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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):
February 16, 2017

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

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







Item 2.02 Results of Operations and Financial Condition

On February 16, 2017, Urban Edge Properties (the "Company") announced its financial results for the three and twelve months ended December 31, 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 February 16, 2017, the Company announced its financial results for the three and twelve months ended December 31, 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 February 16, 2017.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of December 31, 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: February 16, 2017
By:
/s/ Mark Langer
 
 
Mark Langer, Executive Vice President and Chief Financial Officer







INDEX TO EXHIBITS

Exhibit Number
 
Document
 
 
 
99.1
 
Earnings Press Release of Urban Edge Properties dated February 16, 2017
99.2
 
Supplemental Disclosure Package of Urban Edge Properties as of December 31, 2016



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
38103034_image2a04.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 Fourth Quarter and Full Year 2016 Operating Results


                                    
NEW YORK, NY, February 16, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") announced today its financial results for the three and twelve months ended December 31, 2016.

Highlights include:
Generated net income of $0.19 per diluted share for the quarter and $0.91 per diluted share for the twelve months ended December 31, 2016.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $0.32 per share for the quarter and $1.29 per share for the twelve months ended December 31, 2016.
Generated FFO as Adjusted of $0.33 per share for the quarter and $1.27 per share for the twelve months ended December 31, 2016, an increase of 6% as compared to the fourth quarter of 2015 and 5% as compared to the twelve months ended December 31, 2015. FFO as Adjusted excludes tenant bankruptcy settlement income and transaction costs.
Increased same-property cash Net Operating Income (“NOI”) by 5.6% as compared to the fourth quarter of 2015 and by 4.1% as compared to the twelve months ended December 31, 2015 primarily due to new rent commencements and higher recoveries.
Increased same-property cash NOI including properties in redevelopment by 6.1% as compared to the fourth quarter of 2015 and by 3.6% as compared to the twelve months ended December 31, 2015. New rents commencing at the East Hanover warehouses, Walnut Creek and Montehiedra contributed to this growth.
Increased consolidated retail portfolio occupancy by 100 basis points to 97.2% as compared to December 31, 2015 and by 60 basis points as compared to September 30, 2016.
Increased same-property retail portfolio occupancy by 80 basis points to 98.0% as compared to December 31, 2015 and by 60 basis points as compared to September 30, 2016.
Executed new leases, renewals and options totaling 395,000 square feet (sf) during the quarter. Same-space leases totaled 333,000 sf generating average rent spreads of 18.4% on a GAAP basis and 9.9% on a cash basis.
Increased active development projects by $60.0 million to $191.7 million, primarily due to the addition of three more redevelopment projects and increased scope at another. Active and completed projects are expected to generate an 11% return on invested capital.
Subsequent to year-end, acquired three properties located in the New York metropolitan region for an aggregate purchase price of $127.4 million.
Increased dividend by 10% to $0.22 per quarter, as previously announced.
Ended the year with $131.7 million in cash and cash equivalents and no amounts drawn on the $500.0 million revolving credit facility.


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 Projects:
During the quarter, investment in the Company's active projects increased by $60.0 million to $191.7 million. The active and completed projects are expected to generate an 11% return on invested capital based on the expected incremental cash NOI relative to the total investment. Fourth quarter highlights for the active projects include:
Advanced projects at Bergen Town Center in Paramus, NJ, Marlton Commons in Marlton, NJ and East Hanover in East Hanover, NJ with estimated costs of $48.2 million from the pipeline to active status.
Increased estimated gross costs at Bruckner Commons by $12.5 million from $38.4 million to $50.9 million. The new investment recognizes revenues and costs associated with a soon-to-be-announced second anchor and upgraded design elements. The increased costs of this project do not affect the 11% return expected for the active and completed projects.

In addition, the Company has 14 projects in its development pipeline with a total expected investment of $66.0-$80.0 million on which the Company expects to generate a 10% return on invested capital.

Acquisition Activity:

On December 22, 2016, the Company acquired 0.3 acres adjacent to Tonnelle Commons in North Bergen, NJ for $2.7 million. The outparcel is the site of a future 2,000 sf Popeye's.

