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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):
November 2, 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 November 2, 2016, Urban Edge Properties (the "Company") announced its financial results for the three and nine months ended September 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 November 2, 2016, the Company announced its financial results for the three and nine months ended September 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 November 2, 2016.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of September 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: November 2, 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 November 2, 2016
99.2
 
Supplemental Disclosure Package of Urban Edge Properties as of September 30, 2016



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
36525126_image2a02.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 Third Quarter 2016 Operating Results


                                    
NEW YORK, NY, November 2, 2016 - Urban Edge Properties (NYSE:UE) (the "Company") announced today its financial results for the three and nine months ended September 30, 2016.

Highlights include:
Generated net income of $0.19 per diluted share for the quarter and $0.72 per diluted share for the nine months ended September 30, 2016.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $0.33 per share for the quarter and $0.96 per share for the nine months ended September 30, 2016.
Generated FFO as Adjusted of $0.32 per share for the quarter and $0.94 per share for the nine months ended September 30, 2016, an increase of 7% as compared to the third quarter of 2015 and 4% as compared to the nine months ended September 30, 2015. FFO as Adjusted excludes tenant bankruptcy settlement income and transaction costs.
Increased same-property cash Net Operating Income (“NOI”) by 4.1% as compared to the third quarter of 2015 and 3.6% as compared to the nine months ended September 30, 2015 primarily due to new rent commencements and higher recoveries resulting from higher occupancy.
Increased same-property cash NOI including properties in redevelopment by 3.9% as compared to the third quarter of 2015 and 2.8% as compared to the nine months ended September 30, 2015. The expected vacancy of former anchor tenants at Walnut Creek and Bruckner negatively impacted this result by approximately 90 basis points. Anthropologie opened at Walnut Creek on September 16, 2016 and ShopRite is expected to open at Bruckner in the first quarter of 2018.
Rent commencements during the third quarter included LA Fitness at Kearny, Anthropologie at Walnut Creek and Burlington Coat Factory at Garfield.
Increased consolidated retail portfolio occupancy by 50 basis points to 96.6% as compared to September 30, 2015 and by 40 basis points as compared to June 30, 2016.
Increased same-property retail portfolio occupancy by 50 basis points to 97.4% as compared to September 30, 2015 and by 10 basis points as compared to June 30, 2016.
New leases, renewals and options totaling 284,000 square feet ("sf") were executed during the quarter. Same-space leases totaled 184,000 sf at an average rental rate of $25.59 per sf on a GAAP basis and $24.32 per sf on a cash basis generating average rent spreads of 21.2% on a GAAP basis and 11.0% on a cash basis.
Executed contracts to acquire two properties for $76.0 million. Both acquisitions are located in the NY metropolitan region and are adjacent to shopping centers already owned by the Company. These off-market acquisitions are expected to generate a 7.5% unleveraged return on invested capital based on the first year of net operating income.

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


1



Development, Redevelopment and Anchor Repositioning:
The Company is investing approximately $132 million in development, redevelopment and anchor repositioning projects expected to generate a 13% return on invested capital upon completion based on the expected incremental cash NOI relative to the total investment. These projects include:
Walnut Creek, CA (South Main Street) was completed in September 2016 with the opening of a 31,000 sf Anthropologie in a former Barnes & Noble building.
Walnut Creek (Mt Diablo) is scheduled for completion in early 2017 with the opening of a 7,000 sf Z Gallerie in the building formerly occupied by Anthropologie.
The Outlets at Montehiedra in San Juan, Puerto Rico celebrated its grand reopening on October 7, 2016. Initial new tenants include Polo, Gap, Nike, Puma, Skechers, Maidenform (under construction), and Guess (under construction). Additionally, Caribbean Theatres completed a $6.0 million renovation of its 13 screen cinema including the addition of the first IMAX and 4DX offerings in the Caribbean. The project is scheduled to be fully completed by March 2018.
Garfield Commons in Garfield, NJ is on schedule for completion in September 2017. Burlington Coat Factory opened in September 2016, PetSmart opened in October 2016 and 17,000 sf of shop space is under construction.
West End Commons in North Plainfield, NJ is scheduled for completion in September 2017. New retailers include Petco, La-Z-Boy (open), AAA, Aroogas and Texas Roadhouse (open).
Goucher Commons in Towson, MD is scheduled for completion in September 2017 with the addition of Ulta, Tuesday Morning and two other national retailers.
Hackensack Commons in Hackensack, NJ is on schedule for completion in December 2017 with the addition of a 60,000 sf 99 Ranch Market.
Bruckner Commons in the Bronx, NY is scheduled for completion in January 2018. The renovation and anchor repositioning includes the first ShopRite supermarket in the Bronx, a 50,000 sf discount retailer and new food and service offerings.

