registrant's Annual Report on Form
10-K for the year ended October 31, 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 (incorporated by reference to Exhibit 10.22
of the Registrant's Annual Report on Form 10-K for the year
ended October 31, 2002).
10.23 Registration Rights Agreement dated as of May 29, 2003 by and
between the Company and Ferris, Baker Watts, Incorporated
(incorporated by reference to Exhibit 4.1 of the Registrant's
Registration Statement on Form S-3 (SEC File No. 333-107803)).
(14) Code of Ethics for Chief Executive Officer and Senior
Financial Officers
(21) Subsidiaries.
21.1 List of Company's subsidiaries
(23) Consents of Experts and Counsel.
23.1 The consent of Ernst & Young LLP to the incorporation by
reference of its report included herein in the Company's
Registration Statement is filed herewith as part of this
report
31.1 Certification pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, signed and dated by
Charles J.Urstadt.
31.2 Certification pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, signed and dated by James
R.Moore.
(32) Certification pursuant to 18 U.S.C. Section 1350, as adopted,
pursuant to section 906 of the Sarbanes-Oxley Act of 2002,
signed and dated by Charles J. Urstadt and James R. Moore.
(1) Management contract, compensatory plan or arrangement to be filed as an
exhibit to this Annual Report on Form 10-K pursuant to Item 15(c).
26
URSTADT BIDDLE PROPERTIES INC.
Item 15a. INDEX TO FINANCIAL STATEMENTS AND
- --------- ----------------------------------
FINANCIAL STATEMENT SCHEDULES
Page
Consolidated Balance Sheets at October 31, 2003 and 2002 28
Consolidated Statements of Income for each of the
three years in the period ended October 31, 2003 29
Consolidated Statements of Cash Flows for each of the
three years in the period ended October 31, 2003 30
Consolidated Statements of Stockholders' Equity
for each of the three years in the period ended October 31, 2003 31
Notes to Consolidated Financial Statements 32-42
Report of Independent Auditors 43
Schedule.
The following consolidated financial statement schedules of Urstadt Biddle
Properties Inc. are included in Item 15(d):
III Real Estate and Accumulated Depreciation - October 31, 2003 44
IV Mortgage Loans on Real Estate - October 31, 2003 46
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.
27
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 31,
--------------------------------
ASSETS 2003 2002
---- ----
Real Estate Investments:
Core properties-- at cost, net of accumulated depreciation $330,920 $252,711
Non-core properties - at cost, net of accumulated depreciation 11,215 11,944
Mortgage notes and other receivable 2,184 3,447
----- -----
344,319 268,102
Cash and cash equivalents 22,449 46,342
Restricted cash 516 514
Short-term investments 9,532 25,145
Tenant receivables, net allowances of $1,369 and $1,169 8,815 5,695
Prepaid expenses and other assets 3,858 4,541
Deferred charges, net of accumulated amortization 3,229 3,294
----- -----
Total Assets $392,718 $353,633
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $104,588 $106,429
Accounts payable and accrued expenses 2,743 1,021
Deferred officers' compensation 401 287
Other liabilities 5,243 4,218
----- -----
Total Liabilities 112,975 111,955
------- -------
Minority Interests 7,320 7,320
----- -----
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 shares issued and outstanding 14,341 14,341
8.50% Series C Senior Cumulative Preferred Stock, (liquidation preference of $100
per share); 400,000 and -0- shares issued and outstanding 38,406 -
------ ------
Total Preferred Stock 52,747 14,341
------ ------
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;
6,817,771 and 6,578,572 issued and outstanding shares, respectively 68 66
Class A Common stock, par value $.01 per share; 40,000,000 shares authorized;
18,548,453 and 18,449,472 issued and outstanding shares, respectively 185 185
Additional paid in capital 258,296 254,266
Cumulative distributions in excess of net income (33,611) (30,487)
Unamortized restricted stock compensation and officers notes receivable (5,262) (4,013)
--------- -------
Total Stockholders' Equity 219,676 220,017
------- -------
Total Liabilities and Stockholders' Equity $392,718 $353,633
======= ========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
28
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Year Ended October 31,
--------------------------------------------
2003 2002 2001
---- ---- ----
Revenues
Operating leases $59,247 $42,206 $34,209
Lease termination income 80 765 1,137
Interest and other 1,034 1,369 747
----- ------ ------
60,361 44,340 36,093
------ ------ ------
Operating Expenses
Property expenses 17,805 12,781 11,502
Interest 8,094 5,584 4,456
Depreciation 9,919 7,547 6,697
Amortization 469 517 871
General and administrative expenses 3,154 2,836 2,484
Directors' fees and expenses 185 173 144
------ ------ ------
39,626 29,438 26,154
------ ------ ------
Operating Income 20,735 14,902 9,939
Equity in Earnings of Unconsolidated Joint Venture - - 3,864
Minority Interests in Results of Consolidated Joint Ventures (365) (395) (432)
Gains on Sales of Real Estate Investments - - 316
------ ------- ------
Net Income 20,370 14,507 13,687
Preferred Stock Dividends (2,794) (1,498) (3,147)
Excess of Carrying Value Over Cost to Repurchase Preferred Shares
- 3,071 -
------ ------ ------
Net Income Applicable to Common and Class A Common Stockholders $17,576 $16,080 $10,540
======= ======= =======
Basic Earnings per Share:
Common $.67 $.80 $.91
==== ==== ====
Class A Common $.74 $.89 $1.01
==== ==== =====
Diluted Earnings Per Share:
Common $.66 $.78 $.88
==== ==== ====
Class A Common $.73 $.87 $.97
==== ==== ====
Dividends per share:
Common $.76 $.74 $.72
==== ==== ====
Class A Common $.84 $.82 $.80
==== ==== ====
The accompanying notes to consolidated financial statements are an
integral part of these statements.
