Urstadt Biddle Properties Inc.
Annual Report 2004

Plain-text annual report

URSTADT BIDDLE PR O P E R T I E S I N C . 2004 ANNUAL REPORT STOCK PRICES ARE OPINIONS — BUT DIVIDENDS ARE FACTS only always Revenues ■ Funds From Operations ■ Common and Class A Common Dividends Paid $70 (IN MILLIONS) $60 $50 $40 $30 $20 $10 $0 94 95 96 97 98 99 00 01 02 03 04 35 YEARS OF UNINTERRUPTED DIVIDENDS ■ URSTADT BIDDLE PROPERTIES INC. Urstadt Biddle Properties Inc. (UBP) is a self-adminis- tered publicly held real estate investment trust providing investors with a means of participating in the ownership of income-producing properties. UBP’s core properties consist of neighborhood and community shopping centers in the suburban areas of the northeastern United States with a primary concentration in Fairfield County, Connecticut and Westchester and Putnam Counties, New York. Non-core assets consist of office and retail buildings, industrial properties and mortgages. Class A Common Shares, Common Shares and Series C Preferred Shares of the Company trade on the New York Stock Exchange under the symbols “UBA,” “UBP” and “UBP.C.” 2004 ANNUAL REPORT CONTENTS Selected Financial Data ..................1 Letter to Stockholders ....................2 Portfolio Review..............................5 Core Properties..............................10 Investment Portfolio .....................12 Financials........................................13 Directors and Officers ..................37 SELECTED FINANCIAL DATA (In thousands, except per share data) Year Ended October 31, 2004 2003 2002 2001 2000 Balance Sheet Data: Total Assets Mortgage Notes Payable Preferred Stock Net Cash Provided by (Used in): Operating Activities Investing Activities Financing Activities Operating Data: Total Revenues Total Operating Expenses and Minority Interests Income From Continuing Operations Net Income Applicable to Common and Class A Common Stockholders Per Share Data: Net Income – Diluted: Class A Common Stock Common Stock Cash Dividends on: Class A Common Stock Common Stock Other Data: Funds from Operations (Note) Cash Dividends (as a Percentage of Funds $394,917 $107,443 $ 52,747 $ 30,744 $ (2,416) $(24,837) $392,639 $104,588 $ 52,747 $ 31,176 $(69,818) $ 14,749 $353,562 $106,429 $ 14,341 $218,292 $ 47,115 $ 33,462 $ 21,308 $ 18,532 $(64,960) $(11,394) $ 22,040 $ 59,023 $180,727 $ 49,928 $ 33,462 $ 14,262 $ (3,713) $(11,436) $64,916 $59,153 $43,198 $35,048 $30,087 $41,962 $22,954 $39,353 $19,800 $29,227 $13,971 $25,974 $ 9,074 $22,943 $ 7,144 $18,566 $17,576 $16,080 $10,540 $5,442 $.76 $.69 $ .86 $ .78 $1.64 $.73 $.66 $ .84 $ .76 $1.60 $.87 $.78 $ .82 $ .74 $1.56 $.97 $.88 $ .80 $ .72 $1.52 $.55 $.49 $ .78 $ .70 $1.48 $29,813 $27,964 $24,144 $14,611 $ 11,914 from Operations) 72% 74% 62% 60% 64% Note: The Company considers Funds from Operations (FFO) to be an additional financial measure of operating performance of an equity REIT. The Company reports FFO in addition to net income applicable to common shareholders and net cash provided by operating activities. Although FFO is a non-GAAP financial measure, the Company believes it provides useful information to shareholders, potential investors and management because it primarily excludes the assumption that the value of real estate assets diminishes predictably over time and industry analysts have accepted it as a performance measure. FFO is helpful as it excludes various items included in net income that are not indicative of the Company’s operating performance such as gains (or losses) from sales of property. The Company computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO is defined by NAREIT as net income or loss, excluding gains (or losses) from debt restructuring and sales of properties plus depreciation and amortization, and after adjustments for unconsolidated joint ventures. FFO does not represent cash generated from operating activities in accordance with GAAP and is not indicative of cash available to fund cash needs. FFO should not be considered as an alternative to net income as an indicator of the Company’s operating performance or as an alternative to cash flow as a measure of liquidity. Since all companies do not calculate FFO in a similar fashion, the Company’s calculation of FFO presented herein may not be comparable to similarly titled measures as reported by other companies. Total Revenues (In thousands) Funds From Operations (In thousands) 6 1 9 , 4 6 $ 3 5 1 , 9 5 $ 8 9 1 , 3 4 $ 8 4 0 , 5 3 $ 7 8 0 , 0 3 $ 3 1 8 , 9 2 $ 4 6 9 , 7 2 $ 4 4 1 , 4 2 $ 1 1 6 , 4 1 $ 4 1 9 , 1 1 $ Combined Dividends Paid on Common and Class A Common Shares (In dollars per share) 4 6 . 1 $ 0 6 . 1 $ 6 5 . 1 $ 2 5 . 1 $ 8 4 . 1 $ 00 01 02 03 04 00 01 02 03 04 00 01 02 03 04 1 2004 was a milestone year for Urstadt Biddle Properties. We celebrated our 35th year as a publicly traded real estate invest- ment trust listed on the New York Stock Exchange and to commem- orate this event, our Board of Directors “rang the closing bell” at the New York Stock Exchange. It was an honor to have this cele- bration at the center of the world’s financial capital. On a personal note, your Chairman also celebrated his 30th year as a Director of UBP and 15th year as its Chief Executive Officer. We are one of the oldest pub- licly traded REITs in the country. Since our founding in 1969, we The Company has certainly undergone a dramatic transfor- mation since its founding in the late ‘60s. In the early days, the Company was managed by an outside advisor, invested in different property types, in widely disparate regions of the country. This formula utilized by many REITs at the time, proved to have significant limitations. It was a formula that hampered the Company’s ability to grow and limited stockholder values. In 1989, working with our Board of Directors, we adopted a business plan based on the following principles that we have steadfastly followed ever since: have paid an uninterrupted string 1. Specialize in one property of 140 consecutive quarterly dividends…. This is a record type 2. Buy properties in one matched by very few publicly market area traded companies or REITs…. 3. Manage our properties and for the eleventh consecutive directly 4. Keep debt levels low 5. Avoid partnerships whenever possible year….we increased the annual rate of dividends paid. We’ve often said that “dividends are facts” and their safety is our top priority. In 2004, Wall Street rewarded the Company’s dependable dividend record as our stock prices rose for the fourth consecutive year. (See chart.) TO OUR STOCKHOLDERS Since our founding in 1969, we have paid an uninterrupted string of 140 consecutive quarterly dividends…. This is a record matched by very few publicly traded companies or REITs…. Charles J. Urstadt Chairman UBA and UBP Year End Stock Prices (In dollars) $18 $15 $12 $9 $6 $3 $0 2 UBA UBP October 31, 1999 2000 2001 2002 2003 2004 The Urstadt Biddle Properties Board of Directors “rang the closing bell” at the New York Stock Exchange on December 15, 2004. The Company’s success is the result of more than a solid dividend policy. It is the result of owning outstanding retail properties in one of the country’s most affluent regions; a quality tenant base of national and local retailers; and an excel- lent team of real estate professionals.... Willing L. Biddle President The Company’s success is and strive to achieve higher rents; the result of more than a solid and our property management dividend policy. It is the result personnel who maintain of owning outstanding retail the physical condition of our properties in one of the country’s properties and oversee space most affluent regions; a quality renovations, expansion and tenant base of national and local construction projects. These retailers who do well at the individuals are supported by centers; the more than 20 million our highly capable legal and visits we estimate made by finance staff. customers to our properties each year; and an excellent team of real estate professionals led by an experienced and knowledgeable Board of Directors. Our outstanding staff includes experienced profession- At this point you may ask….. “What are our challenges in the year ahead?” We face competition from investors who have aggressively bid-up purchase prices to the highest levels in years. We will als in acquisitions who are adept only buy properties at prices at finding properties in a difficult which we can realize a positive “seller’s” market; a leasing team return on our cost of capital. who keep the properties leased We will not compete for an 3 acquisition that we believe is Oxley legislation which has overvalued. We met this chal- greatly increased the compliance lenge as witnessed by our burden on public companies. In acquisition of the Rye Portfolio 2005, we anticipate that the costs of four retail properties and the to comply with the new regula- most recent addition of The tions may be substantial and will Dock Shopping Center in increase the demands on our Stratford Connecticut. These legal and finance staff as well as acquisitions are described in our Board of Directors. more detail in the Portfolio 2004 was a good year and Review of this annual report. with your continued support Our largest leasing challenge we’ll have many more to come. is in our Southfield, Michigan Our personal thanks to you, office building which was 30% the stockholders, our directors, vacant at year end. Southfield has officers and staff. I, as Chairman, one of the country’s highest office especially want to thank our vacancy rates. We will continue to President, Wing Biddle, who has seek creative solutions to this been so effective in overseeing leasing problem and are confi- our recent acquisition, leasing dent that it will be favorably and management efforts. resolved. Lastly, we want to thank our We are also adjusting to the tenants and their customers, who increased regulations brought have greatly contributed to our about by the recent Sarbanes- success. Sincerely yours, Charles J. Urstadt Willing L. Biddle Chairman President January 14, 2005 TO OUR STOCKHOLDERS 4 PORTFOLIO REVIEW Our strategy is to concentrate our portfolio of properties in the northeast and primarily in one property type — grocery-anchored shopping centers. Our focus is on well-located neighborhood shopping centers leased to retailers who deliver basic services and products to consumers. HIGHLIGHTS FROM 35 YEARS 2003 • Named to the Forbes Small Business 100 Fastest Growing Small Companies • Sells $40 million Series C Preferred stock issue 2002 • Acquires largest real estate investment (Ridgeway Shopping Center) • Sells 8 million shares of Class A common stock • Named to the Russell 2000 Index 2001 • Sells 4.8 million shares of Class A common stock 1998 • HRE changes name to Urstadt Biddle Properties to reflect leadership of the Company • Sells $35 million Series B Preferred stock issue • Issues stock dividend in form of new issue of Class A common stock 1992 • Acquires first Westchester County retail property in Somers, New York 1989 • Charles J. Urstadt becomes CEO and announces plan to focus on northeast retail and sell off properties that are outside northeast region 1986 • HREI breaks with Adviser, becomes self-advised and changes name to HRE Properties 1983 • HREI sells $33 million in common shares 1969 • Founded as Hubbard Real Estate Investments (HREI)—$100 million IPO • Listed on NYSE 5 PORTFOLIO REVIEW ACQUISITIONS 2004 was a tough year for retail property acquisitions. This was not due to lack of appetite for this property type but rather to a combination of reluctant sellers considering a property sale versus refinancing to meet their liquidity needs and historically high prices for quality retail properties. Our acquisition mar- ket of Westchester and Putnam Counties in New York and Fairfield County in Connecticut is one of the most highly compet- itive markets in the country. During this period of intense The Dock, Stratford, Connecticut buying pressure we have remained disciplined in our efforts to buy property only when it makes economic sense and furthers our strategic goal to be the dominant shopping center owner in our regional market. Shortly after the close of our year end and, after more than a year of negotiations, we complet- ed the purchase of The Dock, a 269,000 sf shopping center in Stratford, Connecticut located in the southeast corner of Fairfield County. We plan to complete a redevelopment of the property over the next 24 months to add greater leaseable area to the Total Assets (In thousands) 7 1 9 , 4 9 3 $ 9 3 6 , 2 9 3 $ 2 6 5 , 3 5 3 $ 2 9 2 , 8 1 2 $ 7 2 7 , 0 8 1 $ 00 01 02 03 04 6 property and lease currently Rye, New York. Three of the vacant space in the property. The properties are traditional “street property is unique in that it also retail” properties and contain contains a 192 slip marina. The regional and local tenants. property is our type of property The fourth property known as — a quality, grocer anchored “The Biltmore Shopping shopping center with a stable Center” will be renovated in income stream that has upside 2005 and should be a great addi- potential from renovation, leas- tion to our portfolio. ing and expansion. We are in discussions with a During the year, we pur- number of other potential sellers chased a portfolio of four retail of property in our market and properties in the affluent city of are confident that 2005 will be a strong year for acquisitions. As part of our acquisitions program, we hope to be able to judiciously sell our remaining non-core properties in tax efficient exchange transactions and thus complete the repositioning of the portfolio into primarily one property