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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 3, 2017

URBAN EDGE PROPERTIES
(Exact name of Registrant as specified in its charter)
Maryland
 
No. 001-36523
 
47-6311266
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification Number)
 
888 Seventh Avenue
 
 
New York, NY 10019
 
 
(Address of Principal Executive offices) (Zip Code)
 
Registrant’s telephone number including area code: (212) 956-2556
 
Former name or former address, if changed since last report: N/A

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2.):
o  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o  
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o  
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02 Results of Operations and Financial Condition

On May 3, 2017, Urban Edge Properties (the "Company") announced its financial results for the three months ended March 31, 2017. A copy of the Company's Earnings Press Release is furnished as Exhibit 99.1 to this report on Form 8-K. A copy of the Company's Supplemental Disclosure Package is furnished as Exhibit 99.2 to this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Item 7.01 Regulation FD Disclosure

On May 3, 2017, the Company announced its financial results for the three months ended March 31, 2017 and made available on its website the press release and Supplemental Disclosure Package described in Item 2.02 above. The information contained in this report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:
99.1 - Earnings Press Release of Urban Edge Properties dated May 3, 2017.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of March 31, 2017.






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
URBAN EDGE PROPERTIES
 
 
(Registrant)
 
 
 
 
 
 
Date: May 3, 2017
By:
/s/ Mark Langer
 
 
Mark Langer, Executive Vice President and Chief Financial Officer







INDEX TO EXHIBITS

Exhibit Number
 
Document
 
 
 
99.1
 
Earnings Press Release of Urban Edge Properties dated May 3, 2017
99.2
 
Supplemental Disclosure Package of Urban Edge Properties as of March 31, 2017



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
2000406566_image2a05.jpg
Exhibit 99.1
 
 
 
 
Urban Edge Properties
For additional information:
888 Seventh Avenue
Mark Langer, EVP and
New York, NY 10019
Chief Financial Officer
212-956-2556
 
 
 
 
 
 
 
 
 
FOR IMMEDIATE RELEASE:
 
 
 
 
Urban Edge Properties Reports First Quarter 2017 Results



                                    
NEW YORK, NY, May 3, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the three months ended March 31, 2017.

Financial Results(1) 
Generated net income of $54.7 million, or $0.50 per diluted share.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $73.5 million, or $0.68 per share.
Generated FFO as Adjusted of $35.6 million, or $0.33 per share, an increase of 6.5% per share compared to the first quarter of 2016. FFO as Adjusted excludes $39.2 million of non-cash income from acquired leasehold interests at the Shops at Bruckner and a $1.3 million loss on extinguishment of debt at Tonnelle Commons.

Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 5.6% compared to the first quarter of 2016 primarily due to rent commencements at Garfield Commons, Kearny Commons and Bergen Town Center along with higher recoveries.
Increased same-property cash NOI including properties in redevelopment by 6.6% compared to the first quarter of 2016. Rent commencements at East Hanover warehouses, Walnut Creek and Montehiedra contributed to this growth.
Increased consolidated retail portfolio occupancy by 120 basis points to 97.2% compared to March 31, 2016 and remained unchanged compared to December 31, 2016.
Increased same-property retail portfolio occupancy by 110 basis points to 98.3% compared to March 31, 2016 and by 20 basis points compared to December 31, 2016.
Executed 17 new leases and renewals and exercised options totaling 94,000 square feet (sf) during the quarter. All were same-space leases and generated average rent spreads of 6.2% on a GAAP basis and 1.4% on a cash basis.

Acquisition Activity
Acquired or entered into contracts to acquire nine assets, seven in the New York metro area, totaling $452 million. Funding for these acquisitions comprises $176 million in UE operating partnership units (6.5 million units), $69 million of assumed debt, $117 million in new, non-recourse, mortgage loans and $90 million in cash of which approximately $48 million in cash remains to be funded.
Property
 
Location
 
GLA SF
 
Occupancy
 
 
 
 
 
 
 
Closed transactions
 
 
 
 
 
 
Yonkers Gateway Center
(partial fee and leasehold land interests)
 
Yonkers, NY
 
Included in transaction under contract below
Shops at Bruckner
 
Bronx, NY
 
114,000
 
100%
Hudson Mall
 
Jersey City, NJ
 
383,000
 
97%

1



Property
 
Location
 
GLA SF
 
Occupancy
 
 
 
 
 
 
 
Transactions under contract
 
 
 
 
 
 
Yonkers Gateway Center
(fee and leasehold interests not previously acquired)
 
Yonkers, NY
 
436,770
 
88%
The Plaza at Woodbridge
 
Woodbridge, NJ
 
413,013
 
81%
The Plaza at Cherry Hill
 
Cherry Hill, NJ
 
412,969
 
74%
Manchester Plaza
 
Manchester, MO
 
130,934
 
89%
Millburn Gateway Center
 
Millburn, NJ
 
102,725
 
97%
21 E Broad St/One Lincoln Plaza
 
Westfield, NJ
 
21,908
 
100%
 
 
Total
2,015,319
 
87%

Development, Redevelopment and Anchor Repositioning Activity
Advanced fourteen active projects. Estimated gross costs for active and completed projects total $193 million of which $103 million remains to be funded. These projects are expected to generate an 11% return. Fourteen additional pipeline projects are expected to earn 9% on the projected investment of $70-84 million.

Financing Activity
Refinanced the mortgage on Tonnelle Commons in North Bergen, NJ, increasing the loan balance from $74 million to $100 million and reducing the interest rate from 4.59% to 4.18% with a 10-year fixed rate mortgage. Upon repaying the original loan, the Company recognized a $1.3 million loss on extinguishment of debt.
Amended the revolving credit facility, increasing borrowing capacity by $100 million to $600 million and extending the maturity date from February 2019 to March 2021 with two six-month extension options.

Balance Sheet Highlights at March 31, 2017(2) 
Total market capitalization of approximately $4.1 billion comprising 108.1 million, fully diluted common shares valued at $2.8 billion and $1.3 billion of debt.
Net debt to total market capitalization of 28%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.9x.
$111 million of cash and cash equivalents and no amounts drawn on the $600 million revolving credit facility.




























(1) Refer to "Non-GAAP Financial Measures" and "Operating Metrics" for definitions and additional detail.
(2) The tables accompanying this press release provide the calculation of fully diluted common shares and a reconciliation of net income to EBITDA and Adjusted EBITDA.