Bergen Town Center in Paramus, NJ is undergoing a phased renovation and expansion to be completed over the next several years. The phases include expanding the existing mall by approximately 40,000 sf and developing 60,000-75,000 sf of new retail space on entitled land across the street from the mall. The project will add leading discount and outlet retailers, entertainment venues and enhanced food and dining options. Access, parking, circulation and signage will also be improved. The total investment is now projected to be $70.0-$80.0 million as compared to the previous estimate of approximately $140 million. The reduction reflects the elimination of a proposed, new second level over the existing mall.

During the third quarter, the Company added two new projects to its development and redevelopment pipeline with aggregate expected costs of $5.0-$7.0 million.  The pipeline now comprises 16 projects with total expected costs of $115.0-$140.0 million on which the Company expects to generate an 8% return on invested capital.

Balance Sheet Highlights:
At September 30, 2016:
Total market capitalization (including debt and equity) was approximately $4.2 billion comprising 106.0 million common shares outstanding (on a fully diluted basis) valued at $3.0 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 25.3%
Net debt to annualized Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.6x. A reconciliation of net income to EBITDA and Adjusted EBITDA are provided in the tables accompanying this press release
The Company had approximately $149.7 million of cash and cash equivalents and no amounts drawn on its $500.0 million revolving credit facility





2



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 could 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.
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 77 properties for the three and nine months ended September 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. 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 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 disclosure of 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.

3



EBITDA and Adjusted EBITDA: 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.
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.

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 nine months ended September 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



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 14.8 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.


5



URBAN EDGE PROPERTIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts) 
 
September 30,
 
December 31,
 
2016
 
2015
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
381,550

 
$
389,080

Buildings and improvements
1,623,465

 
1,630,539

Construction in progress
105,936

 
61,147

Furniture, fixtures and equipment
4,123

 
3,876

Total
2,115,074

 
2,084,642

Accumulated depreciation and amortization
(531,623
)
 
(509,112
)
Real estate, net
1,583,451

 
1,575,530

Cash and cash equivalents
149,698

 
168,983

Cash held in escrow and restricted cash
7,653

 
9,042

Tenant and other receivables, net of allowance for doubtful accounts of $2,324 and $1,926, respectively
10,380

 
10,364

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $336 and $148, respectively
87,884

 
88,778

Identified intangible assets, net of accumulated amortization of $21,734 and $22,090, respectively
31,502

 
33,953

Deferred leasing costs, net of accumulated amortization of $13,707 and $12,987, respectively
18,844

 
18,455

Deferred financing costs, net of accumulated amortization of $484 and $709, respectively
2,177

 
2,838

Prepaid expenses and other assets
14,937

 
10,988

Total assets
$
1,906,526

 
$
1,918,931

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,201,466

 
$
1,233,983

Identified intangible liabilities, net of accumulated amortization of $70,639 and $65,220, respectively
148,881

 
154,855

Accounts payable and accrued expenses
47,558

 
45,331

Other liabilities
14,842

 
13,308

Total liabilities
1,412,747

 
1,447,477

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,608,920 and 99,290,952 shares issued and outstanding, respectively
996

 
993

Additional paid-in capital
483,402

 
475,369

Accumulated deficit
(26,203
)
 
(38,442
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
35,228

 
33,177

Noncontrolling interest in consolidated subsidiaries
356

 
357

Total equity
493,779

 
471,454

Total liabilities and equity
$
1,906,526

 
$
1,918,931


6



URBAN EDGE PROPERTIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except share and per share amounts)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
REVENUE
 
 
 
 
 
 
 
Property rentals
$
59,138

 
$
58,111

 
$
176,750

 
$
173,077

Tenant expense reimbursements
19,888

 
19,188

 
62,274

 
63,942

Management and development fees
375

 
551

 
1,356

 
1,779

Other income
572

 
1,975

 
2,118

 
3,525

Total revenue
79,973

 
79,825

 
242,498

 
242,323

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
14,435

 
13,603

 
41,908

 
41,568

Real estate taxes
12,729

 
12,227

 
38,701

 
37,568

Property operating
9,897

 
10,494

 
32,596

 
38,002

General and administrative
6,618

 
6,385

 
20,873

 
25,503

Ground rent
2,508

 
2,527

 
7,529

 
7,606

Transaction costs
223

 
151

 
307

 
22,437

Provision for doubtful accounts
149

 
427

 
994

 
1,139

Total expenses
46,559

 
45,814

 
142,908

 
173,823

Operating income
33,414

 
34,011

 
99,590

 
68,500

Gain on sale of real estate

 

