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EX-23.1 - EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITOR - URSTADT BIDDLE PROPERTIES INC | exhibit23_1.htm |
United
States
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
__________________
FORM 8-K
__________________
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): July 19, 2010
Commission
File Number 1-12803
URSTADT BIDDLE PROPERTIES
INC.
(Exact
Name of Registrant in its Charter)
Maryland
|
04-2458042
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
321 Railroad Avenue,
Greenwich, CT
|
06830
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code: (203) 863-8200
N/A
(Former
Name or Former address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
□
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
□
|
Soliciting
material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR
240.14a-12)
|
□
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
□
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
1
ITEM
8.01 - OTHER ITEMS
During
the period November 1, 2009 through June 18, 2010, Urstadt Biddle Properties
Inc. (“the Company”), acquired in separate transactions two properties
consisting of approximately 258,000 square feet of gross leasable area (“GLA”)
and equity and debt investments in two more properties totaling 443,000 in gross
leasable area, together (the "Acquisitions") for an aggregate investment of
approximately $68.3 million. Set forth in Item 9.01 are audited
financial statements prepared pursuant to Rule 3-14 of Regulation S-X relating
to a majority of Acquisitions, none of which individually are considered
significant within the meaning of Rule 3-14.
On May
12, 2010, the Company, through a wholly owned subsidiary, acquired the New
Milford Plaza Shopping Center, a 231,000 square foot grocery anchored shopping
center in New Milford, Connecticut, located in Litchfield County (“the New
Milford Property”) for $22.5 million, inclusive of closing costs,, from GRE New
Milford LLC (“New Milford Seller”). There is no relationship between
any Director or Officer of the Company and the New Milford Seller. At
the closing of the transaction the Company assumed a mortgage on the property
held by John Hancock Life Insurance Company valued at approximately $9.2
million. The mortgage matures on January 1, 2013 with a fair market
value interest rate of 3.9%. The Company’s cash investment of $13.8
million was funded with available cash and a $13.2 million borrowing on its
unsecured line of credit.
In
addition, on June 18, 2010, the Company purchased, through a wholly-owned
subsidiary, a general partnership interest that equates to a 9.667% equity
interest in the limited partnership which owns the Midway Shopping Center
(“Midway”) in Scarsdale, New York for a purchase price of $5.98 million,
excluding closing costs, from the Milton Axelfield Trust (“Midway
Seller”). There is no relationship between any Director or Officer of
the Company and the Midway Seller. UBP also made an additional
investment in Midway in the form of an unsecured loan (“Midway Loan”) to the
partnership in the approximate amount of $11.6 million which the partnership
used to repay a second mortgage and unsecured loan. The Midway Loan matures in
January 2013 and requires monthly payments of interest only at the per annum
rate of 5.75%. The Company completed the acquisition with available
cash and a $17.45 million borrowing under its unsecured line of
credit.
Material
Factors Considered by the Company:
New Milford
Property:
Market
and Competition:
Prior to
acquiring the New Milford Property, the Company considered general regional and
local economic market conditions and the Property's competitive posture within
that market.
The New
Milford Property acquired is a shopping center located in the Town of New
Milford, Litchfield County, Connecticut. The Property contains 231,000 square
feet of GLA and is situated on 22 acres of land. At June 1, 2010 the Property
was 90% leased to ten tenants whose primary businesses are the sale of retail
products, goods and services.
The New
Milford property was built in 1970 (renovated in the 1990’s), is located
immediately alongside Route 7 (Danbury Road) and is well situated at a
signalized intersection that captures car traffic heading north from I-84 to the
residential and recreational destinations to the north and along Candlewood
Lake. Within 3 miles, the average household income is nearly $85,000 which grows
to over $95,000 within 5 miles. There are approximately 40,000 people
within 5 miles and 120,000 people within 10 miles of the property, which does
not include an affluent summertime crowd that utilizes the various recreational
facilities available at nearby Candlewood Lake. For these people and
other seasonal residents who have homes in Litchfield County, Route 7 is the
only route to get to the next closest shopping areas which are much further away
in Danbury or Torrington.
2
Tenants:
The
property's largest tenants are Wal-Mart, a national retail chain occupying
105,000 square feet (45.4% of the property's GLA) and Stop & Shop, a
subsidiary of Ahold Corporation, a national retail grocery chain occupying
73,000 square feet (31.4% of the Property's GLA). No other tenant leases more
than 6% of the property's GLA.
Substantially
all the leases are with tenants for terms longer than one year and generally
provide for additional rental amounts based on each tenant's share of the cost
of maintaining common areas and certain operating expenses including real estate
taxes and insurance of the property, and percentage of gross sales
rent.
The
following is a schedule of lease expirations of the property by
year:
Number
of Tenants Whose Lease Expire Each
Year
|
Total
Square Footage Expiring Each Year
|
Minimum
Annual Base Rentals
|
%
of Annual Base Rentals
(1)
|
|||||||||||||
Year:
|
||||||||||||||||
2010
|
1 | 2,500 | $ | 25,000 | 1.8 | % | ||||||||||
2011
|
- | - | - | - | ||||||||||||
2012
|
2 | 15,000 | 184,000 | 13.3 | % | |||||||||||
2013
|
3 | 112,000 | 610,000 | 44.1 | % | |||||||||||
2014
|
- | - | - | - | ||||||||||||
2015
|
3 | 4,800 | 79,000 | 5.7 | % | |||||||||||
Thereafter
|
1 | 73,000 | 485,000 | 35.1 | % | |||||||||||
10 | 207,300 | $ | 1,383,000 | 100.0 | % | |||||||||||
(1) Based
on 2010 annualized base rents.