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Non-GAAP Financial Measures
The Company uses certain non-GAAP performance measures, in addition to the primary GAAP presentations, as we believe these measures improve the understanding of the Company's operational results. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the investing public, and thus such reported measures are subject to change. The Company's non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results. The following non-GAAP measures are commonly used by the Company and investing public to understand and evaluate our operating results and performance:
FFO: The Company believes FFO is a useful, supplemental measure of its operating performance that is a recognized metric used extensively by the real estate industry and, in particular REITs. FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and the Company, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciated real estate assets, real estate impairment losses, rental property depreciation and amortization expense. The Company believes that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from FFO primarily because it excludes the assumption that the value of real estate assets diminish predictably. FFO does not represent cash flows from operating activities in accordance with GAAP, should not be considered an alternative to net income as an indication of our performance, and is not indicative of cash flow as a measure of liquidity or our ability to make cash distributions.
FFO as Adjusted: The Company provides disclosure of FFO as Adjusted because it believes it is a useful supplemental measure of its core operating performance that facilitates comparability of historical financial periods. FFO as Adjusted is calculated by making certain adjustments to FFO to account for items the Company does not believe are representative of ongoing core operating results including transaction costs associated with acquisition and disposition activity and non-comparable revenues and expenses. The Company's method of calculating FFO as Adjusted may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Cash NOI: The Company uses cash NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. The Company believes cash NOI is useful to investors as a performance measure because, when compared across periods, cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from operating income or net income. The Company calculates cash NOI using net income as defined by GAAP reflecting only those income and expense items that are incurred at the property level, adjusted for the following items: lease termination fees, bankruptcy settlement income, non-cash rental income and ground rent expense and income or expenses that we do not believe are representative of ongoing operating results, if any.
Same-property Cash NOI: The Company provides disclosure of cash NOI on a same-property basis, which includes the results of properties that were owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three months ended March 31, 2017 and 2016. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, under contract to be sold, or that are in the foreclosure process during the periods being compared. As such, same-property cash NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition or disposition of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company's properties. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when it is designated as a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan that is expected to have a significant impact on its operating income. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally one year after at least 80% of the expected NOI from the project is realized on a cash basis for a full quarter. Acquisitions are moved into the same-property pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment. The Company has also provided disclosure of cash NOI on a same-property basis adjusted to include redevelopment properties.
EBITDA and Adjusted EBITDA: EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized by us in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation

3



of REITs, as a measure of the Company's operational performance as they exclude various items that do not relate to or are not indicative of our operating performance and because they approximate key performance measures in our debt covenants. Accordingly, the Company believes that the use of EBITDA and Adjusted EBITDA, as opposed to income before income taxes in various ratios, provides meaningful performance measures related to the Company's ability to meet various coverage tests for the stated periods. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDA, which it believes is useful to investors as a supplemental measure in evaluating the Company's balance sheet leverage.
The Company believes net income is the most directly comparable GAAP financial measure to the non-GAAP measures outlined above. Reconciliations of these measures to net income have been provided in the tables accompanying this press release.

Operating Metrics

The Company presents certain operating metrics related to our properties including occupancy, leasing activity and rental rates. Operating metrics are used by the Company and useful to investors in facilitating an understanding of the operational performance for our properties.

Occupancy metrics represent the percentage of occupied gross leasable area based on executed leases (including properties in development and redevelopment) and includes leases signed, but for which rent has not yet commenced. Same-property retail portfolio occupancy includes shopping centers and malls that have been owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three months ended March 31, 2017 and 2016. Occupancy metrics presented for the Company's same-property retail portfolio excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired within the past 12 months, properties sold, under contract to be sold, or that are in the foreclosure process during the periods being compared.

Executed new leases, renewals and exercised options are presented on a same-space basis. Same-space leases represent those leases signed on spaces for which there was a previous lease with comparable gross leasable area.







4



ADDITIONAL INFORMATION
For a copy of the Company’s supplemental disclosure package, please access the "Investors" section of UE’s website at www.uedge.com. Our website also includes other financial information, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports.

ABOUT URBAN EDGE
Urban Edge Properties is a NYSE listed real estate investment trust focused on managing, acquiring, developing, and redeveloping retail real estate in urban communities, primarily in the New York metropolitan region. Urban Edge owns 86 properties totaling 15.2 million square feet of gross leasable area.

FORWARD-LOOKING STATEMENTS
Certain statements contained in this Press Release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Press Release. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict; these factors include, among others, the Company's ability to complete its active development, redevelopment and anchor repositioning projects, the Company's ability to pursue, finance and complete acquisition opportunities, the Company's ability to engage in the projects in its planned expansion and redevelopment pipeline and the Company's ability to achieve the estimated unleveraged returns for such projects and acquisitions. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2016 and the other documents filed by the Company with the Securities and Exchange Commission.

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Press Release. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Press Release.


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URBAN EDGE PROPERTIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts) 
 
March 31,
 
December 31,
 
2017
 
2016
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
436,088

 
$
384,217

Buildings and improvements
1,719,079

 
1,650,054

Construction in progress
108,401

 
99,236

Furniture, fixtures and equipment
5,077

 
4,993

Total
2,268,645

 
2,138,500

Accumulated depreciation and amortization
(553,649
)
 
(541,077
)
Real estate, net
1,714,996

 
1,597,423

Cash and cash equivalents
110,974

 
131,654

Restricted cash
11,812

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $2,557 and $2,332, respectively
11,841

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $207 and $261, respectively
86,176

 
87,695

Identified intangible assets, net of accumulated amortization of $23,693 and $22,361, respectively
73,879

 
30,875

Deferred leasing costs, net of accumulated amortization of $14,555 and $13,909, respectively
19,391

 
19,241

Deferred financing costs, net of accumulated amortization of $972 and $726, respectively
4,011

 
1,936

Prepaid expenses and other assets
17,271

 
17,442

Total assets
$
2,050,351

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,256,955

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $58,657 and $72,528, respectively
145,748

 
146,991

Accounts payable and accrued expenses
54,286

 
48,842

Other liabilities
16,154

 
14,675

Total liabilities
1,473,143

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,826,975 and 99,754,900 shares issued and outstanding, respectively
998

 
997

Additional paid-in capital
489,190

 
488,375

Accumulated deficit
(419
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
87,068

 
35,451

Noncontrolling interest in consolidated subsidiaries
371

 
360

Total equity
577,208

 
496,117

Total liabilities and equity
$
2,050,351

 
$
1,904,138


6



URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
 
 
Three Months Ended March 31,
 
2017
 
2016
REVENUE
 
 
 
Property rentals
$
62,498

 
$
58,929

Tenant expense reimbursements
23,771

 
22,507

Income from acquired leasehold interest
39,215

 

Management and development fees
479

 
455

Other income
101

 
1,177

Total revenue
126,064

 
83,068

EXPENSES
 
 
 
Depreciation and amortization
15,828

 
13,915

Real estate taxes
13,392

 
13,249

Property operating
13,368

 
12,859

General and administrative
8,081

 
6,720

Real estate impairment loss
3,164

 

Ground rent
2,670

 
2,538

Transaction costs
51

 
50

Provision for doubtful accounts
193

 
351

Total expenses
56,747

 
49,682

Operating income
69,317

 
33,386

Interest income
127

 
167

Interest and debt expense
(13,115
)
 
(13,429
)
Loss on extinguishment of debt
(1,274
)
 

Income before income taxes
55,055

 
20,124

Income tax expense
(320
)
 
(336
)
Net income
54,735

 
19,788

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
Operating partnership
(4,138
)
 
(1,154
)
Consolidated subsidiaries
(11
)
 
4

Net income attributable to common shareholders
$
50,586

 
$
18,638

 
 
 
 
Earnings per common share - Basic:
$
0.51

 
$
0.19

Earnings per common share - Diluted:
$
0.50

 
$
0.19

Weighted average shares outstanding - Basic
99,639

 
99,265

Weighted average shares outstanding - Diluted
100,093

 
99,363



7



Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and FFO as Adjusted for the three months ended March 31, 2017. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
March 31, 2017
 
(in thousands)
 
(per share)
Net income
$
54,735

 
$
0.51

Less (net income) attributable to noncontrolling interests in:
 
 
 
Operating partnership
(4,138
)
 
(0.04
)
Consolidated subsidiaries
(11
)
 

Net income attributable to common shareholders
50,586

 
0.47

Adjustments:
 
 
 
Rental property depreciation and amortization
15,579

 
0.14

Real estate impairment loss
3,164

 
0.03

Limited partnership interests in operating partnership
4,138

 
0.04

FFO Applicable to diluted common shareholders(1)
73,467

 
0.68

 
 
 
 
Income from acquired leasehold interest(2)
(39,215
)
 
(0.36
)
Loss on extinguishment of debt
1,274

 
0.01

Transaction costs
51

 

Tenant bankruptcy settlement income

(27
)
 

FFO as Adjusted applicable to diluted common shareholders(1)
$
35,550

 
$
0.33

 
 
 
 
Weighted average diluted common shares - FFO(1)
108,255

 
 
(1) Refer to the table below for reconciliation of weighted average diluted shares used in EPS calculations and weighted average diluted common shares used in FFO per share calculations.
(2) Income from acquired leasehold interest at the Shops at Bruckner includes the write-off of unamortized intangible liability related to the below-market ground lease acquired and existing straight-line receivable balance.