Subsequent to December 31, 2016, the Company acquired interests in three properties in the New York Metropolitan area:
Yonkers Gateway Center, a 437,000 sf retail property in Yonkers, NY, for $51.7 million whereby the land owner received 1.8 million operating partnership units valued at $48.8 million and $2.9 million in cash.
Shops at Bruckner, a 114,000 sf retail center in the Bronx, NY, for $32.0 million including the assumption of a $12.6 million mortgage.
Hudson Mall, a 383,000 sf retail center in Jersey City, NJ, for $43.7 million including the assumption of a $23.8 million mortgage.

Balance Sheet Highlights:
At December 31, 2016:
Total market capitalization (including debt and equity) was approximately $4.1 billion comprising 106.1 million common shares outstanding (on a fully diluted basis) valued at $2.9 billion and $1.2 billion of debt. The tables accompanying this press release provide the calculation of fully diluted common shares outstanding.
The ratio of net debt (net of cash) to total market capitalization was 26.0%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.5x and 5.7x for the three and twelve months ended December 31, 2016, respectively. The tables accompanying this press release present a reconciliation of net income to EBITDA and Adjusted EBITDA.
The Company had $131.7 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 are subject to change. The Company's non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results. The following non-GAAP measures are commonly used by the Company and investing public to understand and evaluate our operating results and performance:
FFO: The Company believes FFO is a useful, supplemental measure of its operating performance that is a recognized metric used extensively by the real estate industry and, in particular REITs. FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and the Company, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciated real estate assets, real estate impairment losses, rental property depreciation and amortization expense. The Company believes that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from FFO primarily because it excludes the assumption that the value of real estate assets diminish predictably. FFO does not represent cash flows from operating activities in accordance with GAAP, should not be considered an alternative to net income as an indication of our performance, and is not indicative of cash flow as a measure of liquidity or our ability to make cash distributions.
FFO as Adjusted: The Company provides disclosure of FFO as Adjusted because it believes it is a useful supplemental measure of its core operating performance that facilitates comparability of historical financial periods. FFO as Adjusted is calculated by making certain adjustments to FFO to account for items the Company does not believe are representative of ongoing core operating results including transaction costs associated with acquisition and disposition activity and non-comparable revenues and expenses. The Company's method of calculating FFO as Adjusted may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Cash NOI: The Company uses cash NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. The Company believes cash NOI is useful to investors as a performance measure because, when compared across periods, cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from operating income or net income.
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 twelve months ended December 31, 2016 and 2015. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, or that are in the foreclosure process during the periods being compared. As such, same-property cash NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition or disposition of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company's properties. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when it is designated as a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan that is expected to have a significant impact on its operating income. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally 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 by us 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 they approximate key performance measures in our debt covenants. Accordingly, the Company believes that the use of EBITDA and Adjusted EBITDA, as opposed to income before income taxes in various ratios, provides meaningful performance measures related to the Company's ability to meet various coverage tests for the stated periods. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDA, which 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 twelve months ended December 31, 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, 2016.

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

Real estate, at cost:
 

 
 

Land
$
384,217

 
$
389,080

Buildings and improvements
1,650,054

 
1,630,539

Construction in progress
99,236

 
61,147

Furniture, fixtures and equipment
4,993

 
3,876

Total
2,138,500

 
2,084,642

Accumulated depreciation and amortization
(541,077
)
 
(509,112
)
Real estate, net
1,597,423

 
1,575,530

Cash and cash equivalents
131,654

 
168,983

Restricted cash
8,532

 
9,042

Tenant and other receivables, net of allowance for doubtful accounts of $2,332 and $1,926, respectively
9,340

 
10,364

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $261 and $148, respectively
87,695

 
88,778

Identified intangible assets, net of accumulated amortization of $22,361 and $22,090, respectively
30,875

 
33,953

Deferred leasing costs, net of accumulated amortization of $13,909 and $12,987, respectively
19,241

 
18,455

Deferred financing costs, net of accumulated amortization of $726 and $709, respectively
1,936

 
2,838

Prepaid expenses and other assets
17,442

 
10,988

Total assets
$
1,904,138

 
$
1,918,931

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,197,513

 
$
1,233,983

Identified intangible liabilities, net of accumulated amortization of $72,528 and $65,220, respectively
146,991

 
154,855

Accounts payable and accrued expenses
48,842

 
45,331

Other liabilities
14,675

 
13,308

Total liabilities
1,408,021

 
1,447,477

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,754,900 and 99,290,952 shares issued and outstanding, respectively
997

 
993

Additional paid-in capital
488,375

 
475,369

Accumulated deficit
(29,066
)
 