Building
and Capital Improvements:
The
estimated federal tax basis of the Property (including land) is approximately
$22,500,000. For federal income tax purposes, the Property will be depreciated
over its estimated useful life (39 years) on a straight line basis.
Property
Taxes:
The
annual real estate taxes of the Property are anticipated to be approximately
$305,000 for the 2010 tax year.
Property
Management:
The
Company manages the Property directly.
After
reasonable inquiry, the Company is not aware of any other material factors
relating to the New Milford Property that would cause the reported financial
information not to be necessarily indicative of future operating
results.
The
Company and its operations are, however, subject to a number of risks and
uncertainties. For a discussion of such risks, see the risks
identified in the Company’s Annual Report on Form 10-K for the fiscal year ended
October 31, 2009 under Item 1A Risk Factors and in the other reports filed by
the Company with the Securities and Exchange Commission.
3
Midway
Property:
Market
and Competition:
Prior to
acquiring an approximate 10% equity interest in the limited partnership that
owns Midway and investing an additional $11.6 million in the form of an
unsecured loan to Midway, the Company considered general regional and local
economic market conditions and Midway’s competitive posture within that
market. In addition, the Company considered the overall leverage
levels of Midway in making the unsecured loan. Midway currently has a
first mortgage payable in the approximate amount of $14 million which bears
interest at approximately 6% and is due on January 1, 2013. Midway is a
shopping center located in Scarsdale, Westchester County, New York. The property
contains 247,000 square feet of GLA and is situated on 14 acres of land. At June
1, 2010, the property was 87% leased to sixteen tenants whose primary businesses
are the sale of retail products, goods and services.
Midway is
located on Central Avenue in Scarsdale, Westchester, County, New York, one of
the highest areas of retail concentration in Westchester County. The retail
market of Central Avenue is dense with many other shopping centers and free
standing retailers and, although competitive, this concentration generates large
amounts of retail traffic and potential customers. The surrounding area of
Scarsdale, Greenburgh and Ardsley has a dense residential
population.
The
property was built in 1957. The population within five miles of the
property is approximately 348,000 with a median household income of
approximately $82,000 per annum.
Tenants:
The
property's largest tenants are a ShopRite Supermarket, a national retail grocery
chain occupying 69,000 square feet (28% of the property's GLA) and Simply
Amazing, a national discount clothing retailer occupying 24,000 square feet (10%
of GLA). No other tenant leases more than 5% of the property's
GLA.
Substantially
all the leases are with tenants for terms longer than one year and generally
provide for additional rental amounts based on each tenant's share of the cost
of maintaining common areas and certain operating expenses including real estate
taxes and insurance of the property and percentage of gross sales
rent.
The
following is a schedule of lease expirations of the property by
year:
Number
of Tenants Whose Lease Expire Each
Year
|
Total
Square Footage Expiring
Each
Year
|
Minimum
Annual Base Rentals
|
%
of Annual Base Rentals
(1)
|
|||||||||||||
2011
|
1 | 550 | $ | 11,000 | 0.21 | % | ||||||||||
2012
|
2 | 1,000 | 109,000 | 2.11 | % | |||||||||||
2013
|
2 | 4,500 | 124,000 | 2.40 | % | |||||||||||
2014
|
5 | 55,800 | 1,269,000 | 24.56 | % | |||||||||||
2015
|
3 | 29,000 | 605,000 | 11.71 | % | |||||||||||
2016
|
3 | 16,300 | 729,000 | 14.11 | % | |||||||||||
2017
|
3 | 11,900 | 572,000 | 11.07 | % | |||||||||||
2018
|
1 | 8,090 | 295,000 | 5.71 | % | |||||||||||
2019
|
2 | 4,400 | 135,000 | 2.61 | % | |||||||||||
Thereafter
|
4 | 83,600 | 1,318,000 | 25.51 | % | |||||||||||
26 | 215,140 | $ | 5,167,000 | 100.0 | % |
(1) Based
on 2010 annualized base rents.
4
Accounting
Considerations:
Because
the Company is deemed to have significant influence but does not control Midway,
the Company will record its 10% equity investment in accordance with the equity
method of accounting and will not consolidate the accounts of
Midway. Under the equity method of accounting the Company will record
its initial $6 million investment at cost and subsequently adjust the value for
its share of the net earnings of Midway and reduce its investment for any
distributions it receives.
Property
Taxes:
The
annual real estate taxes of the Property are approximately $1.7 million for the
2010 tax year.
Property
Management:
The
Company will manage Midway directly beginning August 1, 2010. The
Company will also be the primary leasing agent and receive fees standard for the
industry.
After
reasonable inquiry, the Company is not aware of any other material factors
relating to its investment in Midway that would cause the reported financial
information not to be necessarily indicative of future operating
results.
