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Section 1: 8-K (8-K)

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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):
August 3, 2016

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 August 3, 2016, Urban Edge Properties (the "Company") announced its financial results for the three and six months ended June 30, 2016. 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 August 3, 2016, the Company announced its financial results for the three and six months ended June 30, 2016 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 August 3, 2016.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of June 30, 2016.






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: August 3, 2016
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 August 3, 2016
99.2
 
Supplemental Disclosure Package of Urban Edge Properties as of June 30, 2016



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
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 Second Quarter 2016 Operating Results


                                    
NEW YORK, NY, August 3, 2016 - Urban Edge Properties (NYSE:UE) (the "Company") announced today its financial results for the three and six months ended June 30, 2016.

Highlights of the Quarter include:
Net income was $36.1 million, or $0.34 per diluted share, for the quarter and $55.9 million, or $0.53 per diluted share, for the six months ended June 30, 2016
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $33.8 million, or $0.32 per share, for the quarter and $67.4 million, or $0.64 per share, for the six months ended June 30, 2016
Generated FFO as Adjusted (previously referred to as Recurring FFO) of $32.9 million, or $0.31 per share, for the quarter and $65.4 million, or $0.62 per share, for the six months ended June 30, 2016. FFO as Adjusted for the three and six months ended June 30, 2016 excludes tenant bankruptcy settlement income and a benefit related to income taxes
Same-property cash Net Operating Income (“NOI”) increased by 4.2% as compared to the second quarter of 2015 and 3.3% for the six months ended June 30, 2016 as compared to the same period in 2015 due to new rent commencements, higher occupancy and higher recoveries
Same-property cash NOI including properties in redevelopment increased by 2.6% for the second quarter of 2016 as compared to the second quarter in 2015 and 2.3% for the six months ended June 30, 2016 as compared to the same period in 2015. The expected vacancy of former anchor tenants at Walnut Creek and Bruckner negatively impacted this result by approximately 100 basis points. New anchor tenants at Walnut Creek and Bruckner are expected to open in the fourth quarter of this year and the first quarter of 2018, respectively
Consolidated retail portfolio occupancy increased by 20 basis points to 96.2% as compared to June 30, 2015 and by 20 basis points as compared to March 31, 2016
Same-property retail portfolio occupancy increased by 50 basis points to 97.4% as compared to June 30, 2015 and by 20 basis points as compared to March 31, 2016
Executed new leases and renewals and exercised options totaling 63,000 square feet ("sf") in 19 transactions. Same-space leases totaled 40,300 sf at an average rental rate of $31.68 per sf on a GAAP basis and $30.00 per sf on a cash basis generating an average rent spread of 13.3% on a GAAP basis and 4.4% on a cash basis

Refer to "Non-GAAP Financial Measures" and "Operational Metrics" for definitions and further discussions of the measures and metrics highlighted above.

Development, Redevelopment and Anchor Repositioning:
As of June 30, 2016, the Company had approximately $131.4 million of active development, redevelopment and anchor repositioning projects underway of which $81.2 million remains to be funded. The Company expects to generate a 12% return on invested capital based on the expected incremental cash NOI relative to the total investment.

The Company continues to focus on its development and redevelopment pipeline which includes $177.0-$203.0 million of planned expansions and renovations expected to be completed over the next several years. The Company added

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a project at our property in Mt. Kisco, NY to the redevelopment pipeline with an estimated cost of approximately $2.5 million. The Company projects a return on invested capital of approximately 8% on these projects.

Balance Sheet Highlights:
At June 30, 2016:
Total market capitalization (including debt and equity) was approximately $4.4 billion comprised of 105.8 million common shares outstanding (on a fully diluted basis) valued at $3.2 billion and $1.2 billion of debt. The calculation of fully diluted common shares outstanding is provided in the tables accompanying this press release
The ratio of net debt (net of cash) to total market capitalization was 24.2%
Net debt to annualized Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.7x. A reconciliation of net income to EBITDA and Adjusted EBITDA are provided in the tables accompanying this press release
The Company had approximately $156.7 million of cash and cash equivalents and no amounts drawn on its $500.0 million revolving credit facility

Asset Disposition:
On June 9, 2016, the Company completed the sale of a shopping center located in Waterbury, CT for $21.6 million resulting in a gain of $15.6 million. The sale completes a reverse Section 1031 exchange initiated with the acquisition of Cross Bay Commons in Queens, NY in December 2015.