 
15,618

 

Interest income
176

 
39

 
520

 
101

Interest and debt expense
(12,766
)
 
(13,611
)
 
(39,015
)
 
(42,021
)
Income before income taxes
20,824

 
20,439

 
76,713

 
26,580

Income tax expense
(319
)
 
(394
)
 
(349
)
 
(1,399
)
Net income
20,505

 
20,045

 
76,364

 
25,181

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,239
)
 
(1,179
)
 
(4,594
)
 
(1,605
)
Consolidated subsidiaries
(1
)
 
(6
)
 
1

 
(17
)
Net income attributable to common shareholders
$
19,265

 
$
18,860

 
$
71,771

 
$
23,559

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.19

 
$
0.19

 
$
0.72

 
$
0.24

Earnings per common share - Diluted:
$
0.19

 
$
0.19

 
$
0.72

 
$
0.24

Weighted average shares outstanding - Basic
99,304

 
99,252

 
99,281

 
99,250

Weighted average shares outstanding - Diluted
99,870

 
99,286

 
99,711

 
99,272



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 and nine months ended September 30, 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
September 30, 2016
 
Nine Months Ended
September 30, 2016
 
(in thousands)
 
(per share)(2)
 
(in thousands)
 
(per share)(2)
Net income
$
20,505

 
$
0.19

 
$
76,364

 
$
0.72

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,239
)
 
(0.01
)
 
(4,594
)
 
(0.04
)
Consolidated subsidiaries
(1
)
 

 
1

 

Net income attributable to common shareholders
19,265

 
0.18

 
71,771

 
0.68

Adjustments:
 
 
 
 
 
 
 
Gain on sale of real estate

 

 
(15,618
)
 
(0.15
)
Rental property depreciation and amortization
14,269

 
0.14

 
41,419

 
0.39

Limited partnership interests in operating partnership
1,239

 
0.01

 
4,594

 
0.04

FFO Applicable to diluted common shareholders(1)
34,773

 
0.33

 
102,166

 
0.96

 
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(545
)
 
(0.01
)
 
(2,035
)
 
(0.02
)
Benefit related to income taxes

 

 
(625
)
 
(0.01
)
Transaction costs
223

 

 
307

 

FFO as Adjusted applicable to diluted common shareholders(1)
$
34,451

 
$
0.32

 
$
99,813

 
$
0.94

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
106,266

 
 
 
106,009

 
 
(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) Individual items may not add up due to total rounding.

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
September 30, 2016
 
Nine Months Ended
September 30, 2016
Weighted average diluted shares used to calculate EPS
99,870

 
99,711

Assumed conversion of OP and LTIP Units to common stock(1)
6,396

 
6,298

Weighted average diluted common shares used to calculate
FFO per share
106,266

 
106,009

(1) OP and vested LTIP Units are excluded from the calculation of earnings per diluted share for the three and nine months ended September 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 nine months ended September 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,505

 
$
20,045

 
$
76,364

 
$
25,181

Add: Income tax expense
319

 
394

 
349

 
1,399

Income before income taxes
20,824

 
20,439

 
76,713

 
26,580

Gain on sale of real estate

 

 
(15,618
)
 

  Interest income
(176
)
 
(39
)
 
(520
)
 
(101
)
  Interest and debt expense
12,766

 
13,611

 
39,015

 
42,021

Operating income
33,414

 
34,011

 
99,590

 
68,500

Depreciation and amortization
14,435

 
13,603

 
41,908

 
41,568

General and administrative expense
6,618

 
6,385

 
20,873

 
25,503

Transaction costs
223

 
151

 
307

 
22,437

NOI
54,690

 
54,150

 
162,678

 
158,008

    Less: non-cash revenue and expenses
(1,823
)
 
(1,625
)
 
(5,088
)
 
(4,726
)
Cash NOI(1)
52,867

 
52,525

 
157,590

 
153,282

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(4,425
)
 
(4,331
)
 
(12,634
)
 
(13,269
)
Tenant bankruptcy settlement income
(545
)
 