type in our market. Three “street retail” properties acquired in 2004. Rye, New York (left). Renovation plans for The Biltmore Shopping Center, Rye Brook, New York 7 PORTFOLIO REVIEW SALES In November 2004, we sold the Bi-County Shopping Center in Farmingdale, New York. When we received an unsolicited offer to sell the property, we saw an opportunity to realize the full value of the property and achieve higher returns over the long term through a reinvestment of the proceeds into The Dock. LEASING over 10% of the total core portfo- lio GLA. We experienced strong internal growth — and increased our lease renewal contract rental rates by an average of 11% over the expiring rates. For new leases on previously vacant space, rental rates on average were 15% higher than current in-place lease rates. At two of our larger shopping centers, our supermarket anchor tenants — Stop & Shop in Briarcliff Manor, NY and Shaw’s in Darien, CT have agreed to con- struct larger, more modern super- Our core portfolio and tenant markets at our centers and at base is strong! their cost. Shaw’s is under con- Over the year, we increased struction now and expects to the leased percentage of our core reopen in the Fall 2005. Stop & portfolio from 97% in 2003 to a Shop is currently seeking nearly full 99%. In 2004, we approvals and expects to com- leased or renewed over 280,000 sf mence construction in 2006. We of space in our core portfolio — anticipate that the redevelopment Core Property Portfolio Leased Rate (Percent) % 7 9 % 7 9 % 6 9 % 7 9 % 9 9 00 01 02 03 04 Core Property Portfolio Total Gross Leasable Square Footage (In thousands) 8 0 7 2 , 9 5 6 2 , 6 1 2 , 2 6 1 8 1 , 8 4 7 1 , 00 01 02 03 04 Renovation plans for the Arcadian Shopping Center, Briarcliff, New York 8 Renovation plans for the Airport Plaza, Danbury, Connecticut of these anchor spaces will Our single significant and OUTLOOK benefit the properties and their continuing leasing problem in the tenants for decades to come. On portfolio is in the Southfield, the opposite page and below are Michigan office building where renderings showing the proper- we now have more than 100,000 ties after completion of these sf vacant. We are aggressively projects. At the Ridgeway marketing the vacancy but have Shopping Center in Stamford been hampered by a weak office Connecticut, we obtained the market where the office vacancy necessary zoning approvals for rate is more than 25%. our new tenant — LA Fitness — Our other non-core proper- (who signed a lease for 42,700 sf ties are leased to Chrysler We expect demand for space at our shopping centers in 2005 to remain strong. We know that competition to purchase quality shopping centers in our acquisi- tion market will remain fierce. We will remain disciplined in our search for properties. We believe that maintaining good relation- ships with shopping center own- last year) to begin construction Corporation and Mervyn’s under ers in our market combined with of their space later this winter. medium term leases. our direct marketing approach to LA Fitness expects to open in early 2006. Renovation plans for Shaw’s at the Goodwives Shopping Center, Darien, Connecticut locate potential acquisitions gives us a competitive advantage to fill our acquisition pipeline. 9 URSTADT BIDDLE PROPERTIES INC. Carmel ShopRite Center Carmel, New York Towne Centre Shopping Center Somers, New York Heritage 202 Center Somers, New York Arcadian Shopping Center Briarcliff Manor, New York Somers Commons Somers, New York 25 Valley Drive Greenwich, Connecticut Chilmark Shopping Center Briarcliff Manor, New York 7 Riversville Road Greenwich, Connecticut Westchester Pavilion White Plains, New York 530 Old Post Road Greenwich, Connecticut Biltmore Shopping Center Rye Brook, New York 3“Street Retail“ Properties Rye, New York Eastchester Mall Eastchester, New York Valley Ridge Shopping Center Wayne, New Jersey 10 URSTADT BIDDLE PROPERTIES Greenwich, Connecticut Five Town Plaza Springfield, Massachusetts Newington Park Newington, New Hampshire Danbury Square Danbury, Connecticut Townline Square Meriden, Connecticut Airport Plaza Danbury, Connecticut Ridgefield Center Ridgefield, Connecticut Orange Meadows Shopping Center Orange, Connecticut Goodwives Shopping Center Darien, Connecticut Greens Farms Plaza Westport, Connecticut Ridgeway Shopping Center Stamford, Connecticut The Dock Stratford, Connecticut CORE PROPERTIES 11 ✭ INVESTMENT PORTFOLIO (As of January 7, 2005) URSTADT BIDDLE PROPERTIES INC. CORE PROPERTIES UBP owns or has interests in twenty five retail properties and five office buildings which total 2,907,000 square feet. Location Square Feet Principal Tenants 369,000 323,000 313,000 269,000 194,000 185,000 161,000 135,000 126,000 102,000 102,000 95,000 78,000 78,000 70,000 51,000 40,000 38,000 38,000 33,000 29,000 19,000 59,000 Stamford, Connecticut Springfield, Massachusetts Meriden, Connecticut Stratford, Connecticut (1) Danbury, Connecticut White Plains, New York Briarcliff Manor, New York Somers, New York Carmel, New York Wayne, New Jersey Newington, New Hampshire Darien, Connecticut Somers, New York Orange, Connecticut Eastchester, New York Ridgefield, Connecticut Rye, New York (4 buildings) Westport, Connecticut Briarcliff Manor, New York Danbury, Connecticut Briarcliff Manor, New York Somers, New York Greenwich, Connecticut (1) Property acquired on January 7, 2005 NON-CORE PROPERTIES Property Type Shopping center Shopping center Stop & Shop, Bed Bath & Beyond Big Y, Burlington Coat, World Gym ShopRite, Old Navy, Linens ‘N Things Shopping center Stop & Shop, Staples, Petco Shopping center Barnes & Noble, Christmas Tree Shops Shopping center Toys R Us, The Sports Authority Stop & Shop, Mandees Shopping center Shopping center Home Goods, New York Sports Club Shopping center ShopRite, Eckerd Drugs A&P, PNC Bank Shopping center Shopping center Linens ‘N Things, Outback Restaurant Shopping center Shaw’s Supermarket Gristede’s, US Post Office Trader Joe’s, Seamans Furniture Food Emporium (A&P) Chico’s Cosi Pier One Imports Dress Barn, Radio Shack Boston Billards, Sleepy’s Party Plus Warehouse Putnam County Savings Bank Greenwich Hospital, Urstadt Biddle Properties (Executive Offices) Shopping center Shopping center Shopping center Shopping center Street retail Street retail Shopping center Shopping center Shopping center Shopping center Shopping center 5 Office buildings UBP owns one office building containing 202,000 square feet, one retail property containing 126,000 square feet and two industrial properties with a total of 447,000 square feet. The Company also holds long-term mortgages. Location Square Feet Principal Tenant Property Type Southfield, Michigan Tempe, Arizona Dallas, Texas St. Louis, Missouri 202,000 126,000 255,000 192,000 Arcadis Mervyn’s DaimlerChrysler DaimlerChrysler Office building Shopping center Parts distribution facility Parts distribution facility 12 FINANCIALS CONTENTS Consolidated Balance Sheets at October 31, 2004 and 2003 ........14 Consolidated Statements of Income for each of the three years in the period ended October 31, 2004.................15 Consolidated Statements of Cash Flows for each of the three years in the period ended October 31, 2004.................16 Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended October 31, 2004 ...................................................17 Notes to Consolidated Financial Statements .......................18-28 Report of Independent Registered Public Accounting Firm .......29 Management’s Discussion and Analysis of Financial Condition and Results of Operations .................................30 Tax Status ..........................................................................36 Market Price Ranges ...........................................................36 URSTADT BIDDLE PROPERTIES INC. 13 FINANCIAL STATEMENTS URSTADT BIDDLE PROPERTIES INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) ASSETS Real Estate Investments: Core properties — at cost Non-core properties — at cost Less: accumulated depreciation Mortgage notes receivable Property held for sale Cash and cash equivalents Restricted cash Marketable securities Tenant receivables, net of allowances of $2,047 and $1,369, respectively Prepaid expenses and other assets Deferred charges, net of accumulated amortization Total Assets LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Mortgage notes payable Accounts payable and accrued expenses Deferred officers’ compensation Other liabilities Total Liabilities Minority Interests Preferred Stock, par value $.01 per share; 20,000,000 shares authorized; 8.99% Series B Senior Cumulative Preferred stock, (liquidation preference of $100 per share); 150,000 shares issued and outstanding 8.50% Series C Senior Cumulative Preferred stock, (liquidation preference of $100 per share); 400,000 shares issued and outstanding Total Preferred Stock Commitments and Contingencies Stockholders’ Equity: Excess stock, par value $.01 per share; 10,000,000 shares authorized; none issued and outstanding Common stock, par value $.01 per share; 30,000,000 shares authorized; 7,189,991 and 6,817,771 shares issued and outstanding shares at October 31, 2004 and 2003 Class A Common stock, par value $.01 per share; 40,000,000 shares authorized; 18,649,008 and 18,548,453 issued and outstanding shares at October 31, 2004 and 2003 Additional paid in capital Cumulative distributions in excess of net income Accumulated other comprehensive income Unamortized restricted stock compensation and officers notes receivable October 31, 2004 2003 $381,937 20,621 (61,389) 341,169 2,109 343,278 4,002 25,940 1,184 2,681 11,249 3,303 3,280 $394,917 $107,443 1,515 501 3,617 113,076 7,320 14,341 38,406 52,747 — 72 186 264,680 (36,581) 472 (7,055) $369,390 21,376 (52,544) 338,222 2,184 340,406 4,265 22,449 1,098 9,532 8,434 3,245 3,210 $392,639 $104,588 2,741 401 5,166 112,896 7,320 14,341 38,406 52,747 — 68 185 258,296 (33,611) — (5,262) Total Stockholders’ Equity Total Liabilities and Stockholders’ Equity 221,774 219,676 $394,917 $392,639 The accompanying notes to consolidated financial statements are an integral part of these statements. 14 URSTADT BIDDLE PROPERTIES INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Revenues Base rents Recoveries from tenants Lease termination income Interest and other Operating Expenses Property operating Property taxes Interest Depreciation and amortization General and administrative expenses Director’s fees and expenses Operating Income Minority Interests Income from Continuing Operations Income from Discontinued Operations Net Income Preferred Stock Dividends Excess of Carrying Value over Cost to Repurchase Preferred Shares Net Income Applicable to Common and Class A Common Stockholders Basic Earnings Per Share: Per Common Share: Income from Continuing operations Income from Discontinued operations Net Income Applicable to Common Stockholders Per Class A Common Share: Income from Continuing operations Income from Discontinued operations Net Income Applicable to Class A Common Stockholders Diluted Earnings Per Share: Per Common Share: Income from Continuing operations Income from Discontinued operations Net Income Applicable to Common Stockholders Per Class A Common Share: Income from Continuing operations Income from Discontinued operations Net Income Applicable to Class A Common Stockholders Dividends Per Share: Common Class A Common The accompanying notes to consolidated financial statements are an integral part of these statements. Year Ended October 31, 2004 2003 2002 $49,704 13,810 577 825 64,916 10,194 8,571 8,113 11,094 3,416 207 41,595 23,321 (367) 22,954 361 23,315 (4,749) — $45,896 12,143 80 1,034 59,153 9,970 7,354 8,094 10,231 3,154 185 38,988 20,165 (365) 19,800 570 20,370 (2,794) — $33,537 7,527 765 1,369 43,198 7,274 5,061 5,584 7,904 2,836 173 28,832 14,366 (395) 13,971 536 14,507 (1,498) 3,071 $18,566 $17,576 $16,080 $.69 $.01 $.70 $.75 $.02 $.77 $.68 $.01 $.69 $.75 $.01 $.76 $.78 $.86 $.65 $.02 $.67 $.72 $.02 $.74 $.64 $.02 $.66 $.71 $.02 $.73 $.76 $.84 $.77 $.03 $.80 $.86 $.03 $.89 $.75 $.03 $.78 $.84 $.03 $.87 $.74 $.82 15 FINANCIAL STATEMENTS URSTADT BIDDLE PROPERTIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of restricted stock Minority interests Increase in restricted cash Increase in tenant receivables (Decrease) increase in accounts payable and accrued expenses (Decrease) increase in other assets and other liabilities, net Net Cash Provided by Operating Activities Investing Activities: Sales (purchases) of marketable securities Acquisitions of properties Acquisition of minority interests Improvements to properties and deferred charges Net proceeds from sales of properties Distributions to limited partners of consolidated joint ventures Payments to limited partners of unconsolidated joint venture Payments received on mortgage notes and other receivables Deposits on acquisitions of properties Net Cash Used in Investing Activities Financing Activities: Sales of Series C Preferred Stock Sales of additional Common and Class A Common shares Proceeds from bank loans Payments on mortgage notes payable and bank loans Dividends paid — Common and Class A Common shares Dividends paid — Preferred Stock Repurchase of preferred shares Repayments of notes receivable from officers Net Cash (Used In) Provided by Financing Activities Net Increase (Decrease) In Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Year Ended October 31, 2004 2003 2002 $23,315 $20,370 $14,507 11,241 1,322 367 (86) (2,708) (1,226) (1,481) 30,744 7,323 (6,625) — (2,822) — (367) — 75 — (2,416) — 3,141 — (1,826) (21,536) (4,749) — 133 (24,837) 3,491 22,449 10,388 1,105 365 (2) (3,120) 243 1,827 31,176 15,613 (83,485) — (2,844) — (365) — 1,263 — (69,818) 38,406 1,366 — (1,841) (20,700) (2,794) — 312 14,749 (23,893) 46,342 8,064 942 395 (181) (1,871) (1,649) (1,675) 18,532 (25,145) (34,785) (1,258) (2,814) 275 (395) (600) 62 (300) (64,960) — 88,523 17,200 (17,256) (14,913) (1,498) (16,050) 3,017 59,023 12,595 33,747 Cash and Cash Equivalents at End of Year $25,940 $22,449 $46,342 The accompanying notes to consolidated financial statements are an integral part of these statements. 