FFO and FFO as Adjusted are non-GAAP financial measures. The Company believes FFO, as defined by NAREIT, is a widely used and appropriate supplemental measure of operating performance for REITs, and that it provides a relevant basis for comparison among REITs. The Company believes FFO as Adjusted provides additional comparability between historical financial periods. Refer to “Non-GAAP Financial Measures” above.

The following table reflects the reconciliation of weighted average diluted shares used in EPS calculations and weighted average diluted common shares used in FFO per share calculations.
(in thousands)
Three Months Ended
March 31, 2017
Weighted average diluted shares used to calculate EPS
100,093

Assumed conversion of OP and LTIP Units to common stock(1)
8,162

Weighted average diluted common shares used to calculate
FFO per share
108,255

(1) OP and LTIP Units are excluded from the calculation of earnings per diluted share for the three months ended March 31, 2017 because their inclusion is anti-dilutive. FFO includes earnings allocated to unitholders as the inclusion of these units is dilutive to FFO per share.



8



Reconciliation of Net Income to Cash NOI and Same-Property Cash NOI

The following table reflects the reconciliation of net income to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the three months ended March 31, 2017 and 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended March 31, 2017
(Amounts in thousands)
2017
 
2016
Net income
$
54,735

 
$
19,788

Add: income tax expense
320

 
336

Income before income taxes
55,055

 
20,124

  Interest income
(127
)
 
(167
)
  Interest and debt expense
13,115

 
13,429

  Loss on extinguishment of debt
1,274

 

Operating income
69,317

 
33,386

Depreciation and amortization
15,828

 
13,915

Real estate impairment loss
3,164

 

General and administrative expense
8,081

 
6,720

Transaction costs
51

 
50

NOI
96,441

 
54,071

    Less: non-cash revenue and expenses
(40,801
)
 
(1,811
)
Cash NOI(1)
55,640

 
52,260

Adjustments:
 
 
 
Cash NOI related to properties being redeveloped(1)
(5,452
)
 
(4,676
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(1,580
)
 
(493
)
Management and development fee income from non-owned properties
(479
)
 
(455
)
Tenant bankruptcy settlement income
(27
)
 
(1,150
)
Other(2)
(8
)
 
51

    Subtotal adjustments
(7,546
)
 
(6,723
)
Same-property cash NOI
$
48,094

 
$
45,537

Adjustments:

 

Cash NOI related to properties being redeveloped
5,452

 
4,676

Same-property cash NOI including properties in redevelopment
$
53,546

 
$
50,213

(1) Cash NOI is calculated as total property revenues less property operating expenses, excluding the net effects of non-cash rental income and non-cash ground rent expense.
(2) Other adjustments include revenue and expense items attributable to non-same properties and corporate activities.

Cash NOI and same-property cash NOI are non-GAAP financial measures. The Company believes that same-property cash NOI is a widely used and appropriate supplemental measure of operating performance for comparison among REITs. Refer to “Non-GAAP Financial Measures” above.



9



Reconciliation of Net Income to EBITDA and Adjusted EBITDA

The following table reflects the reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2017 and 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended March 31, 2017
(Amounts in thousands)
2017
 
2016
Net income
$
54,735

 
$
19,788

Depreciation and amortization
15,828

 
13,915

Interest and debt expense
13,115

 
13,429

Income tax expense
320

 
336

EBITDA
83,998

 
47,468

Adjustments for Adjusted EBITDA:
 
 
 
Income from acquired leasehold interest
(39,215
)
 

Real estate impairment loss
3,164

 

Loss on extinguishment of debt
1,274

 

Transaction costs
51

 
50

Tenant bankruptcy settlement income
(27
)
 
(1,150
)
Adjusted EBITDA
$
49,245

 
$
46,368

 
 
 
 

EBITDA and Adjusted EBITDA are non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” above.

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
March 31, 2017
Common shares outstanding
99,826,975

OP and LTIP units (dilutive)
8,284,166

Fully diluted common shares
108,111,141




10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
March 31, 2017
 
 



2000406566_image3a06.jpg




 
 
 
 
Urban Edge Properties
888 7th Avenue, New York, NY 10019
NY Office: 212-956-2556
www.uedge.com
 







URBAN EDGE PROPERTIES
SUPPLEMENTAL DISCLOSURE
March 31, 2017
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
First Quarter 2017 Earnings Press Release
1
 
 
Overview
 
Summary Financial Results and Ratios
10
 
 
Consolidated Financial Statements
 
Consolidated Balance Sheets
11
Consolidated Statements of Income
12
 
 
Non-GAAP Financial Measures and Supplemental Data
 
Supplemental Schedule of Net Operating Income
13
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
14
Funds from Operations
15
Market Capitalization, Debt Ratios and Liquidity
16
Additional Disclosures
17
 
 
Leasing Data
 
Tenant Concentration - Top Twenty-Five Tenants
18
Leasing Activity
19
Retail Portfolio Lease Expiration Schedules
20
 
 
Property Data
 
Property Status Report
22
Property Acquisitions and Dispositions
25
Development, Redevelopment and Anchor Repositioning Projects
26
 
 
Debt Schedules
 
Debt Summary
28
Mortgage Debt Summary and Debt Maturity Schedule
29
 
 








 
2000406566_image2a05.jpg
 
 
 
 
 
Urban Edge Properties
For additional information:
888 Seventh Avenue
Mark Langer, EVP and
New York, NY 10019
Chief Financial Officer
212-956-2556
 
 
 
 
 
 
 
 
 
FOR IMMEDIATE RELEASE:
 
 
 
 
Urban Edge Properties Reports First Quarter 2017 Results


        
NEW YORK, NY, May 3, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the three months ended March 31, 2017.

Financial Results(1) 
Generated net income of $54.7 million, or $0.50 per diluted share.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $73.5 million, or $0.68 per share.
Generated FFO as Adjusted of $35.6 million, or $0.33 per share, an increase of 6.5% per share compared to the first quarter of 2016. FFO as Adjusted excludes $39.2 million of non-cash income from acquired leasehold interests at the Shops at Bruckner and a $1.3 million loss on extinguishment of debt at Tonnelle Commons.

Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 5.6% compared to the first quarter of 2016 primarily due to rent commencements at Garfield Commons, Kearny Commons and Bergen Town Center along with higher recoveries.
Increased same-property cash NOI including properties in redevelopment by 6.6% compared to the first quarter of 2016. Rent commencements at East Hanover warehouses, Walnut Creek and Montehiedra contributed to this growth.
Increased consolidated retail portfolio occupancy by 120 basis points to 97.2% compared to March 31, 2016 and remained unchanged compared to December 31, 2016.
Increased same-property retail portfolio occupancy by 110 basis points to 98.3% compared to March 31, 2016 and by 20 basis points compared to December 31, 2016.
Executed 17 new leases and renewals and exercised options totaling 94,000 square feet (sf) during the quarter. All were same-space leases and generated average rent spreads of 6.2% on a GAAP basis and 1.4% on a cash basis.

Acquisition Activity
Acquired or entered into contracts to acquire nine assets, seven in the New York metro area, totaling $452 million. Funding for these acquisitions comprises $176 million in UE operating partnership units (6.5 million units), $69 million of assumed debt, $117 million in new, non-recourse, mortgage loans and $90 million in cash of which approximately $48 million in cash remains to be funded.
Property
 
Location
 
GLA SF
 
Occupancy
 
 
 
 
 
 
 
Closed transactions
 
 
 
 
 
 
Yonkers Gateway Center
(partial fee and leasehold land interests)
 
Yonkers, NY
 
Included in transaction under contract below
Shops at Bruckner
 
Bronx, NY
 
114,000
 
100%
Hudson Mall
 
Jersey City, NJ
 
383,000
 
97%

1


Property
 
Location
 
GLA SF
 
Occupancy
 
 
 
 
 
 
 
Transactions under contract
 
 
 
 
 
 
Yonkers Gateway Center
(fee and leasehold interests not previously acquired)
 
Yonkers, NY
 
436,770
 
88%
The Plaza at Woodbridge
 
Woodbridge, NJ
 
413,013
 
81%
The Plaza at Cherry Hill
 
Cherry Hill, NJ
 
412,969
 
74%
Manchester Plaza
 
Manchester, MO
 
130,934
 
89%
Millburn Gateway Center
 
Millburn, NJ
 
102,725
 
97%
21 E Broad St/One Lincoln Plaza
 
Westfield, NJ
 
21,908
 
100%
 
 
Total
2,015,319
 
87%

Development, Redevelopment and Anchor Repositioning Activity
Advanced fourteen active projects. Estimated gross costs for active and completed projects total $193 million of which $103 million remains to be funded. These projects are expected to generate an 11% return. Fourteen additional pipeline projects are expected to earn 9% on the projected investment of $70-84 million.

Financing Activity
Refinanced the mortgage on Tonnelle Commons in North Bergen, NJ, increasing the loan balance from $74 million to $100 million and reducing the interest rate from 4.59% to 4.18% with a 10-year fixed rate mortgage. Upon repaying the original loan, the Company recognized a $1.3 million loss on extinguishment of debt.
Amended the revolving credit facility, increasing borrowing capacity by $100 million to $600 million and extending the maturity date from February 2019 to March 2021 with two six-month extension options.

Balance Sheet Highlights at March 31, 2017(2) 
Total market capitalization of approximately $4.1 billion comprising 108.1 million, fully diluted common shares valued at $2.8 billion and $1.3 billion of debt.
Net debt to total market capitalization of 28%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.9x.
$111 million of cash and cash equivalents and no amounts drawn on the $600 million revolving credit facility.




























(1) Refer to "Non-GAAP Financial Measures" and "Operating Metrics" for definitions and additional detail.
(2) The tables accompanying this press release provide the calculation of fully diluted common shares and a reconciliation of net income to EBITDA and Adjusted EBITDA.



Non-GAAP Financial Measures
The Company uses certain non-GAAP performance measures, in addition to the primary GAAP presentations, as we believe these measures improve the understanding of the Company's operational results. We continually evaluate the usefulness, relevance, limitations, and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the investing public, and thus such reported measures are subject to change. The Company's non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results. The following non-GAAP measures are commonly used by the Company and investing public to understand and evaluate our operating results and performance:
FFO: The Company believes FFO is a useful, supplemental measure of its operating performance that is a recognized metric used extensively by the real estate industry and, in particular REITs. FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and the Company, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciated real estate assets, real estate impairment losses, rental property depreciation and amortization expense. The Company believes that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from FFO primarily because it excludes the assumption that the value of real estate assets diminish predictably. FFO does not represent cash flows from operating activities in accordance with GAAP, should not be considered an alternative to net income as an indication of our performance, and is not indicative of cash flow as a measure of liquidity or our ability to make cash distributions.
FFO as Adjusted: The Company provides disclosure of FFO as Adjusted because it believes it is a useful supplemental measure of its core operating performance that facilitates comparability of historical financial periods. FFO as Adjusted is calculated by making certain adjustments to FFO to account for items the Company does not believe are representative of ongoing core operating results including transaction costs associated with acquisition and disposition activity and non-comparable revenues and expenses. The Company's method of calculating FFO as Adjusted may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Cash NOI: The Company uses cash NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. The Company believes cash NOI is useful to investors as a performance measure because, when compared across periods, cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from operating income or net income. The Company calculates cash NOI using net income as defined by GAAP reflecting only those income and expense items that are incurred at the property level, adjusted for the following items: lease termination fees, bankruptcy settlement income, non-cash rental income and ground rent expense and income or expenses that we do not believe are representative of ongoing operating results, if any.
Same-property Cash NOI: The Company provides disclosure of cash NOI on a same-property basis, which includes the results of properties that were owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three months ended March 31, 2017 and 2016. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, under contract to be sold, or that are in the foreclosure process during the periods being compared. As such, same-property cash NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition or disposition of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company's properties. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when it is designated as a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan that is expected to have a significant impact on its operating income. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally one year after at least 80% of the expected NOI from the project is realized on a cash basis for a full quarter. Acquisitions are moved into the same-property pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment. The Company has also provided disclosure of cash NOI on a same-property basis adjusted to include redevelopment properties.
EBITDA and Adjusted EBITDA: EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized by us in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation

3


of REITs, as a measure of the Company's operational performance as they exclude various items that do not relate to or are not indicative of our operating performance and because they approximate key performance measures in our debt covenants. Accordingly, the Company believes that the use of EBITDA and Adjusted EBITDA, as opposed to income before income taxes in various ratios, provides meaningful performance measures related to the Company's ability to meet various coverage tests for the stated periods. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDA, which it believes is useful to investors as a supplemental measure in evaluating the Company's balance sheet leverage.
The Company believes net income is the most directly comparable GAAP financial measure to the non-GAAP measures outlined above. Reconciliations of these measures to net income have been provided in the tables accompanying this press release.

Operating Metrics

The Company presents certain operating metrics related to our properties including occupancy, leasing activity and rental rates. Operating metrics are used by the Company and useful to investors in facilitating an understanding of the operational performance for our properties.

Occupancy metrics represent the percentage of occupied gross leasable area based on executed leases (including properties in development and redevelopment) and includes leases signed, but for which rent has not yet commenced. Same-property retail portfolio occupancy includes shopping centers and malls that have been owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three months ended March 31, 2017 and 2016. Occupancy metrics presented for the Company's same-property retail portfolio excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired within the past 12 months, properties sold, under contract to be sold, or that are in the foreclosure process during the periods being compared.

Executed new leases, renewals and exercised options are presented on a same-space basis. Same-space leases represent those leases signed on spaces for which there was a previous lease with comparable gross leasable area.