(1,774
)
 
(2,035
)
 
(3,034
)
Management and development fee income from non-owned properties
(375
)
 
(551
)
 
(1,356
)
 
(1,779
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(392
)
 
(435
)
 
(1,814
)
 
(1,365
)
Environmental remediation costs

 

 

 
1,379

Other(2)
45

 
(112
)
 
129

 
(159
)
    Subtotal adjustments
(5,692
)
 
(7,203
)
 
(17,710
)
 
(18,227
)
Same-property cash NOI
$
47,175

 
$
45,322

 
$
139,880

 
$
135,055

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
4,425

 
4,331

 
12,634

 
13,269

Same-property cash NOI including properties in redevelopment
$
51,600

 
$
49,653

 
$
152,514

 
$
148,324

(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 nine months ended September 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,505

 
$
20,045

 
$
76,364

 
$
25,181

Depreciation and amortization
14,435

13,603,000

13,603

 
41,908

 
41,568

Interest and debt expense
12,766

 
13,611

 
39,015

 
42,021

Income tax expense
319

 
394

 
349

 
1,399

EBITDA
48,025

 
47,653

 
157,636

 
110,169

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(545
)
 
(1,774
)
 
(2,035
)
 
(3,034
)
Transaction costs
223

 
151

 
307

 
22,437

Gain on sale of real estate

 

 
(15,618
)
 

Equity awards issued in connection with the spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Adjusted EBITDA
$
47,703

 
$
46,030

 
$
140,290

 
$
138,094

 
 
 
 
 
 
 
 

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.
 
September 30, 2016
Common shares outstanding
99,478,821

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

Unvested restricted common shares and OPP units
375,587

Fully diluted common shares
106,004,632




10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
September 30, 2016
 
 



36525126_image3a02.jpg




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







URBAN EDGE PROPERTIES
SUPPLEMENTAL DISCLOSURE
September 30, 2016
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Third 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
 
 








 
36525126_image2a02.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 Third Quarter 2016 Operating Results


                                    
NEW YORK, NY, November 2, 2016 - Urban Edge Properties (NYSE:UE) (the "Company") announced today its financial results for the three and nine months ended September 30, 2016.

Highlights include:
Generated net income of $0.19 per diluted share for the quarter and $0.72 per diluted share for the nine months ended September 30, 2016.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $0.33 per share for the quarter and $0.96 per share for the nine months ended September 30, 2016.
Generated FFO as Adjusted of $0.32 per share for the quarter and $0.94 per share for the nine months ended September 30, 2016, an increase of 7% as compared to the third quarter of 2015 and 4% as compared to the nine months ended September 30, 2015. FFO as Adjusted excludes tenant bankruptcy settlement income and transaction costs.
Increased same-property cash Net Operating Income (“NOI”) by 4.1% as compared to the third quarter of 2015 and 3.6% as compared to the nine months ended September 30, 2015 primarily due to new rent commencements and higher recoveries resulting from higher occupancy.
Increased same-property cash NOI including properties in redevelopment by 3.9% as compared to the third quarter of 2015 and 2.8% as compared to the nine months ended September 30, 2015. The expected vacancy of former anchor tenants at Walnut Creek and Bruckner negatively impacted this result by approximately 90 basis points. Anthropologie opened at Walnut Creek on September 16, 2016 and ShopRite is expected to open at Bruckner in the first quarter of 2018.
Rent commencements during the third quarter included LA Fitness at Kearny, Anthropologie at Walnut Creek and Burlington Coat Factory at Garfield.
Increased consolidated retail portfolio occupancy by 50 basis points to 96.6% as compared to September 30, 2015 and by 40 basis points as compared to June 30, 2016.
Increased same-property retail portfolio occupancy by 50 basis points to 97.4% as compared to September 30, 2015 and by 10 basis points as compared to June 30, 2016.
New leases, renewals and options totaling 284,000 square feet ("sf") were executed during the quarter. Same-space leases totaled 184,000 sf at an average rental rate of $25.59 per sf on a GAAP basis and $24.32 per sf on a cash basis generating average rent spreads of 21.2% on a GAAP basis and 11.0% on a cash basis.
Executed contracts to acquire two properties for $76.0 million. Both acquisitions are located in the NY metropolitan region and are adjacent to shopping centers already owned by the Company. These off-market acquisitions are expected to generate a 7.5% unleveraged return on invested capital based on the first year of net operating income.

