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United States

Securities And Exchange Commission

Washington, DC 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission File Number 1-12803

URSTADT BIDDLE PROPERTIES INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland	04-2458042
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

321 Railroad Avenue, Greenwich CT	06830
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (203) 863-8200

N/A

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, par value $.01 per share	UBP	New York Stock Exchange

Class A Common Stock, par value $.01 per share	UBA	New York Stock Exchange

6.25% Series H Cumulative Preferred Stock	UBPPRH	New York Stock Exchange

5.875% Series K Cumulative Preferred Stock	UBPPRK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒

Non-accelerated filer ☐	Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 2, 2023 (latest date practicable), the number of shares of the Registrant's classes of Common Stock and Class A Common Stock outstanding was: 10,358,591 Common Shares, par value $.01 per share, and 28,972,016 Class A Common Shares, par value $.01 per share.

Index


Urstadt Biddle Properties Inc.



Part I. Financial Information

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets – April 30, 2023 (Unaudited) and October 31, 2022.	1

	Consolidated Statements of Income (Unaudited) – Six and three months ended April 30, 2023 and 2022.	2

	Consolidated Statements of Comprehensive Income (Unaudited) – Six and three months ended April 30, 2023 and 2022.	3

	Consolidated Statements of Cash Flows (Unaudited) – Six months ended April 30, 2023 and 2022.	4

	Consolidated Statement of Stockholders' Equity (Unaudited) – Six and three months ended April 30, 2023 and 2022.	5

	Notes to Consolidated Financial Statements.	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	36

Item 4.	Controls and Procedures.	37


Part II. Other Information

Item 1.	Legal Proceedings.	38

Item 1A	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	41

Item 6.	Exhibits.	42

Signatures		43

Index

URSTADT BIDDLE PROPERTIES INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	April 30, 2023			October 31, 2022
	(Unaudited)
Assets
Real Estate Investments:
Real Estate– at cost	$	1,199,222		$	1,190,356
Less: Accumulated depreciation		(316,608	)		(303,488	)
		882,614			886,868
Investments in and advances to unconsolidated joint ventures		28,342			29,586
		910,956			916,454

Cash and cash equivalents		13,453			14,966
Tenant receivables-net		22,829			22,889
Prepaid expenses and other assets		30,917			34,559
Deferred charges, net of accumulated amortization		8,438			8,458
Total Assets	$	986,593		$	997,326

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Revolving credit line	$	39,000		$	30,500
Mortgage notes payable and other loans		298,660			302,316
Accounts payable and accrued expenses		5,666			5,399
Deferred compensation – officers		55			54
Other liabilities		22,272			23,205
Total Liabilities		365,653			361,474

Redeemable Noncontrolling Interests		59,842			61,550

Commitments and Contingencies

Stockholders’ Equity:
6.25% Series H Cumulative Preferred Stock (liquidation preference of $25 per share); 4,600,000 shares issued and outstanding		115,000			115,000
5.875% Series K Cumulative Preferred Stock (liquidation preference of $25 per share); 4,400,000 shares issued and outstanding		110,000			110,000
Excess Stock, par value $0.01 per share; 20,000,000 shares authorized; none issued and outstanding		-			-
Common Stock, par value $0.01 per share; 30,000,000 shares authorized; 10,358,591 and 10,247,072 shares issued and outstanding		105			104
Class A Common Stock, par value $0.01 per share; 100,000,000 shares authorized; 28,972,016 and 28,963,433 shares issued and outstanding		290			290
Additional paid in capital		510,942			511,471
Cumulative distributions in excess of net income		(186,495	)		(179,754	)
Accumulated other comprehensive income (loss)		11,256			17,191
Total Stockholders' Equity		561,098			574,302
Total Liabilities and Stockholders' Equity	$	986,593		$	997,326

The accompanying notes to consolidated financial statements are an integral part of these statements.

Index

URSTADT BIDDLE PROPERTIES INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)

	Six Months Ended April 30,						Three Months Ended April 30,
	2023			2022			2023			2022

Revenues
Lease income	$	70,068		$	68,743		$	34,329		$	34,656
Lease termination		1,572			60			15			32
Other		1,728			2,752			727			1,312
Total Revenues		73,368			71,555			35,071			36,000

Expenses
Property operating		13,108			13,449			6,143			6,447
Property taxes		11,821			11,811			5,903			5,888
Depreciation and amortization		15,975			14,716			7,571			7,572
General and administrative		5,503			5,188			2,777			2,508
Directors' fees and expenses		222			201			103			94
Total Operating Expenses		46,629			45,365			22,497			22,509

Operating Income		26,739			26,190			12,574			13,491

Non-Operating Income (Expense):
Interest expense		(7,323	)		(6,564	)		(3,676	)		(3,262	)
Equity in net income from unconsolidated joint ventures		868			590			448			323
Gain (loss) on sale of property		(6	)		768			(2	)		766
Interest, dividends and other investment income		239			161			105			106
Net Income		20,517			21,145			9,449			11,424

Noncontrolling interests:
Net income attributable to noncontrolling interests		(1,692	)		(1,814	)		(839	)		(903	)
Net income attributable to Urstadt Biddle Properties Inc.		18,825			19,331			8,610			10,521
Preferred stock dividends		(6,825	)		(6,825	)		(3,412	)		(3,412	)

Net Income Applicable to Common and Class A Common Stockholders	$	12,000		$	12,506		$	5,198		$	7,109

Basic Earnings Per Share:
Per Common Share:	$	0.29		$	0.30		$	0.13		$	0.17
Per Class A Common Share:	$	0.33		$	0.33		$	0.14		$	0.19

Diluted Earnings Per Share:
Per Common Share:	$	0.29		$	0.29		$	0.12		$	0.17
Per Class A Common Share:	$	0.32		$	0.32		$	0.14		$	0.18

Dividends Per Share:
Common	$	0.45		$	0.429		$	0.225		$	0.2145
Class A Common	$	0.50		$	0.475		$	0.25		$	0.2375

The accompanying notes to consolidated financial statements are an integral part of these statements.

Index

URSTADT BIDDLE PROPERTIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)

	Six Months Ended April 30,						Three Months Ended April 30,
	2023			2022			2023			2022

Net Income	$	20,517		$	21,145		$	9,449		$	11,424

Other comprehensive income (loss):
Change in unrealized gains (losses) on interest rate swaps		(5,184	)		13,691			(819	)		10,220
Change in unrealized gains (losses) on interest rate swaps-equity investees		(751	)		1,503			(68	)		1,151

Total comprehensive income		14,582			36,339			8,562			22,795
Comprehensive income attributable to noncontrolling interests		(1,692	)		(1,814	)		(839	)		(903	)

Total comprehensive income attributable to Urstadt Biddle Properties Inc.		12,890			34,525			7,723			21,892
Preferred stock dividends		(6,825	)		(6,825	)		(3,412	)		(3,412	)
Total comprehensive income applicable to Common and Class A Common Stockholders	$	6,065		$	27,700		$	4,311		$	18,480

The accompanying notes to consolidated financial statements are an integral part of these statements.

Index

URSTADT BIDDLE PROPERTIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	Six Months Ended April 30,
	2023			2022
Cash Flows from Operating Activities:
Net income	$	20,517		$	21,145
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		15,975			14,716
Straight-line rent adjustment		(602	)		55
Provision for tenant credit losses		457			161
(Gain)/loss on sale of property		6			(768	)
Restricted stock compensation expense and other adjustments		1,999			1,627
Deferred compensation arrangement		1			(14	)
Equity in net (income) of unconsolidated joint ventures		(868	)		(590	)
Distributions of operating income from unconsolidated joint ventures		868			590
Changes in operating assets and liabilities:
Tenant receivables		204			1,227
Accounts payable and accrued expenses		267			537
Other assets and other liabilities, net		(2,134	)		(3,803	)
Net Cash Flow Provided by Operating Activities		36,690			34,883

Cash Flows from Investing Activities:
Acquisitions of real estate investments		-			(33,161	)
Proceeds from sale of property		-			4,400
Improvements to properties and deferred charges		(11,810	)		(6,263	)
Return of capital from unconsolidated affiliates		407			1,543
Net Cash Flow (Used in) Investing Activities		(11,403	)		(33,481	)

Cash Flows from Financing Activities:
Dividends paid -- Common and Class A Common Stock		(19,145	)		(18,673	)
Dividends paid -- Preferred Stock		(6,825	)		(6,825	)
Principal amortization repayments on mortgage notes payable		(3,807	)		(3,489	)
Repayment of mortgage note payable		-			(32,412	)
Proceeds from mortgage note payable		-			46,000
Proceeds from revolving credit facility		12,000			20,000
Repayment of revolving credit facility		(3,500	)		(10,000	)
Acquisitions of noncontrolling interests		(1,303	)		(1,860	)
Distributions to noncontrolling interests		(1,692	)		(1,814	)
Payment of taxes on shares withheld for employee taxes		(493	)		(590	)
Repurchase of Common and Class A Common stock		(2,143	)		-
Net proceeds from the issuance of Common and Class A Common Stock		108			97
Net Cash Flow (Used in) Financing Activities		(26,800	)		(9,566	)

Net Increase/(Decrease) In Cash and Cash Equivalents		(1,513	)		(8,164	)
Cash and Cash Equivalents at Beginning of Period		14,966			24,057

Cash and Cash Equivalents at End of Period	$	13,453		$	15,893

Supplemental Cash Flow Disclosures:
Interest Paid	$	7,156		$	6,199

The accompanying notes to consolidated financial statements are an integral part of these statements.

Index

URSTADT BIDDLE PROPERTIES INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

Six Months Ended April 30, 2023 and 2022

(In thousands, except share and per share data)

	Series H Preferred Stock Issued		Series H Preferred Stock Amount		Series K Preferred Stock Issued		Series K Preferred Stock Amount		Common Stock Issued			Common Stock Amount		Class A Common Stock Issued			Class A Common Stock Amount			Additional Paid In Capital			Cumulative Distributions In Excess of Net Income			Accumulated Other Comprehensive Income (loss)			Total Stockholders’ Equity

Balances - October 31, 2022		4,600,000	$	115,000		4,400,000	$	110,000		10,247,072		$	104		28,963,433		$	290		$	511,471		$	(179,754	)	$	17,191		$	574,302
Net income applicable to Common and Class A common stockholders		-		-		-		-		-			-		-			-			-			12,000			-			12,000
Change in unrealized gains on interest rate swap		-		-		-		-		-			-		-			-			-			-			(5,935	)		(5,935	)
Cash dividends paid :
Common stock ($0.45 per share)		-		-		-		-		-			-		-			-			-			(4,661	)		-			(4,661	)
Class A common stock ($0.50 per share)		-		-		-		-		-			-		-			-			-			(14,485	)		-			(14,485	)
Issuance of shares under dividend reinvestment plan		-		-		-		-		2,006			-		4,163			-			108			-			-			108
Shares issued under restricted stock plan		-		-		-		-		109,800			1		151,750			1			(2	)		-			-			-
Shares withheld for employee taxes		-		-		-		-		-			-		(26,014	)		-			(493	)		-			-			(493	)
Forfeiture of restricted stock		-		-		-		-		-			-		(5,300	)		-			-			-			-			-
Repurchase of Common and Class A Common stock		-		-		-		-		(287	)		-		(116,016	)		(1	)		(2,141	)		-			-			(2,142	)
Restricted stock compensation and other adjustments		-		-		-		-		-			-		-			-			1,999			-			-			1,999
Adjustments to redeemable noncontrolling interests		-		-		-		-		-			-		-			-			-			405			-			405
Balances - April 30, 2023		4,600,000	$	115,000		4,400,000	$	110,000		10,358,591		$	105		28,972,016		$	290		$	510,942		$	(186,495	)	$	11,256		$	561,098

Index

	Series H Preferred Stock Issued		Series H Preferred Stock Amount		Series K Preferred Stock Issued		Series K Preferred Stock Amount		Common Stock Issued		Common Stock Amount		Class A Common Stock Issued			Class A Common Stock Amount		Additional Paid In Capital			Cumulative Distributions In Excess of Net Income			Accumulated Other Comprehensive Income			Total Stockholders’ Equity

Balances - October 31, 2021		4,600,000	$	115,000		4,400,000	$	110,000		10,153,689	$	103		30,073,807		$	301	$	528,713		$	(170,493	)	$	(7,720	)	$	575,904
Net income applicable to Common and Class A common stockholders		-		-		-		-		-		-		-			-		-			12,506			-			12,506
Change in unrealized losses on interest rate swap		-		-		-		-		-		-		-			-		-			-			15,194			15,194
Cash dividends paid :
Common stock ($0.429 per share)		-		-		-		-		-		-		-			-		-			(4,403	)		-			(4,403	)
Class A common stock ($0.475 per share)		-		-		-		-		-		-		-			-		-			(14,270	)		-			(14,270	)
Issuance of shares under dividend reinvestment plan		-		-		-		-		1,779		-		3,369			-		97			-			-			97
Shares issued under restricted stock plan		-		-		-		-		109,500		1		149,000			1		(2	)		-			-			-
Shares withheld for employee taxes		-		-		-		-		-		-		(27,680	)		-		(590	)		-			-			(590	)
Forfeiture of restricted stock		-		-		-		-		-		-		(36,300	)		-		-			-						-
Repurchase of Common and Class A Common stock		-		-		-		-		-		-		-			-		-			-			-			-
Restricted stock compensation and other adjustments		-		-		-		-		-		-		-			-		1,627			-			-			1,627
Adjustments to redeemable noncontrolling interests		-		-		-		-		-		-		-			-		-			1,629			-			1,629
Balances - April 30, 2022		4,600,000	$	115,000		4,400,000	$	110,000		10,264,968	$	104		30,162,196		$	302	$	529,845		$	(175,031	)	$	7,474		$	587,694

The accompanying notes to consolidated financial statements are an integral part of these statements

Index

URSTADT BIDDLE PROPERTIES INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

Three Months Ended April 30, 2023 and 2022

(In thousands, except share and per share data)

	Series H Preferred Stock Issued		Series H Preferred Stock Amount		Series K Preferred Stock Issued		Series K Preferred Stock Amount		Common Stock Issued		Common Stock Amount		Class A Common Stock Issued			Class A Common Stock Amount		Additional Paid In Capital		Cumulative Distributions In Excess of Net Income			Accumulated Other Comprehensive Income (loss)			Total Stockholders’ Equity

