URSTADT BIDDLE PROPERTIES INC - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations

Edgar Glimpses |
The following discussion should be read in conjunction with the consolidated
financial statements of the Company and the notes thereto included elsewhere in
this report, the "Special Note Regarding Forward-Looking Statements" in Part I
and "Item 1A. Risk Factors."

Executive Summary

Overview

We are a fully integrated, self-administered real estate company that has
elected to be a REIT for federal income tax purposes, engaged in the
acquisition, ownership and management of commercial real estate, primarily
neighborhood and community shopping centers, with a concentration in the
metropolitan New York tri-state area outside of the City of New York. Other real
estate assets include office properties, single tenant retail or restaurant
properties and office/retail mixed use properties.  Our major tenants include
supermarket chains and other retailers who sell basic necessities.

At , we owned or had equity interests in 81 properties, which
include equity interests we own in seven consolidated joint ventures and seven
unconsolidated joint ventures, containing a total of 5.1 million square feet of
Gross Leasable Area ("GLA").  Of the properties owned by wholly owned
subsidiaries or joint venture entities that we consolidate, approximately 92.7%
was leased (93.3% at ).  Of the properties owned by
unconsolidated joint ventures, approximately 97.7% was leased (98.4% at ).

We have paid quarterly dividends to our shareholders continuously since our founding in 1969 and have increased the level of dividend payments to our shareholders for 23 consecutive years.


We derive substantially all of our revenues from rents and operating expense
reimbursements received pursuant to long-term leases and focus our investment
activities on community and neighborhood shopping centers, anchored principally
by regional supermarket or pharmacy chains.  We believe that because consumers
need to purchase food and other types of staple goods and services generally
available at supermarket or pharmacy-anchored shopping centers, the nature of
our investments provides for relatively stable revenue flows even during
difficult economic times.

We have a conservative capital structure and we have one $10.0 million mortgage
maturing in .  Thereafter, we do not have any additional secured debt
maturing until .

We focus on increasing cash flow, and consequently the value of our properties, and seek continued growth through strategic re-leasing, renovations and expansions of our existing properties and selective acquisitions of income-producing properties. Key elements of our growth strategies and operating policies are to:

• acquire quality neighborhood and community shopping centers in the northeastern

part of the United States with a concentration on properties in the

metropolitan New York tri-state area outside of the City of New York, and

unlock further value in these properties with selective enhancements to both

the property and tenant mix, as well as improvements to management and leasing

fundamentals. Our hope is to grow our assets through acquisitions by 5% to 15%

per year on a dollar value basis subject to the availability of acquisitions

that meet our investment parameters;

• selectively dispose of underperforming properties and re-deploy the proceeds

  into potentially higher performing properties that meet our acquisition
  criteria;


• invest in our properties for the long-term through regular maintenance,

periodic renovations and capital improvements, enhancing their attractiveness

to tenants and customers, as well as increasing their value;

• leverage opportunities to increase GLA at existing properties, through

development of pad sites and reconfiguring of existing square footage, to meet

the needs of existing or new tenants;

• proactively manage our leasing strategy by aggressively marketing available

GLA, renewing existing leases with strong tenants, and replacing weak ones when

necessary, with an eye towards securing leases that include regular or fixed

contractual increases to minimum rents, replacing below-market-rent leases with

increased market rents when possible and further improving the quality of our

tenant mix at our shopping centers;

• maintain strong working relationships with our tenants, particularly our anchor

  tenants;



• maintain a conservative capital structure with low leverage levels; and



•     control property operating and administrative costs.



Our hope is to grow our assets through acquisitions by 5% to 10% per year on a
dollar value basis, subject to the availability of acquisitions that meet our
investment parameters, although we cannot guarantee that investment properties
meeting our investment specifications will be available to us.

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                               Table Of Contents

Highlights of Fiscal 2017; Recent Developments

Set forth below are highlights of our recent property acquisitions, other investments, property dispositions and financings:

• In , we completed the public offering of 4,600,000 shares of

6.25% Series H Senior Cumulative Preferred Stock (the "Series H Preferred

Stock") at a price of $25 per share for net proceeds of $111.3 million after

underwriting discounts but before offering expenses. These shares are

nonvoting, have no stated maturity and are redeemable for cash at $25 per share

at our option on or after . Holders of these shares are

entitled to cumulative dividends, payable quarterly in arrears. Dividends

accrue from the date of issue at the annual rate of $1.5625 per share per

annum. The holders of our Series H Preferred Stock have general preference

rights with respect to liquidation and quarterly distributions. Except under

certain conditions holders of the Series H Preferred Stock will not be entitled

to vote on most matters. In the event of a cumulative arrearage equal to six

quarterly dividends, holders of Series H Preferred Stock, together with all of

our other Series of preferred stock (voting as a single class without regard to

series) will have the right to elect two additional members to serve on our

Board of Directors until the arrearage has been cured. Upon the occurrence of a

Change of Control, as defined in our Articles of Incorporation, the holder of

the Series H Preferred Stock will have the right to convert all or part of the

  shares of Series H Preferred Stock held by such holder on the applicable
  conversion date into a number of our shares of Class A common stock.