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


1


Development, Redevelopment and Anchor Repositioning:
The Company is investing approximately $132 million in development, redevelopment and anchor repositioning projects expected to generate a 13% return on invested capital upon completion based on the expected incremental cash NOI relative to the total investment. These projects include:
Walnut Creek, CA (South Main Street) was completed in September 2016 with the opening of a 31,000 sf Anthropologie in a former Barnes & Noble building.
Walnut Creek (Mt Diablo) is scheduled for completion in early 2017 with the opening of a 7,000 sf Z Gallerie in the building formerly occupied by Anthropologie.
The Outlets at Montehiedra in San Juan, Puerto Rico celebrated its grand reopening on October 7, 2016. Initial new tenants include Polo, Gap, Nike, Puma, Skechers, Maidenform (under construction), and Guess (under construction). Additionally, Caribbean Theatres completed a $6.0 million renovation of its 13 screen cinema including the addition of the first IMAX and 4DX offerings in the Caribbean. The project is scheduled to be fully completed by March 2018.
Garfield Commons in Garfield, NJ is on schedule for completion in September 2017. Burlington Coat Factory opened in September 2016, PetSmart opened in October 2016 and 17,000 sf of shop space is under construction.
West End Commons in North Plainfield, NJ is scheduled for completion in September 2017. New retailers include Petco, La-Z-Boy (open), AAA, Aroogas and Texas Roadhouse (open).
Goucher Commons in Towson, MD is scheduled for completion in September 2017 with the addition of Ulta, Tuesday Morning and two other national retailers.
Hackensack Commons in Hackensack, NJ is on schedule for completion in December 2017 with the addition of a 60,000 sf 99 Ranch Market.
Bruckner Commons in the Bronx, NY is scheduled for completion in January 2018. The renovation and anchor repositioning includes the first ShopRite supermarket in the Bronx, a 50,000 sf discount retailer and new food and service offerings.

Bergen Town Center in Paramus, NJ is undergoing a phased renovation and expansion to be completed over the next several years. The phases include expanding the existing mall by approximately 40,000 sf and developing 60,000-75,000 sf of new retail space on entitled land across the street from the mall. The project will add leading discount and outlet retailers, entertainment venues and enhanced food and dining options. Access, parking, circulation and signage will also be improved. The total investment is now projected to be $70.0-$80.0 million as compared to the previous estimate of approximately $140 million. The reduction reflects the elimination of a proposed, new second level over the existing mall.

During the third quarter, the Company added two new projects to its development and redevelopment pipeline with aggregate expected costs of $5.0-$7.0 million.  The pipeline now comprises 16 projects with total expected costs of $115.0-$140.0 million on which the Company expects to generate an 8% return on invested capital.


Balance Sheet Highlights:
At September 30, 2016:
Total market capitalization (including debt and equity) was approximately $4.2 billion comprising 106.0 million common shares outstanding (on a fully diluted basis) valued at $3.0 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 25.3%
Net debt to annualized Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.6x. A reconciliation of net income to EBITDA and Adjusted EBITDA are provided in the tables accompanying this press release
The Company had approximately $149.7 million of cash and cash equivalents and no amounts drawn on its $500.0 million revolving credit facility





2


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 could 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.
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 77 properties for the three and nine months ended September 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. 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 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 disclosure of 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.

3


EBITDA and Adjusted EBITDA: 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.
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.

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 nine months ended September 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 nine months ended September 30, 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
September 30, 2016
 
Nine Months Ended
September 30, 2016
 
(in thousands)
 
(per share)(2)
 
(in thousands)
 
(per share)(2)
Net income
$
20,505

 
$
0.19

 
$
76,364

 
$
0.72

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,239
)
 
(0.01
)
 
(4,594
)
 
(0.04
)
Consolidated subsidiaries
(1
)
 

 
1

 

Net income attributable to common shareholders
19,265

 
0.18

 
71,771

 
0.68

Adjustments:
 
 
 
 
 
 
 
Gain on sale of real estate

 

 
(15,618
)
 
(0.15
)
Rental property depreciation and amortization
14,269

 
0.14

 
41,419

 
0.39

Limited partnership interests in operating partnership
1,239

 
0.01

 
4,594

 
0.04

FFO Applicable to diluted common shareholders(1)
34,773

 
0.33

 
102,166

 
0.96

 
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(545
)
 
(0.01
)
 
(2,035
)
 
(0.02
)
Benefit related to income taxes

 

 
(625
)
 
(0.01
)
Transaction costs
223

 

 
307

 

FFO as Adjusted applicable to diluted common shareholders(1)
$
34,451

 
$
0.32

 
$
99,813

 
$
0.94

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
106,266

 
 
 
106,009

 
 
(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) Individual items may not add up due to total rounding.