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Non-GAAP Financial Measures
The Company believes FFO (combined with the primary GAAP presentations) 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. The National Association of Real Estate Investment Trusts ("NAREIT") stated in its April 2002 White Paper on FFO, "Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves." The Company also believes that FFO as Adjusted is a useful supplemental measure of its core operating performance that facilitates comparability of historical financial periods. FFO, as defined by 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 makes certain adjustments to FFO, which it refers to as FFO as Adjusted, to account for items it does not believe are representative of ongoing operating results. The Company believes that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from its FFO and FFO as Adjusted measures primarily because it excludes the assumption that the value of real estate assets diminish predictably. The Company's method of calculating FFO and FFO as Adjusted may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The Company uses cash NOI, which is a non-GAAP financial measure, 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. As such, 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.
In this release, the Company has provided 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 77 properties for the three and six months ended June 30, 2016 and 2015. Information on a same-property basis 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, sold, or that are in the foreclosure process during the periods being compared. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when a property is considered to be a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan and is expected to have a significant impact on property operating income based on the retenanting that is occurring. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally the earlier of one year after construction is substantially complete or when the GLA related to the redevelopment is 90% leased. 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 cash NOI on a same-property basis adjusted to include redevelopment properties. The Company calculates same-property 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.
EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation 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 it approximates a key performance measure 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 a meaningful performance measure as it relates 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 is useful to investors as a supplemental measure in evaluating the Company's balance sheet leverage.
FFO, FFO as Adjusted, cash NOI, same-property cash NOI, EBITDA and Adjusted EBITDA are presented to assist investors in analyzing the Company’s operating performance. FFO and FFO as Adjusted do 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

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distributions. The Company believes net income is the most directly comparable GAAP financial measure to FFO, FFO as Adjusted, cash NOI, same-property cash NOI, EBITDA and Adjusted EBITDA. Reconciliations of these measures to their comparable GAAP measures have been provided in the tables accompanying this press release.

Operational 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 77 properties for the three and six months ended June 30, 2016 and 2015. 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, 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.









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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 83 properties totaling 14.7 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 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. 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, 2015.

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
(Unaudited)
(In thousands, except share and per share amounts) 
 
June 30,
 
December 31,
 
2016
 
2015
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
378,997

 
$
389,080

Buildings and improvements
1,587,158

 
1,630,539

Construction in progress
124,098

 
61,147

Furniture, fixtures and equipment
3,970

 
3,876

Total
2,094,223

 
2,084,642

Accumulated depreciation and amortization
(518,215
)
 
(509,112
)
Real estate, net
1,576,008

 
1,575,530

Cash and cash equivalents
156,672

 
168,983

Cash held in escrow and restricted cash
8,995

 
9,042

Tenant and other receivables, net of allowance for doubtful accounts of $2,270 and $1,926, respectively
8,317

 
10,364

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $370 and $148, respectively
87,925

 
88,778

Identified intangible assets, net of accumulated amortization of $21,459 and $22,090, respectively
32,586

 
33,953

Deferred leasing costs, net of accumulated amortization of $13,438 and $12,987, respectively
18,108

 
18,455

Deferred financing costs, net of accumulated amortization of $242 and $709, respectively
2,419

 
2,838

Prepaid expenses and other assets
8,360

 
10,988

Total assets
$
1,899,390

 
$
1,918,931

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,205,278

 
$
1,233,983

Identified intangible liabilities, net of accumulated amortization of $69,013 and $65,220, respectively
151,061

 
154,855

Accounts payable and accrued expenses
39,889

 
45,331

Other liabilities
14,898

 
13,308

Total liabilities
1,411,126

 
1,447,477

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,425,137 and 99,290,952 shares issued and outstanding, respectively
994

 
993

Additional paid-in capital
477,673

 
475,369

Accumulated deficit
(25,616
)
 
(38,442
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
34,858

 
33,177

Noncontrolling interest in consolidated subsidiaries
355

 
357

Total equity
488,264

 
471,454

Total liabilities and equity
$
1,899,390

 
$
1,918,931


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URBAN EDGE PROPERTIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share and per share amounts)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
REVENUE
 
 
 
 
 
 
 
Property rentals
$
58,683

 
$
57,380

 
$
117,612

 
$
114,966

Tenant expense reimbursements
19,879

 
20,451

 
42,386

 
44,754

Management and development fees
526

 
693

 
981

 
1,228

Other income
369

 
191

 
1,546

 
1,550

Total revenue
79,457

 
78,715

 
162,525

 
162,498

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
13,558

 
14,233

 
27,473

 
27,965

Real estate taxes
12,723

 
12,517

 
25,972

 
25,341

Property operating
9,840

 
10,985

 
22,699

 
27,508

General and administrative
7,535

 
6,792

 
14,255

 
19,118

Ground rent
2,483

 
2,565

 
5,021

 
5,079

Transaction costs
34

 
427

 
84

 
22,286

Provision for doubtful accounts
494

 
389

 
845

 
712

Total expenses
46,667

 
47,908

 
96,349

 
128,009

Operating income
32,790

 
30,807

 
66,176

 
34,489

Gain on sale of real estate
15,618

 

 
15,618

 