The
Company and its operations are, however, subject to a number of risks and
uncertainties. For a discussion of such risks, see the risks
identified in the Company’s Annual Report on Form 10-K for the fiscal year ended
October 31, 2009 under Item 1A Risk Factors and in the other reports filed by
the Company with the Securities and Exchange Commission.
ITEM
9.01 FINANCIAL
STATEMENTS AND EXHIBITS
(a)
|
Financial
Statements
|
(b)
|
Pro Forma Financial
Information
|
(c)
|
Exhibits
|
23.1 Consent
of Independent Auditor
5
URSTADT
BIDDLE PROPERTIES INC.
TABLE
OF CONTENTS
Item
9.01
Financial
Statements and Exhibits
(a)
|
Financial
Statements
|
Page
|
|
New Milford Plaza
Shopping Center:
|
|||
Independent
Auditors’ Report
|
7
|
||
Statement
of Revenues and Certain Expenses of The New Milford Plaza Shopping Center
For the Year Ended December 31, 2009 (Audited) and For the Six Months
Ended June 30, 2010 (Unaudited)
|
8
|
||
Notes
to Statement of Revenues and Certain Expenses of New Milford Plaza
Shopping Center
|
9
|
||
Midway Shopping
Center, L.P.:
|
|||
Independent
Auditors’ Report
|
11
|
||
Statement
of Revenues and Certain Expenses of Midway Shopping Center,
L.P. For the Year Ended December 31, 2009 (Audited) and For the
Six Months Ended June 30, 2010 (Unaudited)
|
12
|
||
Notes
to Statement of Revenues and Certain Expenses of Midway Shopping Center,
L.P.
|
13
|
||
(b)
|
Pro
Forma Financial Information (Unaudited)
|
15
|
|
Pro
Forma Consolidated Balance Sheet as of April 30, 2010
|
16
|
||
Pro
Forma Consolidated Statement of Income For the year ended October 31,
2009
|
17
|
||
Notes
to Unaudited Pro Forma Financial Information
|
18
|
||
Pro
Forma Consolidated Statement of Income For the six months ended April 30,
2010
|
19
|
||
Notes
to Unaudited Pro Forma Financial Information
|
20
|
6
INDEPENDENT
AUDITORS’ REPORT
To the
Board of Directors and Stockholders
Urstadt
Biddle Properties Inc.
Greenwich,
Connecticut
We have
audited the accompanying Statement of Revenues and Certain Expenses of the
property known as New Milford Plaza Shopping Center, (the “Property”) for the
year ended December 31, 2009 (the “Historical Summary”). This
Historical Summary is the responsibility of the Property’s
management. Our responsibility is to express an opinion on this
Historical Summary based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
Historical Summary is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall Historical Summary presentation. We believe that our
audit provides a reasonable basis for our opinion.
The
accompanying Historical Summary was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission as described
in note 2 and is not intended to be a complete presentation of the Property’s
revenues and expenses.
In our
opinion, the Historical Summary referred to above presents fairly, in all
material respects, the Revenues and Certain Expenses of the Property for the
year ended December 31, 2009 in conformity with accounting principles generally
accepted in the United States of America.
/s/ PKF
LLP
New York,
New York
July 15,
2010
7
NEW
MILFORD PLAZA SHOPPING CENTER
STATEMENT
OF REVENUES AND CERTAIN EXPENSES
(in
thousands)
For
the Six Month Period Ended
June 30,
2010
|
For
the Year Ended December 31,
2009
|
|||||||
(Unaudited)
|
||||||||
REVENUES:
|
||||||||
Base
rents
|
$ | 750 | $ | 1,477 | ||||
Percentage
rent
|
128 | 256 | ||||||
Escalations
|
300 | 599 | ||||||
1,178 | 2,332 | |||||||
CERTAIN
EXPENSES:
|
||||||||
Real
estate taxes
|
153 | 303 | ||||||
Maintenance
and repairs
|
52 | 112 | ||||||
Insurance
|
28 | 46 | ||||||
Utilities
|
66 | 76 | ||||||
General
and administrative
|
10 | 19 | ||||||
309 | 556 | |||||||
EXCESS
OF REVENUES OVER CERTAIN EXPENSES
|
$ | 869 | $ | 1,776 |
The
accompanying notes are an integral part of this financial
statement.
8
NEW
MILFORD PLAZA SHOPPING CENTER
NOTES
TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
1. BUSINESS
AND ORGANIZATION
New
Milford Plaza Shopping Center (the "Property") is a retail property located in
the Town of New Milford, Litchfield County, Connecticut. The Property was owned
by GRE New Milford, LLC, a Delaware Limited Liability Company. The Property has
an aggregate gross leasable area (“GLA”) of approximately 231,000 square
feet.
On May
12, 2010, the Property was acquired by Urstadt Biddle Properties Inc., a real
estate investment trust, an unaffiliated party (the "Company").