Balances - January 31, 2023		4,600,000	$	115,000		4,400,000	$	110,000		10,357,529	$	105		28,970,166		$	290	$	509,815	$	(183,483	)	$	12,143		$	563,870
Net income applicable to Common and Class A common stockholders		-		-		-		-		-		-		-			-		-		5,198			-			5,198
Change in unrealized gains on interest rate swap		-		-		-		-		-		-		-			-		-		-			(887	)		(887	)
Cash dividends paid :
Common stock ($0.225 per share)		-		-		-		-		-		-		-			-		-		(2,330	)		-			(2,330	)
Class A common stock ($0.25 per share)		-		-		-		-		-		-		-			-		-		(7,242	)		-			(7,242	)
Issuance of shares under dividend reinvestment plan		-		-		-		-		1,062		-		2,150			-		54		-			-			54
Forfeiture of restricted stock		-		-		-		-		-		-		(300	)		-		-		-			-			-
Repurchase of Common and Class A Common stock										-		-		-			-		-								-
Restricted stock compensation and other adjustments		-		-		-		-		-		-		-			-		1,073		-			-			1,073
Adjustments to redeemable noncontrolling interests		-		-		-		-		-		-		-			-		-		1,362			-			1,362
Balances - April 30, 2023		4,600,000	$	115,000		4,400,000	$	110,000		10,358,591	$	105		28,972,016		$	290	$	510,942	$	(186,495	)	$	11,256		$	561,098

Index

	Series H Preferred Stock Issued		Series H Preferred Stock Amount		Series K Preferred Stock Issued		Series K Preferred Stock Amount		Common Stock Issued		Common Stock Amount		Class A Common Stock Issued			Class A Common Stock Amount		Additional Paid In Capital		Cumulative Distributions In Excess of Net Income			Accumulated Other Comprehensive Income			Total Stockholders’ Equity

Balances - January 31, 2022		4,600,000	$	115,000		4,400,000	$	110,000		10,264,037	$	104		30,161,094		$	302	$	528,807	$	(174,940	)	$	(3,897	)	$	575,376
Net income applicable to Common and Class A common stockholders		-		-		-		-		-		-		-			-		-		7,109			-			7,109
Change in unrealized losses on interest rate swap		-		-		-		-		-		-		-			-		-		-			11,371			11,371
Cash dividends paid :
Common stock ($0.2145 per share)		-		-		-		-		-		-		-			-		-		(2,202	)		-			(2,202	)
Class A common stock ($0.2375 per share)		-		-		-		-		-		-		-			-		-		(7,163	)		-			(7,163	)
Issuance of shares under dividend reinvestment plan		-		-		-		-		931		-		1,802			-		49		-			-			49
Shares withheld for employee taxes		-		-		-		-		-		-		-			-		-		-			-			-
Forfeiture of restricted stock		-		-		-		-		-		-		(700	)		-		-		-			-			-
Repurchase of Common and Class A Common stock		-		-		-		-		-		-		-			-		-		-			-			-
Restricted stock compensation and other adjustments		-		-		-		-		-		-		-			-		989		-			-			989
Adjustments to redeemable noncontrolling interests		-		-		-		-		-		-		-			-		-		2,165			-			2,165
Balances - April 30, 2022		4,600,000	$	115,000		4,400,000	$	110,000		10,264,968	$	104		30,162,196		$	302	$	529,845	$	(175,031	)	$	7,474		$	587,694

The accompanying notes to consolidated financial statements are an integral part of these statements

Index

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Urstadt Biddle Properties Inc. (“Company”), a Maryland corporation, is a real estate investment trust ("REIT"), engaged in the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers in the metropolitan tri-state area outside of the City of New York. The Company's major tenants include supermarket chains and other retailers who sell basic necessities. At April 30, 2023, the Company owned or had equity interests in 77 properties containing a total of 5.3 million square feet of Gross Leasable Area (“GLA”).

As previously announced, on May 17, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Regency Centers Corporation, a Florida corporation (“Regency”), Hercules Merger Sub, LLC, a Maryland limited liability company and a wholly owned subsidiary of Regency (“Merger Sub”), UB Maryland I, Inc., a Maryland corporation and a direct wholly owned subsidiary of the Company (“Hermes Sub I”), and UB Maryland II, Inc., a Maryland corporation and a direct wholly owned subsidiary of Hermes Sub I (“Hermes Sub II”), pursuant to which, in accordance with the terms, and subject to the conditions, set forth therein, (a) Hermes Sub II will be merged with and into the Company (the “First Merger”), with the Company surviving the First Merger as a wholly owned subsidiary of Hermes Sub I, and (b) following the First Merger, Hermes Sub I will be merged with and into Merger Sub (the “Second Merger” and together with the First Merger, the “Mergers”), with Merger Sub being the surviving entity in the Second Merger.

Under the terms of the Merger Agreement, holders of the Company’s Common Stock, par value $0.01 per share (“Common Stock”) and Class A Common Stock, par value $0.01 per share (“Class A Common Stock” and, together with Common Stock, the “Company Common Shares”) will ultimately receive 0.347 of a newly-issued share of common stock, par value $0.01 per share, of Regency (“Regency Common Stock”) for each Company Common Share they own. No fractional shares of Regency Common Stock will be issued in the Mergers. The value of any fractional interests of shares of Regency Common Stock to which a holder would otherwise be entitled will be paid in cash. Under the terms of the Merger Agreement, holders of the Company’s 6.25% Series H Cumulative Redeemable Preferred Stock and 5.875% Series K Cumulative Redeemable Preferred Stock will ultimately receive, for each share of preferred stock they own, one share of newly issued Regency 6.25% Series A Cumulative Redeemable Preferred Stock (“Regency Series A Preferred Stock”) and 5.875% Series B Cumulative Redeemable Preferred Stock (“Regency Series B Preferred Stock”), respectively, having materially the same terms as the Company’s corresponding series of preferred stock.

Regency and the Company have also agreed to coordinate the timing of their regular quarterly dividends prior to the closing of the Mergers, including proration of the Company’s next dividend to take into account the shorter period covered from the prior Company record date to June 14, 2023 as compared to the Company’s regular quarterly dividend timing. Accordingly, on June 1, 2023, the Board of Directors declared a dividend of $0.2083 for each share of Class A Common Stock and $0.1875 for each share of Common Stock. The dividends are payable July 6, 2023 to stockholders of record on June 14, 2023.

Also on May 17, 2023, the Company (solely with respect to certain provisions) entered into a Voting Agreement (the “Voting Agreement”) with Regency and Willing L. Biddle, Catherine U. Biddle, Elinor F. Urstadt, Urstadt Property Company, Inc., Urstadt Realty Associates Co LP and Urstadt Realty Shares II L.P., in their respective capacities as record or beneficial owners of Company Common Shares (together, the “Urstadt Biddle Family Stockholders”) collectively representing approximately 68% of the voting power among the Company’s stockholders, pursuant to which the Urstadt Biddle Family Stockholders have agreed to vote (or cause to be voted) all of their Company Common Shares in favor of any proposal to approve the Mergers and against any alternative proposal. The Urstadt Biddle Family Stockholders have further agreed, under the Voting Agreement, to not transfer any of their shares which are subject to its terms.

The boards of directors of the Company and Regency have each approved the Mergers and the other transactions contemplated by the Merger Agreement. The transaction is currently expected to close late in the third quarter or early in the fourth quarter of calendar year 2023, subject to the receipt of approval of holders of the Company Common Shares and satisfaction of other customary closing conditions. The Board of Directors of the Company has recommended approval of the Mergers, and the other transactions contemplated by the Merger Agreement, by the Company’s stockholders.

COVID-19 Pandemic

On March 11, 2020, the novel coronavirus disease (“COVID-19”) was declared a pandemic (“COVID-19 pandemic”) by the World Health Organization as the disease spread throughout the world. During March 2020, measures to prevent the spread of COVID-19 were initiated, with federal, state and local government agencies issuing regulatory orders enforcing social distancing and limiting certain business operations and group gatherings in order to further prevent the spread of COVID-19. While these regulatory orders vary by state and have changed over time, as of April 30, 2023 most of our tenants’ businesses are operating normally. We have seen foot traffic, retail activity and general business conditions for most of our tenants essentially return to pre-pandemic levels.

Principles of Consolidation and Use of Estimates

The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures in which the Company meets certain criteria in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation”. The Company has determined that such joint ventures should be consolidated into the consolidated financial statements of the Company. In accordance with ASC Topic 970-323 “Real Estate-General-Equity Method and Joint Ventures,” joint ventures that the Company does not control but otherwise exercises significant influence over, are accounted for under the equity method of accounting. See Note 4 for further discussion of the unconsolidated joint ventures. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the three and six months ended April 30, 2023 are not necessarily indicative of the results that may be expected for the year ending October 31, 2023. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2022.

The preparation of financial statements requires management to make estimates and assumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the periods covered by the financial statements. The most significant assumptions and estimates relate to the valuation of real estate, depreciable lives, revenue recognition, fair value estimates, and the collectability of tenant receivables and other assets and liabilities. Actual results could differ from these estimates. The consolidated balance sheet at October 31, 2022 has been derived from audited financial statements at that date.

Federal Income Taxes

The Company has elected to be treated as a REIT 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 intends to distribute all of its taxable income for fiscal 2023 in accordance with the provisions of the Code. Accordingly, no provision has been made for Federal income taxes in the accompanying consolidated financial statements.

The Company follows the provisions of ASC Topic 740, “Income Taxes” that, among other things, defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Based on its evaluation, the Company determined that it has no uncertain tax positions and no unrecognized tax benefits as of April 30, 2023. As of April 30, 2023, the fiscal tax years 2019 through and including 2022 remain open to examination by the Internal Revenue Service. There are currently no federal tax examinations in progress.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and tenant receivables. The Company places its cash and cash equivalents with high quality financial institutions and the balances at times could exceed federally insured limits. 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. The Company has no dependency upon any single tenant.

Marketable Securities

Marketable equity securities are carried at fair value based upon quoted market prices in active markets with changes in fair value recognized in net income.

Derivative Financial Instruments

The Company occasionally utilizes derivative financial instruments, such as interest rate swaps, to manage its exposure to fluctuations in interest rates. The Company has established policies and procedures for risk assessment, and the approval, reporting and monitoring of derivative financial instruments. Derivative financial instruments must be effective in reducing the Company’s interest rate risk exposure in order to qualify for hedge accounting. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative instrument matures or is settled. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. The Company has not entered into, and does not plan to enter into, derivative financial instruments for trading or speculative purposes. Additionally, the Company has a policy of entering into derivative contracts only with major financial institutions.

As of April 30, 2023, the Company believes it has no significant risk associated with non-performance of the financial institutions that are the counterparties to its derivative contracts. At April 30, 2023, the Company had approximately $153.9 million in secured mortgage financings subject to interest rate swaps. Such interest rate swaps converted the LIBOR or Secured Overnight Financing Rate (“SOFR”)-based variable rates on the mortgage financings to a fixed annual rate of 3.74% per annum. As of April 30, 2023 and October 31, 2022, the Company had deferred assets of $10.7 million and $15.9 million, respectively (included in other assets on the consolidated balance sheets), relating to the fair value of the Company’s interest rate swaps applicable to secured mortgages.

Charges and/or credits relating to the changes in fair values of such interest rate swaps are made to other comprehensive income/(loss) as the swaps are deemed effective and are classified as a cash flow hedge.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net income applicable to Common and Class A Common stockholders and other comprehensive income (loss). Other comprehensive income (loss) includes items that are otherwise recorded directly in stockholders’ equity, such as unrealized gains and losses on interest rate swaps designated as cash flow hedges, including the Company's share from entities accounted for under the equity method of accounting. At April 30, 2023, accumulated other comprehensive income consisted of net unrealized gains on interest rate swap agreements of $11.3 million, inclusive of the Company's share of accumulated comprehensive income from joint ventures accounted for by the equity method of accounting. At October 31, 2022, accumulated other comprehensive income consisted of net unrealized gains on interest rate swap agreements of approximately $17.2 million, inclusive of the Company's share of accumulated comprehensive income from joint ventures accounted for by the equity method of accounting. Unrealized gains and losses included in other comprehensive income/(loss) will be reclassified into earnings as gains and losses are realized.

Asset Impairment

On a periodic basis, management assesses whether there are any indicators that the value of its real estate investments 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 useful life is less than the net carrying value of the property. Such cash flow projections consider factors such as expected future operating income, trends 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 impairment losses which could be substantial. As of April 30, 2023, management does not believe that the value of any of its real estate investments is impaired.

Index

Acquisitions of Real Estate Investments, Capitalization Policy and Depreciation

Acquisition of Real Estate Investments:

The Company evaluates each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted for as a business combination. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business:

•

Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or

•

The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e. revenue generated before and after the transaction).

An acquired process is considered substantive if:

•

The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce), that is skilled, knowledgeable, and experienced in performing the process;

•

The process cannot be replaced without significant cost, effort, or delay; or

•

The process is considered unique or scarce.

Generally, the Company expects that acquisitions of real estate or in-substance real estate will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e. land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

Acquisitions of real estate and in-substance real estate that do not meet the definition of a business are accounted for as asset acquisitions. The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. As a result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. The relative fair values used to allocate the cost of an asset acquisition are determined using the same methodologies and assumptions as the Company utilizes to determine fair value in a business combination.

The value of tangible assets acquired is based upon our estimation of value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. We assess the fair value of tangible and intangible assets based on numerous factors, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors, including the historical operating results, known trends, and market/economic conditions that may affect the property.

The values of acquired above and below-market leases, which are included in prepaid expenses and other assets and other liabilities, respectively, are amortized over the terms of the related leases and recognized as either an increase (for below-market leases) or a decrease (for above-market leases) to rental revenue. The values of acquired in-place leases are classified in other assets in the accompanying consolidated balance sheets and amortized over the remaining terms of the related leases.

Capitalization Policy:

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 depreciated over their estimated useful lives.

Depreciation:

The Company is required to make subjective assessments 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	30-40 years
Property Improvements	10-20 years
Furniture/Fixtures	3-10 years
Tenant Improvements	Shorter of lease term or their useful life

Sale of Investment Property and Property Held for Sale

The Company reports properties that are either disposed of or are classified as held for sale in continuing operations in the consolidated statement of income if the removal, or anticipated removal, of the asset(s) from the reporting entity does not represent a strategic shift that has or will have a major effect on an entity's operations and financial results when disposed of.

In September 2021, the Company entered into a purchase and sale agreement to sell its property located in Chester, NJ (the "Chester Property") to an unrelated third party for a sale price of $1.96 million, as that property no longer met its investment objectives. In accordance with ASC Topic 360-10-45, the property met all the criteria to be classified as held for sale in the fourth quarter of fiscal 2021, and accordingly the Company recorded a loss on property held for sale of $342,000, which loss was included in continuing operations in the consolidated statement of income for the year ended October 31, 2021. The amount of the loss represented the net carrying amount of the property over the fair value of the asset less estimated cost to sell. The net book value of the Chester Property was insignificant to financial statement presentation and as a result the Company did not include the asset as held for sale on its consolidated balance sheet at October 31, 2021. In December 2021, the Chester Property sale was completed and the Company realized an additional loss on sale of property of $8,000, which loss is included in operations in the consolidated statement of income for the six months ended April 30, 2022.