29
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended October 31,
-------------------------------------------
2003 2002 2001
---- ---- ----
Operating Activities:
Net income $20,370 $14,507 $13,687
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 10,388 8,064 7,568
Amortization of restricted stock 1,105 942 769
Recovery of investment in properties owned
subject to financing leases - - 191
Equity in income of unconsolidated joint venture - - (3,864)
Minority interests 365 395 432
Gains on sales of real estate investments - - (316)
Increase in restricted cash (2) (181) (174)
(Increase) decrease in tenant receivables (3,120) (1,871) 98
Increase (decrease) in accounts payable and accrued expenses 243 (1,649) 1,448
Increase (decrease) in other assets and other liabilities, net 1,827 (1,675) 1,469
------ ------ ------
Net Cash Provided by Operating Activities 31,176 18,532 21,308
------ ------ ------
Investing Activities:
Sales (purchases) of short term investments 15,613 (25,145) -
Acquisitions of properties (83,485) (34,785) (5,606)
Acquisition of minority interests - (1,258) (1,013)
Improvements to properties and deferred charges (2,844) (2,814) (11,695)
Investment in unconsolidated joint venture - - (480)
Net proceeds from sales of properties - 275 1,216
Distributions to limited partners of consolidated joint venture (365) (395) (432)
Distributions received from unconsolidated joint venture - - 6,544
Payments to limited partners of unconsolidated joint venture - (600) -
Payments received on mortgage notes and other receivables 1,263 62 72
Deposits on acquisitions of properties - (300) -
-------- -------- --------
Net Cash Used in Investing Activities (69,818) (64,960) (11,394)
-------- -------- --------
Financing Activities:
Net proceeds from sale of Series C Preferred Stock 38,406 - -
Sales of additional Common and Class A Common shares 1,366 88,523 42,959
Proceeds from mortgage notes payable and bank loans - 17,200 26,250
Payments on mortgage notes payable and bank loans (1,841) (17,256) (35,190)
Dividends paid - Common and Class A Common shares (20,700) (14,913) (8,797)
Dividends paid - Preferred Stock (2,794) (1,498) (3,147)
Purchases of Common and Class A Common shares - - (35)
Repurchase of preferred shares - (16,050) -
Repayments of notes from officers 312 3,017 -
------ ------ ------
Net Cash Provided by Financing Activities 14,749 59,023 22,040
------ ------ ------
Net (Decrease) Increase In Cash and Cash Equivalents (23,893) 12,595 31,954
Cash and Cash Equivalents at Beginning of Year 46,342 33,747 1,793
------ ------ -----
Cash and Cash Equivalents at End of Year $22,449 $46,342 $33,747
======= ======= =======
The accompanying notes to consolidated financial statements are an
integral part of these statements.
30
URSTADT BIDDLE PROPERTIES INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share data)
Common Stock Class A Common Stock Unamortized
----------------- --------------------- (Cumulative Restricted Stock
Outstanding Outstanding Additional Distribution 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, 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 ($.80
per share) - - - - - (4,310) - (4,310)
Sale of additional shares 200,000 2 4,805,000 48 42,521 - - 42,571
Sale of additional shares under
dividend reinvestment plan 18,652 - 23,257 - 343 - - 343
Shares issued under restricted
stock 48,000 - 48,000 - 686 - (686) -
Plan
Amortization of restricted stock
Compensation - - - - - - 769 769
Purchases of shares (900) - (2,800) - (35) - - (35)
Exercises of stock options 419,000 5 24,859 - 3,043 - - 3,048
Note from officer upon exercise
Of stock options - - - - - - (3,003) (3,003)
Deemed repurchase of shares - (654,546) (6) (6,243) - - (6,249)
--------- -- --------- -- ------- ------- ------- -------
Balances - October 31, 2001 6,242,139 62 9,600,019 96 162,763 (31,654) (4,899) 126,368
Net income applicable to Common
and Class A common - - - - - 16,080 - 16,080
stockholders
Cash dividends paid :
Common stock ($.74 per share) - - - - - (4,750) - (4,750)
Class A common stock ($.82
per share) - - - - - (10,163) - (10,163)
Sales of Class A common shares - - 8,749,222 88 87,835 - - 87,923
Sales of additional shares under
dividend reinvestment plan 14,296 - 19,494 - 364 - - 364
Shares issued under restricted
stock plan 110,375 2 43,425 1 1,577 - (1,580) -
Amortization of restricted stock
compensation - - - - - - 942 942
Exercises of stock options 211,762 2 37,312 - 1,727 - - 1,729
Notes from officers upon exercises
of stock options - - - - - - (1,493) (1,493)
Repayment of notes receivable
from officers - - - - - - 3,017 3,017
--------- -- ---------- --- ------- ------- ------ -------
Balances - October 31, 2002 6,578,572 66 18,449,472 185 254,266 (30,487) (4,013) 220,017
Net income applicable to Common
and Class A common - - - - - 17,576 - 17,576
stockholders
Cash dividends paid :
Common stock ($.76 per share) - - - - - (5,135) - (5,135)
Class A common stock ($.84
per share) - - - - - (15,565) - (15,565)
Sales of additional shares under
dividend reinvestment plan 61,699 1 18,704 - 1,051 - - 1,052
Shares issued under restricted
stock plan 159,500 1 56,200 - 2,665 - (2,666) -
Amortization of restricted stock
compensation - - - - - - 1,105 1,105
Exercises of stock options 18,000 - 24,077 - 314 - - 314
Repayment of notes receivable
from officers - - - - - - 312 312
--------- --- ---------- ---- -------- -------- -------- --------
6,817,771 $68 18,548,453 $185 $258,296 $(33,611) $(5,262) $219,676
========= === ========== ==== ======== ========= ======== ========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
31
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, 2003, the Company owned or had interests in 30 properties containing a total
of 3.4 million square feet of leasable area.