Interest income
177

 
51

 
344

 
62

Interest and debt expense
(12,820
)
 
(13,241
)
 
(26,249
)
 
(28,410
)
Income before income taxes
35,765

 
17,617

 
55,889

 
6,141

Income tax benefit (expense)
306

 
(464
)
 
(30
)
 
(1,005
)
Net income
36,071

 
17,153

 
55,859

 
5,136

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(2,201
)
 
(986
)
 
(3,355
)
 
(426
)
Consolidated subsidiaries
(2
)
 
(5
)
 
2

 
(11
)
Net income attributable to common shareholders
$
33,868

 
$
16,162

 
$
52,506

 
$
4,699

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.34

 
$
0.16

 
$
0.53

 
$
0.05

Earnings per common share - Diluted:
$
0.34

 
$
0.16

 
$
0.53

 
$
0.05

Weighted average shares outstanding - Basic
99,274

 
99,250

 
99,270

 
99,249

Weighted average shares outstanding - Diluted
99,668

 
99,274

 
99,592

 
99,265



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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 and six months ended June 30, 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
June 30, 2016
 
Six Months Ended
June 30, 2016
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net income
$
36,071

 
$
0.34

 
$
55,859

 
$
0.53

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(2,201
)
 
(0.02
)
 
(3,355
)
 
(0.03
)
Consolidated subsidiaries
(2
)
 

 
2

 

Net income attributable to common shareholders
33,868

 
0.32

 
52,506

 
0.50

Adjustments:
 
 
 
 
 
 
 
Gain on sale of real estate
(15,618
)
 
(0.15
)
 
(15,618
)
 
(0.15
)
Rental property depreciation and amortization
13,395

 
0.13

 
27,150

 
0.26

Limited partnership interests in operating partnership
2,201

 
0.02

 
3,355

 
0.03

FFO Applicable to diluted common shareholders(1)
33,846

 
0.32

 
67,393

 
0.64

 
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(340
)
 

 
(1,490
)
 
(0.01
)
Benefit related to income taxes
(625
)
 
(0.01
)
 
(625
)
 
(0.01
)
Transaction costs
34

 

 
84

 

FFO as Adjusted applicable to diluted common shareholders(1)
$
32,915

 
$
0.31

 
$
65,362

 
$
0.62

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
106,041

 
 
 
105,866

 
 
(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.

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
June 30, 2016
 
Six Months Ended
June 30, 2016
Weighted average diluted shares used to calculate EPS
99,668

 
99,592

Assumed conversion of OP and LTIP Units to common stock(1)
6,373

 
6,274

Weighted average diluted common shares used to calculate
FFO per share
106,041

 
105,866

(1) OP and vested LTIP Units are excluded from the calculation of earnings per diluted share for the three and six months ended June 30, 2016 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 and six months ended June 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended June 30,
 
Six Months Ended
June 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
36,071

 
$
17,153

 
$
55,859

 
$
5,136

Add: Income tax (benefit) expense
(306
)
 
464

 
30

 
1,005

Income before income taxes
35,765

 
17,617

 
55,889

 
6,141

Gain on sale of real estate
(15,618
)
 

 
(15,618
)
 

  Interest income
(177
)
 
(51
)
 
(344
)
 
(62
)
  Interest and debt expense
12,820

 
13,241

 
26,249

 
28,410

Operating income
32,790

 
30,807

 
66,176

 
34,489

Depreciation and amortization
13,558

 
14,233

 
27,473

 
27,965

General and administrative expense
7,535

 
6,792

 
14,255

 
19,118

Transaction costs
34

 
427

 
84

 
22,286

NOI
53,917

 
52,259

 
107,988

 
103,858

    Less: non-cash revenue and expenses
(1,454
)
 
(1,401
)
 
(3,265
)
 
(3,101
)
Cash NOI(1)
52,463

 
50,858

 
104,723

 
100,757

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(4,233
)
 
(4,795
)
 
(8,207
)
 
(8,934
)
Tenant bankruptcy settlement income
(340
)
 

 
(1,490
)
 
(1,260
)
Management and development fee income from non-owned properties
(526
)
 
(693
)
 
(981
)
 
(1,228
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(676
)
 
(450
)
 
(1,378
)
 
(884
)
Environmental remediation costs

 

 

 
1,379

Other(2)
37

 
(60
)
 
89

 
(50
)
    Subtotal adjustments
(5,738
)
 
(5,998
)
 
(11,967
)
 
(10,977
)
Same-property cash NOI
$
46,725

 
$
44,860

 
$
92,756

 
$
89,780

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
4,233

 
4,795

 
8,207

 
8,934

Same-property cash NOI including properties in redevelopment
$
50,958

 
$
49,655

 
$
100,963

 
$
98,714

(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 and six months ended June 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
36,071