(38,442
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
35,451

 
33,177

Noncontrolling interest in consolidated subsidiaries
360

 
357

Total equity
496,117

 
471,454

Total liabilities and equity
$
1,904,138

 
$
1,918,931


6



URBAN EDGE PROPERTIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2016
 
2015
 
2016
 
2015
REVENUE
 
 
 
 
 
 
 
Property rentals
$
60,048

 
$
58,790

 
$
236,798

 
$
231,867

Tenant expense reimbursements
22,647

 
20,675

 
84,921

 
84,617

Management and development fees
403

 
482

 
1,759

 
2,261

Other income
380

 
675

 
2,498

 
4,200

Total revenue
83,478

 
80,622

 
325,976

 
322,945

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
14,237

 
15,685

 
56,145

 
57,253

Real estate taxes
12,728

 
11,743

 
51,429

 
49,311

Property operating
12,684

 
12,593

 
45,280

 
50,595

General and administrative
6,565

 
6,541

 
27,438

 
32,044

Ground rent
2,518

 
2,523

 
10,047

 
10,129

Transaction costs
1,098

 
1,574

 
1,405

 
24,011

Provision for doubtful accounts
220

 
387

 
1,214

 
1,526

Total expenses
50,050

 
51,046

 
192,958

 
224,869

Operating income
33,428

 
29,576

 
133,018

 
98,076

Gain on sale of real estate

 

 
15,618

 

Interest income
159

 
49

 
679

 
150

Interest and debt expense
(12,866
)
 
(13,563
)
 
(51,881
)
 
(55,584
)
Income before income taxes
20,721

 
16,062

 
97,434

 
42,642

Income tax (expense) benefit
(455
)
 
105

 
(804
)
 
(1,294
)
Net income
20,266

 
16,167

 
96,630

 
41,348

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,218
)
 
(942
)
 
(5,812
)
 
(2,547
)
Consolidated subsidiaries
(4
)
 
1

 
(3
)
 
(16
)
Net income attributable to common shareholders
$
19,044

 
$
15,226

 
$
90,815

 
$
38,785

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.19

 
$
0.15

 
$
0.91

 
$
0.39

Earnings per common share - Diluted:
$
0.19

 
$
0.15

 
$
0.91

 
$
0.39

Weighted average shares outstanding - Basic
99,609

 
99,256

 
99,364

 
99,252

Weighted average shares outstanding - Diluted
99,988

 
99,291

 
99,794

 
99,278



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 twelve months ended December 31, 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
December 31, 2016
 
Twelve Months Ended
December 31, 2016
 
(in thousands)
 
(per share)(2)
 
(in thousands)
 
(per share)(2)
Net income
$
20,266

 
$
0.19

 
$
96,630

 
$
0.91

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,218
)
 
(0.01
)
 
(5,812
)
 
(0.05
)
Consolidated subsidiaries
(4
)
 

 
(3
)
 

Net income attributable to common shareholders
19,044

 
0.18

 
90,815

 
0.86

Adjustments:
 
 
 
 
 
 
 
Gain on sale of real estate

 

 
(15,618
)
 
(0.15
)
Rental property depreciation and amortization
14,065

 
0.13

 
55,484

 
0.53

Limited partnership interests in operating partnership
1,218

 
0.01

 
5,812

 
0.05

FFO Applicable to diluted common shareholders(1)
34,327

 
0.32

 
136,493

 
1.29

 
 
 
 
 
 
 
 
Transaction costs
1,098

 
0.01

 
1,405

 
0.01

Tenant bankruptcy settlement income
(343
)
 

 
(2,378
)
 
(0.02
)
Benefit related to income taxes

 

 
(625
)
 
(0.01
)
FFO as Adjusted applicable to diluted common shareholders(1)
$
35,082

 
$
0.33

 
$
134,895

 
$
1.27

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
106,367

 
 
 
106,099

 
 
(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
December 31, 2016
 
Twelve Months Ended
December 31, 2016
Weighted average diluted shares used to calculate EPS
99,988

 
99,794

Assumed conversion of OP and LTIP Units to common stock(1)
6,379

 
6,305

Weighted average diluted common shares used to calculate
FFO per share
106,367

 
106,099

(1) OP and vested LTIP Units are excluded from the calculation of earnings per diluted share for the three and twelve months ended December 31, 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 twelve months ended December 31, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended December 31,
 
Twelve Months Ended
December 31,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,266

 
$
16,167

 
$
96,630

 
$
41,348

Add: Income tax expense (benefit)
455

 
(105
)
 