• In , we acquired an approximate 31.4% equity interest in a newly

formed entity, UB Dumont I, LLC ("UB Dumont"). UB Dumont owns a 74,000 square

foot commercial property anchored by a Stop and Shop grocery store and also

includes 19,000 square feet of apartments. We are the managing member of UB

Dumont and lease and manage the property. The properties were contributed to

UB Dumont by the former owners, along with $10.0 million in mortgage debt

secured by the property. The interest rate on the assumed mortgage is 3.87%

per annum. The contributors received ownership units of UB Dumont equal to the

fair market value of the net assets contributed, which equity at formation was

valued at $8.6 million. At the closing of the acquisition, the property was

100% leased. Our initial equity investment in UB Dumont at formation totaled

$3.9 million. The contributors of the property (non-managing members of UB

Dumont) are entitled to receive an annual distribution on their invested

capital, initially at the rate of 5.05% per annum. We will retain all of the

cash flow generated by the three properties after the payment of debt service

and the aforementioned annual distribution to the non-managing members. The

non-managing members have the right to require us to redeem their units of

ownership in UB Dumont at prices defined in the governing agreement. At

inception of UB Dumont, that price was $21 per unit of ownership of UB Dumont.

• In , we sold for $1.2 million a single tenant property located in

Fairfield, CT that we acquired in (see below), and realized a loss

on the sale of $729,000. Prior to the sale, we entered into a lease

termination agreement with the tenant of the property. The agreement provided

for the tenant to pay us $3.2 million in exchange for being released from all

future obligations under its lease. We received payment in and

recorded the payment received as lease termination income, as the payment met

all of the revenue recognition conditions under U.S. GAAP. In addition, when

the aforementioned property was acquired, we allocated $1.2 million of the

consideration paid to this over-market lease. As a result of this termination,

  we wrote-off the remaining $1.1 million asset as a reduction of lease
  termination income for the year ended .


• In , we repaid at maturity the existing $44 million first mortgage

loan encumbering our Ridgeway property, located in Stamford, CT, with available

cash and a $33 million borrowing on our Unsecured Revolving Credit Facility

(the "Facility"). Subsequently in July, we placed a new $50 million

non-recourse first mortgage loan encumbered by the subject property and used a

portion of the proceeds to repay the $33 million borrowing on the Facility.

The new loan has a term of 10 years and requires payments of principal and

interest at the rate of LIBOR plus 1.9% based on a 25-year amortization. We

entered into an interest rate swap agreement with the lender as the

counterparty that converts the variable interest rate (based on LIBOR) to a

fixed rate of 3.398% per annum.

• In , we purchased for $8.2 million a 26,500 square foot shopping

center located in Waldwick, NJ. We funded the purchase with available cash and

the assumption of an environmental remediation obligation in the amount of $3.3

  million which is included in other liabilities on the 
  consolidated balance sheet.


• In , we acquired an approximate 8.8% equity interest in a newly

formed entity, UB High Ridge, LLC, ("UB High Ridge"). UB High Ridge owns a

shopping center, anchored by a Trader Joe's grocery store and two free standing

commercial retail properties, one leased to JP Morgan Chase and the other to

CVS. Two of the properties are located in Stamford, CT and one of the

properties is located in Greenwich, CT. The three properties total

approximately 99,400 square feet. We are the managing member of UB High Ridge

and will lease and manage the properties. The properties were contributed by

the former owners, along with $11.2 million in aggregate mortgage debt secured

by two of the properties. The weighted average interest rate per annum on the

two assumed mortgages is 3.63% per annum. The contributors received ownership

units of UB High Ridge equal to the fair market value of the net assets

contributed, which equity at formation was valued at $55.2 million. At

formation of UB High Ridge, the three properties combined were approximately

96.4% leased. Our initial equity investment in UB High Ridge at formation

totaled $5.5 million. The contributors of the three properties (non-managing

members of UB High Ridge) are entitled to receive an annual distribution on

their invested capital, initially at the rate of 5.46% per annum. We will

retain all of the cash flow generated by the three properties after the payment

of debt service and the aforementioned annual distribution to the non-managing

members. The non-managing members have the right to require us to redeem their

units of ownership in UB High Ridge at prices defined in the governing

agreement. At inception of UB High Ridge, that price was $23.50 per unit of

ownership of UB High Ridge.

• Also in , we purchased for $3.1 million a free-standing 12,900 square

  foot commercial property located in Fairfield, CT, which property is leased by
  Walgreen's.  This property was sold in  (see above).


• In , we completed the sale of our White Plains property for a price

of $56.6 million and realized a gain on sale of the property in the amount of

  $19.5 million.



• In , we, through a wholly-owned subsidiary, purchased for $7.1

million a 36,500 square foot grocery-anchored shopping center located in

Passaic, NJ. In conjunction with the purchase, we assumed a mortgage note

secured by the property in the amount of $3.5 million.

• In , we purchased for $9.0 million a 38,800 square foot

grocery-anchored shopping center located in Derby, CT.

Known Trends; Outlook


We believe that shopping center REITs face opportunities and challenges that are
both common to and unique from other REITs and real estate companies.    As a
shopping center REIT, we are focused on certain challenges that are unique to
the retail industry.  In particular, we recognize the challenges presented by
e-commerce to brick-and-mortar retail establishments, including our tenants.
However, we believe that because consumers prefer to purchase food and other
staple goods and services available at supermarkets in person, the nature of our
properties makes them less vulnerable to the encroachment of e-commerce than
other properties whose tenants may more directly compete with the internet.
Moreover, we believe the nature of our properties makes them less susceptible to
economic downturns than other retail properties whose anchor tenants are not
supermarkets or other staple goods providers.  We note, however, that many
prospective in-line tenants are seeking smaller spaces than in the past, as a
result, in part, of internet encroachment on their brick-and-mortar business.
When feasible, we actively work to place tenants that are less susceptible to
internet encroachment, such as restaurants, fitness centers, healthcare and
personal services.  We continue to be sensitive to these considerations when we
establish the tenant mix at our shopping centers, and believe that our strategy
of focusing on supermarket anchors is a strong one.