Principles of Consolidation and Use of Estimates
The consolidated financial statements include the accounts of the Company, its
wholly owned subsidiaries, and joint ventures in which the Company has the
ability to control the affairs of the venture. Since the Company has operating
control over the joint ventures, the joint ventures are consolidated into the
consolidated financial statements of the Company. All significant intercompany
transactions and balances have been eliminated in consolidation.
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.
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 that is distributed. The
Company believes it qualifies as a REIT and has distributed all of its taxable
income for the fiscal years through 2003 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 that range from 10 to 20 years.
Furniture and fixtures are depreciated over the estimated useful lives that
range from 3 to 10 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 $1,729,000 and $1,485,000 as of October 31, 2003 and 2002,
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 amounts of the assets exceed the
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.
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, 2003 and 2002, approximately $6,372,000 and $3,743,000 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 receivables 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
32
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 receivables (including an allowance for future tenant credit losses of
approximately 10% of the deferred straight-line rents receivable) which is
estimated to be uncollectible. Such allowances are reviewed periodically. At
October 31, 2003 and 2002, tenant receivables in the accompanying consolidated
balance sheets are shown net of allowances for doubtful accounts of $1,369,000
and $1,169,000, 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 consist of investments with original maturities of
greater than three months when purchased and are carried at fair value (which
approximates cost plus accrued interest). At October 31, 2003 and 2002,
short-term investments consists 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, 2003 and 2002, the estimated
aggregate fair value of the mortgage notes and other receivable was $2,161,000
and $3,542,000, respectively.
The estimated fair value of mortgage notes payable was $114,000,000 and
$118,000,000 at October 31, 2003 and 2002, 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.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash and cash equivalents, mortgage loans
receivable and tenant receivables. The Company places its cash and cash
equivalents in excess of insured amounts with high quality financial
institutions. Management of the Company performs ongoing credit evaluations of
its tenants and requires certain tenants to provide security deposits or letters
of credit. Though these security deposits and letters of credit are insufficient
to meet the terminal value of a tenant's lease obligation, they are a measure of
good faith and a source of funds to offset the economic costs associated with
lost rent and the costs associated with retenanting the space.
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.
33
The following table sets forth the reconciliation between basic and diluted EPS
(in thousands):
2003 2002 2001
---- ---- ----
Numerator
Net income applicable to common stockholders - basic $4,171 $4,880 $5,326
Effect of dilutive securities:
Operating partnership units 151 160 (32)
------ ------ ------
Net income applicable to common stockholders - diluted $4,322 $5,040 $5,294
====== ====== ======
Denominator
Denominator for basic EPS-weighted average common shares 6,259 6,089 5,881
Effect of dilutive securities:
Stock options and awards 252 288 157
Operating partnership units 55 55 -
----- ----- -----
Denominator for diluted EPS - weighted average common
equivalent shares 6,566 6,432 6,038
===== ===== =====
Numerator
Net income applicable to Class A common stockholders-basic $13,405 $11,200 $5,214
Effect of dilutive securities:
Operating partnership units 215 202 246
------- ------- ------
Net income applicable to Class A common stockholders - diluted $13,620 $11,402 $5,460
======= ======= ======
Denominator
Denominator for basic EPS - weighted average Class A common shares 18,200 12,615 5,182
Effect of dilutive securities:
Stock options and awards 210 211 135
Operating partnership units 310 310 289
------ ------ -----
Denominator for diluted EPS - weighted average Class A common
equivalent shares 18,720 13,136 5,606
====== ====== =====
The weighted average Common equivalent shares and Class A common equivalent
shares for the year ended October 31, 2001 exclude 54,553 Common and 54,553
Class A Common partnership units that are exchangeable into shares. These shares
were not included in the calculation of diluted EPS because the effect would be
anti-dilutive.