In February 2022, the Company sold its free-standing restaurant property located in Bloomfield, NJ (the "Bloomfield Property") to an unrelated third party for a sale price of $1.8 million, as that property no longer met the Company's investment objectives. In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $544,000, which gain is included in continuing operations in its consolidated income statements for the three and six months ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.

In March 2022, the Company sold its free-standing restaurant property located in Unionville, CT (the "Unionville Property") to an unrelated third party for a sale price of $950,000, as that property no longer met the Company's investment objectives. In accordance with ASC Topic 840, "Contracts with Customers," the Company recorded a gain on sale in the amount of $203,000, which gain is included in continuing operations in its consolidated income statements for the three and six months ended April 30, 2022, when the Company's performance obligation was met, the transfer of the property's title to the buyer and when consideration was received from the buyer for that performance obligation.

The operating results of the Chester Property, the Bloomfield Property and the Unionville Property, which are included in operations, are as follows (amounts in thousands):

	Six Months Ended April 30,					Three Months Ended April 30,
	2023		2022			2023		2022
Revenues	$	-	$	46		$	-	$	8
Property operating expense		-		(27	)		-		(9	)
Depreciation and amortization		-		(14	)		-		(2	)
Net Income (Loss)	$	-	$	5		$	-	$	(3	)

Index

Lease Income, Revenue Recognition and Tenant Receivables

Lease Income:

The Company accounts for lease income in accordance with ASC Topic 842 "Leases".

The Company's existing leases are generally classified as operating leases. However, certain longer-term leases (both lessee and lessor leases) may be classified as direct financing or sales type leases, which may result in selling profit and an accelerated pattern of earnings recognition.

The Company leases space to tenants under agreements with varying terms that generally provide for fixed payments of base rent, with designated increases over the term of the lease. Some of the lease agreements contain provisions that provide for additional rents based on tenants' sales volume ("percentage rent"). Percentage rents are recognized when the tenants achieve the specified targets as defined in their lease agreements. Additionally, most all lease agreements contain provisions for reimbursement of the tenants' share of actual real estate taxes, insurance and Common Area Maintenance ("CAM") costs (collectively, "Recoverable Costs") incurred.

Lease terms generally range from 1 to 5 years for tenant spaces under 10,000 square feet (“Shop Space”) and in excess of 5 years for spaces greater than 10,000 square feet (“Anchor Spaces”). Many leases also provide the option for the tenants to extend their lease beyond the initial term of the lease. If the tenants do not exercise renewal options and the leases mature, the tenants must relinquish their space so it can be leased to a new tenant, which generally involves some level of cost to prepare the space for re-leasing. These costs are capitalized and depreciated over the shorter of the life of the subsequent lease or the life of the improvement.

CAM is a non-lease component of the lease contract under ASC Topic 842, and therefore would be accounted for under ASC Topic 606, Revenue from Contracts with Customers and presented separate from lease income in the accompanying consolidated statements of income, based on an allocation of the overall contract price, which is not necessarily the amount that would be billable to the tenants for CAM reimbursements per the terms of the lease contract. As the timing and pattern of providing the CAM service to the tenant is the same as the timing and pattern of the tenants' use of the underlying lease asset, the Company, in accordance with ASC Topic 842, combines CAM with the remaining lease components, along with tenants' reimbursement of real estate taxes and insurance, and recognizes them together as lease income in the accompanying consolidated statements of income.

Lease income for operating leases with fixed payment terms is recognized on a straight-line basis over the expected term of the lease for all leases for which collectability is considered probable at the commencement date. At lease commencement, the Company expects that collectability is probable for all of its leases due to the Company’s credit checks on tenants and other creditworthiness analysis undertaken before entering into a new lease; therefore, income from all operating leases is initially recognized on a straight-line basis. Lease income each period is reduced by amounts considered uncollectable on a lease-by-lease basis, with any changes in collectability assessments recognized as a current period adjustment to lease income. For operating leases in which collectability of lease income is not considered probable, lease income is recognized on a cash basis and all previously recognized uncollected lease income, including straight-line rental income, is reversed in the period in which the lease income is determined not to be probable of collection.

The Company, as a lessor, may only defer as initial direct costs the incremental costs of a tenant operating lease that would not have been incurred if the lease had not been obtained. These costs generally include third party broker payments, which are capitalized to deferred costs in the accompanying consolidated balance sheets and amortized over the expected term of the lease to depreciation and amortization expense in the accompanying consolidated statements of income.

Revenue Recognition

In those instances in which the Company funds tenant improvements and the improvements are deemed to be owned by the Company, revenue recognition on operating leases will commence when the improvements are substantially completed and possession or control of the space is turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, the Company commences revenue recognition when possession or control of the space is turned over to the tenant for tenant work to begin.

Lease termination amounts are recognized in operating revenues when there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and the termination consideration is probable of collection. Lease termination amounts are paid by tenants who want to terminate their lease obligations before the end of the contractual term of the lease by agreement with the Company. There is no way of predicting or forecasting the timing or amounts of future lease termination fees. 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 U.S. GAAP have been met.

Percentage rent is recognized when a specific tenant’s sales breakpoint is achieved.

Tenant Receivables

During the early days of the COVID-19 pandemic, the actions taken by federal, state and local governments to mitigate the spread of COVID-19, (i) initially by ordering closures of non-essential businesses and ordering residents to generally stay at home, and (ii) subsequently by phasing re-openings resulted in many of our tenants temporarily, or even permanently, closing their businesses, and for some, their ability to pay rent was impacted.

We did not convert any additional tenants to cash-basis accounting in the second half of fiscal 2021, fiscal 2022 or the three and six months ended April 30, 2023. As of April 30, 2023, 37 of the 89 tenants are no longer tenants in the Company's properties.

As of April 30, 2023, the Company is recording lease income on a cash basis for approximately 3.1% of our tenants in accordance with ASC Topic 842.

At April 30, 2023 and October 31, 2022, $20,563,000 and $19,895,000, respectively, have been recognized as straight-line rents receivable (representing the current cumulative rents recognized prior to when billed and collectable, as provided by the terms of the leases), all of which is included in tenant receivables in the accompanying consolidated financial statements.

The Company provides an allowance for doubtful accounts against the portion of tenant receivables that is estimated to be uncollectable. Such allowances are reviewed periodically. At April 30, 2023 and October 31, 2022, tenant receivables in the accompanying consolidated balance sheets are shown net of allowances for doubtful accounts of $6,726,000 and $6,213,600, respectively. Included in the aforementioned allowance for doubtful accounts is an amount for future tenant credit losses of approximately 10% of the deferred straight-line rents receivable, which is estimated to be uncollectable.

Index

Earnings Per Share

The Company calculates basic and diluted earnings per share in accordance with the provisions of ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“EPS”) excludes the impact of dilutive shares and is computed by dividing net income applicable to Common and Class A Common stockholders by the weighted average 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 contracts 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 earnings 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):

	Six Months Ended April 30,						Three Months Ended April 30,
	2023			2022			2023			2022
Numerator
Net income applicable to common stockholders – basic	$	2,758		$	2,768		$	1,195		$	1,574
Effect of dilutive securities:
Restricted stock awards		77			85			34			52
Net income applicable to common stockholders – diluted	$	2,835		$	2,853		$	1,229		$	1,626

Denominator
Denominator for basic EPS – weighted average common shares		9,413			9,327			9,413			9,328
Effect of dilutive securities:
Restricted stock awards		403			424			421			465
Denominator for diluted EPS – weighted average common equivalent shares		9,816			9,751			9,834			9,793

Numerator
Net income applicable to Class A common stockholders-basic	$	9,242		$	9,738		$	4,003		$	5,535
Effect of dilutive securities:
Restricted stock awards		(77	)		(85	)		(34	)		(52	)
Net income applicable to Class A common stockholders – diluted	$	9,165		$	9,653		$	3,969		$	5,483

Denominator
Denominator for basic EPS – weighted average Class A common shares		28,393			29,637			28,365			29,614
Effect of dilutive securities:
Restricted stock awards		163			163			219			217
Denominator for diluted EPS – weighted average Class A common equivalent shares		28,556			29,800			28,584			29,831

Segment Reporting

The Company's primary business is the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers, anchored by supermarkets, pharmacy/drug-stores and wholesale clubs, with a concentration in the metropolitan tri-state area of the City of New York. The Company reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. The Company evaluates financial performance using property operating income, which consists of base rental income and tenant reimbursement income, less rental expenses and real estate taxes. Only one of the Company’s properties, located in Stamford, CT (“Ridgeway”), is considered significant as its revenue is in excess of 10% (in various times in fiscal 2022) of the Company’s consolidated total revenues and accordingly is a reportable segment. The Company has aggregated the remainder of its properties as they share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in the same major metropolitan area, and have similar tenant mixes.

Ridgeway is located in Stamford, Connecticut and was developed in the 1950’s and redeveloped in the mid-1990’s. The property contains approximately 374,000 square feet of GLA. It is the dominant grocery-anchored center and the largest non-mall shopping center located in the City of Stamford, Fairfield County, Connecticut.

Segment information about Ridgeway as required by ASC Topic 280 is included below:

	Six Months Ended April 30,						Three Months Ended April 30,
	2023			2022			2023			2022
Ridgeway Revenues		9.7	%		9.8	%		9.1	%		9.7	%
All Other Property Revenues		90.3	%		90.2	%		90.9	%		90.3	%
Consolidated Revenue		100.0	%		100.0	%		100.0	%		100.0	%

	April 30, 2023			October 31, 2022
Ridgeway Assets		6.4	%		6.5	%
All Other Property Assets		93.6	%		93.5	%
Consolidated Assets (Note 1)		100.0	%		100.0	%

Note 1 - Ridgeway did not have any significant expenditures for additions to long lived assets in the three and six months ended April 30, 2023 or the year ended October 31, 2022.

		April 30, 2023				October 31, 2022
Ridgeway Percent Leased			85	%			98	%

Index

Ridgeway Significant Tenants (Percentage of Base Rent Billed):

	Six Months Ended April 30,						Three Months Ended April 30,
	2023			2022			2023			2022
The Stop & Shop Supermarket Company		23	%		21	%		25	%		21	%
Bed, Bath & Beyond (Note 3)		7	%		15	%		0	%		15	%
Marshall’s Inc.		11	%		11	%		12	%		11	%
All Other Tenants at Ridgeway (Note 2)		59	%		53	%		63	%		53	%
Total		100	%		100	%		100	%		100	%

Note 2 - No other tenant accounts for more than 10% of Ridgeway’s annual base rents in any of the periods presented. Percentages are calculated as a ratio of the tenants' base rent divided by total base rent of Ridgeway.

Note 3 - Bed Bath & Beyond lease expired on January 31, 2023. In the third quarter of fiscal 2023, the Company released a large portion of the space to Burlington.

Income Statements (In Thousands):	Six Months Ended April 30, 2023						Three Months Ended April 30, 2023
	Ridgeway		All Other Operating Segments		Total Consolidated		Ridgeway		All Other Operating Segments		Total Consolidated
Revenues	$	7,087	$	66,281	$	73,368	$	3,194	$	31,877	$	35,071
Property Operating Expenses	$	2,321	$	22,608	$	24,929	$	1,168	$	10,878	$	12,046
Interest Expense	$	780	$	6,543	$	7,323	$	384	$	3,292	$	3,676
Depreciation and Amortization	$	1,117	$	14,858	$	15,975	$	563	$	7,008	$	7,571
Net Income	$	2,870	$	17,647	$	20,517	$	1,080	$	8,369	$	9,449

Income Statements (In Thousands):	Six Months Ended April 30, 2022						Three Months Ended April 30, 2022
	Ridgeway		All Other Operating Segments		Total Consolidated		Ridgeway		All Other Operating Segments		Total Consolidated
Revenues	$	7,114	$	64,441	$	71,555	$	3,475	$	32,525	$	36,000
Property Operating Expenses	$	2,269	$	22,991	$	25,260	$	1,126	$	11,209	$	12,335
Interest Expense	$	800	$	5,764	$	6,564	$	382	$	2,880	$	3,262
Depreciation and Amortization	$	1,145	$	13,571	$	14,716	$	624	$	6,948	$	7,572
Net Income	$	2,900	$	18,245	$	21,145	$	1,343	$	10,081	$	11,424

Index

Stock-Based Compensation

The Company accounts for its stock-based compensation plans under the provisions of ASC Topic 718, “Stock Compensation”, which requires that compensation expense be recognized, based on the fair value of the stock awards less estimated forfeitures. The fair value of stock awards is equal to the fair value of the Company’s stock on the grant date. The Company recognizes compensation expense for its stock awards by amortizing the fair value of stock awards over the requisite service periods of such awards. In certain cases, as defined in the participant agreements, the vesting of stock awards can be accelerated, which will result in the Company charging to compensation expense the remaining unamortized restricted stock compensation related to those stock awards.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period’s presentation.

New Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848).” ASU No. 2020-04 contains practical expedients for reference rate-reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended April 30, 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

The Company has evaluated all other new ASUs issued by FASB, and has concluded that these updates do not have a material effect on the Company's consolidated financial statements as of April 30, 2023.

Index

(2) UNSECURED REVOLVING CREDIT FACILITY

The Company has a $125 million unsecured revolving credit facility with a syndicate of three banks led by The Bank of New York Mellon, as administrative agent. The syndicate also includes Wells Fargo Bank N.A. and Bank of Montreal (co-syndication agents). The Facility gives the Company the option, under certain conditions, to increase the Facility's borrowing capacity to $175 million (subject to lender approval). The maturity date of the Facility is March 29, 2024, with a one year extension at the Company's option. Borrowings under the Facility can be used for general corporate purposes and the issuance of letters of credit (up to $10 million). Borrowings will bear interest at the Company's option of the Secured Overnight Finance Rate ("SOFR") plus 1.55% to 2.30% or The Bank of New York Mellon's prime lending rate plus 0.45% to 1.20% based on consolidated total indebtedness, as defined. The Company pays a quarterly commitment fee on the unused commitment amount of 0.15% to 0.25% based on outstanding borrowings during the year. The Company's ability to borrow under the Facility is subject to its compliance with the covenants and other restrictions on an ongoing basis. The principal financial covenants limit the Company's level of secured and unsecured indebtedness, including preferred stock, and additionally require the Company to maintain certain debt coverage ratios. The Company was in compliance with such covenants at April 30, 2023.