In the metropolitan tri-state area outside of New York City, demographics
(income, density, etc.) remain strong and opportunities for new development, as
well as acquisitions, are competitive, with high barriers to entry.  We believe
that this will remain the case for the foreseeable future, and have focused our
growth strategy accordingly.

As a REIT, we are susceptible to changes in interest rates, the lending
environment, the availability of capital markets and the general economy.  For
example, some experts are predicting an increased interest rate environment,
which could negatively impact the attractiveness of REIT stock to investors and
our borrowing activities.  It is also possible, however, that higher interest
rates could signal a stronger economy, resulting in greater spending by
consumers.  The impact of such changes are difficult to predict.

The U.S. Congress has passed sweeping tax reform legislation that would make
significant changes to corporate and individual tax rates and the calculation of
taxes, as well as international tax rules for U.S. domestic corporations.  As a
REIT, we are generally not required to pay federal taxes otherwise applicable to
regular corporations if we comply with the various tax regulations governing
REITs.  Stockholders, however, are generally required to pay taxes on REIT
dividends.  Tax reform legislation would affect the way in which dividends paid
on our stock are taxed by the holder of that stock and could impact our stock
price or how stockholders and potential investors view an investment in REITs.
 In addition, while certain elements of tax reform legislation would not impact
us directly as a REIT, they could impact the geographic markets in which we
operate, the tenants that populate our shopping centers and the customers who
frequent our properties in ways, both positive and negative, that are difficult
to anticipate.

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                               Table Of Contents
Leasing

Rollovers

For the fiscal year 2017, we signed leases for a total of 650,300 square feet of
retail space in our consolidated portfolio.  New leases for vacant spaces were
signed for 86,800 square feet at an average rental increase of 3.78% on a cash
basis, excluding 3,333 square feet of new leases for which there was no prior
rent history available.  Renewals for 560,200 square feet of space previously
occupied were signed at an average rental increase of 4.36% on a cash basis.

Tenant improvements and leasing commissions averaged $24.38 per square foot for
new leases and $3.40 per square foot for renewals for the fiscal year ended
. The average term for new leases was 5.7 years and the average
term for renewal leases was 4 years.

The rental increases/decreases associated with new and renewal leases generally
include all leases signed in arms-length transactions reflecting market leverage
between landlords and tenants during the period. The comparison between average
rent for expiring leases and new leases is determined by including minimum rent
paid on the expiring lease and minimum rent to be paid on the new lease in the
first year. In some instances, management exercises judgment as to how to most
effectively reflect the comparability of spaces reported in this calculation.
The change in rental income on comparable space leases is impacted by numerous
factors including current market rates, location, individual tenant
creditworthiness, use of space, market conditions when the expiring lease was
signed, the age of the expiring lease, capital investment made in the space and
the specific lease structure. Tenant improvements include the total dollars
committed for the improvement (fit-out) of a space as it relates to a specific
lease but may also include base building costs (i.e. expansion, escalators or
new entrances) that are required to make the space leasable.  Incentives (if
applicable) include amounts paid to tenants as an inducement to sign a lease
that do not represent building improvements.

The leases signed in 2017 generally become effective over the following one to
two years. There is risk that some new tenants will not ultimately take
possession of their space and that tenants for both new and renewal leases may
not pay all of their contractual rent due to operating, financing or other
matters.

In 2018, we believe our leasing volume will be in-line with our historical
averages with overall positive increases in rental income for renewal leases and
flat to slightly positive increases for new leases. However, changes in rental
income associated with individual signed leases on comparable spaces may be
positive or negative, and we can provide no assurance that the rents on new
leases will continue to increase at the above described levels, if at all.

Significant Events with Impacts on Leasing


In , one of our largest tenants, A&P, filed a voluntary petition under
chapter 11 of title 11 of the United States Bankruptcy Code (the "Bankruptcy
Code").  Subsequently, A&P determined that it would be liquidating the
company. Prior to A&P filing for bankruptcy, A&P leased and occupied nine spaces
totaling 365,000 square feet in our portfolio.  The bankruptcy process relating
to our nine spaces is complete with eight of the nine A&P leases having been
assumed by new operators in the bankruptcy process or re-leased by the Company
to new operators.  The remaining lease, located in our Pompton Lakes shopping
center, totaling 63,000 square feet was rejected by A&P in bankruptcy and we are
in the process of marketing that space for re-lease.  In , one other
36,000 square foot space formerly occupied by A&P that we had released to a
local grocery operator became vacant as that operator failed to perform under
their lease and was evicted.  We are currently marketing that space for lease
and have several prospects.

Impact of Inflation on Leasing


Our long-term leases contain provisions to mitigate the adverse impact of
inflation on our operating results. Such provisions include clauses entitling us
to receive (a) scheduled base rent increases and (b) percentage rents based upon
tenants' gross sales, which generally increase as prices rise. In addition, many
of our non-anchor leases are for terms of less than ten years, which permits us
to seek increases in rents upon renewal at then current market rates if rents
provided in the expiring leases are below then existing market rates. Most of
our leases require tenants to pay a share of operating expenses, including
common area maintenance, real estate taxes, insurance and utilities, thereby
reducing our exposure to increases in costs and operating expenses resulting
from inflation.

Critical Accounting Policies

Critical accounting policies are those that are both important to the
presentation of the Company's financial condition and results of operations and
require management's most difficult, complex or subjective judgments.  For a
further discussion about the Company's critical accounting policies, please see
Note 1 to the consolidated financial statements of the Company included in Item
8 of this Annual Report on Form 10-K.