 
$
17,153

 
$
55,859

 
$
5,136

Depreciation and amortization
13,558

 
14,233

 
27,473

 
27,965

Interest and debt expense
12,820

 
13,241

 
26,249

 
28,410

Income tax (benefit) expense
(306
)
 
464

 
30

 
1,005

EBITDA
62,143

 
45,091

 
109,611

 
62,516

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Gain on sale of real estate
(15,618
)
 

 
(15,618
)
 

Tenant bankruptcy settlement income
(340
)
 

 
(1,490
)
 
(1,260
)
Transaction costs
34

 
427

 
84

 
22,286

Equity awards issued in connection with the spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Adjusted EBITDA
$
46,219

 
$
45,518

 
$
92,587

 
$
92,064

 
 
 
 
 
 
 
 

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.
 
June 30, 2016
Common shares outstanding
99,294,491

Diluted common shares:
 
OP and LTIP units
6,150,224

Unvested restricted common shares and OPP units
358,782

Fully diluted common shares
105,803,497




10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit

Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
June 30, 2016
 
 







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







URBAN EDGE PROPERTIES
SUPPLEMENTAL DISCLOSURE
June 30, 2016
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Second Quarter 2016 Earnings Press Release
1
Additional Disclosures
9
 
 
Overview
 
Summary Financial Results and Ratios
10
 
 
Consolidated and Combined Financial Statements
 
Consolidated Balance Sheets
11
Consolidated and Combined 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
14
Consolidated Statements of 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 Maturity Schedule
29
 
 








 
 
 
 
 
 
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 Second Quarter 2016 Operating Results


                                    
NEW YORK, NY, August 3, 2016 - Urban Edge Properties (NYSE:UE) (the "Company") announced today its financial results for the three and six months ended June 30, 2016.

Highlights of the Quarter include:
Net income was $36.1 million, or $0.34 per diluted share, for the quarter and $55.9 million, or $0.53 per diluted share, for the six months ended June 30, 2016
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $33.8 million, or $0.32 per share, for the quarter and $67.4 million, or $0.64 per share, for the six months ended June 30, 2016
Generated FFO as Adjusted (previously referred to as Recurring FFO) of $32.9 million, or $0.31 per share, for the quarter and $65.4 million, or $0.62 per share, for the six months ended June 30, 2016. FFO as Adjusted for the three and six months ended June 30, 2016 excludes tenant bankruptcy settlement income and a benefit related to income taxes
Same-property cash Net Operating Income (“NOI”) increased by 4.2% as compared to the second quarter of 2015 and 3.3% for the six months ended June 30, 2016 as compared to the same period in 2015 due to new rent commencements, higher occupancy and higher recoveries
Same-property cash NOI including properties in redevelopment increased by 2.6% for the second quarter of 2016 as compared to the second quarter in 2015 and 2.3% for the six months ended June 30, 2016 as compared to the same period in 2015. The expected vacancy of former anchor tenants at Walnut Creek and Bruckner negatively impacted this result by approximately 100 basis points. New anchor tenants at Walnut Creek and Bruckner are expected to open in the fourth quarter of this year and the first quarter of 2018, respectively
Consolidated retail portfolio occupancy increased by 20 basis points to 96.2% as compared to June 30, 2015 and by 20 basis points as compared to March 31, 2016
Same-property retail portfolio occupancy increased by 50 basis points to 97.4% as compared to June 30, 2015 and by 20 basis points as compared to March 31, 2016
Executed new leases and renewals and exercised options totaling 63,000 square feet ("sf") in 19 transactions. Same-space leases totaled 40,300 sf at an average rental rate of $31.68 per sf on a GAAP basis and $30.00 per sf on a cash basis generating an average rent spread of 13.3% on a GAAP basis and 4.4% on a cash basis

Refer to "Non-GAAP Financial Measures" and "Operational Metrics" for definitions and further discussions of the measures and metrics highlighted above.

Development, Redevelopment and Anchor Repositioning:
As of June 30, 2016, the Company had approximately $131.4 million of active development, redevelopment and anchor repositioning projects underway of which $81.2 million remains to be funded. The Company expects to generate a 12% return on invested capital based on the expected incremental cash NOI relative to the total investment.

The Company continues to focus on its development and redevelopment pipeline which includes $177.0-$203.0 million of planned expansions and renovations expected to be completed over the next several years. The Company added

1


a project at our property in Mt. Kisco, NY to the redevelopment pipeline with an estimated cost of approximately $2.5 million. The Company projects a return on invested capital of approximately 8% on these projects.