Index

(3) CONSOLIDATED JOINT VENTURES AND REDEEMABLE NONCONTROLLING INTERESTS

The Company has an investment in four joint ventures, UB Orangeburg, LLC ("Orangeburg"), McLean Plaza Associates, LLC ("McLean") and UB Dumont I, LLC ("Dumont"), each of which owns a commercial retail property, and UB High Ridge, LLC ("High Ridge"), which owns three commercial real estate properties. The Company has evaluated its investment in these four joint ventures and has concluded that these joint ventures are fully controlled by the Company and that the presumption of control is not offset by any rights of any of the limited partners or non-controlling members in these ventures and that the joint ventures should be consolidated into the consolidated financial statements of the Company in accordance with ASC Topic 810 "Consolidation". The Company’s investment in these consolidated joint ventures is more fully described below:

Orangeburg

The Company is the managing member and owns a 43.8% interest in Orangeburg, which owns a CVS-anchored shopping center. The other member (non-managing) of Orangeburg is the prior owner of the contributed property, which, in exchange for contributing the net assets of the property, received units of Orangeburg equal to the value of the contributed property less the value of the assigned first mortgage payable. The Orangeburg operating agreement provides for the non-managing member to receive a quarterly cash distribution equal to the regular quarterly cash distribution declared by the Company for one share of the Company’s Class A Common stock, which amount is attributable to each unit of Orangeburg ownership. The quarterly cash distribution is paid from available cash, as defined, of Orangeburg. The balance of available cash, if any, is fully distributable to the Company. Upon liquidation, proceeds from the sale of Orangeburg assets are to be distributed in accordance with the operating agreement. The non-managing member is not obligated to make any additional capital contributions to the partnership. Since acquiring its initial interest in Orangeburg, the Company has made additional investments in the amount of $6.5 million in Orangeburg, and as a result, as of April 30, 2023 the Company's ownership percentage had increased to 43.8% from approximately 2.92% at inception.

McLean

The Company, through a wholly-owned subsidiary, is the managing member and owns a 53% interest in McLean, which owns an Acme grocery-anchored shopping center. The McLean operating agreement provides for the non-managing members to receive a fixed annual cash distribution equal to 5.05% of their invested capital. The annual cash distribution is paid from available cash, as defined, of McLean. The balance of available cash, if any, is fully distributable to the Company. Upon liquidation, proceeds from the sale of McLean assets are to be distributed in accordance with the operating agreement. The non-managing members are not obligated to make any additional capital contributions to the entity.

High Ridge

The Company is the managing member and owns a 30.3% interest in High Ridge. The Company's initial investment was $5.5 million, and the Company has acquired additional interests from non-managing members totaling $11.7 million and has contributed $1.5 million in additional equity to the venture through April 30, 2023. High Ridge, either directly or through a wholly-owned subsidiary, owns three commercial real estate properties, High Ridge Shopping Center, a Trader Joe's grocery-anchored shopping center ("High Ridge Center"), and two single tenant commercial retail properties, one leased to JP Morgan Chase and one leased to CVS. Two properties are located in Stamford, CT and one property is located in Greenwich, CT. The properties were contributed to the new entities by the former owners who received units of ownership of High Ridge equal to the value of properties contributed less liabilities assumed. The High Ridge operating agreement provides for the non-managing members to receive an annual cash distribution, currently equal to 5.26% of their invested capital.

Dumont

The Company is the managing member and owns a 43.1% interest in Dumont. The Company's initial investment was $3.9 million, and the Company has acquired additional interests from non-managing members totaling $1.5 million through April 30, 2023. Dumont owns a retail and residential real estate property, the retail portion of which is anchored by a Stop & Shop grocery store. The property is located in Dumont, NJ. The property was contributed to the new entity by the former owners who received units of ownership of Dumont equal to the value of contributed property less liabilities assumed. The Dumont operating agreement provides for the non-managing members to receive an annual cash distribution, currently equal to 5.0% of their invested capital.

Noncontrolling Interests

The Company accounts for noncontrolling interests in accordance with ASC Topic 810, “Consolidation.” Because the limited partners or noncontrolling members in Orangeburg, McLean, High Ridge and Dumont have the right to require the Company to redeem all or a part of their limited partnership or limited liability company units for cash, or at the option of the Company, shares of its Class A Common stock at prices as defined in the governing agreements, the Company reports the noncontrolling interests in the consolidated joint ventures in the mezzanine section, outside of permanent equity, of the consolidated balance sheets at redemption value which approximates fair value. The value of the Orangeburg, McLean, and a portion of the High Ridge and Dumont redemptions are based solely on the price of the Company’s Class A Common stock on the date of redemption. For the six months ended April 30, 2023 and 2022, the Company increased/(decreased) the carrying value of the noncontrolling interests by $(0.4) million and $(1.6) million, respectively, with the corresponding adjustment recorded in stockholders’ equity.

The following table sets forth the details of the Company's redeemable non-controlling interests for the six months ended April 30, 2023 and the fiscal year ended October 31, 2022 (amounts in thousands):

	April 30, 2023			October 31, 2022
Beginning Balance	$	61,550		$	67,395
Change in Redemption Value		(405	)		(1,948	)
Partial Redemption of High Ridge Noncontrolling Interest		(643	)		(2,681	)
Partial Redemption of Dumont Noncontrolling Interest		(660	)		(168	)
Redemption of UB Rye, LLC Noncontrolling Interest		-			(546	)
Redemption of New City Noncontrolling Interest		-			(502	)

Ending Balance	$	59,842		$	61,550

Index

(4) INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES

At April 30, 2023 and October 31, 2022 investments in and advances to unconsolidated joint ventures consisted of the following (with the Company’s ownership percentage in parentheses) (amounts in thousands):

	April 30, 2023		October 31, 2022
Chestnut Ridge Shopping Center (50%)	$	11,549	$	11,617
Gateway Plaza (50%)		5,051		5,858
Putnam Plaza Shopping Center (66.67%)		4,603		4,952
Midway Shopping Center, L.P. (11.79%)		3,563		3,647
Applebee's at Riverhead (50%)		2,853		2,789
81 Pondfield Road Company (20%)		723		723
Total	$	28,342	$	29,586

Chestnut Ridge Shopping Center

The Company, through a wholly-owned subsidiary, owns a 50% undivided tenancy-in-common interest in the 76,000 square foot Chestnut Ridge Shopping Center located in Montvale, New Jersey (“Chestnut”), which is anchored by a Fresh Market grocery store.

Gateway Plaza and Applebee's at Riverhead

The Company, through two wholly-owned subsidiaries, owns a 50% undivided tenancy-in-common interest in each of Gateway Plaza Shopping Center ("Gateway") and Applebee's Plaza ("Applebee's"). Both properties are located in Riverhead, New York. Gateway, a 198,500 square foot shopping center, is anchored by a 168,000 square foot Walmart, which also has 27,000 square feet of in-line space and a 3,500 square foot outparcel that is leased. Applebee's has a 5,400 square foot free-standing Applebee's restaurant and a 7,200 square foot pad site.

Gateway is subject to a non-recourse first mortgage in the amount of $14.0 million. The mortgage loan matures on July 1, 2032 and requires payments of interest only for the first 7 years at a rate equal to the SOFR plus 1.75% and then requires payments of principal and interest for the duration of the loan. Concurrent with entering into the mortgage, Gateway entered into an interest rate swap agreement, which converts the variable rate based on SOFR to a fixed interest rate of 4.07% per annum for the term of the mortgage note.

Midway Shopping Center, L.P.

The Company, through a wholly-owned subsidiary, owns an 11.79% equity interest in Midway Shopping Center L.P. (“Midway”), which owns a 247,000 square foot ShopRite-anchored shopping center in Scarsdale, New York. Although the Company has less than a 12% equity interest in Midway, it controls 25% of the voting power of Midway and as such, has determined that it exercises significant influence over the financial and operating decisions of Midway and accounts for its investment in Midway under the equity method of accounting.

The Company has allocated the $7.4 million excess of the carrying amount of its investment in and advances to Midway over the Company’s share of Midway’s net book value to real property and is amortizing the difference over the property’s estimated useful life of 39 years.

Midway is subject to a non-recourse first mortgage in the amount of $23.1 million. The loan requires payments of principal and interest at the rate of 4.80% per annum and will mature in 2027.

Putnam Plaza Shopping Center

The Company, through a wholly-owned subsidiary, owns a 66.67% (noncontrolling) undivided tenancy-in-common interest in the 189,000 square foot Tops-anchored Putnam Plaza Shopping Center (“Putnam Plaza”) located in Carmel, New York.

Putnam Plaza is subject to a non-recourse first mortgage payable in the amount of $17.5 million. The mortgage requires monthly payments of principal and interest at a fixed rate of 4.81% and will mature in 2028.

81 Pondfield Road Company

The Company’s other investment in an unconsolidated joint venture is a 20% interest in a retail and office building in Bronxville, New York.

Equity Method of Accounting

The Company accounts for the above investments under the equity method of accounting since it exercises significant influence, but does not control the joint ventures. The other venturers in the joint ventures have substantial participation rights in the financial decisions and operation of the ventures or properties, which preclude the Company from consolidating the investments. The Company has evaluated its investment in the joint ventures and has concluded that the joint ventures are not Variable Interest Entities ("VIE's"). Under the equity method of accounting, the initial investment is recorded at cost as an investment in unconsolidated joint venture, and subsequently adjusted for equity in net income (loss) and cash contributions and distributions from the venture. Any difference between the carrying amount of the investment on the Company’s balance sheet and the underlying equity in net assets of the venture is evaluated for impairment periodically.

Index

(5) LEASES

Lessor Accounting

The Company's Lease income is comprised of both fixed and variable income, as follows:

Fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent. Income for these amounts is recognized on a straight-line basis.

Variable lease income includes recoveries from tenants, which represents amounts that tenants are contractually obligated to reimburse the Company for the tenants’ portion of Recoverable Costs. Generally, the Company’s leases provide for the tenants to reimburse the Company for Recoverable Costs based on the tenants’ share of the actual costs incurred in proportion to the tenants’ share of leased space in the property.

The following table provides a disaggregation of lease income recognized during the six and three month periods ended April 30, 2023 and 2022, under ASC Topic 842, Leases, as either fixed or variable lease income based on the criteria specified in ASC Topic 842 (In thousands):

	Six Months Ended April 30,						Three Months Ended April 30,
	2023			2022			2023			2022
Operating lease income:
Fixed lease income (Base Rent)	$	53,195		$	50,850		$	26,545		$	26,011
Variable lease income (Recoverable Costs)		16,962			17,657			8,076			8,383
Other lease related income, net:
Above/below market rent amortization		369			396			186			222
Uncollectible amounts in lease income		(460	)		(151	)		(356	)		(38	)
ASC Topic 842 cash basis lease income reversal (Including straight-line rent adjustments)		2			(9	)		(122	)		78

Total lease income	$	70,068		$	68,743		$	34,329		$	34,656

Future minimum rents under non-cancelable operating leases for the next five years and thereafter, excluding variable lease payments, are as follows (In thousands):

Fiscal Year Ending
2023 (a)	$	48,583
2024		90,279
2025		77,911
2026		68,812
2027		60,029
Thereafter		258,670
Total	$	604,284

(a) The future minimum rental income for fiscal 2023 includes amounts due between May 2023 through October 31, 2023.

Index

(6) STOCKHOLDERS’ EQUITY

Authorized Stock

The Company's Charter authorizes 200,000,000 shares of stock. The total number of shares of authorized stock consists of 100,000,000 shares of Class A Common Stock, 30,000,000 shares of Common Stock, 50,000,000 shares of Preferred Stock, and 20,000,000 shares of Excess Stock.

Restricted Stock Plan

The Company has a Restricted Stock Plan, as amended (the "Plan") that provides a form of equity compensation for employees of the Company. In March 2023, the Stockholders of the Company approved an increase in the amount of shares available for grant under the Plan by 1,000,000 shares. The Plan, which is administered by the Company's compensation committee, authorizes grants of up to an aggregate of 6,500,000 shares of the Company’s common equity, which at the discretion of the compensation committee, may be awarded in any combination of Class A Common shares or Common shares.

During the six months ended April 30, 2023, the Company awarded 109,800 shares of Common Stock and 151,750 shares of Class A Common Stock to participants in the Plan. The grant date fair value of restricted stock grants awarded to participants in 2023 was approximately $4.9 million.

A summary of the status of the Company’s non-vested Common and Class A Common shares as of April 30, 2023, and changes during the six months ended April 30, 2023 is presented below:

	Common Shares					Class A Common Shares
Non-vested Shares	Shares			Weighted-Average Grant-Date Fair Value		Shares			Weighted-Average Grant-Date Fair Value
Non-vested at October 31, 2022		934,200		$	17.11		547,300		$	19.96
Granted		109,800		$	18.29		151,750		$	18.97
Vested		(102,200	)	$	15.65		(88,150	)	$	22.24
Forfeited		-		$	-		(5,300	)	$	19.83
Non-vested at April 30, 2023		941,800		$	17.40		605,600		$	19.38

As of April 30, 2023, there was $15.1 million of unamortized restricted stock compensation related to non-vested restricted stock grants awarded under the Plan. The remaining unamortized expense is expected to be recognized over a weighted average period of 4.4 years.

The Merger Agreement provides that each share of restricted Common Stock and Class A Common Stock will ultimately fully vest and convert into the right to receive the Merger Consideration at the effective time of the Second Merger.

For the six months ended April 30, 2023 and 2022, amounts charged to compensation expense totaled $2,010,000 and $1,607,000, respectively. For the three months ended April 30, 2023 and 2022, amounts charged to compensation expense totaled $1,084,000 and $989,000, respectively.

Share Repurchase Program

The Board of Directors of the Company has approved a share repurchase program (“Current Repurchase Program”) for the repurchase of up to 2,000,000 shares, in the aggregate, of Common stock and Class A Common stock in open market transactions.

For the six month period ended April 30, 2023, the Company repurchased 116,016 shares of Class A Common Stock at an average price per Class A Common share of $18.39 and 287 shares of Common Stock at an average price per Common Share of $18.40. The Company has repurchased 602,014 shares of Class A Common Stock and 7,127 shares of Common Stock under the Current Repurchase Program. From the inception of all repurchase programs, the Company has repurchased 2,268,093 shares of Class A Common Stock and 53,758 shares of Common Stock.

In connection with the approval of the Mergers, on May 17, 2023, the Company’s Board of Directors suspended the Company’s Current Repurchase Program, effective as of immediately prior to the execution of the Merger Agreement.