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
Statement of Revenue and Certain Expenses (“Historical Summary”) has been
prepared for the purpose of complying with the provisions of Rule 3-14 of
Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”),
which requires certain information with respect to real estate operations to be
included with certain filings with the SEC. The Historical Summary
includes the historical revenues and certain expenses of the Property, exclusive
of interest income, interest expense, depreciation and amortization, rental
income relating to the allocation of purchase price of the property to
above/below market leases and management and advisory fees, which may not be
comparable to the corresponding amounts reflected in the future operations of
the Property.
Real
Estate
Significant
improvements to real estate which enhance the value are capitalized as additions
to the Property's cost basis in the period in which the expenditures are
incurred. Repairs and maintenance costs are expensed as incurred. Tenant
allowances and improvements are capitalized as additions to the Property's cost
basis.
Rental
Operations
The
Property earns rental income from tenants under leasing arrangements which
generally provide for minimum rents, percentage rents and charges to tenants for
their pro rata shares of real estate taxes and operating expenses. All leases
have been accounted for as operating leases. Base rental income is recorded on a
straight-line basis over the terms of the related agreements. Escalation rents
based on payments for real estate taxes and operating expenses are estimated and
accrued. Percentage rent is recognized when a specific tenant's sales breakpoint
is achieved.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Property’s
management to make estimates and assumptions that affect the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
9
Accounts
Receivable
Bad debts
are recorded under the specific identification method, whereby uncollectible
receivables are reserved for when identified.
Subsequent
Events
The
Company has evaluated subsequent events through July 15, 2010, the date on which
the Historical Summary was available to be issued.
3. LEASES
Minimum
future rentals on non-cancelable leases which extend for more than one year at
December 31, 2009 are as follows (in thousands):
Year
Ending
December
31,
|
||||
2010
|
$ | 1,293 | ||
2011
|
1,346 | |||
2012
|
1,246 | |||
2013
|
659 | |||
2014
|
603 | |||
Thereafter
|
3,841 | |||
$ | 8,988 |
Minimum
rentals above do not include recoveries of operating expenses and real estate
taxes, or percentage rents. Such amounts are reflected in the statement of
revenues and certain expenses as escalations and percentage rent
revenues.
For the
year ended December 31, 2009, percentage rent income of $256,000 represents
percentage rent received from one tenant who leases more than 10% of the
Property's GLA.
For the
year ended December 31, 2009, base rent includes approximately $485,000 (32% of
total base rent in 2009) received from a tenant who currently occupies 73,000
square feet of space and $496,000 (34% of total base rent in 2009) received from
a tenant who currently occupies 105,000 square feet of space.
10
INDEPENDENT
AUDITORS’ REPORT
To the
Board of Directors and Stockholders
Urstadt
Biddle Properties Inc.
Greenwich,
Connecticut
We have
audited the accompanying Statement of Revenues and Certain Expenses of the
property known as Midway Shopping Center L.P., (the “Property”) for the year
ended December 31, 2009 (the “Historical Summary”). This Historical
Summary is the responsibility of the Property’s management. Our
responsibility is to express an opinion on this Historical Summary based on our
audit.
We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
Historical Summary is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall Historical Summary presentation. We believe that our
audit provides a reasonable basis for our opinion.
The
accompanying Historical Summary was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission as described
in note 2 and is not intended to be a complete presentation of the Property’s
revenues and expenses.
In our
opinion, the Historical Summary referred to above presents fairly, in all
material respects, the Revenues and Certain Expenses of the Property for the
year ended December 31, 2009 in conformity with accounting principles generally
accepted in the United States of America.
/s/ PKF
LLP
New York,
New York
July 15,
2010
11
MIDWAY
SHOPPING CENTER, L.P.
STATEMENT
OF REVENUES AND CERTAIN EXPENSES
(in
thousands)
For
the Six Month Period Ended
June 30,
2010
|
For
the Year Ended December 31,
2009
|
|||||||
(Unaudited)
|
||||||||
REVENUES:
|
||||||||
Base
rents
|
$ | 2,168 | $ | 4,164 | ||||
Escalations
|
877 | 1,839 | ||||||
Other
|
39 | 132 | ||||||
3,084 | 6,135 | |||||||
CERTAIN
EXPENSES:
|
||||||||
Real
estate taxes
|
845 | 1,643 | ||||||
Maintenance
and repairs
|
442 | 836 | ||||||
Insurance
|
25 | 49 | ||||||
Utilities
|
91 | 150 | ||||||
General
and administrative
|
125 | 381 | ||||||
1,528 | 3,059 | |||||||
EXCESS
OF REVENUES OVER CERTAIN EXPENSES
|
$ | 1,556 | $ | 3,076 |
The
accompanying notes are an integral part of this financial
statement.
12
MIDWAY
SHOPPING CENTER L.P.
NOTES
TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
1. BUSINESS
AND ORGANIZATION
Midway
Shopping Center L.P. (the "Property") is a retail property located in Scarsdale,
Westchester County, New York. The Property has an aggregate gross
leasable area (“GLA”) of approximately 247,000 square feet.
On June
18, 2010, Urstadt Biddle Properties Inc, a real estate investment trust, (the
“Company”) acquired a 9.667% equity interest in the limited partnership which
owns the Property. In addition, on June 18, 2010 the Company also
made an unsecured loan to the limited partnership that owns the Property in the
amount of $11.6 million. The loan requires payments to the Company of
interest only at the rate of 5.75% per annum and matures on January 1,
2013.