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
September 30, 2016
 
Nine Months Ended
September 30, 2016
Weighted average diluted shares used to calculate EPS
99,870

 
99,711

Assumed conversion of OP and LTIP Units to common stock(1)
6,396

 
6,298

Weighted average diluted common shares used to calculate
FFO per share
106,266

 
106,009

(1) OP and vested LTIP Units are excluded from the calculation of earnings per diluted share for the three and nine months ended September 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 nine months ended September 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,505

 
$
20,045

 
$
76,364

 
$
25,181

Add: Income tax expense
319

 
394

 
349

 
1,399

Income before income taxes
20,824

 
20,439

 
76,713

 
26,580

Gain on sale of real estate

 

 
(15,618
)
 

  Interest income
(176
)
 
(39
)
 
(520
)
 
(101
)
  Interest and debt expense
12,766

 
13,611

 
39,015

 
42,021

Operating income
33,414

 
34,011

 
99,590

 
68,500

Depreciation and amortization
14,435

 
13,603

 
41,908

 
41,568

General and administrative expense
6,618

 
6,385

 
20,873

 
25,503

Transaction costs
223

 
151

 
307

 
22,437

NOI
54,690

 
54,150

 
162,678

 
158,008

    Less: non-cash revenue and expenses
(1,823
)
 
(1,625
)
 
(5,088
)
 
(4,726
)
Cash NOI(1)
52,867

 
52,525

 
157,590

 
153,282

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(4,425
)
 
(4,331
)
 
(12,634
)
 
(13,269
)
Tenant bankruptcy settlement income
(545
)
 
(1,774
)
 
(2,035
)
 
(3,034
)
Management and development fee income from non-owned properties
(375
)
 
(551
)
 
(1,356
)
 
(1,779
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(392
)
 
(435
)
 
(1,814
)
 
(1,365
)
Environmental remediation costs

 

 

 
1,379

Other(2)
45

 
(112
)
 
129

 
(159
)
    Subtotal adjustments
(5,692
)
 
(7,203
)
 
(17,710
)
 
(18,227
)
Same-property cash NOI
$
47,175

 
$
45,322

 
$
139,880

 
$
135,055

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
4,425

 
4,331

 
12,634

 
13,269

Same-property cash NOI including properties in redevelopment
$
51,600

 
$
49,653

 
$
152,514

 
$
148,324

(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 nine months ended September 30, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,505

 
$
20,045

 
$
76,364

 
$
25,181

Depreciation and amortization
14,435

13,603,000

13,603

 
41,908

 
41,568

Interest and debt expense
12,766

 
13,611

 
39,015

 
42,021

Income tax expense
319

 
394

 
349

 
1,399

EBITDA
48,025

 
47,653

 
157,636

 
110,169

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(545
)
 
(1,774
)
 
(2,035
)
 
(3,034
)
Transaction costs
223

 
151

 
307

 
22,437

Gain on sale of real estate

 

 
(15,618
)
 

Equity awards issued in connection with the spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Adjusted EBITDA
$
47,703

 
$
46,030

 
$
140,290

 
$
138,094

 
 
 
 
 
 
 
 

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.
 
September 30, 2016
Common shares outstanding
99,478,821

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

Unvested restricted common shares and OPP units
375,587

Fully diluted common shares
106,004,632




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 14.8 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 September 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 nine months ended September 30, 2016 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
 
 
September 30, 2016
 
September 30, 2016
Summary Financial Results
 
 
 
 
Total revenue
 
$
79,973

 
$
242,498

General & administrative expenses (G&A)
 
$
6,618

 
$
20,873

Adjusted EBITDA(7)
 
$
47,703

 
$
140,290

Net income attributable to common shareholders
 
$
19,265

 
$
71,771

Earnings per diluted share
 
$
0.19

 
$
0.72

Funds from operations (FFO)
 
$
34,773

 
$
102,166

FFO per diluted common share
 
$
0.33

 
$
0.96

FFO as Adjusted
 
$
34,451

 
$
99,813

FFO as Adjusted per diluted common share
 
$
0.32

 
$
0.94

Total dividends paid per share
 
$
0.20

 
$
0.60

Stock closing price low-high range
 
$27.06 to $30.15

 
$22.22 to $30.15

Weighted average diluted shares used in EPS computations(1)
 
