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Urstadt Biddle Follow Up

|Includes: Urstadt Biddle Properties Inc. (UBA), UBP

In response to my article on Urstadt Biddle, there were questions that I could not answer in the comment field, so I have chosen this instablog post to respond.

Urstadt Biddle:

First thing - I hate their website. They do not publish a supplemental like most REITs do, so the quality/quantity of their data is somewhat lacking.

Second - there are two classes of equity, A shares and B shares. A shares have 1/20th the vote of the B shares (which are for insiders). Normally, this would be an immediate turn-off as it is no more than a way to protect insiders (and their jobs), but the management, thus far, has not shown that they have used their votes to subvert A share interests. This does, however, have to be considered. Another mitigating factor in this structure is the dividend policy regarding the two classes: Each share of Common Stock (Class B) 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

Lease terms: I was asked about the lease terms and while the company does not give an average lease term, they do show lease expirations going forward (in their 10-k). Go forward lease expirations are the following:

Lease expirations are manageable and intermediate in nature. While I would prefer to see longer leases, given their tenant base, this does not surprise me. Their top tenants are as follows:

The tenant list is strong and contains companies with a strong presence and brand identity in the company's core markets.

Occupancy rates: At October 31, 2011, the Company owned or had equity interests in 52 properties containing a total of 4.8 million square feet of GLA of which approximately 92% was leased. Included in the 52 properties are equity interests in three unconsolidated joint ventures at October 31, 2011. These joint ventures were approximately 97.8% leased.

There were questions regarding their rents versus peers, unfortunately, the company acts like a closely held company (which, to a degree, it is) and does not release significant data on same store or overall rents per sqft. That is one of the downsides of investing in or analyzing smaller cap companies - the information is not always as robust as it is with larger companies - especially those with an institutional capital base (which is one of the reasons I typically look at REITs with public debt - typically means institutions are involved and will demand robust data).

At the end of the day, with Biddle one must look at their coverage, encumbrance and leverage ratios in order to supplement their FFO data to get a sense of comfort with the company.

I will try to reach out to the company to see if I can get more of the requested information as well as anything that might help dig deeper and understand the fundamentals better.

Hope this helps,


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