Balance Sheet Highlights:
At June 30, 2016:
Total market capitalization (including debt and equity) was approximately $4.4 billion comprised of 105.8 million common shares outstanding (on a fully diluted basis) valued at $3.2 billion and $1.2 billion of debt. The calculation of fully diluted common shares outstanding is provided in the tables accompanying this press release
The ratio of net debt (net of cash) to total market capitalization was 24.2%
Net debt to annualized Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.7x. A reconciliation of net income to EBITDA and Adjusted EBITDA are provided in the tables accompanying this press release
The Company had approximately $156.7 million of cash and cash equivalents and no amounts drawn on its $500.0 million revolving credit facility

Asset Disposition:
On June 9, 2016, the Company completed the sale of a shopping center located in Waterbury, CT for $21.6 million resulting in a gain of $15.6 million. The sale completes a reverse Section 1031 exchange initiated with the acquisition of Cross Bay Commons in Queens, NY in December 2015.


2


Non-GAAP Financial Measures
The Company believes FFO (combined with the primary GAAP presentations) 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. The National Association of Real Estate Investment Trusts ("NAREIT") stated in its April 2002 White Paper on FFO, "Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves." The Company also believes that FFO as Adjusted is a useful supplemental measure of its core operating performance that facilitates comparability of historical financial periods. FFO, as defined by 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 makes certain adjustments to FFO, which it refers to as FFO as Adjusted, to account for items it does not believe are representative of ongoing operating results. The Company believes that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from its FFO and FFO as Adjusted measures primarily because it excludes the assumption that the value of real estate assets diminish predictably. The Company's method of calculating FFO and FFO as Adjusted may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
The Company uses cash NOI, which is a non-GAAP financial measure, 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. As such, 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.
In this release, the Company has provided 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 77 properties for the three and six months ended June 30, 2016 and 2015. Information on a same-property basis 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, sold, or that are in the foreclosure process during the periods being compared. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when a property is considered to be a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan and is expected to have a significant impact on property operating income based on the retenanting that is occurring. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally the earlier of one year after construction is substantially complete or when the GLA related to the redevelopment is 90% leased. 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 cash NOI on a same-property basis adjusted to include redevelopment properties. The Company calculates same-property 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.
EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation 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 it approximates a key performance measure 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 a meaningful performance measure as it relates 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 is useful to investors as a supplemental measure in evaluating the Company's balance sheet leverage.
FFO, FFO as Adjusted, cash NOI, same-property cash NOI, EBITDA and Adjusted EBITDA are presented to assist investors in analyzing the Company’s operating performance. FFO and FFO as Adjusted do 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

3


distributions. The Company believes net income is the most directly comparable GAAP financial measure to FFO, FFO as Adjusted, cash NOI, same-property cash NOI, EBITDA and Adjusted EBITDA. Reconciliations of these measures to their comparable GAAP measures have been provided in the tables accompanying this press release.

Operational 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 77 properties for the three and six months ended June 30, 2016 and 2015. 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, 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 and six months ended June 30, 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
June 30, 2016
 
Six Months Ended
June 30, 2016
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net income
$
36,071

 
$
0.34

 
$
55,859

 
$
0.53

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(2,201
)
 
(0.02
)
 
(3,355
)
 
(0.03
)
Consolidated subsidiaries
(2
)
 

 
2

 

Net income attributable to common shareholders
33,868

 
0.32

 
52,506

 
0.50

Adjustments:
 
 
 
 
 
 
 
Gain on sale of real estate
(15,618
)
 
(0.15
)
 
(15,618
)
 
(0.15
)
Rental property depreciation and amortization
13,395

 
0.13

 
27,150

 
0.26

Limited partnership interests in operating partnership
2,201

 
0.02

 
3,355

 
0.03

FFO Applicable to diluted common shareholders(1)
33,846

 
0.32

 
67,393

 
0.64

 
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(340
)
 

 
(1,490
)
 
(0.01
)
Benefit related to income taxes
(625
)
 
(0.01
)
 
(625
)
 
(0.01
)
Transaction costs
34

 

 
84

 

FFO as Adjusted applicable to diluted common shareholders(1)
$
32,915

 
$
0.31

 
$
65,362

 
$
0.62

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
106,041

 
 
 
105,866

 
 
(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.

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
June 30, 2016
 
Six Months Ended
June 30, 2016
Weighted average diluted shares used to calculate EPS
99,668

 
99,592

Assumed conversion of OP and LTIP Units to common stock(1)
6,373

 
6,274

Weighted average diluted common shares used to calculate
FFO per share
106,041

 
105,866

(1) OP and vested LTIP Units are excluded from the calculation of earnings per diluted share for the three and six months ended June 30, 2016 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 and six months ended June 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended June 30,
 
Six Months Ended
June 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
36,071

 
$
17,153

 
$
55,859

 
$
5,136

Add: Income tax (benefit) expense
(306
)
 
464

 
30

 
1,005

Income before income taxes
35,765

 
17,617

 
55,889

 
6,141

Gain on sale of real estate
(15,618
)
 

 
(15,618
)
 