804

 
1,294

Income before income taxes
20,721

 
16,062

 
97,434

 
42,642

Gain on sale of real estate

 

 
(15,618
)
 

  Interest income
(159
)
 
(49
)
 
(679
)
 
(150
)
  Interest and debt expense
12,866

 
13,563

 
51,881

 
55,584

Operating income
33,428

 
29,576

 
133,018

 
98,076

Depreciation and amortization
14,237

 
15,685

 
56,145

 
57,253

General and administrative expense
6,565

 
6,541

 
27,438

 
32,044

Transaction costs
1,098

 
1,574

 
1,405

 
24,011

NOI
55,328

 
53,376

 
218,006

 
211,384

    Less: non-cash revenue and expenses
(1,377
)
 
(1,396
)
 
(6,465
)
 
(6,122
)
Cash NOI(1)
53,951

 
51,980

 
211,541

 
205,262

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(4,681
)
 
(4,230
)
 
(17,315
)
 
(17,497
)
Tenant bankruptcy settlement income(3)
(343
)
 
(815
)
 
(2,378
)
 
(4,022
)
Management and development fee income from non-owned properties
(403
)
 
(482
)
 
(1,759
)
 
(2,261
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(394
)
 
(508
)
 
(2,246
)
 
(1,920
)
Environmental remediation costs

 

 

 
1,379

Real estate tax settlement income related to prior periods

 
(532
)
 

 
(532
)
Other(2)
31

 
173

 
156

 
182

    Subtotal adjustments
(5,790
)
 
(6,394
)
 
(23,542
)
 
(24,671
)
Same-property cash NOI
$
48,161

 
$
45,586

 
$
187,999

 
$
180,591

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
4,681

 
4,230

 
17,315

 
17,497

Same-property cash NOI including properties in redevelopment
$
52,842

 
$
49,816

 
$
205,314

 
$
198,088

(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.
(3) Tenant bankruptcy settlement income includes lease termination income.

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 twelve months ended December 31, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,266

 
$
16,167

 
$
96,630

 
$
41,348

Depreciation and amortization
14,237

 
15,685

 
56,145

 
57,253

Interest and debt expense
12,866

 
13,563

 
51,881

 
55,584

Income tax expense (benefit)
455

 
(105
)
 
804

 
1,294

EBITDA
47,824

 
45,310

 
205,460

 
155,479

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(343
)
 
(704
)
 
(2,378
)
 
(3,738
)
Transaction costs
1,098

 
1,574

 
1,405

 
24,011

Gain on sale of real estate

 

 
(15,618
)
 

Equity awards issued in connection with the spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Severance costs

 
693

 

 
693

Real estate tax settlement income related to prior periods

 
(532
)
 

 
(532
)
Adjusted EBITDA
$
48,579

 
$
46,341

 
$
188,869

 
$
184,435

 
 
 
 
 
 
 
 

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.
 
December 31, 2016
Common shares outstanding
99,754,900

Diluted common shares:
 
OP and LTIP units
6,378,704

Fully diluted common shares
106,133,604




10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
December 31, 2016
 
 



38103034_image3a05.jpg




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







URBAN EDGE PROPERTIES
SUPPLEMENTAL DISCLOSURE
December 31, 2016
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Fourth Quarter 2016 Earnings Press Release
1
 
 
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 (EBITDA)
14
Funds from Operations
15
Market Capitalization, Debt Ratios and Liquidity
16
Additional Disclosures
17
 
 
Leasing Data
 
Tenant Concentration - Top Twenty-Five Tenants
18
Leasing Activity
19
Retail Portfolio Lease Expiration Schedules
20
 
 
Property Data
 
Property Status Report
22
Property Acquisitions and Dispositions
25
Development, Redevelopment and Anchor Repositioning Projects
26
 
 
Debt Schedules
 
Debt Summary
28
Mortgage Debt Summary and Debt Maturity Schedule
29
 
 








 
38103034_image2a04.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 Fourth Quarter and Full Year 2016 Operating Results


                                    
NEW YORK, NY, February 16, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") announced today its financial results for the three and twelve months ended December 31, 2016.