16 URSTADT BIDDLE PROPERTIES INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except shares and per share data) Common Stock Class A Common Stock Outstanding Number of Outstanding Par Number of Shares Value (Cumulative Additional Distributions Accumulated Par Shares Value Paid In In Excess of Comprehensive Income Capital Net Income) Unamortized Restricted Stock Other Compensation and Notes Receivable Total Balances — October 31, 2001 6,242,139 $62 9,600,019 $96 $162,763 $(31,654) $ — $(4,899) $126,368 Net Income applicable to Common and Class A Common stockholders Cash dividends paid: Common stock ($.74 per share) Class A common stock ($.82 per share) Sales of Class A common shares Sale of additional shares under dividend reinvestment plan Shares issued under restricted stock plan Amortization of restricted stock compensation Exercises of stock options Notes from officers upon exercises of stock options Repayment of notes receivable from officers Balances — October 31, 2002 Comprehensive Income: Net income applicable to Common and Class A common stockholders Cash dividends paid: Common stock ($.76 per share) Class A common stock ($.84 per share) Sales of shares under dividend reinvestment plan Shares issued under restricted stock plan Amortization of restricted stock compensation Exercises of stock options Repayment of notes receivable from officers Balances — October 31, 2003 Comprehensive Income: Net income applicable to Common and Class A common stockholders Unrealized gains on marketable securities Total Comprehensive Income Cash dividends paid: Common stock ($.78 per share) Class A common stock ($.86 per share) Sales of additional shares under dividend reinvestment plan Shares issued under restricted stock plan Amortization of restricted stock compensation Exercises of stock options Repayment of note receivable from officer Balances — October 31, 2004 — — — — 14,296 110,375 — 211,762 — — 6,578,572 — — — 61,699 159,500 — 18,000 — 6,817,771 — — — — 181,720 175,500 — 15,000 — — — — — 2 — 2 — — 66 — — — 1 1 — — — 68 — — — — 2 2 — — — 7,189,991 — $72 — — — 16,080 — — — — 88 8,749,222 19,494 — 1 43,425 — — 37,312 — — — — — — — 87,835 364 1,577 — 1,727 — — (4,750) (10,163) — — — — — — — 18,449,472 185 254,266 (30,487) — — — — — — 18,704 — 56,200 — — — 24,077 — — — — — — 1,051 2,665 — 314 — 17,576 (5,135) (15,565) — — — — — 18,548,453 185 258,296 (33,611) — — — — — — — — 18,306 — 1 58,625 — — 23,624 — — — — — — — 2,843 3,245 — 296 — 18,566 — (5,516) (16,020) — — — — — — — — — — — — — — — — — — — — — — — — — — 472 — — — — — — — — 16,080 — (4,750) — (10,163) — 87,923 — (1,580) 364 — 942 — 942 1,729 (1,493) (1,493) 3,017 3,017 (4,013) 220,017 — 17,576 — (5,135) — (15,565) — (2,666) 1,105 — 1,052 — 1,105 314 312 312 (5,262) 219,676 — 18,566 — 472 19,038 — (5,516) — (16,020) — (3,248) 1,322 — 2,845 — 1,322 296 133 133 18,649,008 $186 $264,680 $(36,581) $472 $(7,055) $221,774 The accompanying notes to consolidated financial statements are an integral part of these statements. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Urstadt Biddle Properties Inc. (Company), a real estate investment trust (REIT), is engaged in the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers in the northeast- ern part of the United States. Other assets include office and retail buildings and industrial properties. The Company’s major tenants include supermarket chains and other retailers who sell basic necessities. At October 31, 2004, the Company owned or had interests in 34 properties containing a total of 3.5 million square feet of leasable area. Principles of Consolidation and Use of Estimates The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ven- tures in which the Company has the ability to control the affairs of the venture. The Company believes it has the ability to control the affairs of its consolidated joint ventures because as the sole general partner, the Company has the exclusive right to exercise all management powers over the business and affairs of the respective joint ventures. In addition, the limited partners have no important rights as defined in the AICPA’s Statement of Position (“SOP”) 78-9 “Accounting for Investments in Real Estate Ventures.” The joint ventures are consolidated into the consolidated financial statements of the Company. All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make use of estimates and assumptions that affect amounts reported in the financial statements as well as certain disclosures. Actual results could differ from those estimates. Reclassifications Certain prior period amounts have been reclassified (including the presentation of the consolidated statements of income required by SFAS #144) to conform to the current year presentation. Federal Income Taxes The Company has elected to be treated as a real estate investment trust under Sections 856-860 of the Internal Revenue Code (Code). Under those sections, a REIT, that among other things, distributes at least 90% of real estate trust taxable income and meets certain other qualifications prescribed by the Code will not be taxed on that portion of its taxable income that is distributed. The Company believes it qualifies as a REIT and has distributed all of its taxable income for the fiscal years through 2004 in accordance with the provisions of the Code. Accordingly, no provision has been made for Federal income taxes in the accompanying consolidated financial statements. Real Estate Investments All capitalizable costs related to the improvement or replacement of real estate properties are capitalized. Additions, renovations and improvements that enhance and/or extend the useful life of a property are also capitalized. Expenditures for ordinary maintenance, repairs and improvements that do not materially prolong the normal useful life of an asset are charged to operations as incurred. Upon the acquisition of real estate, the Company assesses the fair value of acquired tangible assets such as land, buildings and tenant improvements, intangible assets such as above and below market leases, acquired-in place leases and other identified intangible assets and assumed liabilities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141. The Company allocates the purchase price to the acquired assets and assumed liabilities based on their relative fair values. The Company assesses and considers fair value based on estimated cash flow projec- tions that utilize appropriate discount and/or capitalization rates, as well as available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. Above and below market leases acquired are recorded at their fair value. The capitalized above-market lease values are amortized as a reduction of rental revenue over the remaining term of the respective leases and the capitalized below- market lease values are amortized as an increase to rental revenue over the remaining term of the respective leases. The value of in-place leases is based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, current market conditions, and cost to execute similar leases. The value of in-place leases are amortized to depreciation and amortization expense over the remaining term of the respective leases. If a tenant vacates its space prior to its contractu- al expiration date, any unamortized balance of their related intangible asset is expensed. Depreciation and Amortization The Company uses the straight-line method for depreciation and amortization. Core and non-core properties are depreciated over the estimated useful lives of the properties, which range from 30 to 40 years. Property improvements are depreciated over the estimated useful lives that range from 10 to 20 years. Furniture and fixtures are depreciated over the estimated useful lives that range from 3 to 10 years. Tenant improvements are amortized over the shorter of the life of the related leases or useful life. 18 URSTADT BIDDLE PROPERTIES INC. Deferred Charges Deferred charges consist principally of leasing commissions, which are amortized ratably over the life of the tenant leases and financing fees, which are amortized over the terms of the respective agreements. Deferred charges in the accompanying consolidated balance sheets are shown at cost, net of accumulated amortization of $1,886,000 and $1,712,000 as of October 31, 2004 and 2003, respectively. Asset Impairment The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to aggregate future net cash flows, (undiscounted and without interest), expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value less costs to sell. It is the Company’s policy to reclassify properties as assets to be disposed of upon determination that such properties will be sold within one year. Revenue Recognition Revenues from operating leases include revenues from core properties and non-core properties. Rental income is generally recognized based on the terms of leases entered into with tenants. Minimum rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term. At October 31, 2004 and 2003, approxi- mately $7,199,000 and $5,735,000 has been recognized as straight-line rents receivable (representing the current net cumulative rents recognized prior to when billed and collectible as provided by the terms of the leases), all of which is included in tenant receivables in the accompanying consolidated financial statements. Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved. Property operating expense recoveries from tenants of common area maintenance, real estate taxes, and other recoverable costs are recognized in the period the related expenses are incurred. Lease termination amounts received by the Company from its tenants are recognized as income in the period received. Interest income is recognized as it is earned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or losses under generally accepted accounting principles have been met. The Company provides an allowance for doubtful accounts against the portion of tenant receivables (including an allowance for future tenant credit losses of approximately 10% of the deferred straight-line rents receivable) which is estimated to be uncollectible. Such allowances are reviewed periodically. At October 31, 2004 and 2003, tenant receiv- ables in the accompanying consolidated balance sheets are shown net of allowances for doubtful accounts of $2,047,000 and $1,369,000, respectively. Cash and Cash Equivalents The Company considers highly liquid investments with original maturities of 90 days or less when purchased to be cash equivalents. Restricted Cash Restricted cash consists of those tenant security deposits and replacement and other reserves required by agreement with certain of the Company’s mortgage lenders for property level capital requirements which are required to be held in sepa- rate bank accounts. Marketable Securities Marketable securities consist of short-term investments and marketable equity securities. Short-term investments (con- sisting of investments with original maturities of greater than three months when purchased) and marketable equity securities are carried at fair value. The Company has classified marketable securities as available for sale. Unrealized gains and losses on available for sale securities are recorded as other comprehensive income in Stockholders Equity. At October 31, 2004, other comprehensive income consists of net unrealized gains of $472,000. Unrealized gains included in other comprehensive income will be reclassified into earnings as gains are realized. Fair Value of Financial Instruments The carrying values of cash and cash equivalents, restricted cash, tenant receivables, prepaid expenses and other assets, accounts payable and accrued expenses and other liabilities are reasonable estimates of their fair values because of the short maturities of these instruments. The estimated fair value of mortgage notes receivable collateralized by real property is based on discounting the future cash flows at a year-end risk adjusted lending rate that the Company would utilize for loans of similar risk and duration. At October 31, 2004 and 2003, the estimated aggregate fair value of the mortgage notes receivable was $2,016,000 and $2,161,000 respectively. 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The estimated fair value of mortgage notes payable was $115,000,000 and $114,000,000 at October 31, 2004 and 2003, respectively. The estimated fair value of mortgage notes payable is based on discounting the future cash flows at a year- end risk adjusted lending rate currently available to the Company for issuance of debt with similar terms and remaining maturities. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, mortgage notes receivable and tenant receivables. The Company places its cash and cash equivalents in excess of insured amounts with high quality financial institutions. The Company performs ongoing credit evaluations of its tenants and may require certain tenants to provide security deposits or letters of credit. Though these security deposits and letters of credit are insufficient to meet the terminal value of a tenant’s lease obligation, they are a measure of good faith and a source of funds to offset the economic costs associated with lost rent and the costs associated with re-tenanting the space. There is no dependence upon any single tenant. Earnings Per Share The Company calculates basic and diluted earnings per share in accordance with SFAS No. 128, “Earnings Per Share.” Basic earnings per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income applica- ble to Common and Class A Common stockholders by the weighted number of Common shares and Class A Common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other con- tracts to issue Common shares or Class A Common shares were exercised or converted into Common shares or Class A Common shares and then shared in the earnings of the Company. Since the cash dividends declared on the Company’s Class A Common stock are higher than the dividends declared on the Common Stock, basic and diluted EPS have been calculated using the “two-class” method. The two-class method is an earnings allocation formula that determines earn- ings per share for each class of common stock according to the weighted average of the dividends declared, outstanding shares per class and participation rights in undistributed earnings. The following table sets forth the reconciliation between basic and diluted EPS (in thousands): Numerator Net income applicable to common stockholders – basic Effect of dilutive securities: Operating partnership units Net income applicable to common stockholders – diluted Denominator Denominator for basic EPS – weighted average common shares Effect of dilutive securities: Stock options and awards Operating partnership units Denominator for diluted EPS – weighted average common equivalent shares Numerator Net income applicable to Class A common stockholders – basic Effect of dilutive securities: Operating partnership units Net income applicable to Class A common stockholders – diluted Denominator Denominator for basic EPS – weighted average Class A common shares Effect of dilutive securities: Stock options and awards Operating partnership units Denominator for diluted EPS – weighted average Class A common equivalent shares 20 2004 2003 2002 $4,488 $4,171 $4,880 192 $4,680 151 $4,322 160 $5,040 6,414 351 55 6,820 6,259 6,089 252 55 6,566 288 55 6,432 $14,078 $13,405 $11,200 175 $14,253 215 $13,620 202 $11,402 18,248 18,200 12,615 278 310 210 310 211 310 18,836 18,720 13,136 URSTADT BIDDLE PROPERTIES INC. Segment Reporting The Company operates in one industry segment, ownership of commercial real estate properties which are located prin- cipally in the northeastern United States. Management reviews operating and financial data for each property separately and independently from all other properties when making resource allocation decisions and measuring performance. Recently Issued Accounting Pronouncements In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities,” which explains how to identify variable interest entities (“VIE”) and assess whether to consolidate such entities. The provisions of this interpretation are effective immediately for VIE’s formed after January 31, 2003. For VIE’s formed prior to January 31, 2003, the provisions of this interpretation apply to the first fiscal year or interim period beginning after December 15, 2003. The adoption of this pronouncement in fiscal 2004 did not have any effect on the Company’s operations or finan- cial position as the Company does not have any VIE’s. In May 2003, the FASB issued SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” (“Statement”). The Statement establishes standards for classifying and measuring as liabili- ties certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. In November 2003, the FASB deferred the classification and measurement provisions of the Statement which apply to certain mandatory redeemable non-controlling interests. This deferral is expected to remain in effect while these provisions are further evaluated by the FASB. The Company has one finite life joint venture which contains a mandatory redeemable non-controlling interest. At October 31, 2004 the estimated fair value of the minority interest was approxi- mately $3.3 million. The joint venture has a termination date of December 31, 2097. In December 2004, the FASB issued SFAS No. 123R “Accounting for Stock-Based Compensation.” The Statement supersedes APB Opinion No. 25 “Accounting for Stock Issued to Employees.” The Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Statement is effective as of the beginning of the third fiscal quarter of 2005. Management does not believe that the adoption of this pronouncement will have a material effect on its operations or financial position. (2) REAL ESTATE INVESTMENTS The Company’s investments in real estate, net of depreciation, were composed of the following at October 31, 2004 and 2003 (in thousands): Retail Office Industrial Undeveloped Land Core Properties Non-core Properties $322,459 7,723 — 304 $330,486 $2,039 7,300 1,344 — $10,683 Mortgage Notes Receivable $2,109 — — — $2,109 2004 Totals $326,607 15,023 1,344 304 $343,278 2003 Totals $322,835 15,703 1,564 304 $340,406 The Company’s investments at October 31, 2004, consisted of equity interests in 34 properties, which are located in various regions throughout the United States and mortgage notes. The Company’s primary investment focus is neighborhood and community shopping centers located in the northeastern United States. These properties are consid- ered core properties of the Company. The remaining properties are located outside of the northeastern United States and are considered non-core properties. As a significant concentration of the Company’s properties are in the northeast, market changes in this region could have an effect on the Company’s leasing efforts and ultimately its overall results of operations. The following is a summary of the geographic locations of the Company’s investments at October 31, 2004 and 2003 (in thousands): Northeast Midwest Southwest 2004 $331,139 8,089 4,050 $343,278 2003 $327,695 8,704 4,007 $340,406 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (3) CORE PROPERTIES The components of core properties were as follows (in thousands): Land Buildings and improvements Accumulated depreciation 2004 $ 70,983 310,954 381,937 (51,451) $330,486 2003 $ 68,729 300,661 369,390 (42,384) $327,006 Space at the Company’s core properties is generally leased to various individual tenants under short and intermedi- ate term leases which are accounted for as operating leases. Minimum rental payments on non-cancelable operating leases become due as follows: 2005 – $42,991,000; 2006 – $41,021,000; 2007 – $38,432,000; 2008 – $35,416,000; 2009 – $30,514,000 and thereafter – $133,337,000. Certain of the Company’s leases provide for the payment of additional rent based on a percentage of the tenant’s revenues. Such additional percentage rents are included in operating lease income and were less than 1% of consolidated revenues in each of the three years ended October 31, 2004. Owned Properties In fiscal 2004, the company purchased four retail properties (“Rye Properties”) totaling 40,000 square feet of leasable space for total consideration of $11.0 million subject to mortgage loans totaling $4.7 million which encumbered three of the properties (with fixed interest rates ranging from 7.0% to 7.82%). The assumption of the mortgage loans represent non-cash financing activities and are therefore not included in the accompanying 2004 consolidated statement of cash flows. The Company has evaluated the carrying amount of the mortgage loans assumed and adjusted such amounts by $218,000 to reflect their estimated fair values at the date of acquisition. In fiscal 2003, the Company acquired four properties for cash consisting of the Westchester Pavilion in White Plains, New York, for $39.9 million, seven retail building units in The Somers Commons in Somers, New York, for $21.65 million, the Orange Meadows Shopping Center in Orange, Connecticut, for $11.3 million, and the Greens Farms Plaza, in Westport, Connecticut, for $10.1 million. In fiscal 2002, the Company acquired the Airport Plaza shopping center in Danbury, Connecticut for $7.0 million subject to a first mortgage loan of $2.0 million at a fixed interest rate of 8.375%. The assumption of the first mortgage represents a non-cash financing activity and is therefore not included in the accompanying 2002 consolidated statement of cash flows. Upon the acquisition of real estate properties, the fair value of the real estate purchased is allocated to the acquired tangible assets, (consisting of land, buildings and building improvements) and identified intangible assets and liabilities, (consisting of above-market and below-market leases and in-place leases) in accordance with SFAS No. 141 “Business Combinations.” The Company utilizes methods similar to those used by independent appraisers in estimating the fair value of acquired assets and liabilities. The fair value of the tangible assets of an acquired property considers the value of the property “as-if-vacant”. The fair value reflects the depreciated replacement cost of the asset. In allocating purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases are estimated based on the differences between (i) contractual rentals and the estimated market rents over the applicable lease term discounted back to the date of acquisition utilizing a discount rate adjusted for the credit risk associated with the respective tenants and (ii) the estimated cost of acquiring such leases giving effect to the Company's history of providing tenant improvements and paying leasing commissions, offset by a vacancy period during which such space would be leased. The aggregate value of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property “as-if-vacant,” determined as set forth above. The Company is currently in the process of analyzing the fair value of in-place leases for the acquisitions of the Rye Properties in fiscal 2004, and consequently, no value has yet been assigned to the leases. Accordingly, the purchase price allocation is preliminary and may be subject to change. Property Held for Sale and Discontinued Operations The Company has adopted the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS #144). SFAS #144 requires, among other things, that the assets and liabilities and the results of operations of the Company’s properties which have been sold or otherwise qualify as held 22 URSTADT BIDDLE PROPERTIES INC. for sale be classified as discontinued operations and presented separately in the Company’s consolidated financial state- ments. Properties held for sale represent properties that are under contract for sale and are expected to close within the next twelve months. Property held for sale consists of a shopping center in Farmingdale, New York which was under contract at October 31, 2004. In November 2004, the property was sold (See Note 12) and accordingly, its operating results for the three years ended October 31, 2004, have been reclassified as discontinued operations in the accompanying consolidated financial statements. Revenues from discontinued operations were $1,034,000, $1,207,000 and $1,142,000 for the years ended October 31, 2004, 2003 and 2002 respectively. Consolidated Joint Ventures The Company is the general partner in a partnership that owns the Eastchester Mall in Eastchester, New York. The limit- ed partner who contributed the property in exchange for common and preferred LP units (“partnership units”) is entitled to preferential distributions of cash flow from the property and may put its partnership units to the Company in exchange for shares of the Company’s Common Stock, Class A Common stock and cash. However the Company, at its option, may elect to redeem the partnership units for cash. The Company also has an option to purchase all of the part- nership units for cash after 2007. At October 31, 2004 there were 54,553 Common LP units, Class A Common LP units and Preferred LP units outstanding. The Company is the general partner in a partnership that owns the Arcadian Shopping Center in Briarcliff Manor, New York. The limited partners contributed the property, subject to a $6.3 million first mortgage, in exchange for part- nership units (“PU’s”) of the entity. The PU’s are exchangeable into an equivalent number of shares of the Company’s Class A Common Stock. The limited partners are entitled to preferential distributions of cash flow from the property and may put their partnership interests to the Company for cash or Class A Common Stock of the Company at a unit price as defined in the partnership agreement. The Company, at its option, may redeem the limited partners’ interest for cash. At October 31, 2004 there were 255,097 PU’s outstanding. The Company is the general partner in a partnership that owns the Ridgeway Shopping Center in Stamford, Connecticut. The partnership acquired the property in 2002, subject to a $57.4 million mortgage loan. The partners are entitled to receive an annual cash preference payable from available cash of the partnership. Any unpaid preferences accumulate and are paid from future available cash, if any. The limited partners' cash preferences are paid after the general partner's preferences are satisfied. The balance of available cash, if any, is distributed in accordance with the respective partners' interests. Upon liquidation, proceeds from the sale of partnership assets are to be distributed in accordance with the respective partners' interests. The partners are not obligated to make any additional capital contri- butions to the partnership. The Company has retained an affiliate of one of the limited partners to provide management and leasing services to the property at an annual fee of $125,000 for a period of five years ending in June 2007. The assumption of the mortgage loan represented a non-cash financing activity and is therefore not included in the accompa- nying 2002 consolidated statement of cash flows. The limited partner interests are reflected in the accompanying consolidated financial statements as Minority Interests. (4) NON-CORE PROPERTIES At October 31, 2004, the non-core properties consist of two distribution and service properties, one office building and one retail property located outside of the Northeast region of the United States. The Board of Directors has authorized management, subject to its approval of any contract for sale, to sell the non-core properties of the Company over a period of several years in furtherance of the Company’s objectives to focus on northeast properties. The components of non-core properties were as follows (in thousands): 2004 Land Buildings and improvements $ 1,943 18,678 20,621 Accumulated depreciation (9,938) $10,683 2003 $ 1,943 19,433 21,376 (10,161) $11,215 Minimum rental payments on non-cancelable operating leases of the non-core properties become due as follows: 2005 – $4,332,000; 2006 – $4,408,000; 2007 – $4,156,000; 2008 – $1,376,000; 2009 – $906,000 and thereafter $1,263,000. 