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
Statement of Revenue and Certain Expenses (“Historical Summary”) has been
prepared for the purpose of complying with the provisions of Rule 3-14 of
Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”),
which requires certain information with respect to real estate operations to be
included with certain filings with the SEC. The Historical Summary
includes the historical revenues and certain expenses of the Property, exclusive
of interest income, interest expense, depreciation and amortization, rental
income relating to the allocation of purchase price of the property to
above/below market leases and management and advisory fees, which may not be
comparable to the corresponding amounts reflected in the future operations of
the Property.
Real
Estate
Significant
improvements to real estate which enhance the value are capitalized as additions
to the Property's cost basis in the period in which the expenditures are
incurred. Repairs and maintenance costs are expensed as incurred. Tenant
allowances and improvements are capitalized as additions to the Property's cost
basis.
Rental
Operations
The
Property earns rental income from tenants under leasing arrangements which
generally provide for minimum rents, and charges to tenants for their pro rata
shares of real estate taxes and operating expenses. All leases have been
accounted for as operating leases. Base rental income is recorded on a
straight-line basis over the terms of the related agreements. Escalation rents
based on payments for real estate taxes and operating expenses are estimated and
accrued.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Property’s
management to make estimates and assumptions that affect the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Accounts
Receivable
Bad debts
are recorded under the specific identification method, whereby uncollectible
receivables are reserved for when identified.
13
Subsequent
Events
The
Company has evaluated subsequent events through July 15, 2010, the date on which
the Historical Summary was available to be issued.
3. LEASES
Minimum
future rentals on non-cancelable leases which extend for more than one year at
December 31, 2009 are as follows (in thousands):
Year
Ending
December
31,
|
||||
2010
|
$ | 4,412 | ||
2011
|
4,928 | |||
2012
|
4,994 | |||
2013
|
5,318 | |||
2014
|
4,227 | |||
Thereafter
|
24,292 | |||
$ | 48,171 |
Minimum
rentals above do not include recoveries of operating expenses and real estate
taxes. Such amounts are reflected in the statement of revenues and
certain expenses as escalations revenue.
For the
year ended December 31, 2009, base rent includes approximately $465,000 (11.2%
of total base rent in 2009) received from a tenant who currently occupies
10,7667 square feet of space and $431,000 (10.4% of total base rent in 2009)
received from a tenant who currently occupies 11,000 square feet of
space.
14
ITEM
9.01
(b) PRO
FORMA FINANCIAL INFORMATION (UNAUDITED)
The
following pro forma information reflects the acquisition of New Milford Plaza
Shopping Center (“New Milford Property”) on May 12, 2010, and the purchase of a
9.667% equity investment and an $11.6 million debt investment in the Midway
Shopping Center L.P. (“Midway”) on June 18, 2010 by Urstadt Biddle Properties
Inc. (the “Company”) (together , the “Acquisition Transactions”).
The Pro
Forma Consolidated Balance Sheet as of April 30, 2010 and the Pro Forma
Consolidated Statement of Income for the year ended October 31, 2009 and the six
months ended April 30, 2010 have been prepared to reflect the Acquisition
Transactions and the adjustments described in the accompanying notes. The
historical financial statements of the properties are for the year ended
December 31, 2009 and the six months ended June 30, 2010. The pro
forma financial information is based on the historical financial statements of
the Company and should be read in conjunction with the notes and management's
assumptions thereto. The pro forma consolidated balance sheet was prepared as if
the Acquisition Transactions occurred on April 30, 2010. The pro
forma consolidated statement of income for the year ended October 31, 2009 was
prepared assuming the purchases occurred on November 1, 2008. The pro forma
consolidated statement of income for the six months ended April 30, 2010 was
prepared assuming the purchases occurred on November 1, 2009. The pro
forma financial information is unaudited and not necessarily indicative of the
actual financial position of the Company as of April 30, 2010 or what the actual
results would have been assuming the acquisition transactions had been
consummated at the beginning of the periods presented, nor does it purport to
represent the future financial position and results of operations for future
periods.
15
URSTADT
BIDDLE PROPERTIES INC.