  Interest income
(177
)
 
(51
)
 
(344
)
 
(62
)
  Interest and debt expense
12,820

 
13,241

 
26,249

 
28,410

Operating income
32,790

 
30,807

 
66,176

 
34,489

Depreciation and amortization
13,558

 
14,233

 
27,473

 
27,965

General and administrative expense
7,535

 
6,792

 
14,255

 
19,118

Transaction costs
34

 
427

 
84

 
22,286

NOI
53,917

 
52,259

 
107,988

 
103,858

    Less: non-cash revenue and expenses
(1,454
)
 
(1,401
)
 
(3,265
)
 
(3,101
)
Cash NOI(1)
52,463

 
50,858

 
104,723

 
100,757

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(4,233
)
 
(4,795
)
 
(8,207
)
 
(8,934
)
Tenant bankruptcy settlement income
(340
)
 

 
(1,490
)
 
(1,260
)
Management and development fee income from non-owned properties
(526
)
 
(693
)
 
(981
)
 
(1,228
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(676
)
 
(450
)
 
(1,378
)
 
(884
)
Environmental remediation costs

 

 

 
1,379

Other(2)
37

 
(60
)
 
89

 
(50
)
    Subtotal adjustments
(5,738
)
 
(5,998
)
 
(11,967
)
 
(10,977
)
Same-property cash NOI
$
46,725

 
$
44,860

 
$
92,756

 
$
89,780

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
4,233

 
4,795

 
8,207

 
8,934

Same-property cash NOI including properties in redevelopment
$
50,958

 
$
49,655

 
$
100,963

 
$
98,714

(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 and six months ended June 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
36,071

 
$
17,153

 
$
55,859

 
$
5,136

Depreciation and amortization
13,558

 
14,233

 
27,473

 
27,965

Interest and debt expense
12,820

 
13,241

 
26,249

 
28,410

Income tax (benefit) expense
(306
)
 
464

 
30

 
1,005

EBITDA
62,143

 
45,091

 
109,611

 
62,516

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Gain on sale of real estate
(15,618
)
 

 
(15,618
)
 

Tenant bankruptcy settlement income
(340
)
 

 
(1,490
)
 
(1,260
)
Transaction costs
34

 
427

 
84

 
22,286

Equity awards issued in connection with the spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Adjusted EBITDA
$
46,219

 
$
45,518

 
$
92,587

 
$
92,064

 
 
 
 
 
 
 
 

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.
 
June 30, 2016
Common shares outstanding
99,294,491

Diluted common shares:
 
OP and LTIP units
6,150,224

Unvested restricted common shares and OPP units
358,782

Fully diluted common shares
105,803,497




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 83 properties totaling 14.7 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 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. 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, 2015.

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 June 30, 2016
 
 
 
 
 
 
 

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 and six months ended June 30, 2016 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Three months ended
 
Six months ended
 
 
June 30, 2016
 
June 30, 2016
Summary Financial Results
 
 
 
 
Total revenue
 
$
79,457

 
$
162,525

General & administrative expenses (G&A)
 
$
7,535

 
$
14,255

Adjusted EBITDA(7)
 
$
46,219

 
$
92,587

Net income attributable to common shareholders
 
$
33,868

 
$
52,506

Earnings per diluted share
 
$
0.34

 
$
0.53

Funds from operations (FFO)
 
$
33,846

 
$
67,393

FFO per diluted common share
 
$
0.32

 
$
0.64

FFO as Adjusted
 
$
32,915

 
$
65,362

FFO as Adjusted per diluted common share
 
$
0.31

 
$
0.62

Total dividends paid per share
 
$
0.20

 
$
0.40

Stock closing price low-high range
 
$24.49 to $29.86

 
$22.22 to $29.86

Weighted average diluted shares used in EPS computations(1)
 
99,668

 
99,592

Weighted average diluted shares used in FFO computations(1)
 
106,041

 
105,866

 
 
 
 
 
Summary Property, Operating and Financial Data
 
 
 
 
# of Total properties / # of Retail properties
 
83 / 82

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
13,761,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
16.89

 
 
Consolidated occupancy at end of period
 
95.1
%
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
96.2
%
 
 
Same-property retail portfolio occupancy at end of period(5)(2)
 
97.4
%
 
 
Same-property retail portfolio physical occupancy at end of period(4)(5)(2)
 
96.4
%
 
 
Same-property cash NOI growth(2)
 
4.2
%
 
3.3
%
Same-property cash NOI growth, including redevelopment properties
 
2.6
%
 
2.3
%
Cash NOI margin - Total portfolio
 
67.4
%
 
65.9
%
Expense recovery ratio - Total portfolio
 
96.5
%
 
94.7
%
New, renewal and option rent spread - cash basis(8)
 
4.4
%
 
16.1
%
New, renewal and option rent spread - GAAP basis(9)
 
13.3
%
 
22.7
%
Net debt to total market capitalization(6)
 
24.2
%
 
24.2
%
Net debt to Adjusted EBITDA(6)
 
5.7
x
 
5.7
x
Adjusted EBITDA to interest expense(7)
 
3.8
x
 
3.7
x
Adjusted EBITDA to fixed charges(7)
 
2.7
x
 
2.7
x
 
 
 
 
 
(1) Weighted average diluted shares used to calculate FFO per share and FFO as Adjusted per share for the periods presented include OP and vested LTIP Units, which are excluded from the calculation of earnings per diluted share for the periods 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, 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 $16.24.
(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.


