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

UBA stockholders will receive at least a 10% higher dividend than UBP. In return, UBA has 1/20th of the vote that UBP has.

Ownership of UBP is significantly made up of company management. As a result, UBP is not heavily traded. UBA is more liquid, since it has a higher degree of institutional ownership.

The decision for investors, is whether additional voting rights is worth a lower dividend yield.

In either case, Urstadt Biddle has maintained an impressive dividend track record. It has paid 187 uninterrupted dividend payments in a row, and has increased its dividend for more than two decades.

UBP Dividend


Source: NAREIT June 2017 Presentation, page 16

In addition to raising external capital, mostly through issuing equity, the company uses existing cash flow and property sales to fund acquisitions.

On March 1st, 2017, Urstadt Biddle sold its Westchester Pavilion property for $56.6 million. The company realized a gain of $19.4 million on the sale, not including closing costs.

Proceeds will be used to repay a portion of its $23 million revolver balance, and reinvest in existing and new properties.

Importantly, the dividend appears to be sustainable, given the company’s cash flow generation. It has a payout ratio of 83%, based on 2016 FFO.

The payout ratio has steadily trended down over the past several years:

  • 2013 payout ratio of 90%
  • 2014 payout ratio of 88%
  • 2015 payout ratio of 86%
  • 2016 payout ratio of 83%

The declining payout ratio is because company’s FFO growth has exceeded its dividend increases. This sets the stage for continued dividend growth going forward.

And, Urstadt Biddle has a strong balance sheet, which adds to its dividend sustainability. For example, the company has a debt-to-total assets ratio of 22%, which is fairly low.

Most of its capitalization (62%) comes from equity, with another 16% from preferred equity. Only 22% of capitalization is derived from mortgage debt, which has low rollover rates moving forward.

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