Preferred Stock

The 6.25% Series H Senior Cumulative Preferred Stock ("Series H Preferred Stock") is non-voting, has no stated maturity and is redeemable for cash at $25.00 per share at the Company's option on or after September 18, 2022. The holders of our Series H Preferred Stock have general preference rights with respect to liquidation and quarterly distributions. Except under certain conditions, holders of the Series H Preferred Stock will not be entitled to vote on most matters. In the event of a cumulative arrearage equal to six quarterly dividends, holders of Series H Preferred Stock, together with all of the Company's other series of preferred stock (voting as a single class without regard to series) will have the right to elect two additional members to serve on the Company's Board of Directors until the arrearage has been cured. Upon the occurrence of a Change of Control, as defined in the Company's Articles of Incorporation, the holders of the Series H Preferred Stock will have the right to convert all or part of the shares of Series H Preferred Stock held by such holders on the applicable conversion date into a number of the Company's shares of Class A common stock. Underwriting commissions and costs incurred in connection with the sale of the Series H Preferred Stock are reflected as a reduction of additional paid in capital.

The 5.875% Series K Senior Cumulative Preferred Stock ("Series K Preferred Stock") is non-voting, has no stated maturity and is redeemable for cash at $25.00 per share at the Company's option on or after October 1, 2024. The holders of our Series K Preferred Stock have general preference rights with respect to liquidation and quarterly distributions. Except under certain conditions, holders of the Series K Preferred Stock will not be entitled to vote on most matters. In the event of a cumulative arrearage equal to six quarterly dividends, holders of Series K Preferred Stock, together with all of the Company's other series of preferred stock (voting as a single class without regard to series) will have the right to elect two additional members to serve on the Company's Board of Directors until the arrearage has been cured. Upon the occurrence of a Change of Control, as defined in the Company's Articles of Incorporation, the holders of the Series K Preferred Stock will have the right to convert all or part of the shares of Series K Preferred Stock held by such holders on the applicable conversion date into a number of the Company's shares of Class A common stock. Underwriting commissions and costs incurred in connection with the sale of the Series K Preferred Stock are reflected as a reduction of additional paid in capital.

Stockholder Rights Agreement

On May 17, 2023, the Company entered into the Amendment to Rights Agreement (the “Amendment”) with Computershare Inc., as Rights Agent (the “Rights Agent”). The Amendment amends the Rights Agreement (the “Rights Agreement”), dated as of August 13, 2018, by and between the Company and the Rights Agent, to change the Expiration Date (defined therein) from November 11, 2028 to May 17, 2023. As a result of the Amendment, effective as of the close of business on May 17, 2023, the Rights (as defined in the Rights Agreement) have expired and cease to be outstanding.

Dividend Reinvestment Plan

The Company has a Dividend Reinvestment and Share Purchase Plan (as amended, the "DRIP"), that permits stockholders to acquire additional shares of Common Stock and Class A Common Stock by automatically reinvesting dividends. In connection with the approval of the Mergers and the other transactions contemplated by the Merger Agreement, on May 17, 2023, the Company’s Board of Directors suspended the DRIP effective as of immediately prior to the execution of the Merger Agreement. As a result of the suspension of the DRIP, any dividends paid after the date hereof will be paid to the Company’s stockholders in cash.

Index

(7) FAIR VALUE MEASUREMENTS

ASC Topic 820, “Fair Value Measurements and Disclosures” defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants.

ASC Topic 820’s valuation techniques are based on observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:

•

Level 1- Quoted prices for identical instruments in active markets

•

Level 2- Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in

markets that are not active; and model-derived valuations in which significant value drivers are observable

•

Level 3- Valuations derived from valuation techniques in which significant value drivers are unobservable

The Company calculates the fair value of the redeemable noncontrolling interests based on either quoted market prices on national exchanges for those interests based on the Company's Class A Common stock (level 1), contractual redemption prices per share as stated in governing agreements (level 2) or unobservable inputs considering the assumptions that market participants would make in pricing the obligations (level 3). The level 3 inputs used include an estimate of the fair value of the cash flow generated by the limited partnership or limited liability company in which the investor owns the joint venture units capitalized at prevailing market rates for properties with similar characteristics or located in similar areas.

The fair values of interest rate swaps are determined using widely accepted valuation techniques, including discounted cash flow analysis, on the expected cash flows of each derivative. The analysis reflects the contractual terms of the swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves (“significant other observable inputs”). The fair value calculation also includes an amount for risk of non-performance using “significant unobservable inputs” such as estimates of current credit spreads to evaluate the likelihood of default. The Company has concluded, as of October 31, 2022 and April 30, 2023, that the fair value associated with the “significant unobservable inputs” relating to the Company’s risk of non-performance was insignificant to the overall fair value of the interest rate swap agreements and, as a result, the Company has determined that the relevant inputs for purposes of calculating the fair value of the interest rate swap agreements, in their entirety, were based upon “significant other observable inputs”.

The Company measures its redeemable noncontrolling interests and interest rate swap derivatives at fair value on a recurring basis. The fair value of these financial assets and liabilities was determined using the following inputs (amount in thousands):

			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
April 30, 2023

Assets:
Interest Rate Swap Agreement	$	10,672	$	-	$	10,672	$	-

Liabilities:
Redeemable noncontrolling interests	$	59,842	$	17,197	$	42,645	$	-

October 31, 2022

Assets:
Interest Rate Swap Agreement	$	15,856	$	-	$	15,856	$	-

Liabilities:
Redeemable noncontrolling interests	$	61,550	$	11,979	$	49,571	$	-

Index

(8) COMMITMENTS AND CONTINGENCIES

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. At April 30, 2023, the Company had commitments of approximately $8.2 million for capital improvements to its properties and tenant-related obligations.

Index

(9) SUBSEQUENT EVENTS

As previously announced, on May 17, 2023, the Company entered into the Merger Agreement. Under the terms of the Merger Agreement, holders Common Stock and Class A Common Stock will ultimately receive 0.347 of a newly-issued share of Regency Common Stock for each share of Common Stock and Class A Common Stock they own. No fractional shares of Regency Common Stock will be issued in the Mergers. The value of any fractional interests of shares of Regency Common Stock to which a holder would otherwise be entitled will be paid in cash. Under the terms of the Merger Agreement, holders of the Company’s 6.25% Series H Cumulative Redeemable Preferred Stock and 5.875% Series K Cumulative Redeemable Preferred Stock will ultimately receive, for each share of preferred stock they own, one share of Regency Series A Preferred Stock and Regency Series B Preferred Stock, respectively, having materially the same terms as the Company’s corresponding series of preferred stock.

Regency and the Company have also agreed to coordinate the timing of their regular quarterly dividends prior to the closing of the Mergers, including proration of the Company’s next dividend to take into account the shorter period covered from the prior Company record date to June 14, 2023 as compared to the Company’s regular quarterly dividend timing. Accordingly, on June 1, 2023 the Board of Directors declared a dividend of $0.2083 for each share of Class A Common Stock and $0.1875 for each share of Common Stock. The dividends are payable July 6, 2023 to stockholders of record on June 14, 2023.

Also on May 17, 2023, the Company (solely with respect to certain provisions) entered into the Voting Agreement with Regency and the Urstadt Biddle Family Stockholders, collectively representing approximately 68% of the voting power among the Company’s stockholders, pursuant to which the Urstadt Biddle Family Stockholders have agreed to vote (or cause to be voted) all of their Company Common Shares in favor of any proposal to approve the Mergers and against any alternative proposal. The Urstadt Biddle Family Stockholders have further agreed, under the Voting Agreement, to not transfer any of their shares which are subject to its terms.

The boards of directors of the Company and Regency have each approved the Mergers and the other transactions contemplated by the Merger Agreement. The transaction is currently expected to close late in the third quarter or early in the fourth quarter of calendar year 2023, subject to the receipt of approval of holders of the Company’s Common Shares and satisfaction of other customary closing conditions. The Board of Directors of the Company has recommended approval of the Mergers, and the other transactions contemplated by the Merger Agreement, by the Company’s stockholders.

Index

2. 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.

Forward Looking Statements:

This Quarterly Report on Form 10-Q of Urstadt Biddle Properties Inc. (the "Company") contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements can generally be identified by such words as “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “seek”, “should”, “will” or variations of such words or other similar expressions and the negatives of such words. All statements included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, including such matters as future capital expenditures, dividends and acquisitions (including the amount and nature thereof), business strategies, expansion and growth of our operations, expectations related to the Mergers with Regency and other such matters, are forward-looking statements. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Such statements are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance or achievements, financial and otherwise, may differ materially from the results, performance or achievements expressed or implied by the forward-looking statements. We caution not to place undue reliance upon any forward-looking statements, which speak only as of the date made. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

Important factors that we think could cause our actual results to differ materially from expected results are summarized below.

New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Important factors, among others, that may affect our actual results include:

•

our ability to consummate the Mergers with Regency and the timing and closing of the Mergers, including, among other things, the ability to obtain the stockholder approval from holders of the Company Common Shares which is required to consummate the Mergers, the satisfaction or waiver of other condition to closing in the Merger Agreement, unanticipated difficulties or expenditures relating to the Mergers, the response of our business partners to the announcement of the Mergers, potential difficulties in employee retention as a result of the Mergers, the occurrence of any event, change or other circumstances that could give rise to the termination of the Mergers and the outcome of any legal proceedings related to the Mergers;

•	negative impacts from the continued spread of COVID-19 or from the emergence of a new strain of virus, including on the U.S. or global economy or on our business, financial position or results of operations;

•	economic and other market conditions, including real estate and market conditions, as well as inflationary pressures, that could impact us, our properties or the financial stability of our tenants;

•	consumer spending and confidence trends, as well as our ability to anticipate changes in consumer buying practices and the space needs of tenants;

•	our relationships with our tenants and their financial condition and liquidity;

•	any difficulties in renewing leases, filling vacancies or negotiating improved lease terms;

•

the inability of our properties to generate increased, or even sufficient, revenues to offset expenses, including amounts we are required to pay to municipalities for real estate taxes, payments for common area maintenance expenses at our properties and salaries for our management team and other employees;

•	the market value of our assets and the supply of, and demand for, retail real estate in which we invest;

•	risks of real estate acquisitions and dispositions, including our ability to identify and acquire retail real estate that meet our investment standards in our markets, as well as the potential failure of transactions to close;

•	risks of operating properties through joint ventures that we do not fully control;

•

financing risks, such as the inability to obtain debt or equity financing on favorable terms or the inability to comply with various financial covenants included in our Unsecured Revolving Credit Facility (the "Facility") or other debt instruments we currently have or may subsequently obtain, as well as the level and volatility of interest rates, which could impact the market price of our common stock and the cost of our borrowings;

•	environmental risk and regulatory requirements;

•	risks related to our status as a real estate investment trust, including the application of complex federal income tax regulations that are subject to change;

•	legislative and regulatory changes generally that may impact us or our tenants;

•

other risks identified in this quarterly report on Form 10-Q under Part II, Item 1A Risk Factors for the quarterly period ended April 30, 2023 and in our Annual Report on Form 10-K under Item 1A. Risk Factors for the fiscal year ended October 31, 2022 and in the other reports filed by the Company with the Securities and Exchange Commission (the “SEC”).

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Merger Agreement with Regency Centers Corporation

As previously announced, on May 17, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Regency Centers Corporation, a Florida corporation (“Regency”), Hercules Merger Sub, LLC, a Maryland limited liability company and a wholly owned subsidiary of Regency (“Merger Sub”), UB Maryland I, Inc., a Maryland corporation and a direct wholly owned subsidiary of the Company (“Hermes Sub I”), and UB Maryland II, Inc., a Maryland corporation and a direct wholly-owned subsidiary of Hermes Sub I (“Hermes Sub II”), pursuant to which, in accordance with the terms, and subject to the conditions, set forth therein, (a) Hermes Sub II will be merged with and into the Company (the “First Merger”), with the Company surviving the First Merger as a wholly owned subsidiary of Hermes Sub I, and (b) following the First Merger, Hermes Sub I will be merged with and into Merger Sub (the “Second Merger” and together with the First Merger, the “Mergers”), with Merger Sub being the surviving entity in the Second Merger.

Under the terms of the Merger Agreement, holders of the Company’s Common Stock, par value $0.01 per share (“Common Stock”), and Class A Common Stock, par value $0.01 per share (“Class A Common Stock” and, together with Common Stock, the “Company Common Shares”), will ultimately receive 0.347 (the “Exchange Ratio”) of a newly-issued share of common stock, par value $0.01 per share, of Regency (“Regency Common Stock”) for each Company Common Share they own. No fractional shares of Regency Common Stock will be issued in the Mergers. The value of any fractional interests of shares of Regency Common Stock to which a holder would otherwise be entitled will be paid in cash. Under the terms of the Merger Agreement, holders of the Company’s 6.25% Series H Cumulative Redeemable Preferred Stock and 5.875% Series K Cumulative Redeemable Preferred Stock will ultimately receive, for each share of preferred stock they own, one share of newly issued Regency 6.25% Series A Cumulative Redeemable Preferred Stock (“Regency Series A Preferred Stock”) and 5.875% Series B Cumulative Redeemable Preferred Stock (“Regency Series B Preferred Stock”), respectively, having materially the same terms as the Company’s corresponding series of preferred stock.

The boards of directors of the Company and Regency have each approved the Mergers and the other transactions contemplated by the Merger Agreement. The transaction is currently expected to close late in the third quarter or early in the fourth quarter of calendar year 2023, subject to the receipt of approval of holders of the Company’s Common Shares and satisfaction of other customary closing conditions. The Board of Directors has recommended approval of the Mergers, and the other transactions contemplated by the Merger Agreement, by the Company’s stockholders.

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Executive Summary

Overview

We are a fully integrated, self-administered real estate company that has elected to be a Real Estate Investment Trust ("REIT") for federal income tax purposes, engaged in the acquisition, ownership and management of commercial real estate, primarily neighborhood and community shopping centers, anchored by supermarkets, pharmacy/drug-stores and wholesale clubs, located in the metropolitan tri-state area outside of the City of New York. Other real estate assets include office properties, three self-storage facilities, single tenant retail or restaurant properties and office/retail mixed-use properties. Our major tenants include supermarket chains and other retailers who sell basic necessities.