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                               Table Of Contents

Liquidity and Capital Resources

Overview


At , we had cash and cash equivalents of $8.7 million, compared
to $7.3 million at .  Our sources of liquidity and capital
resources include operating cash flow from real estate operations, proceeds from
bank borrowings and long-term mortgage debt, capital financings and sales of
real estate investments.  Substantially all of our revenues are derived from
rents paid under existing leases, which means that our operating cash flow
depends on the ability of our tenants to make rental payments.  In fiscal 2017,
2016 and 2015, net cash flow provided by operations amounted to $63.0 million,
$62.1 million and $53.0 million, respectively.

Our short-term liquidity requirements consist primarily of normal recurring
operating expenses and capital expenditures, debt service, management and
professional fees, cash distributions to certain limited partners and
non-managing members of our consolidated joint ventures, dividends paid to our
preferred stockholders and regular dividends paid to our Common and Class A
Common stockholders, which we expect to continue.  Cash dividends paid on Common
and Class A Common stock for the years ended  and 2016 totaled
$40.6 million and $37.1 million, respectively.  Historically, we have met
short-term liquidity requirements, which is defined as a rolling twelve month
period, primarily by generating net cash from the operation of our properties.
We believe that our net cash provided by operations will continue to be
sufficient to fund our short-term liquidity requirements, including payment of
dividends necessary to maintain our federal income tax REIT status.

Our long-term liquidity requirements consist primarily of obligations under our
long-term debt, dividends paid to our preferred stockholders, capital
expenditures and capital required for acquisitions.  In addition, the limited
partners and non-managing members of our five consolidated joint venture
entities, Ironbound, McLean, Orangeburg, UB High Ridge and UB Dumont, have the
right to require the Company to repurchase all or a portion of their limited
partner or non-managing member interests at prices and on terms as set forth in
the governing agreements.  See Note 6 to the financial statements included in
Item 8 of this Report on Form 10-K.  Historically, we have financed the
foregoing requirements through operating cash flow, borrowings under our
Unsecured Revolving Credit Facility (the "Facility"), debt refinancings, new
debt, equity offerings and other capital market transactions, and/or the
disposition of under-performing assets, with a focus on keeping our leverage
low.  We expect to continue doing so in the future.  We cannot assure you,
however, that these sources will always be available to us when needed, or on
the terms we desire.

Capital Expenditures

We invest in our existing properties and regularly make capital expenditures in
the ordinary course of business to maintain our properties. We believe that such
expenditures enhance the competitiveness of our properties. In fiscal 2017, we
paid approximately $9.7 million for property improvements, tenant improvements
and leasing commission costs (approximately $8.5 million representing property
improvements and approximately $1.2 million related to new tenant space
improvements, leasing costs and capital improvements as a result of new tenant
spaces).  The amount of these expenditures can vary significantly depending on
tenant negotiations, market conditions and rental rates.  We expect to incur
approximately $6.0 million predominantly for anticipated capital improvements
and leasing costs related to new tenant leases and property improvements during
fiscal 2018.  These expenditures are expected to be funded from operating cash
flows, bank borrowings or other financing sources.

Financing Strategy, Unsecured Revolving Credit Facility and other Financing Transactions


Our strategy is to maintain a conservative capital structure with low leverage
levels by commercial real estate standards.  Mortgage notes payable and other
loans of $297.1 million consist entirely of fixed-rate mortgage loan
indebtedness with a weighted average interest rate of 4.2% at .
These mortgages are secured by 26 properties with a net book value of $568
million and have fixed rates of interest ranging from 3.5% to 6.6%.  We may
refinance our mortgage loans, at or prior to scheduled maturity, through
replacement mortgage loans.  The ability to do so, however, is dependent upon
various factors, including the income level of the properties, interest rates
and credit conditions within the commercial real estate market. Accordingly,
there can be no assurance that such re-financings can be achieved.

At , we had $4 million of variable-rate debt consisting of draws
on our Facility (see below) that was not fixed through an interest rate swap or
otherwise. See "Item 7.A. Quantitative and Qualitative Disclosures about Market
Risk" included in this Annual Report on Form 10-K for additional information on
our interest rate risk.

We currently maintain a ratio of total debt to total assets below 30% and a
fixed charge coverage ratio of over 3.86 to 1 (excluding preferred stock
dividends), which we believe will allow us to obtain additional secured mortgage
loans or other types of borrowings, if necessary.  We own 48 properties in our
consolidated portfolio that are not encumbered by secured mortgage debt.  At
, we had borrowing capacity of $95 million on our Facility. 

Our

Facility includes financial covenants that limit, among other things, our ability to incur unsecured and secured indebtedness. See Note 6 in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information on these and other restrictions.

Unsecured Revolving Credit Facility and Other Property Financings




We have a $100 million unsecured revolving credit facility with a syndicate of
three banks, BNY Mellon, BMO and Wells Fargo N.A. with the ability under certain
conditions to additionally increase the capacity to $150 million, subject to
lender approval.  The maturity date of the Facility is  with a
one-year extension at our option.  Borrowings under the Facility can be used for
general corporate purposes and the issuance of up to $10 million of letters of
credit.  Borrowings will bear interest at our option of Eurodollar rate plus
1.35% to 1.95% or The Bank of New York Mellon's prime lending rate plus 0.35% to
0.95%, based on consolidated indebtedness, as defined.  We pay a quarterly
commitment fee on the unused commitment amount of 0.15% to 0.25% per annum,
based on outstanding borrowings during the year.  As of , $95
million was available to be drawn on the Facility.  Our ability to borrow under
the Facility is subject to its compliance with the covenants and other
restrictions on an ongoing basis.  The principal financial covenants limit our
level of secured and unsecured indebtedness and additionally require us to
maintain certain debt coverage ratios.  We were in compliance with such
covenants at .