PRO
FORMA CONSOLIDATED BALANCE SHEET
AS
OF APRIL 30, 2010
(UNAUDITED)
(in
thousands)
Company
Historical
|
(a)
|
Pro
Forma
Adjustments
|
Company
Pro
Forma
|
|||||||||||
ASSETS
|
||||||||||||||
Real
Estate Investments:
|
||||||||||||||
Core
properties - at cost
|
$ | 575,841 | $ | 22,900 |
(b)
|
$ | 598,741 | |||||||
Non-core
properties - at cost
|
1,383 | - | 1,383 | |||||||||||
Less:
accumulated depreciation
|
(111,129 | ) | - | (111,129 | ) | |||||||||
466,095 | 22,900 | 488,995 | ||||||||||||
Mortgage
Notes Receivable
|
1,131 | - | 1,131 | |||||||||||
Loan
Receivable
|
- | 11,600 |
(b)
|
11,600 | ||||||||||
Unconsolidated
Joint Ventures
|
7,183 | 6,000 |
(b)
|
13,183 | ||||||||||
474,409 | 40,500 | 514,909 | ||||||||||||
Cash
and cash equivalents
|
1,505 | (689 | ) |
(b)
|
816 | |||||||||
Restricted
cash
|
857 | - | 857 | |||||||||||
Marketable
securities
|
1,097 | - | 1,097 | |||||||||||
Tenant
receivables
|
21,117 | - | 21,117 | |||||||||||
Prepaid
expenses and other assets
|
4,827 | - | 4,827 | |||||||||||
Deferred
charges, net of accumulated amortization
|
4,642 | - | 4,642 | |||||||||||
Deposits
on real estate investments
|
1,157 | - | 1,157 | |||||||||||
Total Assets
|
$ | 509,611 | $ | 39,811 | $ | 549,422 | ||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||||||||
LIABILITIES
|
||||||||||||||
Bank
loans
|
$ | 13,300 | $ | 30,650 |
(b)
|
$ | 43,950 | |||||||
Mortgage
notes payable
|
110,212 | 9,161 |
(b)
|
119,373 | ||||||||||
Accounts
payable and accrued expenses
|
1,735 | - | 1,735 | |||||||||||
Deferred
officers' compensation
|
265 | - | 265 | |||||||||||
Other
liabilities
|
11,277 | - | 11,277 | |||||||||||
Total Liabilities
|
136,789 | 39,811 | 176,600 | |||||||||||
Redeemable
noncontrolling interests
|
8,241 | - | 8,241 | |||||||||||
Redeemable
Preferred Stock
|
96,203 | - | 96,203 | |||||||||||
Commitments
and Contingencies
|
||||||||||||||
Stockholders'
Equity:
|
||||||||||||||
7.5% Series D Senior Cumulative
Preferred Stock
|
61,250 | - | 61,250 | |||||||||||
Common Stock
|
84 | - | 84 | |||||||||||
Class A Common
Stock
|
183 | - | 183 | |||||||||||
Additional paid in
capital
|
263,597 | - | 263,597 | |||||||||||
Cumulative
distributions in excess of net income
|
(56,687 | ) | - | (56,687 | ) | |||||||||
Accumulated
other Comprehensive income
|
(49 | ) | - | (49 | ) | |||||||||
Total Stockholders'
Equity
|
268,378 | - | 268,378 | |||||||||||
Total Liabilities and
Stockholders' Equity
|
$ | 509,611 | $ | 39,811 | $ | 549,422 |
The
accompanying notes and management's assumptions are an integral part of this pro
forma consolidated balance sheet.
16
URSTADT
BIDDLE PROPERTIES INC.
PRO
FORMA CONSOLIDATED STATEMENT OF INCOME
FOR
THE YEAR ENDED OCTOBER 31, 2009
(UNAUDITED)
(in
thousands, except per share data)
Company
Historical
|
(a)
|
New
Milford
Property
|
(b)
|
Midway
|
Pro
Forma
Adjustments
|
Company
Pro
Forma
|
||||||||||||||||||
Revenues
|
$ | 83,233 | $ | 2,315 | $ | - | $ |
17
200
|
(c)
(k)
|
$ | 85,765 | |||||||||||||
Expenses
|
||||||||||||||||||||||||
Property
Expenses
|
26,328 | 698 | - | (142 | ) |
(h)
|
26,884 | |||||||||||||||||
Interest
|
6,695 | 533 | - |
(173
616
|
)
|
(i)
(d)
|
7,671 | |||||||||||||||||
Depreciation
and Amortization
|
15,366 | - | - |
461
167
|
(e)
(j)
|
15,994 | ||||||||||||||||||
General
and Administrative
|
6,350 | - | - | - | 6,350 | |||||||||||||||||||
Directors
Fees
|
292 | - | - | - | 292 | |||||||||||||||||||
Total Operating
Expenses
|
55,031 | 1,231 | - | 929 | 57,191 | |||||||||||||||||||
Operating
Income
|
28,202 | 1,084 | - | (712 | ) | 28,574 | ||||||||||||||||||
Non
Operating Income (Expense)
|
||||||||||||||||||||||||
Equity in Earnings
(Loss) of
Unconsolidated
Joint Venture
|
- | - | 50 |
(g)
|
- | 50 | ||||||||||||||||||
Interest Income
|
- | - | - | 667 |
(f)
|
667 | ||||||||||||||||||
Minority
Interest
|
(459 | ) | - | - | - | (459 | ) | |||||||||||||||||
Income
from Continuing Operations
|
27,743 | 1,084 | 50 | (45 | ) | 28,832 | ||||||||||||||||||
Preferred
Stock Dividends
|
(13,094 | ) | - | - | - | (13,094 | ) | |||||||||||||||||
Net
Income Applicable to Common
|
||||||||||||||||||||||||
and Class A Common
Stockholders
|
$ | 14,649 | $ | 1,084 | $ | 50 | $ | (45 | ) | $ | 15,738 | |||||||||||||
Basic
Earnings Per Share
|
||||||||||||||||||||||||
Per Common
Share:
|
$ | 0.55 | $ | 0.59 | ||||||||||||||||||||
Per Class A Common
Share:
|
$ | 0.60 | $ | 0.65 | ||||||||||||||||||||
Diluted
Earnings Per Share
|
||||||||||||||||||||||||
Per Common
Share:
|
$ | 0.54 | $ | 0.58 | ||||||||||||||||||||
Per Class A Common
Share:
|
$ | 0.59 | $ | 0.64 | ||||||||||||||||||||
Weighted
Average Shares :
|
||||||||||||||||||||||||
Basic Earnings Per
Share
|
||||||||||||||||||||||||
Common Shares
|
7,069 | 7,069 | ||||||||||||||||||||||
Class A Common
Shares
|
17,910 | 17,910 | ||||||||||||||||||||||
Diluted Earnings Per
Share
|
||||||||||||||||||||||||
Common Shares
|
7,392 | 7,392 | ||||||||||||||||||||||
Class A Common
Shares
|
18,026 | 18,026 |
The
accompanying notes and management's assumptions are an integral part of this pro
forma consolidated statement of income.