23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (5) MORTGAGE NOTES RECEIVABLE Mortgage notes receivable consist of two fixed rate mortgages with contractual interest rates of 9% and 12% which are secured by commercial property. Interest is recognized on the effective yield method. The mortgage notes are recorded at a discounted amount which reflects market interest rates at the time of acceptance of the notes. At October 31,2004 and 2003, the unamortized discounts were $349,000 and $393,000 respectively. At October 31, 2004, principal payments on the mortgage notes receivable become due as follows: 2005 – $130,000; 2006 – $142,000; 2007 – $156,000; 2008 – $170,000; 2009 – $186,000 and thereafter – $1,673,000. (6) MORTGAGE NOTES PAYABLE AND LINES OF CREDIT At October 31, 2004, mortgage notes payable are due in installments over various periods to fiscal 2011 at fixed rates of interest ranging from 6.29% to 8.375% and are collateralized by real estate investments having a net carrying value of $170,372,000. Scheduled principal payments during the next five years and thereafter are as follows: 2005 – $2,247,000; 2006 – $9,040,000; 2007 – $11,348,000; 2008 – $53,392,000; 2009 – $17,754,000 and thereafter – $13,662,000. At October 31, 2004, the Company had two revolving lines of credit arrangements with a bank. One line of credit (the “Secured Credit Facility”) expires in October 2005 and is secured by first mortgage liens on two properties and pro- vides for draws of up to $17.5 million. Interest is at Prime + 1/2% or LIBOR + 1.5%. The Secured Credit Facility requires the Company to maintain certain debt service coverage ratios during its term. At October 31, 2004, the Company had no outstanding borrowings under this revolving credit agreement. The Company pays an annual fee of .25% on the unused portion of this credit facility. The Company also has a $20 million unsecured line of credit arrangement with the same bank which expires in January 2005. The line of credit is available to acquire real estate, refinance indebtedness and for working capital needs. Extensions of credit are at the bank’s discretion and subject to the bank’s satisfaction of certain conditions. Outstanding borrowings bear interest at the Prime + 1/2% or LIBOR + 2.5%. The Company pays an annual fee of .25% on unused amounts. There were no borrowings outstanding under this line of credit at October 31, 2004. Interest paid in each of the three years ended October 31, 2004, was $8,113,000, $8,094,000 and $5,584,000, respectively. (7) PREFERRED STOCK The 8.99% Series B Senior Cumulative Preferred Stock ("Series B Preferred Stock") and 8.50% Series C Senior Cumulative Preferred Stock ("Series C Preferred Stock") have no stated maturity, are not subject to any sinking fund or mandatory redemption and are not convertible into other securities or property of the Company. On or after ten years from date of issuance, the Company at its option may redeem the Series B Preferred Stock and/or Series C Preferred Stock, in whole or in part, at a redemption price of $100 per share, plus all accrued dividends. Upon a change in control of the Company (as defined), each holder of Series B Preferred Stock and Series C Preferred Stock has the right, at such holder's option, to require the Company to repurchase all or any part of such holder's stock for cash at a repurchase price of $100 per share, plus all accrued and unpaid dividends. As the holders of the Series B Preferred Stock and Series C Preferred Stock only have a contingent right to require the Company to repurchase all or part of such holders shares upon a change of control of the Company (as defined), the Series B Preferred Stock and Series C Preferred Stock are classified as redeemable equity instruments as a change in control is not certain to occur. The Series B Preferred Stock and Series C Preferred Stock contain covenants which require the Company to maintain certain financial coverages relating to fixed charge and capitalization ratios. Shares of both Preferred Stock series are non-voting; however, under certain circumstances (relating to non-payment of dividends or failure to comply with the financial covenants) the preferred stockholders will be entitled to elect two directors. The Company was in compliance with such covenants at October 31, 2004 and 2003. In fiscal 2002, the Company repurchased 200,000 shares of its Series B Preferred Stock for $16,050,000 in a negotiated transaction with a holder of the preferred shares. The Company recorded the excess of the carrying value over the cost to repurchase the preferred shares of $3,071,000 as an increase in net income applicable to Common and Class A Common stockholders. 24 URSTADT BIDDLE PROPERTIES INC. (8) STOCKHOLDERS’ EQUITY In fiscal 2002, the Company completed a secondary offering of 8,050,000 shares of its Class A Common Stock in an underwritten public offering. The net proceeds to the Company (after deducting underwriting fees and expenses) were $81,854,000. In November 2001, the Company also sold 699,222 shares to its underwriters to cover over allotments in connection with the Company's secondary stock offering of 4,800,000 shares in fiscal 2001. Net proceeds to the Company amounted to $6,069,000. Underwriting commissions and costs incurred in connection with the Company's stock offerings are reflected as a reduction of additional paid in capital. The Class A Common Stock entitles the holder to 1/20 of one vote per share. Each share of Common Stock and Class A Common Stock has 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. The Company has a Dividend Reinvestment and Share Purchase Plan, as amended, (the “Plan”) which permits shareholders to acquire additional shares of Common Stock and Class A Common Stock by automatically reinvesting dividends. During fiscal 2004, the Company issued 181,720 shares of Common Stock and 18,306 shares of Class A Common Stock (61,699 shares of Common Stock and 18,704 shares of Class A Common Stock in fiscal 2003) through the Plan. As of October 31, 2004, there remained 299,907 shares of common stock and 525,228 shares of Class A common stock available for issuance under the Plan. The Company has a stockholders rights agreement, which expires on November 12, 2008. The rights are not currently exercisable. When they are exercisable, the holder will be entitled to purchase from the Company one one hundredth of a share of a newly established Series A Participating Preferred Stock at a price of $65 per one one hun- dredth of a preferred share, subject to certain adjustments. The distribution date for the rights will occur 10 days after a person or group either acquires or obtains the right to acquire 10% (“Acquiring Person”) or more of the combined voting power of the Company’s Common Shares, or announces an offer the consummation of which would result in such person or group owning 30% or more of the then outstanding Common Shares. Thereafter, shareholders other than the Acquiring Person will be entitled to purchase original common shares of the Company having a value equal to two times the exercise price of the right. If the Company is involved in a merger or other business combination at any time after the rights become exercis- able, and the Company is not the surviving corporation or 50% or more of the Company assets are sold or transferred, the rights agreement provides that the holder other than the Acquiring Person will be entitled to purchase a number of shares of common stock of the acquiring company having a value equal to two times the exercise price of each right. The Company’s articles of incorporation provide that if any person acquires more than 7.5% of the aggregate value of all outstanding stock, except, among other reasons, as approved by the Board of Directors, such shares in excess of this limit shall automatically be exchanged for an equal number of shares of Excess Stock. Excess Stock has limited rights, may not be voted and is not entitled to any dividends. 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (9) STOCK OPTION AND OTHER BENEFIT PLANS Stock Option Plan The Company has a stock option plan whereby 824,093 Common shares and 743,003 Class A Common shares were reserved for issuance to key employees and non-employee Directors of the Company. As of October 31, 2004, options to purchase 2,406 shares of Class A Common Stock (and no shares of common stock) were available for future grant. Options are granted at fair market value on the date of the grant, have a duration of ten years from the date of grant, and vest over a maximum period of four years from the date of grant. A summary of stock option transactions during the three years ended October 31, 2004 is as follows: Year ended October 31, 2004 2003 2002 Common stock: Balance at beginning of period Granted Exercised Canceled/Forfeited Balance at end of period Exercisable Class A Common Stock: Balance at beginning of period Granted Exercised Canceled/Forfeited Balance at end of period Exercisable Weighted Average Exercise Prices $7.62 — $7.29 $7.27 $7.70 $7.83 — $7.93 $7.85 Number of Shares 55,876 — (15,000) (15,728) 25,148 25,148 42,733 — (23,624) — 19,109 19,109 Weighted Average Exercise Prices $7.50 — $7.22 $7.44 $7.62 $7.71 — $7.61 — $7.83 Number of Shares 91,570 — (18,000) (17,694) 55,876 55,876 66,810 — (24,077) — 42,733 42,733 Weighted Average Exercise Prices $7.00 — $6.88 $7.03 $7.50 $7.50 — $7.26 $7.16 $7.71 Number of Shares 315,060 — (211,762) (11,728) 91,570 91,570 314,605 — (37,312) (210,483) 66,810 66,810 At October 31, 2004, exercise prices of shares of Common Stock and Class A Common Stock under option ranged from $7.04 to $7.69, for the Common Stock and $6.78 to $9.28, for the Class A Common Stock. For both classes of stock option expiration dates range from April 2005 through April 2009 and the weighted average remaining contractual life of these options is 2.5 years. As of October 31, 2004, outstanding options to acquire approximately 6,000 shares each of Common Stock and Class A Common stock permit the optionee to elect to receive either shares of Common stock, Class A Common Stock or a combination of both. Upon an election to exercise shares of a class of common stock by the optionee, an equivalent number of shares of the class of common stock not elected by such optionee are deemed cancelled and no longer avail- able for future grants. In connection with the exercise of stock options certain officers of the Company executed full recourse promissory notes equal to the purchase price of the shares. At October 31, 2004 officers notes receivable totaled $1,300,000 ($1,434,000 at October 31, 2003) The outstanding notes have a term of ten years and bear interest at an annual rate determined at the date of origination of the note. The shares are pledged as additional collateral for the notes. Interest is payable quarterly. The exer- cise of the stock options and the issuance of the notes represent non-cash financing activities and are therefore not included in the accompanying consolidated statements of cash flows. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation” (“SFAS 123”). Accordingly, no compensation expense has been recognized for stock options granted under the plan. Had compensation cost for stock options granted been determined based on the fair value on the grant date consistent with the provisions of SFAS 123, the effect on the Company’s net income and earnings per share in each of the three years ended October 31, 2004 would have been immaterial. 