Urstadt Biddle Properties Will Benefit From A Rush To The NYC Suburbs

Summary

• The suburbs outside of New York City are booming as a huge influx of urbanites escape the city for the space and affordability of the 'burbs.
• UBA is a small-cap shopping center REIT that owns grocery-anchored properties in the NY tri-state area — right where all the affluent city slickers are going.
• COVID-19 caused serious pain to UBA, wiping out its previous 25+ year dividend growth streak, but current trends are in the REIT's favor.
• Leverage is modest, management is conservative and shareholder-friendly, the dividend is already rising, and the stock is cheap. What's not to like?
• This idea was discussed in more depth with members of my private investing community, High Yield Landlord. Get started today »

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Flight To The Suburbs

The housing market is booming in suburbs surrounding New York City, where the coronavirus pandemic hit hardest and where lockdowns were strictest.

Home sales in New Jersey, New York, and Connecticut are skyrocketing — specifically, in the suburbs around the vast New York City metropolis. Meanwhile, for now, at least, apartments sit vacant in the city and Manhattan real estate sales are slumping. The city's affluent are fleeing this particularly hard hit urban metro for the 'burbs.

It reminds me of the 1980s Kurt Russell movie, Escape From New York...

People are buying houses, settling in, preparing to live their lives in a new place. And it isn't just homebuyers, either. This New York Times article discusses the trend of urbanites abandoning the city for more space, expanded activities, and greater affordability in suburban apartments. This is especially true for new-build, higher end apartments and condos in the suburbs of New Jersey, Long Island, and Connecticut.

This influx of affluent individuals from the city will inevitably have spillover effects on businesses and commercial real estate in those areas. Grocery stores and restaurants will make more sales, retailers will enjoy higher foot traffic, banks will be more frequented, childcare centers will get busier, and so on.

As High Yield Landlord subscribers are already aware (from a research report published before this company's September 8th earnings report), this "flight to the NYC suburbs" trend is tremendously bullish for one particular REIT: Urstadt Biddle Properties (UBA). I wrote about this company in a June, 2020 article. It primarily owns grocery-anchored shopping centers in the New York tri-state area, which consists of New

Analyst’s Disclosure:I am/we are long UBA, UBP, UBP.PH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.