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.
Recently Issued Accounting Pronouncement
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities," which explains how to identify variable interest
entities ("VIE") and assess whether to consolidate such entities. The provisions
of this interpretation are effective immediately for VIEs formed after January
31, 2003. For VIEs formed prior to January 31, 2003, the provisions of this
interpretation apply to the first fiscal year or interim period beginning after
December 15, 2003. Management does not believe that the adoption of this
pronouncement will have a material effect on its operations or financial
position.
In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" ("Statement").
The Statement establishes standards for classifying and measuring as liabilities
certain financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity. As the holders of the Series B
Preferred Stock and Series C Preferred Stock only have a contingent right to
require the Company to repurchase all or part of such holders interests upon a
change of control of the Company (as defined), the Series B Preferred Stock and
Series C Preferred Stock are classified as redeemable equity instruments as a
change in control is not certain to occur.
In November 2003, the FASB deferred the classification and measurement
provisions of FASB No. 150 which apply to certain mandatorily redeemable
non-controlling interests. This deferral is expected to remain in effect while
these provisions are further evaluated by the FASB. The Company has one finite
life joint venture which contains a mandatorily redeemable non-controlling
interest. At October 31, 2003 the estimated fair value of the minority interest
was approximately $2.4 million. The joint venture has a termination date of
December 31, 2097.
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
34
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, 2003 would have been
immaterial.
(2) REAL ESTATE INVESTMENTS
The Company's investments in real estate, net of depreciation, were composed of
the following at October 31, 2003 and 2002 (in thousands):
Core Non-core Mortgage Notes 2003 2002
Properties Properties Receivables Totals Totals
- ------------------------------------------------------------------------------------------------
Retail $322,734 $1,830 $2,184 $326,748 $249,751
Office 7,882 7,821 - 15,703 16,263
Industrial - 1,564 - 1,564 1,784
Undeveloped Land 304 - - 304 304
-------- ------- ------ ------- --------
$330,920 $11,215 $2,184 344,319 $268,102
======== ======= ====== ======= ========
The Company's investments at October 31, 2003, consisted of equity interests in
30 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, 2003 and 2002 (in thousands):
2003 2002
- ----------------------------------------------------------------------------------------------------------
Northeast $331,608 $253,432
Southeast - 1,196
Midwest 8,704 9,048
Southwest 4,007 4,426
-------- --------
$344,319 $268,102
======== ========
(3) CORE PROPERTIES
The components of core properties were as follows (in thousands):
2003 2002
- ----------------------------------------------------------------------------------------------------------
Land $69,756 $53,021
Buildings and improvements 304,985 236,362
------- -------
374,741 289,383
Accumulated depreciation (43,821) (36,672)
-------- --------
$330,920 $252,711
======== ========
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 become due as
follows: 2004 -$41,343,000; 2005 - $38,672,000; 2006 - $36,745,000; 2007 -
$34,556,000; 2008 - $31,946,000 and thereafter - $151,909,000.
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 $60,000, $47,000, and
$70,000, in 2003, 2002 and 2001, respectively.
Owned Properties
In fiscal 2003, the Company acquired four properties consisting of the
Westchester Pavilion in White Plains, New York, a 185,000 square foot property
for $39.9 million, seven retail building units totaling 135,000 square feet in
The Somers Commons in Somers, New York, for $21.65 million, the Orange Meadows
Shopping Center in Orange, Connecticut, a 78,000 square foot property for $11.3
million, and the Greens Farms Plaza, in Westport, Connecticut, a 38,000 square
foot property for $10.1 million.
35
In connection with the purchase of Orange Meadows, the Company has agreed to pay
the seller approximately $1.5 million as additional purchase price pursuant to
an agreed formula, which amount is included in Accounts Payable in the
accompanying consolidated balance sheet at October 31, 2003.
In fiscal 2002, the Company acquired the Airport Plaza 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 two properties consisting of an office
property in Greenwich, Connecticut and a 38,000 square foot shopping center in
Westchester County, New York 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.
Upon the acquisition of real estate properties, the fair value of the real
estate purchased is allocated to the acquired tangible assets, (consisting of
land, buildings and building improvements) and identified intangible assets and
liabilities, (consisting of above-market and below-market leases and in-place
leases) in accordance with SFAS No. 141 "Business Combinations". The Company
utilizes methods similar to those used by independent appraisers in estimating
the fair value of acquired assets and liabilities. The fair value of the
tangible assets of an acquired property considers the value of the property
"as-if-vacant". The fair value reflects the depreciated replacement cost of the
asset. In allocating purchase price to identified intangible assets and
liabilities of an acquired property, the value of above-market and below-market
leases are estimated based on the differences between (i) contractual rentals
and the estimated market rents over the applicable lease term discounted back to
the date of acquisition utilizing a discount rate adjusted for the credit risk
associated with the respective tenants and (ii) the estimated cost of acquiring
such leases giving effect to the Company's history of providing tenant
improvements and paying leasing commissions, offset by a vacancy period during
which such space would be leased. The aggregate value of in-place leases, is
measured by the excess of (i) the purchase price paid for a property after
adjusting existing in-place leases to market rental rates over (ii) the
estimated fair value of the property "as-if-vacant," determined as set forth
above.
