At 40, Urstadt Biddle Properties Inc. is not the flashiest player in a retail real estate market that reaches from Fairfield County in Connecticut through Westchester and Putnam counties and into Bergen County, N.J. The Greenwich, Conn., company largely sticks to a proven business practice: Buy grocery-anchored shopping centers in well-known markets without taking on much debt and without partners.
“That”™s been a pretty good formula,” Willing L. Biddle, president and chief operating officer at the publicly traded real estate investment trust, said recently.
“”˜Slow and steady wins the race.”™ That”™s probably our motto. We”™re the turtle. We”™re like a fast turtle with very little debt.”
”˜A good find”™
Biddle was in Katonah, where his company departed a bit from formula in April with its off-market purchase of about 31,000 square feet of retail and office space that make up Village Commons, three commercial properties on opposite sides of Katonah Avenue. Urstadt Biddle bought it from the previous owner”™s estate, paying $8.55 million free and clear.
“We don”™t usually buy these kinds of properties,” said Biddle, who has signed a toy store and a relocating local clothing store for teen girls as tenants in Katonah.
Although Village Commons is anchored at one end by a Mrs. Green”™s Natural Market, UBP usually focuses on larger shopping centers anchored by a large grocery chain such as Stop & Shop and ShopRite. “Our typical property has a grocery store and then a series of other shops that all feed off the constant traffic” from the anchor grocery, Biddle said.
The Katonah deal, which was brought to Urstadt Biddle by the late property owner”™s son, a real estate broker, was too good to pass up. “Any time you can buy real estate within walking distance of a train in a town like this in Westchester, that”™s a good find,” said Biddle.
Regional transactions
Starting 2010 with 44 core properties that total nearly 3.5 million square feet, Urstadt Biddle has continued buying this year at a time when more highly leveraged developers have been forced to the sidelines by the credit crisis. The Greenwich-based REIT has made three recent shopping-center deals in New York and Connecticut in addition to the Katonah purchase and is working on another purchase in Bergen County.
UBP in June paid $6 million to acquire a 10 percent equity interest in the Midway Shopping Center on Central Avenue in the town of Greenburgh. It also made a loan of about $11.6 million to the limited partnership it joined there. The 248,000-square-foot shopping center is owned by members of the Steinberg family that built it in the 1950s. “We were fortunate to be admitted in as a family member,” Biddle said.
In the Central Avenue deal, Urstadt Biddle also took over management and leasing of the property, which will be boosted by the opening later this year of a 69,000-square-foot ShopRite supermarket. It will also manage and lease space at an adjacent 60,000-square-foot shopping center owned by some Midway partners.
In May, UBP completed its $22.5 million purchase of the 231,000-square-foot New Milford Plaza in New Milford, Conn., in another off-market transaction.
Anchored by Stop & Shop and Walmart, the center gave UBP control of the only two grocery-anchored shopping centers in New Milford.
In April, Urstadt Biddle coupled its Katonah purchase with the acquisition of Putnam Plaza, a 193,000-square-foot, 34-tenant shopping center in Carmel in Putnam County anchored by a Hannaford Bros. supermarket. Departing again from its preferred formula, the company partnered in the deal with a long-time business associate and acquired a two-thirds interest in the center. At closing the partners took out a $21 million mortgage.
Working with tenants
In White Plains, Biddle said a Queens-based operator of metropolitan-area day spas plans to launch a new, “very upscale Oriental day spa” business in UBP”™s Westchester Pavilion. The Korean owner has signed a 15-year lease for the 35,000-square-foot space vacated in early 2008 by Borders Books and Music.
Biddle said the owner is seeking equity investors for what will be an $8 million construction project and already has financial backing from a large Korean construction company.
Except for grocers and deep-dollar discount stores, “The last two years have been very, very tough retail-wise,” said Biddle. He said about 10 percent of UBP”™s tenants have sought rent relief and have had their leases restructured. Tenants in Massachusetts and central Connecticut have struggled more than those in the stronger, more populous metro market here, he said.
Because of its low leveraging and high capital level, UBP has been able to work with tenants, while other debt-repaying landlords cannot afford to offer temporarily reduced rents.
“We still have plenty of money,” Biddle said. “We”™re still looking to buy. Ideally, we like to grow the company 10 percent a year. We”™ve done that so far this year.
“We buy in difficult times. We don”™t buy when the markets are overheated.”