99,870

 
99,711

Weighted average diluted common shares used in FFO computations(1)
 
106,266

 
106,009

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

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
13,829,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
17.05

 
 
Consolidated occupancy at end of period
 
96.3
%
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
96.6
%
 
 
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)
 
96.0
%
 
 
Same-property cash NOI growth(2)
 
4.1
%
 
3.6
%
Same-property cash NOI growth, including redevelopment properties
 
3.9
%
 
2.8
%
Cash NOI margin - total portfolio
 
67.7
%
 
66.5
%
Expense recovery ratio - total portfolio
 
97.2
%
 
96.5
%
New, renewal and option rent spread - cash basis(8)
 
11.0
%
 
13.3
%
New, renewal and option rent spread - GAAP basis(9)
 
21.2
%
 
21.9
%
Net debt to total market capitalization(6)
 
25.3
%
 
25.3
%
Net debt to Adjusted EBITDA(6)
 
5.6
x
 
5.6
x
Adjusted EBITDA to interest expense(7)
 
4.0
x
 
3.8
x
Adjusted EBITDA to fixed charges(7)
 
2.8
x
 
2.7
x
 
 
 
 
 
(1) Weighted average diluted common 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 $16.30.
(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 September 30, 2016 (unaudited) and December 31, 2015
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
September 30,
 
December 31,
 
2016
 
2015
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
381,550

 
$
389,080

Buildings and improvements
1,623,465

 
1,630,539

Construction in progress
105,936

 
61,147

Furniture, fixtures and equipment
4,123

 
3,876

Total
2,115,074

 
2,084,642

Accumulated depreciation and amortization
(531,623
)
 
(509,112
)
Real estate, net
1,583,451

 
1,575,530

Cash and cash equivalents
149,698

 
168,983

Cash held in escrow and restricted cash
7,653

 
9,042

Tenant and other receivables, net of allowance for doubtful accounts of $2,324 and $1,926, respectively
10,380

 
10,364

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $336 and $148, respectively
87,884

 
88,778

Identified intangible assets, net of accumulated amortization of $21,734 and $22,090, respectively
31,502

 
33,953

Deferred leasing costs, net of accumulated amortization of $13,707 and $12,987, respectively
18,844

 
18,455

Deferred financing costs, net of accumulated amortization of $484 and $709, respectively
2,177

 
2,838

Prepaid expenses and other assets
14,937

 
10,988

Total assets
$
1,906,526

 
$
1,918,931

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,201,466

 
$
1,233,983

Identified intangible liabilities, net of accumulated amortization of $70,639 and $65,220, respectively
148,881

 
154,855

Accounts payable and accrued expenses
47,558

 
45,331

Other liabilities
14,842

 
13,308

Total liabilities
1,412,747

 
1,447,477

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,608,920 and 99,290,952 shares issued and outstanding, respectively
996

 
993

Additional paid-in capital
483,402

 
475,369

Accumulated deficit
(26,203
)
 
(38,442
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
35,228

 
33,177

Noncontrolling interest in consolidated subsidiaries
356

 
357

Total equity
493,779

 
471,454

Total liabilities and equity
$
1,906,526

 
$
1,918,931


11



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

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
REVENUE
 
 
 
 
 
 
 
Property rentals
$
59,138

 
$
58,111

 
$
176,750

 
$
173,077

Tenant expense reimbursements
19,888

 
19,188

 
62,274

 
63,942

Management and development fees
375

 
551

 
1,356

 
1,779

Other income
572

 
1,975

 
2,118

 
3,525

Total revenue
79,973

 
79,825

 
242,498

 
242,323

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
14,435

 
13,603

 
41,908

 
41,568

Real estate taxes
12,729

 
12,227

 
38,701

 
37,568

Property operating
9,897

 
10,494

 
32,596

 
38,002

General and administrative
6,618

 
6,385

 
20,873

 
25,503

Ground rent
2,508

 
2,527

 
7,529

 
7,606

Transaction costs
223

 
151

 
307

 
22,437

Provision for doubtful accounts
149

 
427

 
994

 
1,139

Total expenses
46,559

 
45,814

 
142,908

 
173,823

Operating income
33,414

 
34,011

 
99,590

 
68,500

Gain on sale of real estate

 

 
15,618

 

Interest income
176

 
39

 
520

 
101

Interest and debt expense
(12,766
)
 