As of October 31, 2003, as a result of its evaluations, the Company has
allocated $192,000 to an asset and $560,000 to a liability associated with the
net fair value assigned to the acquired leases at the properties.
The Company is currently in the process of analyzing the fair value of in-place
leases for the acquisition of the Somers Commons property, and consequently, no
value has yet been assigned to the leases. Accordingly, the purchase price
allocation is preliminary and may be subject to change.
Consolidated Joint Ventures
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 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 (PU's) of the entity. The PU'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. In
fiscal 2001, the Company redeemed, at net book value, 127,548 PU's for cash of
$1.0 million. At October 31, 2003 and 2002 there were 255,097 PU's outstanding.
The Company has a 90% general partner interest in a partnership that owns the
Ridgeway Shopping Center in Fairfield County, Connecticut. The partnership
acquired the property in fiscal 2002, subject to a $57.4 million first mortgage.
The partners receive an annual cash preference payable 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.
36
The limited partnership interests are reflected in the accompanying consolidated
financial statements as Minority Interests.
(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, 2003,
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):
2003 2002
- -----------------------------------------------------------------------------------------------------------
Land $1,943 $1,943
Buildings and improvements 19,433 19,321
------ ------
21,376 21,264
Accumulated depreciation (10,161) (9,320)
-------- -------
$11,215 $11,944
======= =======
Minimum rental payments on non-cancelable operating leases of the non-core
properties become due as follows: 2004 - $4,257,000; 2005 - $4,332,000; 2006 -
$4,408,000; 2007 - $4,156,000; 2008 - $1,376,000 and thereafter $2,170,000.
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.
The operating income of the properties sold during each of the years ended
October 31, 2002 and 2001 was less than 1% of the consolidated operating income
in each of the years then ended.
In fiscal 2001, the Company had a general partner interest in the Countryside
Square Limited Partnership (the "Partnership"), an unconsolidated joint venture,
which owned the Countryside Square Shopping Center in Clearwater, Florida. The
Company accounted for its investment in the partnership by the equity method of
accounting. Under the equity method, only the Company's share of income or loss
of the partnership is reflected in the financial statements. During fiscal 2001,
the property was sold and the partnership liquidated. Accordingly, through the
date of sale, 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.
(5) MORTGAGE NOTES AND OTHER RECEIVABLE
The components of the mortgage notes and other receivable at October 31, 2003
and 2002 were as follows (in thousands):
2003 2002
- -------------------------------------------------------------------------------------------------------------
Mortgage notes receivable:
Remaining principal balance $2,577 $2,685
Unamortized discounts to reflect market interest rates
at time of acceptance of notes (393) (434)
----- -----
2,184 2,251
Other receivable - 1,196
------ -----
$2,184 $3,447
Mortgage notes receivable consist of two fixed rate mortgages with contractual
interest rates of 9% and 12% which are secured by commercial property.
At October 31, 2003, principal payments on the mortgage notes receivable become
due as follows: 2004 - $119,000; 2005 - $130,000; 2006 - $142,000; 2007 -
$156,000; 2008 - $170,000 and thereafter - $1,860,000.
37
(6) MORTGAGE NOTES PAYABLE AND LINES OF CREDIT
At October 31, 2003, the Company had ten non-recourse first mortgage notes
payable totaling $104,588,000 ($106,429,000 at October 31, 2002) 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 $167,000,000 as of October 31, 2003.
Scheduled principal payments during the next five years and thereafter are as
follows: 2004 - $1,985,000; 2005 - $2,139,000; 2006 - $8,927,000; 2007 -
$11,225,000; 2008 - $53,261,000 and thereafter - $27,051,000.
At October 31, 2003, the Company had a secured revolving line of credit with a
bank, which allows for borrowings up to $18.125 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 + .5% 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, 2003 and 2002, the Company had no outstanding borrowings under this
revolving credit agreement. The Company pays annual fees of .25% on the unused
portion of this credit facility.
The Company also has a $20 million unsecured line of credit arrangement with the
same bank. The line of credit expires in fiscal 2004 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 + .5% or LIBOR + 2.5%. The Company pays an
annual fee of .25% on unused amounts. There were no borrowings outstanding under
this line of credit at October 31, 2003 and 2002.
Interest paid for the years ended October 31, 2003, 2002, and 2001 was
$8,094,000, $5,584,000 and $4,456,000, respectively.
(7) PREFERRED STOCK
The 8.99% Series B Senior Cumulative Preferred Stock ("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 Company at its option may redeem the
Series B Preferred Stock, 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.
In fiscal 2003, the Company sold 400,000 shares of 8.50% Series C Senior
Cumulative Preferred stock, ("Series C Preferred Stock") for net proceeds of $
38.4 million. The Series C Preferred Stock has no stated maturity and is not
convertible into other securities of the Company. On or after May 29, 2013, the
Series C Preferred Stock may be redeemed by the Company, at its option, at a
redemption price of $100 per share.