4


Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and FFO as Adjusted for the three months ended March 31, 2017. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
March 31, 2017
 
(in thousands)
 
(per share)
Net income
$
54,735

 
$
0.51

Less (net income) attributable to noncontrolling interests in:
 
 
 
Operating partnership
(4,138
)
 
(0.04
)
Consolidated subsidiaries
(11
)
 

Net income attributable to common shareholders
50,586

 
0.47

Adjustments:
 
 
 
Rental property depreciation and amortization
15,579

 
0.14

Real estate impairment loss
3,164

 
0.03

Limited partnership interests in operating partnership
4,138

 
0.04

FFO Applicable to diluted common shareholders(1)
73,467

 
0.68

 
 
 
 
Income from acquired leasehold interest(2)
(39,215
)
 
(0.36
)
Loss on extinguishment of debt
1,274

 
0.01

Transaction costs
51

 

Tenant bankruptcy settlement income

(27
)
 

FFO as Adjusted applicable to diluted common shareholders(1)
$
35,550

 
$
0.33

 
 
 
 
Weighted average diluted common shares - FFO(1)
108,255

 
 
(1) Refer to the table below for reconciliation of weighted average diluted shares used in EPS calculations and weighted average diluted common shares used in FFO per share calculations.
(2) Income from acquired leasehold interest at the Shops at Bruckner includes the write-off of unamortized intangible liability related to the below-market ground lease acquired and existing straight-line receivable balance.

FFO and FFO as Adjusted are non-GAAP financial measures. The Company believes FFO, as defined by NAREIT, is a widely used and appropriate supplemental measure of operating performance for REITs, and that it provides a relevant basis for comparison among REITs. The Company believes FFO as Adjusted provides additional comparability between historical financial periods. Refer to “Non-GAAP Financial Measures” above.

The following table reflects the reconciliation of weighted average diluted shares used in EPS calculations and weighted average diluted common shares used in FFO per share calculations.
(in thousands)
Three Months Ended
March 31, 2017
Weighted average diluted shares used to calculate EPS
100,093

Assumed conversion of OP and LTIP Units to common stock(1)
8,162

Weighted average diluted common shares used to calculate
FFO per share
108,255

(1) OP and LTIP Units are excluded from the calculation of earnings per diluted share for the three months ended March 31, 2017 because their inclusion is anti-dilutive. FFO includes earnings allocated to unitholders as the inclusion of these units is dilutive to FFO per share.



5


Reconciliation of Net Income to Cash NOI and Same-Property Cash NOI

The following table reflects the reconciliation of net income to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the three months ended March 31, 2017 and 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended March 31, 2017
(Amounts in thousands)
2017
 
2016
Net income
$
54,735

 
$
19,788

Add: income tax expense
320

 
336

Income before income taxes
55,055

 
20,124

  Interest income
(127
)
 
(167
)
  Interest and debt expense
13,115

 
13,429

  Loss on extinguishment of debt
1,274

 

Operating income
69,317

 
33,386

Depreciation and amortization
15,828

 
13,915

Real estate impairment loss
3,164

 

General and administrative expense
8,081

 
6,720

Transaction costs
51

 
50

NOI
96,441

 
54,071

    Less: non-cash revenue and expenses
(40,801
)
 
(1,811
)
Cash NOI(1)
55,640

 
52,260

Adjustments:
 
 
 
Cash NOI related to properties being redeveloped(1)
(5,452
)
 
(4,676
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(1,580
)
 
(493
)
Management and development fee income from non-owned properties
(479
)
 
(455
)
Tenant bankruptcy settlement income
(27
)
 
(1,150
)
Other(2)
(8
)
 
51

    Subtotal adjustments
(7,546
)
 
(6,723
)
Same-property cash NOI
$
48,094

 
$
45,537

Adjustments:

 

Cash NOI related to properties being redeveloped
5,452

 
4,676

Same-property cash NOI including properties in redevelopment
$
53,546

 
$
50,213

(1) Cash NOI is calculated as total property revenues less property operating expenses, excluding the net effects of non-cash rental income and non-cash ground rent expense.
(2) Other adjustments include revenue and expense items attributable to non-same properties and corporate activities.

Cash NOI and same-property cash NOI are non-GAAP financial measures. The Company believes that same-property cash NOI is a widely used and appropriate supplemental measure of operating performance for comparison among REITs. Refer to “Non-GAAP Financial Measures” above.



6


Reconciliation of Net Income to EBITDA and Adjusted EBITDA

The following table reflects the reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2017 and 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended March 31, 2017
(Amounts in thousands)
2017
 
2016
Net income
$
54,735

 
$
19,788

Depreciation and amortization
15,828

 
13,915

Interest and debt expense
13,115

 
13,429

Income tax expense
320

 
336

EBITDA
83,998

 
47,468

Adjustments for Adjusted EBITDA:
 
 
 
Income from acquired leasehold interest
(39,215
)
 

Real estate impairment loss
3,164

 

Loss on extinguishment of debt
1,274

 

Transaction costs
51

 
50

Tenant bankruptcy settlement income
(27
)
 
(1,150
)
Adjusted EBITDA
$
49,245

 
$
46,368

 
 
 
 

EBITDA and Adjusted EBITDA are non-GAAP financial measures. Refer to “Non-GAAP Financial Measures” above.

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
March 31, 2017
Common shares outstanding
99,826,975

OP and LTIP units (dilutive)
8,284,166

Fully diluted common shares
108,111,141




7


ADDITIONAL INFORMATION
For a copy of the Company’s supplemental disclosure package, please access the "Investors" section of UE’s website at www.uedge.com. Our website also includes other financial information, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports.

ABOUT URBAN EDGE
Urban Edge Properties is a NYSE listed real estate investment trust focused on managing, acquiring, developing, and redeveloping retail real estate in urban communities, primarily in the New York metropolitan region. Urban Edge owns 86 properties totaling 15.2 million square feet of gross leasable area.

FORWARD-LOOKING STATEMENTS
Certain statements contained in this Press Release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Press Release. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict; these factors include, among others, the Company's ability to complete its active development, redevelopment and anchor repositioning projects, the Company's ability to pursue, finance and complete acquisition opportunities, the Company's ability to engage in the projects in its planned expansion and redevelopment pipeline and the Company's ability to achieve the estimated unleveraged returns for such projects and acquisitions. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2016 and the other documents filed by the Company with the Securities and Exchange Commission.

For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date of this Press Release. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances occurring after the date of this Press Release.


8



URBAN EDGE PROPERTIES
 
 
 
ADDITIONAL DISCLOSURES
 
 
 
As of March 31, 2017
 
 
 
 
 
 
 

Basis of Presentation
The information contained in the Supplemental Disclosure Package does not purport to disclose all items required by GAAP and is unaudited information. This Supplemental Disclosure Package should be read in conjunction with the Company's most recent Form 10-K and Form 10-Q. The results of operations of any property acquired are included in the Company's financial statements since the date of its acquisition, although such properties may be excluded from certain metrics disclosed in this Supplemental Disclosure Package.
Non-GAAP Financial Measures and Forward Looking Statements
For additional information regarding non-GAAP financial measures and forward looking statements, please see pages 3 and 8 of this Supplemental Disclosure Package.