During the year ended , we borrowed $52 million on our Facility
to fund a portion of the equity for property acquisitions, capital improvements
to our properties and to repay the mortgage secured by our Ridgeway property at
maturity until a new mortgage could be put in place later that month. For the
year ended  we repaid $56 million of borrowings on our Facility,
with proceeds from the sale of our White Plains property and proceeds from the
refinancing of our mortgage loan encumbering the Stamford property.

See Note 5 included in our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for a further description of mortgage financing transactions in fiscal 2017 and 2016.

Net Cash Flows from Operating Activities

Increase from fiscal 2016 to 2017:


The increase in operating cash flows was primarily due to our generating
additional operating income for the year ended  from properties
acquired in fiscal 2016 and 2017 and the receipt of a lease termination payment
in the amount of $3.2 million from a former tenant whose lease was terminated in
 offset by an increase in tenant receivables in fiscal 2017 when
compared with fiscal 2016.

Increase from fiscal 2015 to fiscal 2016:


The increase was primarily due to an increase in operating income at various
properties in fiscal 2016 when compared with fiscal 2015, resulting from new
leasing completed in fiscal 2015 and fiscal 2016 and $4.8 million in extension
fees collected from the entity under contract to purchase our White Plains
property.  In addition, the increase was further aided by an increase in the
collection of tenant receivables in fiscal 2016 when compared with fiscal 2015.

Net cash flows from Investing Activities

Increase from fiscal 2016 to 2017:


The increase in net cash flows provided by investing activities in fiscal 2017
when compared to fiscal 2016 was the result of the Company selling its White
Plains, NY property and a single tenant property located in Fairfield, CT in
fiscal 2017 and generating net proceeds of $45.3 million on those sales.  In
addition, we expended $11.8 million less for improvements to our investment
properties in fiscal 2017 when compared to fiscal 2016.  This increase was
further accentuated by our acquiring four properties and investing in two joint
ventures, which we consolidate, that acquired four properties in fiscal 2017 for
a total equity investment of $30.6 million as compared with fiscal 2016 during
which we acquired two investment properties requiring $58.7 million of equity
capital.  The increase was further bolstered by the repayment of our one
mortgage note receivable by the borrower in the amount of $13.5 million in
fiscal 2017.  This note was funded in fiscal 2016.

Decrease in cash used from fiscal 2015 to fiscal 2016: The decrease in cash flows used in investing activities in fiscal 2016 when compared to the prior fiscal year was the result of the purchase of two properties totaling $58.7 million is fiscal 2016 versus purchasing six properties totaling $138.5 million in fiscal 2015, offset by the Company receiving $42.9 million in fiscal 2015 in proceeds from the sale of the Meriden property. In addition, we initiated a first mortgage loan in the amount of $13.5 million in fiscal 2016.

We regularly make capital investments in our properties for property improvements, tenant improvements costs and leasing commissions.

Net cash flows from Financing Activities

Cash generated:


Fiscal 2017: (Total $213.5 million)
· Proceeds from mortgage note payable in the amount of $50 million.
· Proceeds from revolving credit line borrowings in the amount of $52 million.
· Proceeds from the issuance of Series H Preferred Stock in the amount of $111.3
million.

Fiscal 2016: (Total $159.5 million)
· Proceeds from issuance of Class A Common Stock in the amount of $73.7 million.
· Proceeds from revolving credit line borrowings in the amount of $52.0 million.
· Proceeds from mortgage financings in the amount of $33.7 million.

Fiscal 2015: (Total $237.6 million)
· Proceeds from mortgage financings in the amount of $68.2 million.
· Proceeds from revolving credit line borrowings in the amount of $104.8
million.
· Proceeds from the issuance of Series G Preferred Stock in the amount of $4.6
million.
· Proceeds from the issuance of Class A Common stock in the amount of $59.8
million.

Cash used:

Fiscal 2017: (Total $291.4 million)
· Dividends to shareholders in the amount of $55.6 million.
· Repayment of mortgage notes payable in the amount of $43.7 million.
· Repayment of revolving credit line borrowings in the amount of $56 million.
· Redemption of preferred stock in the amount of $129.4 million.

Fiscal 2016: (Total $138.9 million) · Dividends to shareholders in the amount of $51.4 million. · Repayment of mortgage notes payable in the amount of $20.7 million. · Repayment of revolving credit line borrowings in the amount of $66.8 million.


Fiscal 2015:  (Total $250.1 million)
· Dividends to shareholders in the amount of $50.0 million.
· Repayment of mortgage notes payable in the amount of $12.9 million.
· Repayment of revolving credit line borrowings in the amount of $97.6 million.
· Repayment of the unsecured term loan in the amount of $25 million.
· Redemption of preferred stock in the amount of $61.3 million.
· Repurchase of Class A Common stock in the amount of $3.4 million.