17
NOTES
TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
ADJUSTMENTS
TO PRO FORMA CONSOLIDATED BALANCE SHEET:
(a)
|
Derived
from the Company's unaudited financial statements at April 30,
2010.
|
(b)
|
Reflects
the pro forma acquisition of the New Milford Property valued at
$22,900,000 and the assumption of a mortgage note payable valued at
$9,161,000 with a fair market value interest rate of 4% per
annum. In addition it reflects the purchase of a 9.667% equity
interest in Midway for $6,000,000. In addition the Company made
an unsecured loan to the Midway in the amount of
$11,600,000. The Company utilized cash and cash equivalents of
$689,000, with the balance of the investment funded with a $30,650,000
borrowing on the Company's unsecured revolving credit line. The
Company intends to account for the acquisition of the New Milford Property
in accordance with Accounting Standards Codification (“ASC”) Section 805
“Business Combinations” and as a result the Company is currently in the
process of analyzing the fair value of in-place leases and, consequently,
no value has yet been assigned to the leases. Accordingly, the purchase
price allocation is preliminary and may be subject to change. The Company
will include the accounts of the New Milford Property in its consolidated
financial statements. The Company intends to account for its
equity investment in the Midway Partnership under the equity method of
accounting as it exercises significant influence but does not control the
partnership. The Company will record its loan to Midway at cost
and make the appropriate market value disclosures in accordance with ASC
Section 825 “Financial
Instruments”.
|
ADJUSTMENTS
TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED OCTOBER 31,
2009:
(a)
|
Derived
from the Company's audited financial statements for the year ended October
31, 2009.
|
(b)
|
Reflects
revenues and operating expenses as reported by New Milford Property for
the year ended December 31, 2009.
|
(c)
|
Reflects
the pro forma adjustment to record operating rents on a straight line
basis.
|
(d)
|
Reflects
pro forma interest on credit line borrowings of $30.7 million as if the
borrowings were made on November 1, 2008. Interest on the credit line
borrowings is at variable rate using a weighted average rate of 2.0%
outstanding during the period.
|
(e)
|
Reflects
depreciation expense for the year ended October 31, 2009 for New Milford
Property based on a 39 year estimated useful life for the property's
building and improvements using a cost basis of $17,966,000 (the remaining
purchase price is assumed to be allocated to land) as if the property had
been owned for the entire period.
|
(f)
|
Reflects
interest income on the $11.6 million unsecured loan to Midway which earns
interest at the rate of 5.75% per
annum.
|
(g)
|
Reflects
the Company’s equity in earnings of Midway for year ended October 31, 2009
based on the earnings of Midway for the 12 months ended December 31,
2009.
|
(h)
|
Reflects
adjustment of management related costs from the New Milford Property that
will not continue after the
purchase.
|
(i)
|
Represents
a reduction in interest expense as a result of recording the mortgage
assumed on the acquisition of the New Milford Property at the fair market
value interest rate of 4% per
annum.
|
(j)
|
Represents
the annual charge for depreciation expense for the excess of the cost paid
for the Company’s 9.667% share of the equity in the limited partnership
that owns Midway over the Company’s share of Midway’s net book
value.
|
(k)
|
Represents
the annual charge for management fees on
Midway.
|
18
URSTADT
BIDDLE PROPERTIES INC.