9



URBAN EDGE PROPERTIES
 
 
SUMMARY FINANCIAL RESULTS AND RATIOS
 
 
For the three months ended March 31, 2017 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Three months ended
 
 
March 31, 2017
Summary Financial Results
 
 
Total revenue
 
$
126,064

General & administrative expenses (G&A)(10)
 
$
8,081

Adjusted EBITDA(7)
 
$
49,245

Net income attributable to common shareholders
 
$
50,586

Earnings per diluted share
 
$
0.50

Funds from operations (FFO)
 
$
73,467

FFO per diluted common share
 
$
0.68

FFO as Adjusted
 
$
35,550

FFO as Adjusted per diluted common share
 
$
0.33

Total dividends paid per share
 
$
0.22

Stock closing price low-high range
 
$25.11 to $28.85

Weighted average diluted shares used in EPS computations(1)
 
100,093

Weighted average diluted common shares used in FFO computations(1)
 
108,255

 
 
 
Summary Property, Operating and Financial Data
 
 
# of Total properties / # of Retail properties
 
86 / 85

Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
14,217,000

Weighted average annual rent psf - retail portfolio(3)(5)
 
$
17.43

Consolidated occupancy at end of period
 
96.9
%
Consolidated retail portfolio occupancy at end of period(5)
 
97.2
%
Same-property retail portfolio occupancy at end of period(5)(2)
 
98.3
%
Same-property retail portfolio physical occupancy at end of period(4)(5)(2)
 
96.6
%
Same-property cash NOI growth(2)
 
5.6
%
Same-property cash NOI growth, including redevelopment properties
 
6.6
%
Cash NOI margin - total portfolio
 
65.3
%
Expense recovery ratio - total portfolio
 
97.6
%
New, renewal and option rent spread - cash basis(8)
 
1.4
%
New, renewal and option rent spread - GAAP basis(9)
 
6.2
%
Net debt to total market capitalization(6)
 
28.1
%
Net debt to Adjusted EBITDA(6)
 
5.9
x
Adjusted EBITDA to interest expense(7)
 
4.0
x
Adjusted EBITDA to fixed charges(7)
 
2.9
x
 
 
 
(1) Weighted average diluted common shares used to calculate FFO per share and FFO as Adjusted per share for the period presented include OP and LTIP Units, which are excluded from the calculation of earnings per diluted share for the period presented because their inclusion is anti-dilutive. FFO includes earnings allocated to unit holders as the inclusion of these units is dilutive to FFO per share.
(2) The same-property pool for both cash NOI and occupancy includes retail properties the Company consolidated, owned and operated for the entirety of both periods being compared and excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and excludes properties acquired, sold, under contract to be sold, or that are in the foreclosure process during the periods being compared.
(3) GLA - retail portfolio excludes 942,000 square feet of warehouses. Weighted average annual rent per square foot for our retail portfolio and warehouses was $16.68.
(4) Physical occupancy includes tenants that have access to their leased space and includes dark and paying tenants.
(5) Our retail portfolio includes shopping centers and malls and excludes warehouses.
(6) See computation on page 16.
(7) See computation on page 14.
(8) Rents have not been calculated on a straight-line basis. Previous/expiring rent is that as of time of expiration and includes any percentage rent paid as well. New rent is that which is paid at commencement.
(9) Rents are calculated on a straight-line ("GAAP") basis. See computation on page 19.
(10) Includes $0.5 million of severance expense incurred in the quarter ended March 31, 2017.


10



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED BALANCE SHEETS
 
 
As of March 31, 2017 (unaudited) and December 31, 2016
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
March 31,
 
December 31,
 
2017
 
2016
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
436,088

 
$
384,217

Buildings and improvements
1,719,079

 
1,650,054

Construction in progress
108,401

 
99,236

Furniture, fixtures and equipment
5,077

 
4,993

Total
2,268,645

 
2,138,500

Accumulated depreciation and amortization
(553,649
)
 
(541,077
)
Real estate, net
1,714,996

 
1,597,423

Cash and cash equivalents
110,974

 
131,654

Restricted cash
11,812

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $2,557 and $2,332, respectively
11,841

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $207 and $261, respectively
86,176

 
87,695

Identified intangible assets, net of accumulated amortization of $23,693 and $22,361, respectively
73,879

 
30,875

Deferred leasing costs, net of accumulated amortization of $14,555 and $13,909, respectively
19,391

 
19,241

Deferred financing costs, net of accumulated amortization of $972 and $726, respectively
4,011

 
1,936

Prepaid expenses and other assets
17,271

 
17,442

Total assets
$
2,050,351

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,256,955

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $58,657 and $72,528, respectively
145,748

 
146,991

Accounts payable and accrued expenses
54,286

 
48,842

Other liabilities
16,154

 
14,675

Total liabilities
1,473,143

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,826,975 and 99,754,900 shares issued and outstanding, respectively
998

 
997

Additional paid-in capital
489,190

 
488,375

Accumulated deficit
(419
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
87,068

 
35,451

Noncontrolling interest in consolidated subsidiaries
371

 
360

Total equity
577,208

 
496,117

Total liabilities and equity
$
2,050,351

 
$
1,904,138


11



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
For the three months ended March 31, 2017 and 2016 (unaudited)
 
(in thousands, except share and per share amounts)
 
 
 
 
 

 
Three Months Ended March 31,
 
2017
 
2016
REVENUE
 
 
 
Property rentals
$
62,498

 
$
58,929

Tenant expense reimbursements
23,771

 
22,507

Income from acquired leasehold interest
39,215

 

Management and development fees
479

 
455

Other income
101

 
1,177

Total revenue
126,064

 
83,068

EXPENSES
 
 
 
Depreciation and amortization
15,828

 
13,915

Real estate taxes
13,392

 
13,249

Property operating
13,368

 
12,859

General and administrative
8,081

 
6,720

Real estate impairment loss
3,164

 

Ground rent
2,670

 
2,538

Transaction costs
51

 
50

Provision for doubtful accounts
193

 
351

Total expenses
56,747

 
49,682

Operating income
69,317

 
33,386

Interest income
127

 
167

Interest and debt expense
(13,115
)
 
(13,429
)
Loss on extinguishment of debt
(1,274
)
 

Income before income taxes
55,055

 
20,124

Income tax expense
(320
)
 
(336
)
Net income
54,735

 
19,788

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
Operating partnership
(4,138
)
 
(1,154
)
Consolidated subsidiaries
(11
)
 
4

Net income attributable to common shareholders
$
50,586

 
$
18,638

 
 
 
 
Earnings per common share - Basic:
$
0.51

 
$
0.19

Earnings per common share - Diluted:
$
0.50

 
$
0.19

Weighted average shares outstanding - Basic
99,639

 
99,265

Weighted average shares outstanding - Diluted
100,093

 
99,363



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME
 
 
For the three months ended March 31, 2017 and 2016
 
(in thousands)
 
 
 
 
 
 
Three Months Ended
March 31,
 
Percent Change
 
2017
 
2016
 
Total cash NOI(1)
 
 
 
 
 
Total revenue
$
84,350

 
$
80,411

 
4.9%
Total property operating expenses
(29,264
)
 
(28,632
)
 
2.2%
Cash NOI - total portfolio
$
55,086

 
$
51,779

 
6.4%
 
 
 
 
 
 
NOI margin (NOI / Total revenue)
65.3
%
 
64.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-property cash NOI(2)
 
 
 
 
 
Property rentals
$
51,877

 
$
50,374

 
 
Tenant expense reimbursements
21,386

 
20,475

 
 
Percentage rent
385

 
259

 
 
Total revenue
73,648

 
71,108

 
3.6%
Real estate taxes
(12,085
)
 
(12,129
)
 
 
Property operating
(11,137
)
 