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                               Table Of Contents
Results of Operations

Fiscal 2017 vs. Fiscal 2016

The following information summarizes our results of operations for the years ended and 2016 (amounts in thousands):

                              Year Ended October 31,                                                 Change Attributable to:
                                                                                                                         Properties
                                                                                                                          Held in
                                                              Increase           %                Property              Both Periods
Revenues                       2017             2016         (Decrease)        Change        Acquisitions/Sales           (Note 1)
Base rents                 $     88,383       $  87,172     $      1,211            1.4 %   $              1,539       $         (328 )
Recoveries from tenants          28,676          25,788            2,888           11.2 %                  1,950                  938
Other income                      4,069           3,213              856           26.6 %                    155                  701

Operating Expenses
Property operating               20,074          18,717            1,357            7.3 %                    720                  637
Property taxes                   19,621          18,548            1,073            5.8 %                    641                  432
Depreciation and
amortization                     26,512          23,025            3,487           15.1 %                  2,302                1,185
General and
administrative                    9,183           9,284             (101 )         -1.1 %                    n/a                  n/a

Non-Operating
Income/Expense
Interest expense                 12,981          12,983               (2 )          0.0 %                  1,098               (1,100 )
Interest, dividends, and
other investment income             356             242              114           47.1 %                    n/a                  n/a



Note 1 - Properties held in both periods includes only properties owned for the
entire periods of 2017 and 2016.  All other properties are included in the
property acquisition/sales column.  There are no properties excluded from the
analysis.

Revenues

Base rents increased by 1.4% to $88.4 million in fiscal 2017, as compared with
$87.2 million in the comparable period of 2016.  The increase in base rents and
the changes in other income statement line items were attributable to:

Property Acquisitions and Properties Sold:


In fiscal 2017, the Company purchased four properties totaling 114,700 square
feet of GLA, invested in two joint ventures that owns four properties totaling
173,600 square feet, whose operations we consolidate, and sold two properties
totaling 203,800 square feet.  In fiscal 2016, the Company purchased two
properties totaling 101,400 square feet.  These properties accounted for all of
the revenue and expense changes attributable to property acquisitions and sales
in year ended  when compared with fiscal 2016.

Properties Held in Both Periods:

Revenues

Base Rent The decrease in base rents for properties owned in both periods was caused predominantly by a slight reduction in the percent of the portfolio that is leased in fiscal 2017 when compared with fiscal 2016.


In fiscal 2017, the Company leased or renewed approximately 650,000 square feet
(or approximately 15.0% of total consolidated property leasable area).  At
, the Company's consolidated properties were approximately 92.7%
leased (93.3% leased at ).

Tenant Recoveries
For the year ended , recoveries from tenants for properties
owned in both periods (which represent reimbursements from tenants for operating
expenses and property taxes) increased by $938,000. This increase was a result
of an increase in both property operating expenses and property tax expense in
the consolidated portfolio for properties owned for the entire periods of fiscal
2017 and 2016, along with an increase in leased rate at some properties which
increased the rate at which the Company could bill operating expenses to tenants
in fiscal 2017 versus fiscal 2016.

Expenses


Property operating expenses for properties owned in both fiscal year 2017 and
2016 increased by $637,000.  This increase was predominantly as a result of an
increase in snow removal costs at our properties.

Real estate taxes for properties owned in both fiscal year 2017 and 2016 increased by $432,000 as a result of normal tax assessment increases at some of our properties.


Interest expense for properties owned in both fiscal year 2017 and 2016
decreased by $1.1 million as a result of the refinancing of our largest mortgage
in .  In  we refinanced our mortgage loan secured by our
Stamford, CT property and although the principal increased from $44 million to
$50 million the interest rate was reduced from 5.52% to 3.398% per annum.  In
addition, we repaid our mortgage at our Bloomfield, NJ property after the second
quarter of fiscal 2016.  In addition, the reduction was accentuated by normal
recurring amortization payments on our portfolio of mortgages, which reduces
interest expense in fiscal 2017 when compared with fiscal 2016 for the same
mortgages.

Depreciation and amortization expense for properties owned in both fiscal year
2017 and 2016 increased by $1.2 million as a result of an increase in capital
improvements on properties held in both periods in fiscal 2016 and 2017.

General and Administrative Expenses


General and administrative expense for the year ended , when
compared with the year ended  decreased by $101,000, as a result
of a decrease in restricted stock amortization, which reduces compensation
expense and a reduction in professional fees offset by increased compensation
expense for additional staffing at the Company and increased bonus compensation
for our employees in fiscal 2017 when compared with fiscal 2016.

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Fiscal 2016 vs. Fiscal 2015

The following information summarizes our results of operations for the years ended and 2015 (amounts in thousands):

                              Year Ended October 31,                                                  Change Attributable to:
                                                                                                                        Properties Held
                                                                                                                               in
                                                              Increase           %                Property                Both Periods
Revenues                       2016             2015         (Decrease)       Change         Acquisitions/Sales             (Note 2)
Base rents                 $     87,172       $  83,885     $      3,287           3.9 %    $              (1,556 )     $          4,843
Recoveries from tenants          25,788          28,703           (2,915 )       (10.2 )%                    (516 )               (2,399 )
Other income                      3,213           2,252              961          42.7 %                     (114 )                1,075

Operating Expenses
Property operating               18,717          21,267           (2,550 )       (12.0 )%                    (690 )               (1,860 )
Property taxes                   18,548          18,224              324           1.8 %                       33                    291
Depreciation and
amortization                     23,025          22,435              590           2.6 %                      403                    187
General and
administrative                    9,284           8,576              708           8.3 %                      n/a                    n/a

Non-Operating
Income/Expense
Interest expense                 12,983          13,475             (492 )        (3.7 )%                     497                   (989 )
Interest, dividends, and
other investment income             242             228               14           6.1 %                      n/a                    n/a




Note 2 - Properties held in both periods includes only properties owned for the
entire periods of 2016 and 2015.  All other properties are included in the
property acquisition/sales column.  There are no properties excluded from the
analysis.

