Urstadt Biddle Properties: 40% Stock Price Upside And Higher Dividends To Come

Summary

• Despite a 50% jump in the share price since its COVID-19 lows, UBA has ample share price upside as well as dividend growth ahead.
• Rent collection has been remarkably strong this year, a testament to the essentiality of UBA's mostly grocery-anchored shopping centers.
• UBA's quality real estate is still attracting strong retailers and grocers like Whole Foods Market and Lidl.
• If and when the dividend is normalized after the pandemic subsides, buyers of UBA at the current share price can expect a yield-on-cost over 7%.
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Investment Thesis

All things considered, New York tri-state area shopping center REIT Urstadt Biddle Properties (UBA, UBP.PK) navigated the dumpster fire year that was 2020 pretty well.

The REIT operates in an area of the Northeast that, culturally and politically, treats the coronavirus pandemic as a much more serious threat than many areas of the South and middle-America. By nature of UBA's retail orientation, both voluntary social distancing and regulatory restrictions on certain businesses severely burdened a select number of their tenants while greatly benefiting others. And, of course, the fortunes of the landlord depend upon the fortunes of the tenant.

As such, news of multiple effective COVID-19 vaccines in early November of this year sent UBA's stock price soaring, delivering a 50% gain since I last wrote about the company in September.

For the past few weeks, however, the stock price appears to have stalled out, leading to the natural question: Are shares still attractive for dividend-focused investors?

I believe UBA shares are still attractive — for income investors, dividend growth investors, and value investors alike. Given the quality of UBA's real estate portfolio, balance sheet, and management, my opinion is that UBA has another 40% upside to post-Covid fair value. Moreover, based on the current share price (as of this writing) of $14.50, I believe UBA's normalized, post-Covid dividend will render a very enticing 7% yield-on-cost.

Goodwives Shopping Center, Darien, CT

Update On The Portfolio And Performance

In my September 17th article on Urstadt Biddle Properties, I highlighted the flight of affluent urbanites from New York City into the surrounding suburbs — precisely where the vast majority of UBA's properties are located — as a strong tailwind for the shopping center REIT. To wit:

This influx of affluent individuals from the city will inevitably have spillover effects on

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.