26 URSTADT BIDDLE PROPERTIES INC. Restricted Stock Plan The Company has a restricted stock plan for key employees and directors of the Company. The restricted stock plan, as amended, provides for the grant of up to 1,650,000 of the Company's common equity consisting of 350,000 Common shares, 350,000 Class A Common shares and 950,000 shares, which at the discretion of the Company's compensation committee, may be awarded in any combination of Class A common shares or Common shares. As of October 31, 2004, the Company has awarded 685,000 shares of Common Stock and 397,875 shares of Class A Common Stock to partici- pants as an incentive for future services. The shares vest between five and ten years after the date of grant. At October 31, 2004, 26,750 shares each of Common Stock and Class A Common Stock were vested (13,250 shares each of Common Stock and Class A Common Stock at October 31, 2003). Dividends on vested and non-vested shares are paid as declared. The market value of shares is recorded as unamortized restricted stock compensation on the date of grant. Unamortized restricted stock compensation is expensed over the respective vesting periods. For the years ended October 31, 2004, 2003 and 2002 amounts charged to expense totaled $1,322,000, $1,105,000 and $942,000, respectively. Profit Sharing and Savings Plan The Company has a profit sharing and savings plan (the “401K Plan”), which permits all eligible employees to defer a portion of their compensation in accordance with the Internal Revenue Code. Under the 401K Plan, the Company may make discretionary contributions on behalf of eligible employees. For the years ended October 31, 2004, 2003 and 2002, the Company made contributions to the 401K Plan of $127,000, $95,000 and $93,000, respectively. The Company also has an Excess Benefits and Deferred Compensation Plan that allows eligible employees to defer benefits in excess of amounts provided under the Company's 401K Plan and a portion of the employee's current compensation. (10) PRO FORMA FINANCIAL INFORMATION (UNAUDITED) The unaudited pro forma financial information set forth below is based upon the Company’s historical consolidated statements of income for the years ended October 31, 2004 and 2003 adjusted to give effect to the acquisitions completed in fiscal 2003 (see Note 3), the disposition of the Company’s Farmingdale, New York property in November 2004 and the issuance of 400,000 shares of Series C Preferred Stock (May 2003) as though these transactions were completed on November 1, 2002. The pro forma financial information is presented for informational purposes only and may not be indicative of what the actual results of operations would have been had the transactions occurred as of November 1, 2002 nor does it purport to represent the results of future operations. (Amounts in thousands, except per share figures). Pro forma revenues: Pro forma net income applicable to Common and Class A Common: Pro forma basic shares outstanding: Common and Common Equivalent Class A Common and Class A Common Equivalent Pro forma diluted shares outstanding: Common and Common Equivalent Class A Common and Class A Common Equivalent Pro forma earnings per share: Basic: Common Class A Common Diluted: Common Class A Common Year ended October 31, 2003 2004 $64,916 $18,566 6,414 18,248 6,820 18,836 $.69 $.75 $.68 $.75 $62,096 $17,064 6,259 18,200 6,566 18,720 $.63 $.70 $.62 $.69 27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (11) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The unaudited quarterly results of operations for the years ended October 31, 2004 and 2003 are as follows (in thousands, except per share data): Year Ended October 31, 2004 Year Ended October 31, 2003 Quarter Ended Quarter Ended Jan 31 Apr 30 July 31 Oct 31 Jan 31 Apr 30 July 31 Oct 31 $16,844 $16,157 $15,694 $16,221 $13,372 $14,706 $15,125 $15,950 $6,271 $5,866 $5,341 $5,837 $4,197 $4,870 $5,459 $5,844 Revenues (1) Net Income Preferred Stock Dividends (1,187) (1,187) (1,187) (1,188) (337) (337) (932) (1,188) Net Income Applicable to Common and Class A Common Stockholders Basic Earnings per Share: Common Class A Common Diluted Earnings per Share: Common Class A Common $5,084 $4,679 $4,154 $4,649 $3,860 $4,533 $4,527 $4,656 $.19 $.21 $.19 $.21 $.18 $.19 $.17 $.19 $.16 $.17 $.15 $.17 $.17 $.20 $.18 $.19 $.15 $.16 $.15 $.16 $.17 $.19 $.17 $.19 $.17 $.19 $.17 $.19 $.18 $.19 $.17 $.19 (1) All periods have been adjusted to reflect the impact of operating properties classified as held for sale as of October 31, 2004, which are reflected in the caption Discontinued Operations in the accompanying Consolidated Statements of Income. (12) SUBSEQUENT EVENTS, COMMITMENTS AND CONTINGENCIES On January 7, 2005, the Company acquired a 269,000 square foot shopping center located in Stratford, Connecticut for $50.25 million excluding closing costs. The acquisition was funded with available cash and borrowings of $17.5 million under the Company’s secured line of credit. On December 22, 2004, the Company contracted to purchase four retail properties totaling 73,000 square feet located in New York for an aggregate purchase price of $18 million. In November 2004, the Company sold a 70,000 square foot shopping center in Farmingdale, New York for a sale price of $9.75 million, realizing a net gain on the sale of approximately $5.7 million. In the normal course of business, from time to time, the Company is involved in legal actions relating to the ownership and operations of its properties. In management's opinion, the liabilities, if any that may ultimately result from such legal actions are not expected to have a material adverse effect on the consolidated financial position, results of operations or liquidity of the Company. 28 URSTADT BIDDLE PROPERTIES INC. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Urstadt Biddle Properties Inc.: We have audited the accompanying consolidated balance sheets of Urstadt Biddle Properties Inc. (the ‘Company’) as of October 31, 2004 and 2003, and the related consolidated statements of income, cash flows and stockholders' equity for each of the three years in the period ended October 31, 2004. These financial state- ments are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Urstadt Biddle Properties Inc. at October 31, 2004 and 2003 and the consolidated results of their operations and their cash flows for each of the three years in the period ended October 31, 2004 in confor- mity with U.S. generally accepted accounting principles. ERNST & YOUNG LLP New York, New York December 15, 2004 except for the first two paragraphs in Note 12 as to which the date is January 7, 2005 29 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. • Hold core properties for long-term investment and enhance their value through regular maintenance, periodic renovation and capital improvement FORWARD LOOKING STATEMENTS This report includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this report that address activities, events or developments that the Company expects, believes or antici- pates will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), expansion and other development trends of the real estate industry, busi- ness strategies, expansion and growth of the Company’s operations and other such matters are forward-looking statements. These statements are based on certain assump- tions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, general eco- nomic and business conditions, the business opportunities that may be presented to and pursued by the Company, changes in laws or regulations and other factors, many of which are beyond the control of the Company. Any such statements are not guarantees of future performance and actual results or developments may differ materially from those anticipated in the forward-looking statements. OVERVIEW The Company, a REIT, is engaged in the acquisition, owner- ship and management of commercial real estate, primarily neighborhood and community shopping centers in the northeastern part of the United States. Other real estate assets include office and retail buildings and industrial properties. The Company’s major tenants include supermar- ket chains and other retailers who sell basic necessities. At October 31, 2004, the Company owned or had controlling interests in 34 properties containing a total of 3.5 million square feet of GLA, of which approximately 97% was leased at October 31, 2004. The Company focuses on increasing cash flow and, con- sequently, the value of its properties and seeks continued growth through strategic re-leasing, renovations and expan- sion of its existing properties and selective acquisition of income producing properties, primarily neighborhood and community shopping centers in the northeastern part of the United States. Key elements of the company’s growth strategies and operating policies are to: • Acquire neighborhood and community shopping cen- ters in the northeastern part of the United States with a concentration in Fairfield County, Connecticut, and Westchester and Putnam Counties, New York 30 • Selectively dispose of non-core assets and re-deploy the proceeds into properties located in the Company’s preferred region • Increase property values by aggressively marketing available GLA and renewing existing leases • Renovate, reconfigure or expand existing properties to meet the needs of existing or new tenants • Negotiate and sign leases which provide for regular or fixed contractual increases to minimum rents • Control property operating and administrative costs 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 diffi- cult, complex or subjective judgments. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. This summary should be read in con- junction with the more complete discussion of the Company’s accounting policies included in Note 1 to the consolidated financial statements of the Company. Revenue Recognition The Company records base rents on a straight-line basis over the term of each lease. The excess of rents recognized over amounts contractually due pursuant to the underlying leases is included in tenant receivables on the accompanying balance sheets. Most leases contain provisions that require tenants to reimburse a pro-rata share of real estate taxes and certain common area expenses. These amounts are recog- nized in the period the related expenses are incurred. Expense reimbursement payments generally are made monthly based on an estimated amount determined at the beginning of the year. The difference between the actual amount due and the estimated amounts paid by the tenant throughout the year is billed or credited to the tenant. Allowance for Doubtful Accounts The allowance for doubtful accounts and mortgage notes receivable is established based on a quarterly analysis of the risk of loss on specific accounts. The analysis places particu- lar emphasis on past-due accounts and considers informa- tion such as the nature and age of the receivables, the pay- ment history of the tenants or other debtors, the financial condition of the tenants and management’s assessment of their ability to meet their lease obligations, the basis for any disputes and the status of related negotiations, among other things. Management’s estimates of the required allowance is subject to revision as these factors change and is sensitive to the effects of economic and market conditions on tenants, particularly those at retail centers. Estimates are used to establish reimbursements from tenants for common area maintenance, real estate tax and insurance costs. Adjustments are also made throughout the year to tenant receivables and the related cost recovery income based upon the Company’s best estimate of the final amounts to be billed and collected. The Company analyzes the balance of its estimated accounts receivable for real estate taxes, com- mon area maintenance and insurance for each of its proper- ties by comparing actual recoveries versus actual expenses and any actual write-offs. Based on its analysis, the Company may record an additional amount in its allowance for doubtful accounts related to these items. It is also the Company’s policy to maintain an allowance of approximate- ly 10% of the deferred straight-line rents receivable balance for future tenant credit losses. Real Estate Land, buildings, property improvements, furniture/fixtures and tenant improvements are recorded at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and/or replacements, which improve or extend the life of the asset, are capitalized and depreciat- ed over their estimated useful lives. The amounts to be capitalized as a result of an acquisi- tion and the periods over which the assets are depreciated or amortized are determined based on estimates as to fair value and the allocation of various costs to the individual assets. The Company allocates the cost of an acquisition based upon the estimated fair value of the net assets acquired. The Company also estimates the fair value of intangibles related to its acquisitions. The valuation of the fair value of intangi- bles involves estimates related to market conditions, proba- bility of lease renewals and the current market value of in- place leases. This market value is determined by considering factors such as the tenant’s industry, location within the property and competition in the specific region in which the property operates. Differences in the amount attributed to the intangible assets can be significant based upon the assumptions made in calculating these estimates. The Company is required to make subjective assess- ments as to the useful life of its properties for purposes of determining the amount of depreciation. These assessments have a direct impact on the Company’s net income. Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Buildings Property Improvements Furniture/Fixtures Tenant Improvements 30-40 years 10-20 years 3-10 years Shorter of lease term or useful life Assessments by the Company of certain other lease related costs are made when the Company has a reason to believe that the tenant may not be able to perform under the terms of the lease as originally expected. This requires man- agement to make estimates as to the recoverability of such assets. Asset Impairment On a periodic basis, management assesses whether there are any indicators that the value of the real estate properties and mortgage notes receivable may be impaired. A property value is considered impaired when management’s estimate of current and projected operating cash flows (undiscounted and without interest) of the property over its remaining use- ful life is less than the net carrying value of the property. Such cash flow projections consider factors such as expected future operating income, trend and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the loss is measured as the excess of the net carrying amount of the property over the fair value of the asset. Changes in estimated future cash flows due to changes in the Company’s plans or market and economic conditions could result in recognition of impair- ment losses which could be substantial. Management does not believe that the value of any of its rental properties or mortgage notes receivable is impaired at October 31, 2004. LIQUIDITY AND CAPITAL RESOURCES At October 31, 2004, the Company had unrestricted cash and cash equivalents of $25.9 million compared to $22.4 million in 2003. The Company's sources of liquidity and capital resources include its cash and cash equivalents, proceeds from bank borrowings and long-term mortgage debt, capital financings and sales of real estate investments. Payments of expenses related to real estate operations, debt service, man- agement and professional fees, and dividend requirements place demands on the Company's short-term liquidity. Cash Flows The Company expects to meet its short-term liquidity requirements primarily by generating net cash from the operations of its properties. The Company believes that its net cash provided by operations will be sufficient to fund its short-term liquidity requirements for fiscal 2005 and to meet its dividend requirements necessary to maintain its REIT status. In fiscal 2004, 2003 and 2002, net cash provided by operations amounted to $30.7 million, $31.2 million and $18.5 million, respectively. Cash dividends paid increased to $26.3 million in 2004 compared to $23.5 million in 2003 and $16.4 million in 2002. The Company expects to continue pay- ing regular dividends to its stockholders. These dividends will be paid from operating cash flows which are expected to increase due to property acquisitions and growth in oper- ating income in the existing portfolio and from other sources. The Company derives substantially all of its rev- enues from tenants under existing leases at its properties. The Company’s operating cash flow therefore depends on the rents that it is able to charge to its tenants, and the ability of its tenants to make rental payments. The Company believes that the nature of the properties in which it typical- ly invests — primarily grocery-anchored neighborhood and community shopping centers — provides a more stable rev- enue flow in uncertain economic times, in that consumers still need to purchase basic staples and convenience items. However, even in the geographic areas in which the Company owns properties, general economic downturns may adversely impact the ability of the Company’s tenants to make lease payments and the Company’s ability to re- lease space as leases expire. In either of these cases, the Company’s cash flow could be adversely affected. Capital Resources The Company expects to fund its long-term liquidity requirements such as property acquisitions, repayment of indebtedness and capital expenditures through other long- term indebtedness (including indebtedness assumed in acquisitions), proceeds from sales of properties and/or the issuance of equity securities. The Company believes that 31 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS these sources of capital will continue to be available to it in the future to fund its long-term capital needs; however, there are certain factors that may have a material adverse effect on its access to capital sources. The Company’s ability to incur additional debt is dependent upon its existing leverage, the value of its unencumbered assets and borrowing limitations imposed by existing lenders. The Company’s ability to raise funds through sales of equity securities is dependent on, among other things, general market conditions for REITs, market perceptions about the Company and its stock price in the market. The Company’s ability to sell properties in the future to raise cash will be dependent upon market condi- tions at the time of sale. Financings and Debt During fiscal 2002, the Company filed a shelf registration statement on Form S-3 for up to $150 million of debt securi- ties, preferred stock, depository shares, common stock and Class A common stock. As of October 31, 2004, the Company had $62.3 million available for issuance under this shelf registration statement. In May 2003, the Company sold 400,000 shares of a new issue of Series C Cumulative Preferred Stock (Series C Preferred Stock) for net proceeds of $38.4 million. The Series C Preferred Stock issue entitles the holders to a 8.5% cumu- lative dividend. The Company used a portion of the pro- ceeds to purchase retail properties in 2004 and 2003. The Company intends to use the balance of the proceeds for property acquisitions during fiscal 2005. The Company is exposed to interest rate risk primarily through its borrowing activities. There is inherent rollover risk for borrowings as they mature and are renewed at cur- rent market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and the Company’s future financing requirements. Mortgage notes payable consist of $107,443,000 of fixed rate mortgage loan indebtedness with a weighted average interest rate of 7.48% at October 31, 2004. The mortgage loans are secured by fourteen properties and have fixed rates of interest ranging from 6.29% to 8.375%. The Company antici- pates that it will make principal mortgage payments due in fiscal 2005 from available cash. The Company expects to refi- nance a majority of its mortgage loans, at or prior to sched- uled maturity, through replacement mortgage loans. The abil- ity 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 refinancing can be achieved. At October 31, 2004, the Company had a secured revolv- ing credit facility with a bank which expires in October 2005 and allows for borrowings up to $17.5 million. The secured credit line is collateralized by two properties having a net book value of $28.5 million at October 31, 2004. The Company intends to seek renewal of the facility at its scheduled expira- tion. The Company also has a $20 million unsecured revolv- ing line of credit with the same bank which was scheduled to expire in January 2005. In December 2004, the Company extended the unsecured credit line for an additional one year 32 period. Extensions of credit under the unsecured credit line are at the bank’s discretion and subject to certain conditions to the bank’s satisfaction. Both revolving credit lines are avail- able to finance the acquisition, management and/or develop- ment of commercial real estate, refinance indebtedness and for working capital purposes. There were no borrowings on either credit line during the year and there were no outstand- ing borrowings at October 31, 2004. Contractual Obligations The Company’s contractual payment obligations as of October 31, 2004, were as follows (amounts in thousands): Payments Due by Period Total 2005 2006 2007 2008 2009 There- after Mortage Notes Payable Tenant Obligations* Total Contractual Obligations $107,443 $2,247 $9,040 $11,348 $53,392 $17,754 $13,662 1,843 1,034 809 — — — — $109,286 $3,281 $9,849 $11,348 $53,392 $17,754 $13,662 *Committed tenant-related obligations based on executed leases as of October 31, 2004. The Company has various standing or renewable ser- vice contracts with vendors related to its property manage- ment. In addition, the Company also has certain other utility contracts entered into in the ordinary course of business which may extend beyond one year, which vary based on usage. These contracts include terms that provide for cancel- lation with insignificant or no cancellation penalties. Contract terms are generally one year or less. Off-Balance Sheet Arrangements During the twelve month periods ended October 31, 2004 and 2003, the Company did not have any off-balance sheet arrangements. Capital Expenditures The Company invests in its existing properties and regularly incurs capital expenditures in the ordinary course of busi- ness to maintain its properties. The Company believes that such expenditures enhance the competitiveness of its prop- erties. In each of the three years ended October 31, 2004, the Company incurred approximately $2.8 million for capital expenditures for property improvements and tenant allowances and commissions in connection with the Company’s leasing activities. The amounts of these expendi- tures can vary significantly depending on tenant negotia- tions, market conditions and rental rates. The Company expects to incur an additional $5 million for expected capital improvements and leasing costs in fiscal 2005. These expen- ditures are expected to be funded from operating cash flows or borrowings. Acquisitions and Sales The Company seeks to acquire properties which are primari- ly shopping centers located in the northeastern part of the United States. In fiscal 2004, the Company acquired four retail proper- ties totaling 40,000 square feet of leasable space, for a total purchase price of $11.0 million. In connection with the acqui- sition of three of the properties, the Company assumed mortgage loans totaling $4.7 million. In fiscal 2003, the Company acquired four properties totaling 436,000 square feet in separate transactions for approximately $83 million. The properties were purchased with cash raised from sales of equity securities and consisted of: the Westchester Pavilion in White Plains, New York, for $39.9 million, the Orange Meadows Shopping Center in Orange, Connecticut, for $11.3 million, the Greens Farms Plaza in Westport, Connecticut, for $10.1 million and seven retail building units in Somers Commons in Somers, New York for $21.7 million. In fiscal 2002, the Company acquired a 90% general partner interest in a shopping center in Stamford, Connecticut for $86.8 million. The property was acquired subject to a $57.4 million first mortgage loan. The Company also purchased a shopping center in Danbury, Connecticut for $7.0 million subject to a first mortgage loan of $2.0 million and acquired the remaining 15% interest in an office building for a purchase price of $1.25 million. Shortly after the close of fiscal 2004, the Company sold its Farmingdale, New York property for $9.75 million. The proceeds are expected to be used to acquire additional prop- erties in the Company’s target acquisition area. On December 22, 2004, the Company contracted to purchase four retail properties totaling 73,000 square feet in New York for an aggregate purchase price of $18 million. On January 7, 2005, the Company acquired a 269,000 square foot shopping center located in Stratford, Connecticut for $50.25 million, excluding closing costs. The acquisition was funded with available cash and borrowings of $17.5 million under the Company’s secured line of credit. NON-CORE ASSETS In a prior year, the Company's Board of Directors expanded and refined the strategic objectives of the Company to refo- cus its real estate portfolio into one of self-managed retail properties located in the northeast and authorized the sale of the Company’s non-core properties in the normal course of business over a period of several years. The non-core prop- erties consist of two distribution service facilities, one office building and one retail property (all of which are located outside of the northeast region of the United States). The Company intends to sell its non-core properties as opportu- nities become available. The Company’s ability to generate cash from asset sales is dependent upon market conditions and will necessarily be limited if market conditions make such sales unattractive. There were no sales of non-core properties during fiscal 2004. At October 31, 2004, the four non-core properties had a net book value of approximately $10.7 million. FUNDS FROM OPERATIONS The Company considers Funds from Operations (“FFO”) to be an additional measure of an equity REIT’s operating per- formance. The Company reports FFO in addition to its 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 to be a meaningful, addi- tional measure of operating performance because it primari- ly excludes the assumption that the value of its 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 the Company’s 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) • should not be considered an alternative to net income as an indication of the Company’s performance. FFO as defined by us, may not be comparable to simi- larly 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 in accordance with GAAP to FFO for each of the three years in the period ended October 31, 2004 (amounts in thousands). October 31, 2004 2003 2002 Net Income Applicable to Common and Class A Common Stockholders $18,566 $17,576 $16,080 Plus: Real property depreciation 8,547 7,831 5,459 Amortization of tenant improvements and allowances Amortization of deferred leasing costs 2,175 2,088 2,088 525 469 517 Funds from Operations Applicable to Common and Class A Common Stockholders Net Cash Provided by (Used in): $29,813 $27,964 $24,144 Operating Activities $30,744 $31,176 $18,532 Investing Activities $(2,416) $(68,818) $(64,960) Financing Activities $(24,837) $14,749 $59,023 FFO increased by 6.6% to $29.8 million in fiscal 2004 compared to $28.0 million in fiscal 2003. This increase is attributable to an increase in net income from continuing operations resulting from an increase in overall property operating income and recent property acquisitions. 