10



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED BALANCE SHEETS
 
 
As of June 30, 2016 (unaudited) and December 31, 2015
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
June 30,
 
December 31,
 
2016
 
2015
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
378,997

 
$
389,080

Buildings and improvements
1,587,158

 
1,630,539

Construction in progress
124,098

 
61,147

Furniture, fixtures and equipment
3,970

 
3,876

Total
2,094,223

 
2,084,642

Accumulated depreciation and amortization
(518,215
)
 
(509,112
)
Real estate, net
1,576,008

 
1,575,530

Cash and cash equivalents
156,672

 
168,983

Cash held in escrow and restricted cash
8,995

 
9,042

Tenant and other receivables, net of allowance for doubtful accounts of $2,270 and $1,926, respectively
8,317

 
10,364

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $370 and $148, respectively
87,925

 
88,778

Identified intangible assets, net of accumulated amortization of $21,459 and $22,090, respectively
32,586

 
33,953

Deferred leasing costs, net of accumulated amortization of $13,438 and $12,987, respectively
18,108

 
18,455

Deferred financing costs, net of accumulated amortization of $242 and $709, respectively
2,419

 
2,838

Prepaid expenses and other assets
8,360

 
10,988

Total assets
$
1,899,390

 
$
1,918,931

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,205,278

 
$
1,233,983

Identified intangible liabilities, net of accumulated amortization of $69,013 and $65,220, respectively
151,061

 
154,855

Accounts payable and accrued expenses
39,889

 
45,331

Other liabilities
14,898

 
13,308

Total liabilities
1,411,126

 
1,447,477

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,425,137 and 99,290,952 shares issued and outstanding, respectively
994

 
993

Additional paid-in capital
477,673

 
475,369

Accumulated deficit
(25,616
)
 
(38,442
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
34,858

 
33,177

Noncontrolling interest in consolidated subsidiaries
355

 
357

Total equity
488,264

 
471,454

Total liabilities and equity
$
1,899,390

 
$
1,918,931


11



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
 
 
For the three and six months ended June 30, 2016 and 2015 (unaudited)
 
(in thousands, except share and per share amounts)
 
 
 
 
 

 
Three Months Ended June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
REVENUE
 
 
 
 
 
 
 
Property rentals
$
58,683

 
$
57,380

 
$
117,612

 
$
114,966

Tenant expense reimbursements
19,879

 
20,451

 
42,386

 
44,754

Management and development fees
526

 
693

 
981

 
1,228

Other income
369

 
191

 
1,546

 
1,550

Total revenue
79,457

 
78,715

 
162,525

 
162,498

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
13,558

 
14,233

 
27,473

 
27,965

Real estate taxes
12,723

 
12,517

 
25,972

 
25,341

Property operating
9,840

 
10,985

 
22,699

 
27,508

General and administrative
7,535

 
6,792

 
14,255

 
19,118

Ground rent
2,483

 
2,565

 
5,021

 
5,079

Transaction costs
34

 
427

 
84

 
22,286

Provision for doubtful accounts
494

 
389

 
845

 
712

Total expenses
46,667

 
47,908

 
96,349

 
128,009

Operating income
32,790

 
30,807

 
66,176

 
34,489

Gain on sale of real estate
15,618

 

 
15,618

 

Interest income
177

 
51

 
344

 
62

Interest and debt expense
(12,820
)
 
(13,241
)
 
(26,249
)
 
(28,410
)
Income before income taxes
35,765

 
17,617

 
55,889

 
6,141

Income tax benefit (expense)
306

 
(464
)
 
(30
)
 
(1,005
)
Net income
36,071

 
17,153

 
55,859

 
5,136

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(2,201
)
 
(986
)
 
(3,355
)
 
(426
)
Consolidated subsidiaries
(2
)
 
(5
)
 
2

 
(11
)
Net income attributable to common shareholders
$
33,868

 
$
16,162

 
$
52,506

 
$
4,699

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.34

 
$
0.16

 
$
0.53

 
$
0.05

Earnings per common share - Diluted:
$
0.34

 
$
0.16

 
$
0.53

 
$
0.05

Weighted average shares outstanding - Basic
99,274

 
99,250

 
99,270

 
99,249

Weighted average shares outstanding - Diluted
99,668

 
99,274

 
99,592

 
99,265



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME
 
 
For the three and six months ended June 30, 2016 and 2015
 
(in thousands)
 