(13,611
)
 
(39,015
)
 
(42,021
)
Income before income taxes
20,824

 
20,439

 
76,713

 
26,580

Income tax expense
(319
)
 
(394
)
 
(349
)
 
(1,399
)
Net income
20,505

 
20,045

 
76,364

 
25,181

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,239
)
 
(1,179
)
 
(4,594
)
 
(1,605
)
Consolidated subsidiaries
(1
)
 
(6
)
 
1

 
(17
)
Net income attributable to common shareholders
$
19,265

 
$
18,860

 
$
71,771

 
$
23,559

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.19

 
$
0.19

 
$
0.72

 
$
0.24

Earnings per common share - Diluted:
$
0.19

 
$
0.19

 
$
0.72

 
$
0.24

Weighted average shares outstanding - Basic
99,304

 
99,252

 
99,281

 
99,250

Weighted average shares outstanding - Diluted
99,870

 
99,286

 
99,711

 
99,272



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME
 
 
For the three and nine months ended September 30, 2016 and 2015
 
(in thousands)
 
 
 
 
 
 
Three Months Ended
September 30,
 
Percent Change
 
Nine Months Ended
September 30,
 
Percent Change
 
2016
 
2015
 
 
2016
 
2015
 
Total cash NOI(1)
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$
77,486

 
$
77,186

 
0.4%
 
$234,865
 
$234,089
 
0.3%
Total property operating expenses
(25,022
)
 
(25,241
)
 
(0.9)%
 
(78,715)
 
(82,904)
 
(5.1)%
Cash NOI - total portfolio
$
52,464

 
$
51,945

 
1.0%
 
$
156,150

 
$
151,185

 
3.3%
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin (NOI / Total revenue)
67.7
%
 
67.3
%
 
 
 
66.5
%
 
64.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-property cash NOI(2)
 
 
 
 
 
 
 
 
 
 
 
Property rentals
$
51,496

 
$
50,223

 
 
 
$
153,324

 
$
149,244

 
 
Tenant expense reimbursements
18,114

 
17,677

 
 
 
56,572

 
58,558

 
 
Percentage rent
104

 
79

 
 
 
411

 
555

 
 
Total revenue
69,714

 
67,979

 
2.6%
 
210,307

 
208,357

 
0.9%
Real estate taxes
(11,873
)
 
(11,337
)
 
 
 
(35,675
)
 
(34,790
)
 
 
Property operating
(8,345
)
 
(8,822
)
 
 
 
(27,608
)
 
(31,210
)
 
 
Ground rent
(2,213
)
 
(2,211
)
 
 
 
(6,612
)
 
(6,591
)
 
 
Provision for doubtful accounts(4)
(108
)
 
(287
)
 
 
 
(532
)
 
(711
)
 
 
Total property operating expenses
(22,539
)
 
(22,657
)
 
(0.5)%
 
(70,427
)
 
(73,302
)
 
(3.9)%
Same-property cash NOI(3)
$
47,175

 
$
45,322

 
4.1%
 
$
139,880

 
$
135,055

 
3.6%
 
 
 
 
 
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
$
4,425

 
$
4,331

 
 
 
$
12,634

 
$
13,269

 
 
Same-property cash NOI including properties in redevelopment
$
51,600

 
$
49,653

 
3.9%
 
$
152,514

 
$
148,324

 
2.8%
 
 
 
 
 
 
 
 
 
 
 
 
Same-property physical occupancy(3)
96.0
%
 
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 $0.1 million, $0.2 million and $0.4 million of bad debt expense related to non-cash straight-line rents for the three months ended September 30, 2015 and the nine months ended September 30, 2016 and 2015, respectively.

13



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

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
20,505

 
$
20,045

 
$
76,364

 
$
25,181

Depreciation and amortization
14,435

 
13,603

 
41,908

 
41,568

Interest expense
12,043

 
12,952

 
36,909

 
39,942

Amortization of deferred financing costs
723

 
659

 
2,106

 
2,079

Income tax expense
319

 
394

 
349

 
1,399

EBITDA
48,025

 
47,653

 
157,636

 
110,169

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(545
)
 
(1,774
)
 
(2,035
)
 
(3,034
)
Transaction costs
223

 
151

 
307

 
22,437

Gain on sale of real estate

 

 
(15,618
)
 

Equity awards issued in connection with spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Adjusted EBITDA
$
47,703

 
$
46,030

 
$
140,290

 
$
138,094