(10,960
)
 
 
Ground rent
(2,247
)
 
(2,206
)
 
 
Provision for doubtful accounts
(85
)
 
(276
)
 
 
Total property operating expenses
(25,554
)
 
(25,571
)
 
(0.1)%
Same-property cash NOI(3)
$
48,094

 
$
45,537

 
5.6%
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
$
5,452

 
$
4,676

 
 
Same-property cash NOI including properties in redevelopment
$
53,546

 
$
50,213

 
6.6%
 
 
 
 
 
 
Same-property physical occupancy(3)
96.6
%
 
95.7
%
 
 
Same-property leased occupancy(3)
98.3
%
 
97.2
%
 
 
Number of properties included in same-property analysis
76

 
 
 
 
 
 
 
 
 
 
(1) Total revenue includes cash received from tenant bankruptcy settlements and lease termination fees and excludes management and development fee income and non-cash amounts. Property operating expense amounts have been adjusted to exclude non-cash amounts.
(2) Excludes management and development fee income, lease termination fees, bankruptcy settlement income, non-cash rental income and ground rent expense and income or expenses that we do not believe are representative of ongoing operating results, if any.
(3) The same-property pool for both NOI and occupancy includes retail properties the Company consolidated, owned and operated for the entirety of both periods being compared and excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and properties acquired, sold, under contract to be sold, or are in the foreclosure process during the periods being compared. Same-property occupancy includes dark and paying tenants.


13



URBAN EDGE PROPERTIES
 
 
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION and AMORTIZATION (EBITDA)
For the three months ended March 31, 2017 and 2016
 
(in thousands)
 
 
 
 
 

 
Three Months Ended
March 31,
 
2017
 
2016
Net income
$
54,735

 
$
19,788

Depreciation and amortization
15,828

 
13,915

Interest expense
12,251

 
12,770

Amortization of deferred financing costs
864

 
659

Income tax expense
320

 
336

EBITDA
83,998

 
47,468

Adjustments for Adjusted EBITDA:
 
 
 
Income from acquired leasehold interest
(39,215
)
 

Real estate impairment loss
3,164

 

Loss on extinguishment of debt
1,274

 

Transaction costs
51

 
50

Tenant bankruptcy settlement income
(27
)
 
(1,150
)
Adjusted EBITDA
$
49,245

 
$
46,368

 
 
 
 
Interest expense
$
12,251

 
$
12,770

 
 
 
 
Adjusted EBITDA to interest expense
4.0
x
 
3.6
x
 
 
 
 
Fixed charges
 
 
 
Interest expense
$
12,251

 
$
12,770

Scheduled principal amortization
4,636

 
4,130

Total fixed charges
$
16,887

 
$
16,900

 
 
 
 
Adjusted EBITDA to fixed charges
2.9
x
 
2.7
x
 
 
 
 



14



URBAN EDGE PROPERTIES
 
 
FUNDS FROM OPERATIONS
 
For the three months ended March 31, 2017 and 2016
 
(in thousands, except per share amounts)
 
 
 
 
 
 
Three Months Ended
March 31,
 
2017
 
2016
Net income
$
54,735

 
$
19,788

Less (net income) attributable to noncontrolling interests in:
 
 
 
Operating partnership
(4,138
)
 
(1,154
)
Consolidated subsidiaries
(11
)
 
4

Net income attributable to common shareholders
50,586

 
18,638

Adjustments:
 
 
 
Rental property depreciation and amortization
15,579

 
13,755

Real estate impairment loss
3,164

 

Limited partnership interests in operating partnership(1)
4,138

 
1,154

FFO Applicable to diluted common shareholders
73,467

 
33,547

FFO per diluted common share(2)
0.68

 
0.32

Adjustments to FFO:
 
 
 
Income from acquired leasehold interest
(39,215
)
 

Loss on extinguishment of debt

1,274

 

Transaction costs
51

 
50

Tenant bankruptcy settlement income

(27
)
 
(1,150
)
FFO as Adjusted applicable to diluted common shareholders

$
35,550

 
$
32,447

FFO as Adjusted per diluted common share(2)
$
0.33

 
$
0.31

 
 
 
 
Weighted Average diluted common shares(2)
108,255

 
105,649

(1) Represents earnings allocated to LTIP and OP unit holders for unissued common shares which have been excluded for purposes of calculating earnings per diluted share for the periods presented. FFO applicable to diluted common shareholders and FFO as Adjusted applicable to diluted common shareholders calculations includes earnings allocated to LTIP and OP unit holders and the respective weighted average share totals include the redeemable shares outstanding as their inclusion is dilutive.
(2) Weighted average diluted shares used to calculate FFO per share and FFO as Adjusted per share for the periods presented are higher than the GAAP weighted average diluted shares as a result of the dilutive impact of LTIP and OP units which may be redeemed for our common stock for the three months ended March 31, 2017 and 2016, respectively. These redeemable units are not included in the weighted average diluted share count for GAAP purposes because their inclusion is anti-dilutive.






15



URBAN EDGE PROPERTIES
 
 
MARKET CAPITALIZATION, DEBT RATIOS AND LIQUIDITY
 
 
As of March 31, 2017
 
 
(in thousands, except share amounts)
 
 
 
 
 

 
March 31, 2017
Closing market price of common shares
$
26.30

 
 
Basic common shares
99,826,975

OP and LTIP units (dilutive)
8,284,166

Diluted common shares
108,111,141

 
 
Equity market capitalization
$
2,843,323

 
 
 
 
Total consolidated debt(1)
$
1,265,494

Cash and cash equivalents
(110,974
)
Net debt
$
1,154,520

 
 
Net Debt to Adjusted EBITDA
5.9
x
 
 
Total consolidated debt(1)
$
1,265,494

Equity market capitalization
2,843,323

Total market capitalization
$
4,108,817

 
 
Net debt to total market capitalization at applicable market price
28.1
%
 
 
 
 
Cash and cash equivalents including restricted cash
$
122,786

Available under unsecured credit facility
600,000

Total liquidity
$
722,786

 
 
(1) Total consolidated debt excludes unamortized debt issuance costs of $8.5 million.


16



URBAN EDGE PROPERTIES
 
 
ADDITIONAL DISCLOSURES
 
(in thousands)
 
 
 
 
 
 
 
Three Months Ended
March 31,
 
 
2017
 
2016
Certain non-cash items:
 
 
 

Straight-line rental income(1)
 
$
(90
)
 
$
301

Amortization of below-market lease intangibles, net(1)
 
2,036

 
1,875

Straight-line ground rent expense(2)
 
(54
)
 
(88
)
Amortization of below-market lease intangibles, lessee(2)
 
360

 
(243
)
Amortization of deferred financing costs(4)
 
(864
)
 
(659
)
Capitalized interest
 
940

 
518

Share-based compensation expense(3)
 
(1,484
)
 
(1,297
)
 
 
 
 
 
Capital expenditures: (5)
 
 
 
 
Development and redevelopment costs
 
$
9,248

 
$
10,912

Maintenance capital expenditures
 
656

 
560

Leasing commissions
 
200

 
565

Tenant improvements and allowances
 
1,246

 
1,557

Total capital expenditures
 
$
11,350

 
$
13,594

 
 
 
 
 
 
 
March 31, 2017
 
December 31, 2016
Other Liabilities:
 
 
 
 
Deferred ground rent expense
 
$
6,338

 
$
6,284

Deferred tax liability, net
 
3,834

 
3,802

Other
 
5,982

 
4,589

Total other liabilities
 
$
16,154

 
$
14,675

 
 
 
 
 
Accounts payable and accrued expenses:
 
 
 
 
Tenant prepaid/deferred revenue
 
$
12,752

 
$
13,619

Accrued capital expenditures and leasing costs
 
15,698

 
13,850

Accrued interest payable
 
6,735

 
6,635

Security deposits
 
5,023

 
4,287

Accrued taxes payable
 
2,935

 
1,698

Other
 
11,143

 
8,753

Total accounts payable and accrued expenses
 
$
54,286

 
$
48,842

(1) Amounts included in the financial statement line item "Property rentals" in the consolidated statements of income.
(2) Amounts included in the financial statement line item "Ground rent" in the consolidated statements of income.
(3) Amounts included in the financial statement line item "General and administrative" in the consolidated statements of income.
(4) Amounts included in the financial statement line item "Interest and debt expense" in the consolidated statements of income.
(5) Amounts presented on a cash basis.