33 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Fiscal 2004 vs. Fiscal 2003 Revenues Base rents increased 8.3% to $49.7 million in fiscal 2004 from $45.9 million in fiscal 2003. The increase in base rents reflects the additional base rents from four properties acquired in fiscal 2003. The acquisitions of these properties increased base rents incrementally by $3.2 million in fiscal 2004. In addition, base rents increased by $584,000 in fiscal 2004 from the effect of new leasing and renewals of expiring leases at generally higher base rental rates. Recoveries from tenants (which represent reimburse- ments from tenants for property operating expenses and property taxes) increased 13.7% in fiscal 2004 compared to fiscal 2003. The increase in recoveries from tenants includes amounts applicable to properties acquired in fiscal 2003 which increased this component of revenues by $888,000 in fiscal 2004 compared to fiscal 2003. Recoveries from tenants for properties owned in both 2004 and 2003 increased by $779,000 due to higher tenant recovery rates and property tax recoveries. In fiscal 2004, the Company leased or renewed approximately 284,000 square feet of space or 10.5% of the total core property GLA. At October 31, 2004, the Company’s core properties were 99% leased, an increase of approximately 2% since the beginning of the year. The Company’s non-core office building property in Southfield, Michigan was approximately 30% vacant at October 31, 2004. The office leasing market in this region of the country continues to be weak and the Company is aggressively marketing the vacant space. A tenant who leased 41,000 sf of space in the building did not renew its lease upon expiration in December 2004. The Company’s single largest real estate investment is its 90% ownership interest in Ridgeway Shopping Center (a consolidated joint venture) located in Stamford, Connecticut. Ridgeway’s revenues represented approximately 15.4% or $10.2 million of total consolidated revenues in fiscal 2004 compared to 16.4% or $9.9 million in fiscal 2003. The proper- ty was 99% leased at October 31, 2004. Lease termination income of $577,000 in fiscal 2004 consisted of a lease cancellation payment of $265,000 from a tenant who terminated during the year and a payment of $312,000 received in settlement of a bankruptcy action of a former tenant. Interest income in fiscal 2004 decreased from the prior year from the utilization of cash to purchase properties in both fiscal 2004 and 2003 and the repayment of a $1.2 mil- lion note receivable in fiscal 2003. Expenses Property operating expenses increased 2.2% to $10.2 million in fiscal 2004 from $10.0 million last year. Property expenses of recently acquired properties increased operating expenses by $557,000 in fiscal 2004. Operating expenses for properties owned in both 2004 and 2003 decreased by $358,000 from 34 lower snow removal costs and repairs and maintenance expenses. Property taxes increased to $8.6 million or 16.5% in fiscal 2004 compared to 2003. New properties increased property taxes by $628,000 in fiscal 2004. Property taxes for properties owned in both 2004 and 2003 increased by $613,000 from higher real estate tax assessment rates at several of the Company’s properties in the current year. The Company anticipates that it will incur higher property tax assessment rates at certain of its properties in fiscal 2005. Depreciation and amortization expense increased $863,000 in fiscal 2004 from additional depreciation on recent property acquisitions. General and administrative expense increased by $262,000 in fiscal 2004 due primarily to higher compensation costs, including an increase in restricted stock compensation of $217,000 in fiscal 2004. Discontinued Operations In September 2004, the Company contracted to sell its Farmingdale, New York shopping center for $9.75 million and in November 2004, the property was sold. Accordingly, the property’s operating results for the three years ended October 31, 2004 have been reclassified as discontinued operations in accordance with SFAS #144. Revenues for this property totaled $1,034,000, $1,207,000, and $1,142,000 for the years ended October 31, 2004, 2003, and 2002, respectively. Fiscal 2003 vs. Fiscal 2002 Revenues Base rents and recoveries from tenants increased to $45.9 million and $12.1 million or 36.9% and 61.3% respectively, in fiscal 2003 from $33.5 million and $7.5 million in fiscal 2002. The increase in base rents and recoveries from tenants resulted primarily from (i) the acquisition of four properties in fiscal 2003 containing 436,000 square feet of leasable space, providing revenues of $8.3 million in the year (ii) the full year impact related to two operating prop- erties acquired in 2002, providing incremental revenue of $6.5 million in fiscal 2003 (iii) an increase in recoveries of property operating expenses and property taxes from tenants of $700,000 in fiscal 2003 and (iv) an overall increase in the leasing levels at the Company’s properties. At October 31, 2003, the Company’s core portfolio was 97% leased compared to 96% leased in fiscal 2002. During fiscal 2003, the Company renewed or signed new leases totaling 375,000 square feet of space. Lease termination income of $80,000 represented a lease cancellation payment from a tenant who terminated its lease early. This space was re-leased during the year. Interest income in fiscal 2003 decreased due to the utilization of cash from the Company’s sale of 8,050,000 shares of Class A common stock in fiscal 2002. The cash was used to acquire properties in fiscal 2003. ENVIRONMENTAL MATTERS Based upon management’s ongoing review of its properties, management is not aware of any environmental condition with respect to any of the Company’s properties which would be reasonably likely to have a material adverse effect on the Company. There can be no assurance, however, that (a) the discovery of environmental conditions, which were previously unknown, (b) changes in law, (c) the conduct of tenants or (d) activities relating to properties in the vicinity of the Company’s properties, will not expose the Company to material liability in the future. Changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures or may otherwise adversely affect the opera- tions of the Company’s tenants, which would adversely affect the Company’s financial condition and results of operations. Expenses Operating expenses, including depreciation and amortiza- tion, increased to $38.9 million in fiscal 2003 from $28.8 million in fiscal 2002. Property operating expenses increased $5.0 million of which $4.6 million was attributable to the property expenses of newly acquired properties. Property expenses for properties owned during both 2003 and 2002 increased 4.0% from higher snow removal and property tax costs, which increased expenses by $475,000 and $171,000 respectively in fiscal 2003. Interest expense increased to $8.1 million in fiscal 2003 from $60 million in mortgage loans assumed in connection with property acquisitions in fiscal 2002. Depreciation expense increased by $2.4 million in fiscal 2003 from the additional depreciation on recent property acquisitions. General and administrative expenses increased to $3.2 million in fiscal 2003 due principally to higher compensation costs . INFLATION The Company’s long-term leases contain provisions to miti- gate the adverse impact of inflation on its operating results. Such provisions include clauses entitling the Company 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 the Company’s non-anchor leases are for terms of less than ten years, which permits the Company to seek increases in rents upon renew- al at then current market rates if rents provided in the expir- ing leases are below then existing market rates. Most of the Company’s leases require tenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance and utilities, thereby reducing the Company’s exposure to increases in costs and operating expenses resulting from inflation. 35 TAX STATUS The Company has elected to be treated as a real estate investment trust under the Internal Revenue Code. Thus, generally it will be subject to Federal income taxes only on that part of its taxable income not distributed as dividends so long as 90% of such taxable income is distributed. The Company has distributed all of its taxable income for fiscal 2004 and, accordingly, no provision has been made for Federal income taxes. INCOME TAX INFORMATION The tax status for Federal income tax purposes of the dividends paid by the Company during fiscal 2004 is as follows: Common and Class A Common Shares: Common Share Gross Dividend Distributed Class A Common Share Gross Dividend Distributed Paid Ordinary Income Per Share Non Taxable Paid Ordinary Income Per Share Non Taxable Dividend Payment Date January 16, 2004 April 16, 2004 July 16, 2004 October 15, 2004 Total Preferred Shares:* Dividend Payment Date January 31, 2004 April 30, 2004 July 30, 2004 October 29, 2004 Total $.195 $.195 $.195 $.195 $.780 $.178 $.178 $.178 $.178 $.712 $.017 $.017 $.017 $.017 $.068 $.215 $.215 $.215 $.215 $.860 $.196 $.196 $.196 $.196 $.784 $.019 $.019 $.019 $.019 $.076 Series B Preferred Share Series C Preferred Share $2.2475 $2.2475 $2.2475 $2.2475 $8.99 $2.1250 $2.1250 $2.1250 $2.1250 $8.50 *All dividends paid during 2004 on shares of Series B Preferred Stock and Series C Preferred Stock were ordinary income for federal income tax purposes. MARKET PRICE RANGES The following sets forth, for the fiscal years ended October 31, 2004 and 2003, the low and high closing sales price per Common Share and Class A Common Share as quoted on The New York Stock Exchange. Shares trade on the New York Stock Exchange under the Symbols: UBP and UBA. Common Shares First Quarter Second Quarter Third Quarter Fourth Quarter Class A Common Shares First Quarter Second Quarter Third Quarter Fourth Quarter 36 Fiscal 2004 Low High $13.15 – $14.00 $13.00 – $15.10 $12.91 – $14.70 $13.75 – $15.85 $13.63 – $14.94 $13.88 – $16.60 $12.60 – $15.55 $13.75 – $16.81 Fiscal 2003 Low High $11.00 – $12.70 $11.95 – $13.03 $12.70 – $13.80 $12.60 – $13.40 $10.85 – $11.72 $11.00 – $12.54 $12.15 – $13.80 $13.10 – $14.30 URSTADT BIDDLE PROPERTIES INC. DIRECTORS CHARLES J. URSTADT Chairman, Urstadt Biddle Properties Inc. ROBERT R. DOUGLASS Vice Chairman, Urstadt Biddle Properties Inc. Of Counsel, Milbank, Tweed, Hadley and McCloy WILLING L. BIDDLE President, Urstadt Biddle Properties Inc. E. VIRGIL CONWAY Retired Chairman, New York State Metropolitan Transportation Authority PETER HERRICK Retired Vice Chairman, The Bank of New York GEORGE H.C. LAWRENCE Chairman and Chief Executive Officer Lawrence Properties ROBERT J. MUELLER Retired Senior Executive Vice President The Bank of New York CHARLES D. URSTADT President, Urstadt Property Co., Inc. GEORGE J. VOJTA Retired Vice Chairman Bankers Trust Company Directors Emeriti GEORGE T. CONKLIN, JR. GEORGE M. HUBBARD, JR. JAMES O. YORK Officers CHARLES J. URSTADT Chairman and Chief Executive Officer WILLING L. BIDDLE President and Chief Operating Officer JAMES R. MOORE Executive Vice President, Chief Financial Officer and Treasurer RAYMOND P. ARGILA Senior Vice President, Legal THOMAS D. MYERS Senior Vice President and Secretary JOHN C. MERRITT Vice President, Acquisitions LINDA L. LACEY Vice President, Leasing JAMES M. ARIES Vice President, Acquisitions and Leasing JOSEPH V. LoPARRINO Vice President, Controller WAYNE W. WIRTH Vice President, Construction HEIDI R. BRAMANTE Assistant Vice President and Assistant Controller CHARLES R. DAVIS, JR. Assistant Vice President, Leasing LUISA CAYCEDO-KIMURA Assistant Secretary Securities Traded New York Stock Exchange Symbols: UBA, UBP and UBP.C Stockholders of Record as of December 31, 2004: Common Stock: 1,276 and Class A Common Stock: 1,291 Annual Meeting The annual meeting of stockholders will be held at 11:00 A.M. March 9, 2005 at The Stamford Marriott Hotel, Stamford, Connecticut. Form 10-K A copy of the Company’s 2004 Annual Report on Form 10-K filed with the Securities and Exchange Commission may be obtained by stockholders without charge by writing to the Secretary of the Company at its executive office. Shareholder Information and Dividend Reinvestment Plan Inquiries regarding stock ownership, dividends or the transfer of shares can be addressed to our Transfer Agent, The Bank of New York, Shareholder Relations Department–11E, P.O. Box 11258, Church Street Station, New York, NY 10286-1258 or call toll-free at 1-800-524-4458. The Company has a dividend reinvest- ment plan which provides stockholders with a con- venient means of increasing their holdings without incurring commissions or fees. For information about the plan, stockholders should contact the Transfer Agent. Other shareholder inquiries should be directed to Thomas D. Myers, Secretary, telephone (203)-863-8200. Investor Relations Investors desiring information about the Company can contact James R. Moore, Executive Vice President, telephone (203) 863-8200. Investors are also encouraged to visit our web site at: www.ubproperties.com Auditors Ernst & Young LLP General Counsel Coudert Brothers Executive Office of the Company 321 Railroad Avenue Greenwich, CT 06830 Tel: (203) 863-8200 Fax: (203) 861-6755 Website: www.ubproperties.com Memberships National Association of Real Estate Investment Trusts, Inc. (NAREIT) International Council of Shopping Centers (ICSC) 37 URSTADT BIDDLE PR O P E R T I E S I N C . 321 RAILROAD AVENUE GREENWICH, CONNECTICUT 06830 Somers Commons Somers, New York Townline Square Meriden, Connecticut Ridgeway Shopping Center Stamford, Connecticut Greens Farms Plaza Westport, Connecticut Five Town Plaza Springfield, Massachusetts 

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