The Series B Preferred Stock and Series C Preferred Stock contain covenants,
which require the Company to maintain certain financial coverages relating to
fixed charge and capitalization ratios. Shares of both Preferred Stock series
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, 2003 and 2002.
In fiscal 2002, the Company repurchased 200,000 shares of its Series B Preferred
Stock for $16,050,000 in a negotiated transaction with a holder of the preferred
shares. The Company 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.
38
(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.
Underwriting commissions and costs incurred in connection with the Company's
stock offerings are reflected as a reduction of additional paid in capital.
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 Dividend Reinvestment and Share Purchase Plan that allows
shareholders to acquire additional shares of Common Stock and Class A Common
Stock by automatically reinvesting dividends. The Company issued 61,699 shares
of Common Stock and 18,704 shares of Class A Common Stock in fiscal year ended
October 31, 2003 (14,296 shares of Common Stock and 19,494 shares of Class A
Common Stock in fiscal year ended October 31, 2002) through the Plan.
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 aggregate value of all outstanding 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 has limited rights, may not be voted and is not entitled to
any dividends.
39
(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 are 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 vest over a maximum period of four years from the date of grant.
A summary of stock option transactions during the periods covered by these
financial statements is as follows:
Year ended October 31 2003 2002 2001
- --------------------- ------------------- ------------------- ---------------------
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 91,570 $7.50 315,060 $7.00 739,958 $6.91
Granted - - - - - -
Exercised (18,000) $7.22 (211,762) $6.88 (419,000) $6.83
Canceled/Forfeited (17,694) $7.44 (11,728) $7.03 (5,898) $7.54
--------- -------- -------
Balance at end of period 55,876 $7.62 91,570 $7.50 315,060 $7.00
Exercisable 55,876 91,570 222,060
Class A Common Stock:
Balance at beginning of period 66,810 $7.71 314,605 $7.50 739,464 $7.48
Granted - - - - - -
Exercised (24,077) $7.61 (37,312) $7.26 (24,859) $7.38
Canceled/Forfeited - - (210,483) $7.16 (400,000) $7.13
-------- --------- ---------
Balance at end of period 42,733 $7.83 66,810 $7.71 314,605 $7.50
Exercisable 42,733 66,810 221,605
At October 31, 2003, 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 2004 through April 2009 and the weighted
average remaining contractual life of these options is 3.5 years.
As of October 31, 2003, outstanding options to acquire approximately 21,000
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 are deemed cancelled and no longer available
for future grants.
In connection with the exercise of stock options certain officers of the Company
executed full recourse promissory notes equal to the purchase price of the
shares. At October 31, 2003, notes from officers totaled $1,434,000 ($1,746,000
at October 31, 2002). The notes have 10-year terms and bear fixed rates of
interest ranging from 6.8% to 8%. The shares are pledged as additional
collateral for the notes. Interest is payable quarterly. The exercise of the
stock options and the issuance of the notes 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 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,
2003, the Company has awarded 509,500 shares of Common Stock and 242,500 shares
of Class A Common Stock to participants as an incentive for future services. The
shares vest between five and ten years after the date of grant. At October 31,
2003, 13,250 shares each of Common Stock and Class A Common Stock were vested
(3,500 shares each of Common and Class A Common Stock at October 31, 2002).
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. Unamortized restricted stock compensation is charged to expense
over the respective vesting periods. For the years ended October 31, 2003, 2002
and 2001 amounts charged to expense totaled $1,105,000, $942,000 and $769,000,
respectively.
40
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, 2003, 2002 and 2001, the Company made contributions to the
401K Plan of $95,000, $93,000 and $88,000, respectively. The Company also has an
Excess Benefits and Deferred Compensation Plan that allow eligible employees to
defer benefits in excess of amounts provided under the Company's 401K Plan and a
portion of the employee's 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 years ended
October 31, 2003 and 2002 adjusted to give effect to the acquisitions of the
Ridgeway Shopping Center, (June 2002) Westchester Pavilion (December 2002),
Orange Meadows Shopping Center (December 2002), Greens Farms Plaza (February
2003), and Somers Commons (June 2003) as though these transactions were
completed on November 1, 2001. The pro forma information also gives effect to
the issuance of 8,050,000 shares of Class A Common stock (July 2002) and 400,000
shares of Series C Preferred Stock (May 2003) as though these transactions were
also completed on November 1, 2001.
The pro forma financial information is presented for informational purposes only
and may not be indicative of what the actual results of operations would have
been had the transactions occurred as of November 1, 2001, nor does it purport
to represent the results of future operations. (Amounts in thousands, except per
share figures).