17



URBAN EDGE PROPERTIES
 
 
TENANT CONCENTRATION - TOP TWENTY-FIVE TENANTS
 
As of March 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant
Number of stores
Square feet
% of total square feet
Annualized base rent
% of total annualized base rent
Weighted average annual rent per square foot
Average remaining term of ABR(1)
The Home Depot
7

920,226

6.4%
$
15,801,538

6.7%
$
17.17

14.3
Walmart / Sam's Wholesale
9

1,438,730

10.0%
10,726,552

4.5%
7.46

8.8
The TJX Companies, Inc.
17

607,105

4.2%
10,069,246

4.2%
16.59

4.3
Lowe's
6

976,415

6.8%
8,575,004

3.6%
8.78

10.5
Stop & Shop / Koninklijke Ahold NV
9

655,618

4.5%
8,015,606

3.4%
12.23

6.5
Best Buy Co., Inc.
7

312,952

2.2%
6,966,025

2.9%
22.26

7.5
Kohl's
8

716,345

5.0%
6,713,770

2.8%
9.37

6.2
PetSmart, Inc.
10

253,086

1.7%
5,804,745

2.4%
22.94

4.7
BJ's Wholesale Club
4

454,297

3.1%
5,278,625

2.2%
11.62

9.6
Sears Holdings, Inc. (Kmart)
4

547,443

3.8%
5,244,737

2.2%
9.58

18.7
ShopRite
4

265,997

1.8%
4,236,388

1.8%
15.93

6.8
Staples, Inc.
9

186,030

1.3%
3,922,796

1.7%
21.09

2.6
Toys "R" Us
8

324,568

2.2%
3,793,989

1.6%
11.69

5.8
The Gap, Inc.
8

123,784

0.9%
3,498,295

1.5%
28.26

4.5
Target
2

297,856

2.1%
3,448,666

1.5%
11.58

15.0
Century 21
1

156,649

1.1%
3,394,181

1.4%
21.67

9.8
Whole Foods
2

100,682

0.7%
3,365,570

1.4%
33.43

10.7
Dick's Sporting Goods
4

167,786

1.2%
3,356,429

1.4%
20.00

1.8
LA Fitness
4

181,342

1.3%
3,165,032

1.3%
17.45

10.2
24 Hour Fitness
1

53,750

0.4%
2,564,520

1.1%
47.71

14.8
National Wholesale Liquidator
1

171,216

1.2%
2,204,219

0.9%
12.87

5.8
Anthropologie
1

31,450

0.2%
2,201,500

0.9%
70.00

11.5
Mattress Firm
12

71,222

0.5%
1,966,134

0.8%
27.61

4.7
Petco
7

100,935

0.7%
1,899,390

0.8%
18.82

5.1
Bed, Bath & Beyond
4

143,973

1.0%
1,884,720

0.8%
13.09

4.1
 
 
 
 
 
 
 
 
Total/Weighted Average
149

9,259,457

64.3%
$
128,097,677

53.8%
$
13.83

8.7
 
 
 
 
 
 
 
 
(1) In years, excluding tenant renewal options. Total top twenty-five tenants is weighted based on annualized base rent ("ABR").

Note: Amounts shown in the table above include all retail properties, including those in redevelopment, on a cash basis other than tenants in a free rent period which are shown at their initial cash rent.


18



URBAN EDGE PROPERTIES
 
 
LEASING ACTIVITY
 
For the three months ended March 31, 2017
 
 
 
 
 
 
 
 
Three months ended
March 31, 2017
 
GAAP(3)
 
Cash(2)
New leases
 
 
 
Number of new leases executed
5

 
5

Total square feet
39,016

 
39,016

Number of same space leases(1)
5

 
5

Same space square feet
39,016

 
39,016

Prior rent per square foot
$
16.33

 
$
16.50

New rent per square foot
$
16.79

 
$
15.63

Same space weighted average lease term (years)
10.1

 
10.1

Same space TIs per square foot(4)
N/A

 
$
10.18

Rent spread
2.8
%
 
(5.2
)%
 
 
 
 
Renewals & Options
 
 
 
Number of new leases executed
12

 
12

Total square feet
55,363

 
55,363

Number of same space leases(1)
12

 
12

Same space square feet
55,363

 
55,363

Prior rent per square foot
$
18.54

 
$
18.72

New rent per square foot
$
20.06

 
$
19.75

Same space weighted average lease term (years)
5.0

 
5.0

Same space TIs per square foot(4)
N/A

 
$

Rent spread
8.2
%
 
5.5%
 
 
 
 
Total New Leases and Renewals & Options
 
 
 
Number of new leases executed
17

 
17

Total square feet
94,379

 
94,379

Number of same space leases(1)
17

 
17

Same space square feet
94,379

 
94,379

Prior rent per square foot
$
17.62

 
$
17.80

New rent per square foot
$
18.71

 
$
18.04

Same space weighted average lease term (years)
7.1

 
7.1

Same space TIs per square foot(4)
N/A

 
$
4.21

Rent spread
6.2
%
 
1.4%
(1) Leases executed on a same space basis include leases with comparable sf and prior existing tenants.
(2) Rents have not been calculated on a straight-line basis. Previous/expiring rent is that as of time of expiration and includes any percentage rent paid as well. New rent is that which is paid at commencement.
(3) Rents are calculated on a straight-line ("GAAP") basis.
(4) Includes both tenant improvements and landlord contributions.


19



URBAN EDGE PROPERTIES
 
 
RETAIL PORTFOLIO LEASE EXPIRATION SCHEDULE
 
As of March 31, 2017
 
 
 
 
 
 
 
 
 
ANCHOR TENANTS (SF>=10,000)
SHOP TENANTS (SF<10,000)
TOTAL TENANTS
Year(1)
# of leases
Square Feet
% of Total SF
Weighted Avg Annual Base Rent PSF(2)
# of leases
Square Feet
% of Total SF
Weighted Avg Annual Base Rent PSF(2)
# of leases
Square Feet
% of Total SF
Weighted Avg Annual Base Rent PSF(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
M-T-M


%
$

25

70,000

3.2%
$
30.97

25

70,000

0.5
%
$
30.97

2017
5

125,000

1.0
%
12.32

53

142,000

6.5%
33.83

58

267,000

1.9
%
23.76

2018
18

864,000

7.2
%
10.02

64

181,000

8.3%
40.27

82

1,045,000

7.4
%
15.26

2019
28

995,000

8.3
%
18.17