At April 30, 2023, we owned or had equity interests in 77 properties containing a total of 5.3 million square feet of Gross Leasable Area (“GLA”), which include equity interests in four consolidated joint ventures and six unconsolidated joint ventures. Of the properties owned by wholly-owned subsidiaries or consolidated joint venture entities, approximately 93.1% of the GLA was leased (93.0% at October 31, 2022). Of the properties owned by unconsolidated joint ventures, approximately 95.8% of the GLA was leased (94.4% at October 31, 2022). In addition, we own and operate self-storage facilities at three of our retail properties. The self-storage facilities are managed for us by Extra Space Storage, a publicly traded REIT. One of the self-storage facilities is located in the back of our Yorktown Heights, NY shopping center in below grade space. As of April 30, 2023, the Yorktown Heights self-storage facility had 57,389 square feet of available GLA, which was 95.1% leased. As discussed later in this Item 2, we have also developed a second self-storage facility located in Stratford, CT with 90,000 square feet of available GLA. The Stratford facility has been operational for approximately 24 months and is 93.9% leased. In addition, we just recently completed and opened a third self-storage facility at our Pompton Lakes, NJ property that we are just beginning to lease. The Pompton Lakes facility has 60,000 square feet and is 4.9% leased.

In addition to our business of owning and managing real estate, we are also involved in the beer, wine and spirits retail business, through our ownership of six subsidiary corporations formed as taxable REIT subsidiaries. Each subsidiary corporation owns and operates a beer, wine and spirits retail store at one of our shopping centers. To assist with the management of our operations, we have engaged an experienced third-party, retail beer, wine and spirits manager, which also owns many stores of its own. Each of these stores occupies space at one of our shopping centers, fulfilling a strategic need for a beer, wine and spirits business at such shopping center. These stores are not currently providing material earnings in excess of what the Company would have earned from leasing the space to unrelated tenants at market rents. However, these businesses are continuing to mature, and net sales and earnings may eventually become material to our financial position and net income. Nevertheless, our primary business remains the ownership and management of real estate, and we expect that the beer, wine and spirts business will remain an ancillary aspect of our business model. We may open additional beer, wine and spirits stores at other shopping centers if we determine that any such store would be a strategic fit for our overall business and the investment return analysis supports such a determination.

We have paid quarterly dividends to our stockholders continuously since our founding in 1969.

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. During the early part of the pandemic, the U.S. market came under severe pressure due to numerous factors, including preventive measures taken by local, state and federal authorities to alleviate the public health crisis, such as mandatory business closures, quarantines and restrictions on travel. These measures, as implemented by the tri-state area of Connecticut, New York and New Jersey, generally permitted businesses designated as “essential” to remain open, but limited the operations of other categories of our tenants to varying degrees. These restrictions have been long since lifted, and the negative impact of the COVID-19 pandemic appears to be much improved, with most tenant businesses operating at pre-pandemic levels. For certain categories of our tenants, such as dry cleaners and some small format fitness tenants, however, the negative impact of COVID-19 was more severe and the recovery is still in progress.

The following information is intended to provide certain information regarding the impact of the COVID-19 pandemic on our portfolio and our tenants:

•	As of April 30, 2023, all of our 71 retail shopping centers, stand-alone restaurants and stand-alone bank branches are open and operating.

•

As of April 30, 2023, approximately 87% of our GLA is located in properties anchored by grocery stores, pharmacies or wholesale clubs, 4% of our GLA is located in outdoor retail shopping centers adjacent to regional malls, and 8% of our GLA is located in outdoor neighborhood convenience retail, with the remaining 1% of our GLA consisting of six suburban office buildings located in Greenwich, Connecticut and Bronxville, New York and three retail bank branches. All six suburban office buildings are open and all of the retail bank branches are open.

Similar to other retail landlords across the United States, we received a number of requests for rent relief from tenants, with most requests received during the early days of the COVID-19 pandemic when stay-at-home orders were in place and many businesses were required to close. We evaluated each request on a case-by-case basis to determine the best course of action, recognizing that in many cases some type of concession may be appropriate and beneficial to our long-term interests. Although each negotiation was specific to that tenant, most concessions were in the form of deferred rent for some portion of rents due in April 2020 through the beginning of fiscal 2021, to be paid back over the later part of the lease, preferably within a period of one year or less. Some of these concessions were in the form of rent abatements for some portion of tenant rents due.

Each reporting period, we must make estimates as to the collectability of our tenants’ accounts receivable related to base rent, straight-line rent, expense reimbursements and other revenues. Management analyzes accounts receivable by considering tenant creditworthiness, current economic trends, including the impact of the COVID-19 pandemic on tenants’ businesses, and changes in tenants’ payment patterns when evaluating the adequacy of the allowance for doubtful accounts.

As a result, in accordance with ASC Topic 842, we revised our collectability assumptions for many of our tenants that were most significantly impacted by COVID-19. This amount includes changes in our collectability assessments for certain tenants in our portfolio from probable to not probable, which requires that revenue recognition for those tenants be converted to cash basis accounting, with previously uncollected billed rents reversed in the current period. From the beginning of the COVID-19 pandemic through the end of our second quarter of fiscal 2021, we converted 89 tenants to cash basis accounting in accordance with ASC Topic 842. We have not converted any additional tenants to cash basis accounting since our second quarter of fiscal 2021. As of April 30, 2023, 37 of the 89 tenants are no longer tenants in the Company's properties. In addition, when one of the Company’s tenants is converted to cash basis accounting in accordance with ASC Topic 842, all previously recorded straight-line rent receivables need to be reversed in the period in which the tenant is converted to cash basis revenue recognition.

During the six and three month periods ended April 30, 2023, we recognized collectability adjustments totaling $457,000 and $477,000, respectively, predominantly related to a former tenant, Bed Bath and Beyond, whose lease naturally expired on January 31, 2023.

During the six month period ended April 30, 2022, we recognized collectability adjustments totaling $160,000. We did not have any significant collectability adjustments in the three months ended April 30, 2022.

As of April 30, 2023, the revenue from approximately 3.1% of our tenants (based on total commercial leases) are being recognized on a cash basis.

Each reporting period, management assesses whether there are any indicators that the value of the Company’s real estate investments may be impaired, and management has concluded that none of the Company’s investment properties are impaired at April 30, 2023. We will continue to monitor the economic, financial, and social conditions resulting from the COVID-19 pandemic and assess our real estate asset portfolio for any impairment indicators as required under GAAP. If we determine that any of our real estate assets are impaired, we will be required to take impairment charges, and such amounts could be material. See Footnote 1 to the Notes to the Company’s Consolidated Financial Statements for additional discussion regarding our policies on impairment charges.

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Strategy, Challenges and Outlook

We have a conservative capital structure, which includes permanent equity sources of Common Stock, Class A Common Stock and two series of perpetual preferred stock, which are only redeemable at our option. In addition, we have mortgage debt secured by some of our properties and a $125 million Facility. We do not have any significant secured debt maturing until August of 2024.

Key elements of our growth strategy and operating policies are to:

•

maintain our focus on community and neighborhood shopping centers, anchored principally by regional supermarkets, pharmacy chains or wholesale clubs, which we believe can provide a more stable revenue flow even during difficult economic times, given the focus on food and other types of staple goods;

•

acquire quality neighborhood and community shopping centers in the northeastern part of the United States with a concentration on properties in the metropolitan tri-state area outside of the City of New York, and unlock further value in these properties with selective enhancements to both the property and tenant mix, as well as improvements to management and leasing fundamentals, with the hope of growing our assets through acquisitions, subject to the availability of acquisitions that meet our investment parameters;

•	selectively dispose of underperforming properties and re-deploy the proceeds into potentially higher performing properties that meet our acquisition criteria;

•	invest in our properties for the long term through regular maintenance, periodic renovations and capital improvements, enhancing their attractiveness to tenants and customers (e.g. curbside pick-up), as well as increasing their value;

•	leverage opportunities to increase GLA at existing properties, through development of pad sites and reconfiguring of existing square footage, to meet the needs of existing or new tenants;

•

proactively manage our leasing strategy by aggressively marketing available GLA, renewing existing leases with strong tenants, anticipating tenant weakness when necessary by pre-leasing their spaces and replacing below-market-rent leases with increased market rents, with an eye towards securing leases that include regular or fixed contractual increases to minimum rents;

•	improve and refine the quality of our tenant mix at our shopping centers;

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

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

•	control property operating and administrative costs.

We believe our strategy of focusing on community and neighborhood shopping centers, anchored principally by regional supermarkets, pharmacy chains or wholesale clubs, has been validated during the COVID-19 pandemic. We believe the nature of our properties makes them less susceptible to economic downturns than other retail properties whose anchor tenants do not supply basic necessities. During normal conditions, we believe that consumers generally prefer to purchase food and other staple goods and services in person, and even during the COVID-19 pandemic our supermarkets, pharmacies and wholesale clubs have been posting strong in-person sales. Moreover, most of our grocery stores implemented or expanded curbside pick-up or partnered with delivery services to cater to the needs of their customers during the COVID-19 pandemic.

We recognize, however, that the pandemic may have accelerated a movement towards e-commerce that may be challenging for weaker tenants that lack an omni-channel sales or micro-fulfillment strategy. We launched a program designating dedicated parking spots for curbside pick-up and are assisting tenants in many other ways. Many tenants have adapted to the new business environment through use of our curbside pick-up program, and early industry data seems to indicate that micro-fulfillment from retailers with physical locations may be a new competitive alternative to e-commerce.

We have seen significant improvement in general business conditions, but the public health situation is difficult to predict. Moreover, challenges presented by inflation, labor shortages, supply chain disruptions and uncertainties in the U.S. economy could present continued or new challenges for our tenants. We will continue to accrue rental revenue during the deferral period, except for tenants for which revenue recognition was converted to cash basis accounting in accordance with ASC Topic 842.

As a REIT, we are susceptible to changes in interest rates, the lending environment, the availability of capital markets and the general economy. During the past year, the United States, as well as many other parts of the world, has experienced rising interest rates, a tightening lending environment, and a disrupted capital market. While recent indicators point toward an improvement in theses market factors, any future changes are difficult to predict.

Transaction Highlights of Fiscal 2023; Recent Developments

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

•	In December 2022, we redeemed 29,653 units of UB High Ridge, LLC ("High Ridge") from a non-managing member. The total cash price paid for the redemptions was $643,000. As a result of the redemptions, our ownership percentage of High Ridge increased to 30.3% from 29.2% at October 31, 2022.

•	In January 2023, we redeemed 31,451 units of UB Dumont, LLC ("Dumont") from a non-managing member. The total cash price paid for the redemption was $660,400. As a result of the redemptions, our ownership percentage of Dumont increased to 43.1% from 37.8% at October 31, 2022.

•

From November 1, 2022 to December 19, 2022, the Company repurchased 116,016 shares of Class A Common Stock at an average per share price of $18.39 and 287 shares of Common Stock at an average per share price of $18.40 under a previously announced stock repurchase program through a Rule 10b5-1(c)(1) agreement entered into between the Company and its broker Deutsche Bank Securities Inc. We believed the repurchase was a good use of our cash and a way to add value to our stockholders. In connection with the approval of the Mergers, on May 17, 2023, our Board of Directors suspended the Company’s Current Repurchase Program, effective as of immediately prior to the execution of the Merger Agreement.

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Leasing

Overview

With the negative impacts of the COVID-19 pandemic largely behind us and most tenant businesses operating at pre-pandemic levels, we have observed a marked increase in leasing activity, including interest from potential new tenants and tenants interested in renewing their leases. However, challenges presented by inflation, labor shortages, supply chain disruptions and uncertainties in the U.S. economy could present continued or new challenges for our tenants.

For the six months ended April 30, 2023, we signed leases for a total of 288,000 square feet of retail space in our consolidated portfolio. New leases for vacant spaces were signed for 100,000 square feet at an average rental increase of 7.6% on a cash basis. Renewals for 188,000 square feet of space previously occupied were signed at an average rental increase of 0.8% on a cash basis.

Tenant improvements and leasing commissions averaged $54.40 per square foot in the aggregate for new leases for the six months ended April 30, 2023. We did not pay any significant tenant improvements and leasing commissions on renewal leases for the six months ended April 30, 2023. The average term for new leases was 7 years and the average term for renewal leases was 3 years.

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

The leases signed in 2023 generally become effective over the following one to two years. There is risk that some new tenants will not ultimately take possession of their space and that tenants for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other reasons.

Impact of Inflation on Leasing

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

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Critical Accounting Estimates

Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation and uncertainty and are reasonably likely to have a material impact on the financial condition or results of operations of the Company and require management’s most difficult, complex or subjective judgments. Our most significant accounting estimates are as follows:

•	Valuation of investment properties

•	Determining the amount of our allowance for doubtful accounts

Valuation of Investment Properties

At each reporting period management must assess whether the value of any of its investment properties are impaired. The judgement of impairment is subjective and requires management to make assumptions about future cash flows of an investment property and to consider other factors. The estimation of these factors has a direct effect on valuation of investment properties and consequently net income. As of April 30, 2023, management does not believe that any of our investment properties are impaired based on information available to us at April 30, 2023.

Allowance for Doubtful Accounts

GAAP requires us to bill our tenants based on the terms in their leases and to record lease income on a straight-line basis. When a tenant does not pay a billed amount due under their lease, it becomes a tenant account receivable, or an asset of the Company. GAAP requires that receivables, like most assets, be recorded at their realizable value. Each reporting period we analyze our tenant accounts receivable, and based on the information available to management at the time, record an allowance for doubtful accounts for any unpaid tenant receivable that we believe is uncollectable. This analysis is subjective and the conclusions reached have a direct impact on net income. As of April 30, 2023, the portion of our billed but unpaid tenant receivables, excluding straight-line rent receivables that we believe are collectable, amounts to $1.7 million.

For a further discussion of our accounting estimates and critical accounting policies, please see Note 1 in our consolidated financial statements included in Item 1 of this Form 10-Q.

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Liquidity and Capital Resources

Overview

At April 30, 2023, we had cash and cash equivalents of $13.5 million, compared to $15.0 million at October 31, 2022. Our sources of liquidity and capital resources include operating cash flows from real estate operations, proceeds from bank borrowings and long-term mortgage debt, capital financings and sales of real estate investments. Substantially all of our revenues are derived from rents paid under existing leases, which means that our operating cash flow depends on the ability of our tenants to make rental payments. For the six months ended April 30, 2023 and 2022, net cash flows from operating activities amounted to $36.7 million and $34.9 million, respectively.

The Merger Agreement contains provisions which restrict or prohibit certain capital expenditures without the consent of Regency as well as certain capital transactions that may be used to fund our short and long-term liquidity requirements. Until the Mergers close, or the Merger Agreement is terminated, our liquidity requirements will primarily be funded by our cash flow from operations and certain other capital activities allowed under the Merger Agreement. In particular, we are subject to various restrictions under the Merger Agreement on assuming additional debt, issuing additional equity, repurchasing equity and entering into certain acquisition and disposition transactions, among other restrictions. We are also subject to restrictions on certain activities related to non-wholly owned subsidiaries and entities.