Highlights include:
Generated net income of $0.19 per diluted share for the quarter and $0.91 per diluted share for the twelve months ended December 31, 2016.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $0.32 per share for the quarter and $1.29 per share for the twelve months ended December 31, 2016.
Generated FFO as Adjusted of $0.33 per share for the quarter and $1.27 per share for the twelve months ended December 31, 2016, an increase of 6% as compared to the fourth quarter of 2015 and 5% as compared to the twelve months ended December 31, 2015. FFO as Adjusted excludes tenant bankruptcy settlement income and transaction costs.
Increased same-property cash Net Operating Income (“NOI”) by 5.6% as compared to the fourth quarter of 2015 and by 4.1% as compared to the twelve months ended December 31, 2015 primarily due to new rent commencements and higher recoveries.
Increased same-property cash NOI including properties in redevelopment by 6.1% as compared to the fourth quarter of 2015 and by 3.6% as compared to the twelve months ended December 31, 2015. New rents commencing at the East Hanover warehouses, Walnut Creek and Montehiedra contributed to this growth.
Increased consolidated retail portfolio occupancy by 100 basis points to 97.2% as compared to December 31, 2015 and by 60 basis points as compared to September 30, 2016.
Increased same-property retail portfolio occupancy by 80 basis points to 98.0% as compared to December 31, 2015 and by 60 basis points as compared to September 30, 2016.
Executed new leases, renewals and options totaling 395,000 square feet (sf) during the quarter. Same-space leases totaled 333,000 sf generating average rent spreads of 18.4% on a GAAP basis and 9.9% on a cash basis.
Increased active development projects by $60.0 million to $191.7 million, primarily due to the addition of three more redevelopment projects and increased scope at another. Active and completed projects are expected to generate an 11% return on invested capital.
Subsequent to year-end, acquired three properties located in the New York metropolitan region for an aggregate purchase price of $127.4 million.
Increased dividend by 10% to $0.22 per quarter, as previously announced.
Ended the year with $131.7 million in cash and cash equivalents and no amounts drawn on the $500.0 million revolving credit facility.


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 Projects:
During the quarter, investment in the Company's active projects increased by $60.0 million to $191.7 million. The active and completed projects are expected to generate an 11% return on invested capital based on the expected incremental cash NOI relative to the total investment. Fourth quarter highlights for the active projects include:
Advanced projects at Bergen Town Center in Paramus, NJ, Marlton Commons in Marlton, NJ and East Hanover in East Hanover, NJ with estimated costs of $48.2 million from the pipeline to active status.
Increased estimated gross costs at Bruckner Commons by $12.5 million from $38.4 million to $50.9 million. The new investment recognizes revenues and costs associated with a soon-to-be-announced second anchor and upgraded design elements. The increased costs of this project do not affect the 11% return expected for the active and completed projects.

In addition, the Company has 14 projects in its development pipeline with a total expected investment of $66.0-$80.0 million on which the Company expects to generate a 10% return on invested capital.

Acquisition Activity:

On December 22, 2016, the Company acquired 0.3 acres adjacent to Tonnelle Commons in North Bergen, NJ for $2.7 million. The outparcel is the site of a future 2,000 sf Popeye's.

Subsequent to December 31, 2016, the Company acquired interests in three properties in the New York Metropolitan area:
Yonkers Gateway Center, a 437,000 sf retail property in Yonkers, NY, for $51.7 million whereby the land owner received 1.8 million operating partnership units valued at $48.8 million and $2.9 million in cash.
Shops at Bruckner, a 114,000 sf retail center in the Bronx, NY, for $32.0 million including the assumption of a $12.6 million mortgage.
Hudson Mall, a 383,000 sf retail center in Jersey City, NJ, for $43.7 million including the assumption of a $23.8 million mortgage.