|
PRO
FORMA CONSOLIDATED STATEMENT OF
INCOME
|
FOR
THE SIX MONTHS ENDED APRIL 30, 2010
|
(UNAUDITED)
|
(in
thousands, except per share data)
|
Company
Historical
|
(a)
|
New
Milford
Property
|
(b)
|
Midway
|
Pro
Forma
Adjustments
|
Company
Pro
Forma
|
|||||||||||||||||||
Revenues
|
$ | 41,797 | $ | 1,169 | $ |
9
100
|
(c)
(k)
|
$ | 43,075 | ||||||||||||||||
Expenses
|
|||||||||||||||||||||||||
Property
Expenses
|
13,965 | 380 | - | (71 | ) |
(h)
|
14,274 | ||||||||||||||||||
Interest
|
3,622 | 263 | - |
300
(83)
|
(d)
(i)
|
4,102 | |||||||||||||||||||
Depreciation
and Amortization
|
7,177 | - | - |
230
84
|
(e)
(j)
|
7,491 | |||||||||||||||||||
General
and Administrative
|
3,527 | - | - | - | 3,527 | ||||||||||||||||||||
Acquisition
Costs
|
156 | - | - | - | 156 | ||||||||||||||||||||
Directors
Fees
|
174 | - | - | - | 174 | ||||||||||||||||||||
Other
Expense
|
449 | 449 | |||||||||||||||||||||||
Total Operating
Expenses
|
29,070 | 643 | - | 460 | 30,173 | ||||||||||||||||||||
Operating
Income
|
12,727 | 526 | - | (351 | ) | 12,902 | |||||||||||||||||||
Non
Operating Income (Expense)
|
|||||||||||||||||||||||||
Equity
in Earnings (Loss) of
Unconsolidated Joint Venture
|
- | - | 55 | - | 55 | ||||||||||||||||||||
Interest
Income
|
- | - | - | 333 |
(f)
|
333 | |||||||||||||||||||
Net
Income Attributable to
Noncontrolling
Interests
|
(154 | ) | - | - | - | (154 | ) | ||||||||||||||||||
Income
from Continuing Operations
|
12,573 | 526 | 55 | (18 | ) | 13,136 | |||||||||||||||||||
Preferred
Stock Dividends
|
(6,547 | ) | - | - | - | (6,547 | ) | ||||||||||||||||||
Net
Income Applicable to Common
|
|||||||||||||||||||||||||
and
Class A Common Stockholders
|
$ | 6,026 | $ | 526 | $ | 55 | $ | (18 | ) | $ | 6,589 | ||||||||||||||
Basic
Earnings Per Share From
|
|||||||||||||||||||||||||
Continuing
Operations:
|
|||||||||||||||||||||||||
Per Common Share:
|
$ | 0.22 | $ | 0.25 | |||||||||||||||||||||
Per Class A Common
Share:
|
$ | 0.25 | $ | 0.27 | |||||||||||||||||||||
Diluted
Earnings Per Share from
|
|||||||||||||||||||||||||
Continuing
Operations:
|
|||||||||||||||||||||||||
Per Common
Share:
|
$ | 0.22 | $ | 0.24 | |||||||||||||||||||||
Per Class A Common
Share:
|
$ | 0.24 | $ | 0.26 | |||||||||||||||||||||
Weighted
Average Shares :
|
|||||||||||||||||||||||||
Basic
Earnings Per Share
|
|||||||||||||||||||||||||
Common Shares
|
7,100 | 7,100 | |||||||||||||||||||||||
Class A Common
Shares
|
17,939 | 17,939 | |||||||||||||||||||||||
Diluted
Earnings Per Share
|
|||||||||||||||||||||||||
Common Shares
|
7,530 | 7,530 | |||||||||||||||||||||||
Class A Common
Shares
|
18,051 | 18,051 |
The
accompanying notes and management's assumptions are an integral part of this pro
forma consolidated statement of income.
19
NOTES
TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
ADJUSTMENTS
TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED APRIL
30, 2010:
(a)
|
Derived
from the Company's unaudited financial statements for the six months ended
April 30, 2010.
|
(b)
|
Based
on six months of revenues and operating expenses as reported by New
Milford Property for the period ended June 30, 2010 for the purpose of
inclusion in the Company’s six month pro-forma operating results for the
six months ended April 30, 2010.
|
(c)
|
Reflects
the pro forma adjustment to record operating rents on a straight line
basis.
|
(d)
|
Reflects
pro forma interest on credit line borrowings of $30.7 million as if the
borrowings were made on November 1, 2009. Interest on the credit line
borrowings is at variable rate using a weighted average rate of 2.0%
outstanding during the period.
|
(e)
|
Reflects
depreciation expense for the six months ended April 30, 2010 for New
Milford Property based on a 39 year estimated useful life for the
property's building and improvements using a cost basis of $17,966,000
(the remaining purchase price is assumed to be allocated to land) as if
the property had been owned for the entire
period.
|
(f)
|
Reflects
six months interest income on the $11.6 million unsecured loan to Midway
which earns interest at the rate of 5.75% per
annum.
|
(g)
|
Reflects
the Company’s equity in earnings of Midway for the six months ended April
30, 2010 based on the earnings of Midway for the six months ended June 30,
2010.
|
(h)
|
Reflects
adjustment of management related costs from the New Milford Property that
will not continue after the
purchase.
|
(i)
|
Represents
a reduction in interest expense as a result of recording the mortgage
assumed on the acquisition of the New Milford Property at the fair market
value interest rate of 4% per
annum.
|
(j)
|
Represents
the six month charge for depreciation expense for the excess of the cost
paid for the Company’s 9.667% share of the equity in the limited
partnership that owns Midway over the Company’s share of Midway’s net book
value.
|
(k)
|
Represents
the six month charge for management fees on
Midway.
|
20
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
URSTADT BIDDLE PROPERTIES
INC.
(Registrant)
Date:
July 19,
2010 By: /s/ John T.
Hayes
John T. Hayes
Senior Vice President and
Chief Financial Officer
21
Exhibit
Index
Exhibit
No
|
Description
|
23.1
|
Consent
of Independent Auditor
|