Our short-term liquidity requirements consist primarily of normal recurring operating expenses and capital expenditures, debt service, management and professional fees, cash distributions to certain limited partners and non-managing members of our consolidated joint ventures, and regular dividends paid to our Common and Class A Common stockholders. Cash dividends paid on Common and Class A Common stock for the six months ended April 30, 2023 and 2022 totaled $19.1 million and $18.7 million, respectively. Historically, we have met short-term liquidity requirements, which is defined as a rolling twelve month period, primarily by generating net cash from the operation of our properties and borrowings under our credit facilities. The credit facilities will be available to us during the term of the Merger Agreement for use in the ordinary course of business, subject to certain limitations, or for funding transactions expressly permitted by the Merger Agreement. The amount and timing of short term liquidity needs may vary if the Mergers close as expected.

In December 2022, the Board of Directors increased the annualized dividend by approximately $0.05 per Common and Class A Common share beginning with our January 2023 dividend. In January and April 2023, we paid dividends in the amount of $0.225 per share of Common stock and $0.25 per share of Class A Common stock. The Merger Agreement restricts our ability to pay further dividends on our capital stock. However, prior to the Mergers closing, we are permitted under the terms of the Merger Agreement to pay a dividend on our Common Stock and Class A Common Stock with a record date of June 14, 2023, payable on July 6, 2023. The amount of such dividend must be equal to (a) the product of (i) (2.5 divided by 3) multiplied by (ii) $0.225 per share of Common Stock and (b) the product of (i) (2.5 divided by 3) multiplied by (ii) $0.25 per share of Class A Common Stock. Accordingly, on June 1, 2023, the Board of Directors declared a dividend of $0.2083 for each share of Class A Common Stock and $0.1875 for each share of Common Stock. The dividends are payable July 6, 2023 to stockholders of record on June 14, 2023. The Company will continue to pay the dividends on its Series H and Series K Preferred Stock up until the closing of the Mergers at the previously announced dates and terms.

In November and December 2022, we repurchased 116,016 shares of our Class A Common stock at an average price of $18.39 per share and 287 shares of our Common stock at an average price per share of $18.40. All share repurchases were funded with available cash and proceeds from investment property sales.

Our long-term liquidity requirements consist primarily of obligations under our long-term debt, dividends paid to our preferred stockholders, capital expenditures and capital required for acquisitions. In addition, the limited partners and non-managing members of our four consolidated joint venture entities, McLean Plaza Associates, LLC, UB Orangeburg, LLC, UB High Ridge, LLC and UB Dumont I, LLC, have the right to require us to repurchase all or a portion of their limited partner or non-managing member interests at prices and on terms as set forth in the governing agreements. See Note 4 to the consolidated financial statements included in Item 1 of this Report on Form 10-Q. Historically, we have financed the foregoing requirements through operating cash flow, borrowings under our Facility, debt refinancings, new debt, equity offerings and other capital market transactions, and/or the disposition of under-performing assets, with a focus on keeping our debt level low. Pursuant to the terms of the Merger Agreement, the Company is subject to restrictions on, among other things, equity issuances, other capital markets activities, and sales of properties, subject to certain limited exceptions. Our long-term liquidity needs and access to funds will be different if the Mergers close as expected.

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Capital Expenditures

We invest in our existing properties and regularly make capital expenditures in the ordinary course of business to maintain our properties. We believe that such expenditures enhance the competitiveness of our properties. For the six months ended April 30, 2023, we paid approximately $11.8 million for property improvements, tenant improvements and leasing commission costs ($3.8 million representing property improvements, $3.4 million in property improvements related to our Pompton Lakes, NJ self-storage project (see paragraph below) and approximately $4.6 million related to new tenant space improvements, leasing costs and capital improvements as a result of new tenant spaces). The amount of these expenditures can vary significantly depending on tenant negotiations, market conditions and rental rates. We expect to incur approximately $8.2 million for anticipated capital improvements, tenant improvements/allowances and leasing costs related to new tenant leases and property improvements during the remainder of fiscal 2023 and fiscal 2024. This amount is inclusive of our remaining commitments for the Pompton Lakes, NJ development discussed directly below. These expenditures are expected to be funded from operating cash flows, bank borrowings or other financing sources. A significant portion of our future capital expenditures are discretionary in nature and we may ultimately determine not to make these expenditures or the timing of expenditures may vary. In addition, the amount and timing of future capital expenditures may vary if the Mergers close as expected. Additionally, pursuant to the Merger Agreement, the Company is subject to restrictions on, among other things, making capital expenditures, subject to certain limited exceptions.

We recently completed construction of a new self-storage facility at our Pompton Lakes, NJ property. Our total investment in this development is estimated to be approximately $9.0 million. As of April 30, 2023, we have invested approximately $8.6 million, which has been funded with available cash. Any remaining investment will be funded with available cash or borrowings on our Facility.

We remain in the process of developing 3.4 acres of recently-acquired land adjacent to a shopping center we own in Stratford, CT. We built one pad-site building that is leased to two retail chains and will be building another pad-site building once approvals are obtained to move a cell tower to an alternate site on our adjacent shopping center property. These two pad sites total approximately 5,200 square feet. In addition, we built a self-storage facility of approximately 131,000 square feet, which is managed for us by a national self-storage company. The total project cost of the completed pad site and the completed self-storage facility was approximately $18.8 million (excluding land cost). We plan on funding the development cost for the second pad site with available cash, borrowings on our Facility or other sources, as more fully described earlier in this Item 2. The Stratford self-storage building is approximately 93.9% leased as of April 30, 2023.

Financing Strategy, Unsecured Revolving Credit Facility and other Financing Transactions

Our strategy is to maintain a conservative capital structure with low leverage levels by commercial real estate standards. Mortgage notes payable and other loans of $298.7 million consist of $1.7 million in variable rate debt with an interest rate of 4.55% as of April 30, 2023 and $297.0 million in fixed-rate mortgage loans, with a weighted average interest rate of 3.8% at April 30, 2023. The mortgages are secured by 23 properties with a net book value of $487 million and have fixed rates of interest ranging from 3.1% to 5.6%. The $1.7 million in variable rate debt is unsecured. We may refinance our mortgage loans, at or prior to scheduled maturity, through replacement mortgage loans. The ability to do so, however, is dependent upon various factors, including the income level of the properties, interest rates and credit conditions within the commercial real estate market. Accordingly, there can be no assurance that such re-financings can be achieved. At April 30, 2023, we had 48 properties in our consolidated portfolio that were unencumbered by mortgages.

Included in the mortgage notes discussed above, we have nine promissory notes secured by properties we consolidate and two promissory notes secured by properties in joint ventures that we do not consolidate, the interest rate on which 11 notes is based on some variation of the London Interbank Offered Rate (“LIBOR”) or Secured Overnight Financing Rate ("SOFR"), plus a specified credit spread amount. In addition, on each of the dates these notes were executed by us, we entered into a corresponding derivative interest rate swap contract, the counterparty of which was either the lender on the aforementioned promissory notes or an affiliate of that lender. These swap contracts are in accordance with the International Swaps and Derivatives Association, Inc ("ISDA"). These swap contracts convert the variable interest rate in the notes, which are based on LIBOR or SOFR, to a fixed rate of interest for the life of each note. In July 2017, the United Kingdom regulator that regulates LIBOR announced its intention to phase out LIBOR rates by the end of 2021. However, the ICE Benchmark Administration, in its capacity as administrator of USD LIBOR, subsequently announced that it extended publication of USD LIBOR (other than one-week and two-month tenors) by 18 months to June 30, 2023. In August 2022, December 2022 and May 2023, we amended seven mortgages and their related interest rate swap agreements to include market standard provisions for determining the benchmark replacement rate for LIBOR in the form of SOFR. We are in the process of working with the lenders and counterparties to amend the remaining promissory notes and swap contracts that reference LIBOR. We have good working relationships with all of our lenders/counterparties, and expect that the replacement reference rate under the amended notes will continue to match the replacement rates in the swaps. Therefore, we believe there would be no material effect on our financial position or results of operations. See Item 3. Quantitative and Qualitative Disclosures about Market Risk” included in this Form 10-Q for additional information on our interest rate risk.

We currently maintain a ratio of total debt to total assets below 34.2% and a fixed charge coverage ratio of over 3.5 to 1 (excluding preferred stock dividends), which we believe will allow us to obtain additional secured mortgage loans or other types of borrowings, if necessary. We own 48 properties in our consolidated portfolio that are not encumbered by secured mortgage debt. At April 30, 2023, we had borrowing capacity of $85.2 million on our Facility (exclusive of the accordion feature discussed in the following paragraph). Our Facility includes financial covenants that limit, among other things, our ability to incur unsecured and secured indebtedness. See Note 2 in our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information on these and other restrictions.

We currently have a $125 million unsecured revolving credit facility with a syndicate of three banks led by The Bank of New York Mellon, as administrative agent. The syndicate also included Wells Fargo Bank N.A. and Bank of Montreal (co-syndication agents). The Facility gives us the option, under certain conditions, to increase the Facility's borrowing capacity to $175 million (subject to lender approval). The maturity date of the Facility is March 29, 2024, with a one year extension at our option. Borrowings under the Facility can be used for general corporate purposes and the issuance of letters of credit (up to $10 million). Borrowings will bear interest at our option of either SOFR plus 1.55% to 2.30%, or The Bank of New York Mellon's prime lending rate plus 0.45% to 1.20% based on consolidated total indebtedness, as defined. We pay a quarterly commitment fee on the unused commitment amount of 0.15% to 0.25% based on outstanding borrowings during the year. Our ability to borrow under the Facility is subject to our compliance with the covenants and other restrictions on an ongoing basis. The principal financial covenants limit our level of secured and unsecured indebtedness, including preferred stock, and additionally requires us to maintain certain debt coverage ratios. We were in compliance with such covenants at April 30, 2023. The Facility includes market standard provisions for determining the benchmark replacement rate for LIBOR.

The Facility contains representations and financial and other affirmative and negative covenants usual and customary for this type of agreement. So long as any amounts remain outstanding or unpaid under the Facility, we must satisfy certain financial covenants:

•	unsecured indebtedness may not exceed $400 million;

•	secured indebtedness may not exceed 40% of gross asset value, as determined under the Facility;

•	total secured and unsecured indebtedness, excluding preferred stock, may not be more than 60% of gross asset value;

•	total secured and unsecured indebtedness, plus preferred stock, may not be more than 70% of gross asset value;

•	unsecured indebtedness may not exceed 60% of the eligible real asset value of unencumbered properties in the unencumbered asset pool as defined under the Facility;

•	earnings before interest, taxes, depreciation and amortization must be at least 175% of fixed charges, which exclude preferred stock dividends;

•	the net operating income from unencumbered properties must be 200% of unsecured interest expenses;

•	not more than 25% of the gross asset value and unencumbered asset pool may be attributable to the Company's pro rata share of the value of unencumbered properties owned by non-wholly owned subsidiaries or unconsolidated joint ventures; and

•	the number of un-mortgaged properties in the unencumbered asset pool must be at least 10 and at least 10 properties must be owned by the Company or a wholly owned subsidiary.

For purposes of these covenants, eligible real estate value is calculated as the sum of the Company's properties annualized net operating income for the prior four fiscal quarters capitalized at 6.75% and the purchase price of any eligible real estate asset acquired during the prior four fiscal quarters. Gross asset value is calculated as the sum of eligible real estate value, the Company's pro rata share of eligible real estate value of eligible joint venture assets, cash and cash equivalents, marketable securities, the book value of the Company's construction projects and the Company's pro rata share of the book value of construction projects owned by unconsolidated joint ventures, and eligible mortgages and trade receivables, as defined in the agreement.

At April 30, 2023, we have $39.0 million outstanding on our Facility.

The Facility will be available to us during the term of the Merger Agreement for use in the ordinary course of business, subject to certain exceptions, or for funding transactions expressly permitted by the Merger Agreement.

Index

Unconsolidated Joint Venture Debt

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

•

a 66.67% equity interest in Putnam Plaza Shopping Center,

•

an 11.792% equity interest in Midway Shopping Center, L.P.,

•

a 50% equity interest in Chestnut Ridge Shopping Center,

•

a 50% equity interest in each of Gateway Plaza Shopping Center and Applebee’s Plaza, and

•

a 20% interest in a suburban office building with ground level retail.

These unconsolidated joint ventures are accounted for under the equity method of accounting, as we have the ability to exercise significant influence over, but not control of, the operating and financial decisions of these investments. Our off-balance sheet arrangements are more fully discussed in Note 4, “Investments in and Advances to Unconsolidated Joint Ventures” in our financial statements in Item 1 of this Quarterly Report on Form 10-Q. Although we have not guaranteed the debt of these joint ventures, we have agreed to customary environmental indemnifications and nonrecourse carve-outs (e.g. guarantees against fraud, misrepresentation and bankruptcy) on certain loans of the joint ventures. The below table details information about the outstanding non-recourse mortgage financings on our unconsolidated joint ventures (amounts in thousands):

		Principal Balance				Fixed Interest
Joint Venture Description	Location	Original Balance		At April 30, 2023		Rate Per Annum		Maturity Date
Midway Shopping Center	Scarsdale, NY	$	32,000	$	23,100		4.80%	Dec-2027
Putnam Plaza Shopping Center	Carmel, NY	$	18,900	$	17,500		4.81%	Oct-2028
Gateway Plaza	Riverhead, NY	$	14,000	$	14,000		4.07%	July 2032

Index

Net Cash Flows from:

Operating Activities

Net cash flows provided by operating activities amounted to $36.7 million for the six months ended April 30, 2023, compared to $34.9 million in the comparable period of fiscal 2022. The net increase in operating cash flows, when compared with the corresponding prior period, was primarily related to new leasing in the portfolio completed after the first half of fiscal 2022 and in fiscal 2023 and the net operating income from our Shelton Square acquisition, which closed after the first quarter of fiscal 2022.

Investing Activities

Net cash flows used by investing activities amounted to $11.4 million for the six months ended April 30, 2023 compared to net cash used by investing activities in the amount of $33.5 million in the comparable period of fiscal 2022. The decrease in net cash flows used by investing activities in the six months ended April 30, 2023 when compared to the corresponding prior period was the result of acquiring one property in the first half of fiscal 2022 in the amount of $33.2 million and not acquiring any properties in the first six months of fiscal 2023. This net decrease was offset by an increase in capital improvements of $5.5 million in the first six months of fiscal 2023 when compared with the corresponding prior period. In addition, the net decrease was offset by $4.4 million in proceeds from sales of properties in the first six months of fiscal 2022. We did not sell any properties in the first six months of fiscal 2023.

