Urstadt Biddle Properties: 5%+ Dividend Yield And Growth From High-Quality Properties

Urstadt Biddle’s portfolio strategy has led to strong growth rates for many years.

Growth Prospects

Urstadt Biddle’s growth is very impressive, especially for a REIT, which are typically slow-and-steady stocks.

From 2000-2016, Urstadt Biddle’s revenue and FFO both increased by 8.4% each year, on average. FFO, meaning funds from operations, is a non-GAAP measure typically used by REITs as an alternative for earnings-per-share.

Since REITs absorb high depreciation expense, which is a non-cash charge, FFO is widely seen as a more accurate measure of a REIT’s cash flow.

Urstadt Biddle’s growth has accelerated more recently. In 2016, the company grew FFO by 15%. On a per-share basis, FFO-per-share increased 12% from 2015.

The strong results continued in 2017. First-quarter FFO rose 19%, or 8% on a per-share basis.

A key piece of Urstadt Biddle’s growth strategy is investing in new properties. A few of its major acquisitions in the past year are as follows:

UBP Acquisitions

 

Source: NAREIT June 2017 Presentation, page 8

Generally speaking, Urstadt Biddle’s acquisition strategy is to focus on smaller properties that fly under the radar of larger REITs, which are accretive to future cash flow.

The company hit a bump in the road in the most recent quarter. For the fiscal second quarter, FFO-per-share declined 3% from the same quarter last year.

However, this should be a temporary slowdown. FFO was reduced after the Westchester sale. But, the sale has helped finance new acquisitions, such as the 36,500 square foot Van Houten Farms Shopping Center, among others.

The newly acquired properties will begin generating cash flow soon, which should return Urstadt Biddle to growth in future quarters.

Dividend Analysis

There are two classes of Urstadt Biddle common stock that investors can purchase, under the ticker symbols UBP and UBA.

The two classes are almost identical, except when it comes to dividends.

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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