Balance Sheet Highlights:
At December 31, 2016:
Total market capitalization (including debt and equity) was approximately $4.1 billion comprising 106.1 million common shares outstanding (on a fully diluted basis) valued at $2.9 billion and $1.2 billion of debt. The tables accompanying this press release provide the calculation of fully diluted common shares outstanding.
The ratio of net debt (net of cash) to total market capitalization was 26.0%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") was 5.5x and 5.7x for the three and twelve months ended December 31, 2016, respectively. The tables accompanying this press release present a reconciliation of net income to EBITDA and Adjusted EBITDA.
The Company had $131.7 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 are subject to change. The Company's non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results. The following non-GAAP measures are commonly used by the Company and investing public to understand and evaluate our operating results and performance:
FFO: The Company believes FFO is a useful, supplemental measure of its operating performance that is a recognized metric used extensively by the real estate industry and, in particular REITs. FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and the Company, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciated real estate assets, real estate impairment losses, rental property depreciation and amortization expense. The Company believes that financial analysts, investors and stockholders are better served by the presentation of comparable period operating results generated from FFO primarily because it excludes the assumption that the value of real estate assets diminish predictably. FFO does not represent cash flows from operating activities in accordance with GAAP, should not be considered an alternative to net income as an indication of our performance, and is not indicative of cash flow as a measure of liquidity or our ability to make cash distributions.
FFO as Adjusted: The Company provides disclosure of FFO as Adjusted because it believes it is a useful supplemental measure of its core operating performance that facilitates comparability of historical financial periods. FFO as Adjusted is calculated by making certain adjustments to FFO to account for items the Company does not believe are representative of ongoing core operating results including transaction costs associated with acquisition and disposition activity and non-comparable revenues and expenses. The Company's method of calculating FFO as Adjusted may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs.
Cash NOI: The Company uses cash NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. The Company believes cash NOI is useful to investors as a performance measure because, when compared across periods, cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from operating income or net income.
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 twelve months ended December 31, 2016 and 2015. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, or that are in the foreclosure process during the periods being compared. As such, same-property cash NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition or disposition of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company's properties. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when it is designated as a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan that is expected to have a significant impact on its operating income. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally 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 by us 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 they approximate key performance measures in our debt covenants. Accordingly, the Company believes that the use of EBITDA and Adjusted EBITDA, as opposed to income before income taxes in various ratios, provides meaningful performance measures related to the Company's ability to meet various coverage tests for the stated periods. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDA, which 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 twelve months ended December 31, 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 twelve months ended December 31, 2016. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
December 31, 2016
 
Twelve Months Ended
December 31, 2016
 
(in thousands)
 
(per share)(2)
 
(in thousands)
 
(per share)(2)
Net income
$
20,266

 
$
0.19

 
$
96,630

 
$
0.91

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,218
)
 
(0.01
)
 
(5,812
)
 
(0.05
)
Consolidated subsidiaries
(4
)
 

 
(3
)
 

Net income attributable to common shareholders
19,044

 
0.18

 
90,815

 
0.86

Adjustments:
 
 
 
 
 
 
 
Gain on sale of real estate

 

 
(15,618
)
 
(0.15
)
Rental property depreciation and amortization
14,065

 
0.13

 
55,484

 
0.53

Limited partnership interests in operating partnership
1,218

 
0.01

 
5,812

 
0.05

FFO Applicable to diluted common shareholders(1)
34,327

 
0.32

 
136,493

 
1.29

 
 
 
 
 
 
 
 
Transaction costs
1,098

 
0.01

 
1,405

 
0.01

Tenant bankruptcy settlement income
(343
)
 

 
(2,378
)
 
(0.02
)
Benefit related to income taxes

 

 
(625
)
 
(0.01
)
FFO as Adjusted applicable to diluted common shareholders(1)
$
35,082

 
$
0.33

 
$
134,895

 
$
1.27

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
106,367

 
 
 
106,099

 
 
(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
December 31, 2016
 
Twelve Months Ended
December 31, 2016
Weighted average diluted shares used to calculate EPS
99,988

 
99,794

Assumed conversion of OP and LTIP Units to common stock(1)
6,379

 
6,305

Weighted average diluted common shares used to calculate
FFO per share
106,367

 
106,099

(1) OP and vested LTIP Units are excluded from the calculation of earnings per diluted share for the three and twelve months ended December 31, 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 twelve months ended December 31, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended December 31,
 
Twelve Months Ended
December 31,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,266

 
$
16,167

 
$
96,630

 
$
41,348

Add: Income tax expense (benefit)
455

 
(105
)
 
804

 
1,294

Income before income taxes
20,721

 
16,062

 
97,434

 
42,642

Gain on sale of real estate

 

 
(15,618
)
 

  Interest income
(159
)
 
(49
)
 
(679
)
 
(150
)
  Interest and debt expense
12,866

 
13,563

 
51,881

 
55,584

Operating income
33,428

 
29,576

 
133,018

 
98,076

Depreciation and amortization
14,237

 
15,685

 
56,145

 
57,253

General and administrative expense
6,565

 
6,541

 
27,438

 
32,044

Transaction costs
1,098

 
1,574

 
1,405

 
24,011

NOI
55,328

 
53,376

 
218,006

 
211,384

    Less: non-cash revenue and expenses
(1,377
)
 