We regularly make capital investments in our properties for improvements and pursuant to our obligations for tenant improvements and leasing commissions.

Financing Activities

The $17.2 million increase in net cash flows used by financing activities for the six months ended April 30, 2023, when compared to the corresponding prior period, was predominantly the result of refinancing two mortgages in the first half of fiscal 2022 and realizing net proceeds of $14 million. We did not refinance any mortgages in the first half of fiscal 2023. In addition, we invested $2.1 million to repurchase our common stock in the first quarter of fiscal 2023. We did not repurchase any common stock in the first half of fiscal 2022.

Index

Results of Operations

The following information summarizes our results of operations for the six and three months ended April 30, 2023 and 2022 (amounts in thousands):

	Six Months Ended												Change Attributable to
	April 30,						Increase						Property			Properties Held In
Revenues	2023			2022			(Decrease)			% Change			Acquisitions/Sales			Both Periods (Note 1)
Base rents	$	53,432		$	51,196		$	2,236			4.4	%	$	844		$	1,392
Recoveries from tenants		16,962			17,657			(695	)		(3.9	)%		190			(885	)
Uncollectable amounts in lease income		(460	)		(152	)		(308	)		202.6	%		-			(308	)
ASC Topic 842 cash basis lease income reversal (including straight-line rent)		134			42			92			219.0	%		-			92
Total lease income		70,068			68,743

Lease termination		1,572			60			1,512			2,520.0	%		-			1,512
Other income		1,728			2,752			(1,024	)		(37.2	)%		(20	)		(1,004	)

Operating Expenses
Property operating		13,109			13,449			(340	)		(2.5	)%		191			(531	)
Property taxes		11,821			11,811			10			0.1	%		21			(11	)
Depreciation and amortization		15,975			14,716			1,259			8.6	%		225			1,034
General and administrative		5,502			5,188			314			6.1	%		n/a			n/a

Non-Operating Income/Expense
Interest expense		7,323			6,564			759			11.6	%		-			759
Interest, dividends, and other investment income		239			161			78			48.4	%		n/a			n/a

	Three Months Ended												Change Attributable to
	April 30,						Increase						Property			Properties Held In
Revenues	2023			2022			(Decrease)			% Change			Acquisitions/Sales			Both Periods (Note 1)
Base rents	$	26,599		$	26,206		$	393			1.5	%	$	48		$	345
Recoveries from tenants		8,076			8,383			(307	)		(3.7	)%		(3	)		(304	)
Uncollectable amounts in lease income		(356	)		(38	)		(318	)		836.8	%		-			(318	)
ASC Topic 842 cash basis lease income reversal (including straight-line rent)		10			105			(95	)		(90.5	)%		-			(95	)
Total lease income		34,329			34,656

Lease termination		15			32			(17	)		(53.1	)%		-			(17	)
Other income		727			1,312			(585	)		(44.6	)%		(10	)		(575	)

Operating Expenses
Property operating		6,143			6,447			(304	)		(4.7	)%		32			(336	)
Property taxes		5,903			5,888			15			0.3	%		(43	)		58
Depreciation and amortization		7,571			7,573			(2	)		-			(56	)		54
General and administrative		2,776			2,508			268			10.7	%		n/a			n/a

Non-Operating Income/Expense
Interest expense		3,676			3,262			414			12.7	%		-			414
Interest, dividends, and other investment income		106			106			-			-			n/a			n/a

Note 1 – Properties held in both periods includes only properties owned for the entire periods of 2023 and 2022 and for interest expense the amount also includes parent company interest expense. All other properties are included in the property acquisition/sales column. There are no properties excluded from the analysis.

Base rents increased by 4.4% to $53.4 million for the six months ended April 30, 2023, as compared with $51.2 million in the corresponding period of 2022. Base rents increased by 1.5% to $26.6 million for the three months ended April 30, 2023, as compared with $26.2 million in the corresponding period of 2022. The change in base rent and the changes in other income statement line items analyzed in the table above were attributable to:

Property Acquisitions and Properties Sold:

In fiscal 2022, we acquired one property totaling 188,000 square feet and sold three properties totaling 14,300 square feet. These properties accounted for all of the revenue and expense changes attributable to property acquisitions and sales in the six months ended April 30, 2023, when compared with the corresponding period in fiscal 2022.

Properties Held in Both Periods:

Revenues

Base Rent

For properties held in both periods, base rent for the six and three months ended April 30, 2023 increased by $1.4 million and $345,000, respectively, when compared with the corresponding prior period. This positive variance in the six and three months ended April 30, 2023, when compared with the corresponding prior period, was primarily a result of net new leasing in the portfolio after the first quarter of fiscal 2022 predominantly at nine properties.

In the first six months of fiscal 2023, we leased or renewed approximately 288,000 square feet (or approximately 6.3% of total GLA). At April 30, 2023, our consolidated properties were 93.1% leased (93.0% leased at October 31, 2022).

Tenant Recoveries

In the six and three months ended April 30, 2023, recoveries from tenants (which represent reimbursements from tenants for operating expenses and property taxes) decreased by a net $885,000 and $304,000, respectively, when compared with the corresponding prior periods, predominantly related to the recalculation of one tenant's real estate tax reimbursement calculations, which resulted in additional billings to that tenant in the first quarter of fiscal 2022, which creates negative variance in the fiscal 2023 and a reduction in operating expenses in both the three and six month periods ended April 30, 2023 when compared with the corresponding prior periods.

Lease Termination Income

In the six months ended April 30, 2023, lease termination income increased by $1.5 million when compared with the corresponding prior period, related predominantly to three lease termination settlements reached with three different tenants in the first quarter of fiscal 2023. Those tenants had vacated their premises and reached agreement with the company to settle the remaining obligations under their leases. There was no significant variance in lease termination income in the three months ended April 30, 2023, when compared with the corresponding prior period.

Uncollectable Amounts in Lease Income

In the six and three months ended April 30, 2023, uncollectable amounts in lease income increased by $308,000 and $318,000, respectively, when compared to the corresponding prior periods, primarily as a result of reserving for uncollected rents from a tenant whose lease expired on January 31, 2023 and who subsequently filed for bankruptcy.

ASC Topic 842 Cash Basis Lease Income Reversals

We adopted ASC Topic 842 "Leases" at the beginning of fiscal 2020. ASC Topic 842 requires, among other things, that if the collectability of a specific tenant’s future lease payments as contracted are not probable of collection, revenue recognition for that tenant must be converted to cash-basis accounting and be limited to the lesser of the amount billed or collected from that tenant. In addition, any straight-line rental receivables would need to be reversed in the period that the collectability assessment changed to not probable. As a result of continuing to analyze our entire tenant base, we determined that as a result of the COVID-19 pandemic, 89 tenants' future lease payments were no longer probable of collection. All such tenants were converted to cash basis after our second quarter of fiscal 2020 and prior to our third quarter of fiscal 2021. As of April 30, 2023, 37 of these 89 tenants are no longer tenants in the Company's properties. There were no significant charges related to cash-basis tenants in the six and three months ended April 30, 2023 and 2022.

Expenses

Property Operating

In the six and three months ended April 30, 2023, property operating expenses decreased by $531,000 and $336,000, respectively, when compared with the corresponding prior periods, predominantly related to a decrease in snow removal costs throughout the portfolio.

Property Taxes

In the six and three months ended April 30, 2023, property tax expenses were relatively unchanged when compared with the corresponding prior periods.

Interest

In the six and three months ended April 30, 2023, interest expense increased by $759,000 and $414,000, respectively, when compared with the corresponding prior periods. The increase was mainly the result of having higher amounts drawn on our Facility coupled with higher interest rates as interest on the Facility is calculated on a variable rate.

Depreciation and Amortization

In the six months ended April 30, 2023, depreciation and amortization increased by $1.0 million when compared with the corresponding prior period. This increase was related to additional tenant improvement amortization resulting from the termination of three tenant leases at our Orange Meadows property, which terminations were required so that we can deliver the combined spaces to new tenants. There was no significant increase in depreciation and amortization expense in the three months ended April 30, 2023 when compared to the corresponding prior period.

General and Administrative Expenses

In the six and three months ended April 30, 2023, general and administrative expenses increased by $314,000 and $268,000, respectively, when compared with the corresponding prior periods primarily as a result of decreased restricted stock amortization expense in the second quarter of fiscal 2022, when an employee left the company and forfeited their restricted stock. This creates a negative variance in the six and three month periods ended April 30, 2023.

Index

Funds from Operations

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

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

•

does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income); and

•

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

FFO as defined by us may not be comparable to similarly titled items reported by other real estate investment trusts due to possible differences in the application of the NAREIT definition used by such REITs. The table below provides a reconciliation of net income applicable to Common and Class A Common stockholders in accordance with GAAP to FFO for the six and three months ended April 30, 2023 and 2022 (amounts in thousands):

Reconciliation of Net Income Available to Common and Class A Common Stockholders To Funds From Operations:	Six Months Ended					Three Months Ended
	April 30,					April 30,
	2023		2022			2023		2022
Net Income Applicable to Common and Class A Common Stockholders	$	12,000	$	12,506		$	5,198	$	7,109

Real property depreciation		11,903		11,622			5,989		5,884
Amortization of tenant improvements and allowances		3,170		2,123			1,172		1,132
Amortization of deferred leasing costs		874		936			396		539
Depreciation and amortization on unconsolidated joint ventures		750		746			379		371
(Gain)/loss on sale of property		6		(768	)		2		(766	)

Funds from Operations Applicable to Common and Class A Common Stockholders	$	28,703	$	27,165		$	13,136	$	14,269

FFO amounted to $28.7 million in the six months ended April 30, 2023, compared to $27.2 million in the corresponding period of fiscal 2022. The net increase in FFO is attributable, among other things to:

Increases:

•	A net $1.4 million increase in base rent for new leasing in the portfolio after the first quarter of fiscal 2022 predominantly at nine properties, partially offset by vacancies in the portfolio specifically at three properties.

•	The net operating income from our Shelton Square acquisition, which closed after the first quarter of fiscal 2022.

•

An increase in lease termination income of $1.5 million when compared with the corresponding prior period, related predominantly to three lease termination settlements reached with three different tenants in the first quarter of fiscal 2023. Those tenants had vacated their premises and reached agreements with the company to settle the remaining obligations under their leases.

•	A decrease of $122,000 in net income to noncontrolling interests as a result of redeeming units after the second quarter of fiscal 2022.

Decreases:

•	An increase in interest expense of $759,000 when compared with the corresponding prior period. The increase was mainly the result of having higher amounts drawn on our Facility coupled with higher interest rates, as interest on the Facility is calculated on a variable rate.

•

A $365,000 net decrease in recoveries from tenants (which represent reimbursements from tenants for operating expenses and property taxes) when compared with the corresponding prior period, predominantly related to the recalculation of one tenant's real estate tax reimbursement calculations, which resulted in additional billings to that tenant in the first quarter of fiscal 2022, creating a negative variance in the first half of fiscal 2023.

•	A $308,000 increase in uncollectable amounts in lease income predominantly related to reserving the uncollected rents from one tenant whose lease expired on January 31, 2023 and who subsequently filed for bankruptcy.

•	A $1.0 million decrease in other income primarily related to recognizing income in the first half of fiscal 2022 for the settlement of insurance claims related to a flood casualty at several of our properties.

•	A $314,000 increase in general and administrative expenses when compared with the corresponding prior periods primarily as a result of decreased restricted stock amortization expense in the second quarter of fiscal 2022, when an employee left the company and forfeited their restricted stock.

FFO amounted to $13.1 million in the three months ended April 30, 2023, compared to $14.3 million in the corresponding period of fiscal 2022. The net decrease in FFO is attributable, among other things to:

Decreases:

•	An increase in interest expense of $414,000 when compared with the corresponding prior period. The increase was mainly the result of having higher amounts drawn on our Facility coupled with higher interest rates, as interest on the Facility is calculated on a variable rate.

•	A $318,000 increase in uncollectable amounts in lease income predominantly related to reserving the uncollected rents from one tenant whose lease expired on January 31, 2023 and who subsequently filed for bankruptcy.

•	A $585,000 decrease in other income primarily related to recognizing income in the second quarter of fiscal 2022 for the settlement of insurance claims related to a flood casualty at several of our properties.

•	A $268,000 increase in general and administrative expenses when compared with the corresponding prior periods primarily as a result of decreased restricted stock amortization expense in the second quarter of fiscal 2022, when an employee left the company and forfeited their restricted stock.

Increases:

•	A net $345,000 increase in base rent for new leasing in the portfolio after the first quarter of fiscal 2022 predominantly at nine properties offset by vacancies in the portfolio specifically at six properties.

Index

Same Property Net Operating Income

We present Same Property Net Operating Income ("Same Property NOI"), which is a non-GAAP financial measure. Same Property NOI excludes from Net Operating Income (“NOI”) properties that have not been owned for the full periods presented. The most directly comparable GAAP financial measure to NOI is operating income. To calculate NOI, operating income is adjusted to add back depreciation and amortization, general and administrative expense, interest expense, amortization of above and below-market lease intangibles and to exclude straight-line rent adjustments, interest, dividends and other investment income, equity in net income of unconsolidated joint ventures, and gain/loss on sale of operating properties.

We use Same Property NOI internally as a performance measure, and we believe Same Property NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Our management also uses Same Property NOI to evaluate property level performance and to make decisions about resource allocations. Further, we believe Same Property NOI is useful to investors as a performance measure because, when compared across periods, Same Property NOI reflects the impact on operations from trends in occupancy rates, rental rates and operating costs on an unleveraged basis, providing perspective not immediately apparent from income from continuing operations. Same Property NOI excludes certain components from net income attributable to Urstadt Biddle Properties Inc. in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. Same Property NOI presented by us may not be comparable to Same Property NOI reported by other REITs that define Same Property NOI differently.

	Six Months Ended April 30,			Three Months Ended April 30,
	2023	2022	% Change	2023	2022	% Change
Same Property Operating Results:

Number of Properties (Note 1)	70			70

Revenue (Note 2)
Base Rent (Note 3)	$51,983	$50,999	1.9%	$26,029	$25,765	1.0%
Uncollectable amounts in lease income	(459)	(152)	202.0%	(355)	(39)	810.3%
ASC Topic 842 cash-basis lease income reversal-same property	2	(10)	(120.0)%	(122)	77	(258.4)%
Recoveries from tenants	16,545	17,429	(5.1)%	7,857	8,159	(3.7)%
Other property income	273	1,130	(75.8)%	136

URSTADT BIDDLE PROPERTIES INC 10-Q