Urstadt Biddle Properties: Some Upside Available Upon A Return To Normalcy

Summary

• Urstadt Biddle Properties is an interesting REIT with an intriguing value proposition.
• The company has had decent performance in recent years, but nothing all that special.
• A return to normalcy implies some upside might still be available to shareholders, but not much.
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One intriguing type of REIT to look at these days is the type dedicated to shopping centers with anchors. These provide access to tenants that are often considered essential no matter how the economy performs, and that stability is something that should appeal to many investors. One company dedicated to this approach is Urstadt Biddle Properties (UBA) (NYSE:UBP). While fairly small with a market capitalization of just over $600 million, Urstadt provides investors with an interesting play on the local economy. In recent years, performance has been alright, but where the opportunity lies is in the fact that shares of the business are likely trading at a slight discount to where they probably should be.

A look at Urstadt

As of the end of its 2020 fiscal year, Urstadt owned 81 different properties. Collectively, these accounted for 5.3 million square feet of gross leasable area. 84% of these assets by gross leasable area are anchored by grocery, pharmacy, and/or wholesale club tenants. This can be a tricky market to play in for a REIT because the quality of the assets is often determined by cash flow, and cash flow is often determined by location. Property is located in low-income areas, for instance, are likely to yield less and to see lower occupancy rates. Fortunately for Urstadt’s investors, this has not been a problem.

According to management, the median income of households within a three-mile radius of its properties is about 70% higher the national average. In addition, management has said that about 74% of its annualized base rent is leased out to companies that are considered Internet resistant. If this is an accurate approximation, it means that these firms should fare well even as the economy moves more toward e-commerce providers.

*Taken from Urstadt Biddle Properties

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Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.