Year Ended October 31,
----------------------
2003 2002
---- ----
Pro forma revenues: $63,302 $61,442
Pro forma net income applicable to Common
And Class A Common Stockholders: $17,064 $18,526
Pro forma basic shares outstanding:
Common and Common Equivalent 6,259 6,089
===== =====
Class A Common and Class A Common Equivalent 18,200 18,097
====== ======
Pro forma diluted shares outstanding:
Common and Common Equivalent 6,566 6,432
===== =====
Class A Common and Class A Common Equivalent 18,720 18,618
====== ======
Pro forma earnings per share:
Basic:
Common $.65 $.71
==== ====
Class A Common $.72 $.79
==== ====
Diluted:
Common $.64 $.70
==== ====
Class A Common $.71 $.77
==== ====
41
(11) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The unaudited quarterly results of operations for the years ended October 31,
2003 and 2002 are as follows (in thousands, except per share data):
Year Ended October 31, 2003 Year Ended October 31, 2002
--------------------------- ---------------------------
Quarter Ended Quarter Ended
------------- -------------
Jan 31 Apr 30 July 31 Oct 31 Jan 31 Apr 30 July 31 Oct 31
------ ------ ------- ------ ------ ------ ------- ------
Revenues $13,681 $15,027 $15,413 $16,240 $10,014 $9,971 $11,223 $13,132
======= ======= ======= ======= ======= ====== ======= =======
Net Income $4,197 $4,870 $5,459 $5,844 $3,508 $3,368 $3,295 $4,336
Preferred Stock Dividends (337) (337) (932) (1,188) (487) (337) (337) (337)
Excess of Carrying Value Over
Cost to Repurchase Preferred
Shares - - - - 3,071 - - -
------- ------- ------- ------- ------ ----- ----- ------
Net Income Applicable to
Common and Class A
Common Stockholders $3,860 $4,533 $4,527 $4,656 $6,092 $3,031 $2,958 $3,999
====== ====== ====== ====== ====== ====== ====== ======
Basic Earnings per Share:
Common $.15 $.17 $.17 $.18 $.36 $.18 $.15 $.15
Class A Common $.16 $.19 $.19 $.19 $.40 $.20 $.17 $.17
Diluted Earnings per Share:
Common $.15 $.17 $.17 $.17 $.35 $.17 $.15 $.15
Class A Common $.16 $.19 $.19 $.19 $.38 $.19 $.16 $.17
(12) COMMITMENTS AND CONTINGENCIES
In the normal course of business, from time to time, the Company is involved in
legal actions relating to the ownership and operations of its properties. In
management's opinion, the liabilities, if any that may ultimately result from
such legal actions are not expected to have a material adverse effect on the
consolidated financial position, results of operations or liquidity of the
Company.
42
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of Urstadt Biddle Properties Inc.:
We have audited the accompanying consolidated balance sheets of Urstadt Biddle
Properties Inc. (the "Company") as of October 31, 2003 and 2002, and the related
consolidated statements of income, cash flows and stockholders' equity for each
of the two years in the period ended October 31, 2003. Our audits also included
the financial statement schedules listed in the Index at Item 15 (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 audits. The financial statements of
Urstadt Biddle Properties Inc. as of October 31, 2001, and for the year then
ended, were audited by other auditors who have ceased operations. Those auditors
expressed an unqualified opinion on those financial statements and financial
statement schedules listed in the Index at Item 15 (a) 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, 2003 and 2002 and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
October 31, 2003 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 10, 2003
43
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 2003
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
- -----------------------------------------------------------------------------------------------------------------------------------
Life on which
Cost Capitalized depreciation for
Initial Subsequent Amount at which building and improvement
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 $ 106 2001 31.5
Greenwich, CT ** 488 1,139 - 61 488 1,200 1,688 103 2000 31.5
Greenwich, CT ** 570 2,359 - 180 570 2,539 3,109 354 1998 31.5
Greenwich, CT ** 199 795 - 29 199 824 1,023 146 1993 31.5
Greenwich, CT ** 111 444 - 22 111 466 577 180 1993 31.5
Southfield, MI ** 1,000 10,280 - 4,013 1,000 14,293 15,293 7,472 1983 35.0
----- ----- ------ --- ----- ----- ------ ------ -----
5,800 3,076 16,658 - 4,331 3,076 20,989 24,065 8,361
----- ----- ------ --- ----- ----- ------ ------ -----
Shopping Centers:
Somers, NY - 4,345 17,378 - - 4,345 17,378 21,723 149 2003 39.0
Westport, CT - 2,076 8,305 - 189 2,076 8,494 10,570 162 2003 39.0
White Plains, NY - 8,065 32,258 - 160 8,065 32,418 40,483 689 2003 39.0
Orange, CT - 2,291 10,438 - 2 2,291 10,440 12,731 224 2003 39.0
Stamford, CT 56,266 17,965 71,859 - 226 17,965 72,085 90,050 2,632 2002 39.0
Danbury, CT 1,930 2,459 4,566 - - 2,459 4,566 7,025 195 2002 39.0
Briarcliff, NY 3,957 2,222 5,185 - 19 2,222 5,204 7,426 300 2001 40.0