 
 
 
 
 
Three Months Ended
June 30,
 
Percent Change
 
Six Months Ended
June 30,
 
Percent Change
 
2016
 
2015
 
 
2016
 
2015
 
Total cash NOI(1)
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$
76,968

 
$
75,804

 
1.5%
 
$157,379
 
$156,903
 
0.3%
Total property operating expenses
(25,061
)
 
(25,828
)
 
(3.0)%
 
(53,693)
 
(56,284)
 
(4.6)%
Cash NOI - total portfolio
$
51,907

 
$
49,976

 
3.9%
 
$
103,686

 
$
100,619

 
3.0%
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin (NOI / Total revenue)
67.4
%
 
65.9
%
 
 
 
65.9
%
 
64.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-property cash NOI(2)
 
 
 
 
 
 
 
 
 
 
 
Property rentals
$
51,088

 
$
49,564

 
 
 
$
101,879

 
$
99,072

 
 
Tenant expense reimbursements
17,905

 
18,586

 
 
 
38,468

 
40,895

 
 
Percentage rent
48

 
106

 
 
 
307

 
476

 
 
Total revenue
69,041

 
68,256

 
1.2%
 
140,654

 
140,443

 
0.2%
Real estate taxes
(11,719
)
 
(11,757
)
 
 
 
(23,812
)
 
(23,469
)
 
 
Property operating
(8,241
)
 
(9,335
)
 
 
 
(19,266
)
 
(22,390
)
 
 
Ground rent
(2,193
)
 
(2,215
)
 
 
 
(4,399
)
 
(4,380
)
 
 
Provision for doubtful accounts(4)
(163
)
 
(89
)
 
 
 
(421
)
 
(424
)
 
 
Total property operating expenses
(22,316
)
 
(23,396
)
 
(4.6)%
 
(47,898
)
 
(50,663
)
 
(5.5)%
Same-property cash NOI(3)
$
46,725

 
$
44,860

 
4.2%
 
$
92,756

 
$
89,780

 
3.3%
 
 
 
 
 
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
$
4,233

 
$
4,795

 
 
 
$
8,207

 
$
8,934

 
 
Same-property cash NOI including properties in redevelopment
$
50,958

 
$
49,655

 
2.6%
 
$
100,963

 
$
98,714

 
2.3%
 
 
 
 
 
 
 
 
 
 
 
 
Same-property physical occupancy(3)
96.4
%
 
96.2
%
 
 
 
 
 
 
 
 
Same-property leased occupancy(3)
97.4
%
 
96.9
%
 
 
 
 
 
 
 
 
Number of properties included in same-property analysis
77

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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, or are in the foreclosure process during the periods being compared. Same-property occupancy includes dark and paying tenants.
(4)  
Excludes $0.2 million and $0.3 million of bad debt expense related to non-cash straight-line rents for the three and six months ended June 30, 2016 and 2015, respectively.

13



URBAN EDGE PROPERTIES
 
 
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION and AMORTIZATION (EBITDA)
For the three and six months ended June 30, 2016 and 2015
 
(in thousands)
 
 
 
 
 

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
36,071

 
$
17,153

 
$
55,859

 
$
5,136

Depreciation and amortization
13,558

 
14,233

 
27,473

 
27,965

Interest expense
12,097

 
12,505

 
24,867

 
26,990

Amortization of deferred financing costs
723

 
736

 
1,382

 
1,420

Income tax (benefit) expense
(306
)
 
464

 
30

 
1,005

EBITDA
62,143

 
45,091

 
109,611

 
62,516

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Gain on sale of real estate
(15,618
)
 

 
(15,618
)
 

Tenant bankruptcy settlement income
(340
)
 

 
(1,490
)
 
(1,260
)
Transaction costs
34

 
427

 
84

 
22,286

Equity awards issued in connection with spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Adjusted EBITDA
$
46,219

 
$
45,518

 
$
92,587

 
$
92,064

 
 
 
 
 
 
 
 
Interest expense
$
12,097

 
$
12,505

 
$
24,867

 
$
26,990

 
 
 
 
 
 
 
 
Adjusted EBITDA to interest expense
3.8
x
 
3.6
x
 
3.7
x
 
3.4
x
 
 
 
 
 
 
 
 
Fixed charges
 
 
 
 
 
 
 
Interest and debt expense(1)
$
12,820

 
$
13,241

 
$
26,249

 
$
28,410

Scheduled principal amortization
4,325

 
3,950

 
8,455

 
7,637

Total fixed charges
$
17,145