Revenues

Base rents increased by 3.9% to $87.2 million in fiscal 2016, as compared with
$83.9 million in the comparable period of 2015.  The increase in base rents and
the changes in other income statement line items were attributable to:

Property Acquisitions and Properties Sold:

In fiscal 2015, the Company purchased equity interests in six properties totaling approximately 409,000 square feet of GLA and sold two properties totaling approximately 320,000 square feet and in fiscal 2016, the Company purchased two properties totaling 101,000 square feet. These properties accounted for all of the revenue and expense changes attributable to property acquisitions and sales in fiscal 2016 when compared with fiscal 2015.

Properties Held in Both Periods:

Revenues


Base Rent
Base rents increased by $4.8 million in fiscal 2016 as compared to fiscal 2015
primarily as a result of the Company receiving $4.8 million in extension fees
from our White Plains property, which was sold in fiscal 2017.  In fiscal 2015,
the Company entered into contract to sell our White Plains property and that
closing was scheduled to occur in .  In February the purchaser
approached the Company and asked for an extension of the closing to .  In exchange for granting the extension the Company received $2.8
million.  In October, the purchaser approached us again and asked for an
additional extension, and in exchange for granting that extension the Company
received an additional $2 million.  The Company recorded the entire $4.8 million
in base rent on the accompanying consolidated income statements for the year
ended , as the fees collected for the extensions essentially
amounted to the purchaser renting the shopping center until the closing of the
sale, which took place in March of 2017.  In addition the increase was caused by
an increase in base rents billed at several of our other shopping centers in
excess of the prior year for new leasing done in the portfolio in fiscal 2015
and 2016 offset by a reduction in base rents at the three shopping centers which
were leased to A&P and were not assumed in the A&P bankruptcy process (see
leasing - significant events with impact on leasing section earlier in this Item
7).  Two of those three spaces have been re-leased and are now paying rent.

In fiscal 2016, the Company leased or renewed approximately 418,400 square feet
(or approximately 10.4% of total consolidated property leasable area).  At
, the Company's consolidated properties were approximately
93.3%.  The above percentages exclude the Company's White Plains property which
is being held vacant for sale.

Tenant Recoveries
For the year ended , recoveries from tenants for properties
owned in both periods (which represent reimbursements from tenants for operating
expenses and property taxes) decreased by a net $2.4 million. This decrease was
primarily the result of incurring $1.9 million less in operating expenses for
properties owned in both periods, predominantly attributable to a significant
reduction in snow removal costs during fiscal 2016 as compared with fiscal
2015.  In addition, this decrease was also the result of having two anchor
stores formerly occupied by A&P vacant for most of the first and second quarters
of fiscal 2016, which reduced the Company's recovery rate for operating costs at
these properties.

Expenses

Property operating expenses for properties owned in both fiscal year 2016 and
2015 decreased by $1.9 million.  This decrease was primarily the result of
having $1.9 million less in operating expenses in the portfolio, predominantly
attributable to a significant reduction in snow removal costs during fiscal 2016
as compared with fiscal 2015.

Real estate taxes for properties owned in both fiscal year 2016 and 2015 increased by $291,000 as a result of normal tax assessment increases at some of our properties.


Interest expense for properties owned in both fiscal year 2016 and 2015
decreased by $989,000 as a result of the Company having less outstanding on its
Facility in fiscal 2016 as compared with fiscal 2015 and the Company repaying
two mortgages totaling $14.8 million in fiscal 2015 and 2016 and the Company
repaying its $25 million term loan in .

Depreciation and amortization expense from properties owned in the year ended
 as compared to the corresponding prior period, increased by
$187,000 as a result of an increase in capital improvements on properties held
in both periods.

General and Administrative Expenses:


General and administrative expense for the year ended , when
compared with the year ended  increased by $708,000, as a result
of increased compensation expense for additional staffing at the Company,
increased bonus compensation for our employees and an increase in restricted
stock amortization as a result of newer tranches of restricted stock grants
being valued at a higher stock price than that of expiring tranches of
restricted stock.
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Funds from Operations


We consider Funds from Operations ("FFO") to be an additional measure of our
operating performance.  We report FFO in addition to net income applicable to
common stockholders and net cash provided by operating activities.  Management
has adopted the definition suggested by The National Association of Real Estate
Investment Trusts ("NAREIT") and defines FFO to mean net income (computed in
accordance with GAAP) excluding gains or losses from sales of property, plus
real estate-related depreciation and amortization and after adjustments for
unconsolidated joint ventures.

Management considers FFO a meaningful, additional measure of operating
performance because it primarily excludes the assumption that the value of the
Company's real estate assets diminishes predictably over time and industry
analysts have accepted it as a performance measure.  FFO is presented to assist
investors in analyzing the performance of the Company.  It is helpful as it
excludes various items included in net income that are not indicative of our
operating performance, such as gains (or losses) from sales of property and
depreciation and amortization.  However, FFO:

• does not represent cash flows from operating activities in accordance with GAAP

(which, unlike FFO, generally reflects all cash effects of transactions and

other events in the determination of net income); and

• should not be considered an alternative to net income as an indication of our

  performance.