Somers, NY 6,101 1,834 7,383 - 27 1,834 7,410 9,244 981 1999 31.5
Briarcliff, NY 5,516 2,300 9,708 - 1,694 2,300 11,402 13,702 1,453 1998 40.0
Ridgefield, CT - 900 3,793 - 582 900 4,375 5,275 767 1998 40.0
Darien, CT 13,911 4,260 17,192 - 601 4,260 17,793 22,053 2,348 1998 40.0
Eastchester, NY 4,503 1,500 6,128 - 718 1,500 6,846 8,346 955 1997 31.0
Tempe, AZ - 493 2,284 - 1,079 493 3,363 3,856 2,026 1996 40.0
Danbury, CT * - 3,850 15,811 - 4,020 3,850 19,831 23,681 4,226 1995 31.5
Carmel, NY 4,840 1,488 5,973 - 1,813 1,488 7,786 9,274 1,752 1995 31.5
Farmingdale, NY - 1,027 4,174 - 150 1,027 4,324 5,351 1,438 1993 31.5
Meriden, CT - 5,000 20,309 - 6,318 5,000 26,627 31,627 7,852 1993 31.5
Somers, NY 1,764 821 2,600 - - 821 2,600 3,421 758 1992 31.5
Wayne, NJ * - 2,492 9,966 - 399 2,492 10,365 12,857 2,933 1992 31.0
Newington, NH - 728 1,997 - 3,752 728 5,749 6,477 3,080 1979 40.0
Springfield, MA - 1,372 3,656 307 15,165 1,679 18,821 20,500 9,184 1970 40.0
------ ----- ------ --- ----- ----- ------ ------ -----
98,788 67,488 260,963 307 36,914 67,795 297,877 365,671 44,104
------ ------ ------- --- ------ ------ ------- ------- ------
Industrial Distribution Center
Dallas, TX - 216 844 - - 216 844 1,060 379 1970 40.0
St.Louis,MO - 232 933 - - 232 933 1,165 284 1970 40.0
--- --- ----- --- --- --- ----- ----- ---
- 448 1,777 - - 448 1,777 2,225 663
--- --- ----- --- --- --- ----- ----- ---
Mixed Use Facility: Retail/Office:
Briarcliff, NY - 380 1,531 - 2,245 380 3,776 4,156 854 1999 40.0
--- --- ----- --- ----- --- ----- ----- -----
- 380 1,531 - 2,245 380 3,776 4,156 854
--- --- ----- --- ----- --- ----- ------ -----
Total $104,588 $71,392 $280,929 $307 $43,490 $71,699 $324,419 $396,117 $53,982
======= ======= ======== === ======= ======= ======== ======== =======
* Properties secure a $18.125 million secured revolving credit line. At October
31, 2003 there were no outstanding borrowings.
**Properties are cross collateralized for a mortgage in the amount of $5,800
at October 31, 2003.
44
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31, 2003
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(In thousands)
- ---------------------------------------------------------------------- ------------ ------------ ------------
NOTES: 2003 2002 2001
---- ---- ----
(a) RECONCILIATION OF REAL ESTATE -
OWNED SUBJECT TO OPERATING LEASES
Balance at beginning of year $310,646 $211,636 $192,233
Property improvements during the year 2,393 2,406 10,167
Property acquired during the year 84,964 98,867 9,758
Property sold during the year --- (275) (800)
Property reclassed from financing leases --- --- 2,252
Property assets fully written off (1,886) (1,988) (1,974)
------- ------- -------
Balance at end of year $396,117 $310,646 $211,636
======== ======== ========
(b) RECONCILIATION OF ACCUMULATED DEPRECIATION
Balance at beginning of year $45,993 $40,446 $35,768
Provision during the year charged to income 9,875 7,535 6,652
Property assets fully written off (1,886) (1,988) (1,974)
------- ------- -------
Balance at end of year $53,982 $45,993 $40,446
======= ======= =======
(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, 2003 is $416,398.
(e) The depreciation provision represents the expense calculated on real
property only.
45
URSTADT BIDDLE PROPERTIES INC.
OCTOBER 31 2003
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. $841 $688
Retail Store:
Riverside, CA 9% 12% 15-Jan-13 Payable in quarterly installments of
Principal and Interest of $54,313. 1,736 1,496
----------------------
TOTAL MORTGAGE LOANS ON REAL ESTATE $2,577 $2,184
----------------------
46
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 26, 2004
47
Pursuant to the requirements of the Securities Exchange Act
of 1934, the following persons on behalf of the Registrant and in the capacities
and on the date indicated have signed this Report below.
/S/ Charles J. Urstadt January 26, 2004
- ------------------------------
Charles J. Urstadt
Chairman and Director
(Principal Executive Officer)
/S/ Willing L. Biddle January 26, 2004
- ---------------------------
Willing L. Biddle
President and Director
/S/ James R. Moore January 26, 2004
- --------------------------
James R. Moore
Executive Vice President -
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
/S/ E. Virgil Conway January 26, 2004
- ---------------------------
E. Virgil Conway
Director
/S/ Robert R. Douglass January 26, 2004
- --------------------------
Robert R. Douglass
Director
/S/ Peter Herrick January 26, 2004
- -------------------------------
Peter Herrick
Director
/S/ George H.C. Lawrence January 26, 2004
- ------------------------
George H. C. Lawrence
Director
/S/ Charles D. Urstadt January 26, 2004
- -----------------------------
Charles D. Urstadt
Director
/S/ George J. Vojta January 26, 2004
- --------------------------------
George J. Vojta
Director
48
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