FFO as defined by us may not be comparable to similarly titled items reported by
other real estate investment trusts due to possible differences in the
application of the NAREIT definition used by such REITs.  The table below
provides a reconciliation of net income applicable to Common and Class A Common
Stockholders in accordance with GAAP to FFO for each of the three years in the
period ended  (amounts in thousands):

                                                            Year Ended October 31,
                                                       2017          2016          2015

Net Income Applicable to Common and Class A Common
Stockholders                                         $  33,898     $  19,436     $  34,659

Real property depreciation                              20,505        18,866        18,750
Amortization of tenant improvements and allowances       4,448         3,517         3,161
Amortization of deferred leasing costs                   1,468           557           449
Depreciation and amortization on unconsolidated
joint ventures                                           1,618         1,589         1,414
(Gain)/loss on sale of properties                      (18,734 )        

(362 ) (20,377 )


Funds from Operations Applicable to Common and
Class A Common Stockholders                          $  43,203     $  43,603     $  38,056



FFO amounted to $43.2 million in fiscal 2017, compared to $43.6 million in fiscal 2016 and $38.1 million in fiscal 2015.


The net increase in FFO in fiscal 2017 when compared with fiscal 2016 was
predominantly attributable, among other things, to: (a) the additional net
income generated from properties acquired in the second half of fiscal 2016 and
properties acquired in fiscal 2017; (b) a reduction in the charge for bad debt
expense in the amount of $578,000 in fiscal 2017 versus fiscal 2016; (c)
interest income generated from a $13.5 million mortgage originated in the fourth
quarter of fiscal 2016, which was not repaid until October of fiscal 2017; d) a
$1.8 million increase in lease termination income in fiscal 2017 versus fiscal
2016 related to the lease termination of the only lease in our Fairfield, CT
property in the third quarter of fiscal 2017; (e) a $412,000 reduction in
acquisition costs in fiscal 2017 versus fiscal 2016 as a result of an accounting
change that became effective for us on the first day of fiscal 2017 which
changes how costs related to investment property acquisitions are accounted for;
offset by (f) $4.1 million in preferred stock redemption charges in fiscal 2017
related to the Company redeeming its Series F preferred stock in ,
there were no preferred stock redemption charges in fiscal 2016 or fiscal 2015.

The net increase in FFO in fiscal 2016 when compared with fiscal 2015 was
predominantly attributable, among other things, to: (a) a decrease in
acquisition costs of $1.7 million in fiscal 2016 when compared to fiscal 2015;
(b) a decrease in preferred stock dividends as a result of issuing a new series
of preferred stock in fiscal 2015 with a lower interest rate than the series it
replaced; (c) extension fees received from the entity in contract to purchase
our Westchester Pavilion property that gave them the right to delay the closing
of the property to 2017 in the amount of $4.8 million (included in base rent);
(d) an increase in operating income at several of our properties from new
leasing completed in fiscal 2015 and fiscal 2016; offset by (e) a decrease in
rental income relating to tenant vacancies at several properties, most notably
three spaces formerly occupied by A&P See "Leasing-Significant Events with
Impacts on Leasing" in this Item 7.
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Off-Balance Sheet Arrangements

We have seven off-balance sheet investments in real property through unconsolidated joint ventures:

• a 66.67% equity interest in the Putnam Plaza Shopping Center,

• an 11.642% equity interest in the Midway Shopping Center L.P.,

• a 50% equity interest in the Chestnut Ridge Shopping Center and Plaza 59

  Shopping Centers,



• a 50% equity interest in the Gateway Plaza shopping center and the Riverhead

  Applebee's Plaza, and



• a 20% economic interest in a partnership that owns a suburban office building

  with ground level retail.



These unconsolidated joint ventures are accounted for under the equity method of
accounting, as we have the ability to exercise significant influence over, but
not control of, the operating and financial decisions of these investments. 

Our

off-balance sheet arrangements are more fully discussed in Note 7, "Investments
in and Advances to Unconsolidated Joint Ventures" in our financial statements in
Item 8.  Although we have not guaranteed the debt of these joint ventures, we
have agreed to customary environmental indemnifications and nonrecourse
carve-outs (e.g. guarantees against fraud, misrepresentation and bankruptcy) on
certain loans of the joint ventures.  The below table details information about
the outstanding non-recourse mortgage financings on our unconsolidated joint
ventures (amounts in thousands):

                                              Principal Balance
  Joint Venture                                             At October      

Fixed Interest

Description Location Original Balance 31, 2017 Rate Per Annum Maturity Date

Midway Shopping

Center Scarsdale, NY $ 32,000 $ 28,397

4.80 % Dec-2027

Putnam Plaza

Shopping Center Carmel, NY $ 21,000 $ 19,046

4.17 % Oct-2024

Gateway Plaza Riverhead, NY $ 14,000 $ 12,749

           4.18 %     Feb-2024
Applebee's Plaza    Riverhead, NY     $           1,300     $     1,044               5.98 %     Aug-2026
Applebee's Plaza    Riverhead, NY     $           1,000     $       906               3.38 %     Aug-2026




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Contractual Obligations

Our contractual payment obligations as of were as follows (amounts in thousands):


                                                    Payments Due by Period
                 Total         2018          2019          2020          2021          2022         Thereafter
Mortgage
notes
payable and
other loans    $ 297,071     $  16,295     $  33,076     $   5,848     $   6,200     $  54,989     $    180,663
Interest on
mortgage
notes
payable           71,551        12,655        11,435        10,232         9,881         8,560           18,788
Revolving
Credit Lines       4,000             -             -             -         4,000             -                -
Tenant
obligations*       6,000         6,000             -             -             -             -                -
Total
Contractual
Obligations    $ 378,622     $  34,950     $  44,511     $  16,080     $  20,081     $  63,549     $    199,451


*Committed tenant-related obligations based on executed leases as of .

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