(1,396
)
 
(6,465
)
 
(6,122
)
Cash NOI(1)
53,951

 
51,980

 
211,541

 
205,262

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(4,681
)
 
(4,230
)
 
(17,315
)
 
(17,497
)
Tenant bankruptcy settlement income(3)
(343
)
 
(815
)
 
(2,378
)
 
(4,022
)
Management and development fee income from non-owned properties
(403
)
 
(482
)
 
(1,759
)
 
(2,261
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(394
)
 
(508
)
 
(2,246
)
 
(1,920
)
Environmental remediation costs

 

 

 
1,379

Real estate tax settlement income related to prior periods

 
(532
)
 

 
(532
)
Other(2)
31

 
173

 
156

 
182

    Subtotal adjustments
(5,790
)
 
(6,394
)
 
(23,542
)
 
(24,671
)
Same-property cash NOI
$
48,161

 
$
45,586

 
$
187,999

 
$
180,591

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
4,681

 
4,230

 
17,315

 
17,497

Same-property cash NOI including properties in redevelopment
$
52,842

 
$
49,816

 
$
205,314

 
$
198,088

(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.
(3) Tenant bankruptcy settlement income includes lease termination income.

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 twelve months ended December 31, 2016 and 2015. Net income is considered the most directly comparable GAAP measure.
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
(Amounts in thousands)
2016
 
2015
 
2016
 
2015
Net income
$
20,266

 
$
16,167

 
$
96,630

 
$
41,348

Depreciation and amortization
14,237

 
15,685

 
56,145

 
57,253

Interest and debt expense
12,866

 
13,563

 
51,881

 
55,584

Income tax expense (benefit)
455

 
(105
)
 
804

 
1,294

EBITDA
47,824

 
45,310

 
205,460

 
155,479

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(343
)
 
(704
)
 
(2,378
)
 
(3,738
)
Transaction costs
1,098

 
1,574

 
1,405

 
24,011

Gain on sale of real estate

 

 
(15,618
)
 

Equity awards issued in connection with the spin-off

 

 

 
7,143

Environmental remediation costs

 

 

 
1,379

Severance costs

 
693

 

 
693

Real estate tax settlement income related to prior periods

 
(532
)
 

 
(532
)
Adjusted EBITDA
$
48,579

 
$
46,341

 
$
188,869

 
$
184,435

 
 
 
 
 
 
 
 

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.
 
December 31, 2016
Common shares outstanding
99,754,900

Diluted common shares:
 
OP and LTIP units
6,378,704

Fully diluted common shares
106,133,604




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, 2016.

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 December 31, 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 twelve months ended December 31, 2016 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Three months ended
 
Twelve months ended
 
 
December 31, 2016
 
December 31, 2016
Summary Financial Results
 
 
 
 
Total revenue
 
$
83,478

 
$
325,976

General & administrative expenses (G&A)
 
$
6,565

 
$
27,438

Adjusted EBITDA(7)
 
$
48,579

 
$
188,869

Net income attributable to common shareholders
 
$
19,044

 
$
90,815

Earnings per diluted share
 
$
0.19

 
$
0.91

Funds from operations (FFO)
 
$
34,327

 
$
136,493

FFO per diluted common share
 
$
0.32

 
$
1.29

FFO as Adjusted
 
$
35,082

 
$
134,895

FFO as Adjusted per diluted common share
 
$
0.33

 
$
1.27

Total dividends paid per share
 
$
0.22

 
$
0.82

Stock closing price low-high range
 
$24.74 to $28.21

 
$22.22 to $30.15

Weighted average diluted shares used in EPS computations(1)
 
99,988

 
99,794

Weighted average diluted common shares used in FFO computations(1)
 
106,367

 
106,099

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

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
13,831,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
17.07

 
 
Consolidated occupancy at end of period
 
96.8
%
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
97.2
%
 
 
Same-property retail portfolio occupancy at end of period(5)(2)
 
98.0
%
 
 
Same-property retail portfolio physical occupancy at end of period(4)(5)(2)
 
96.1
%
 
 
Same-property cash NOI growth(2)
 
5.6
%
 
4.1
%
Same-property cash NOI growth, including redevelopment properties
 
6.1
%
 
3.6
%
Cash NOI margin - total portfolio
 
65.7
%
 
66.3
%
Expense recovery ratio - total portfolio
 
99.2
%
 
97.2
%
New, renewal and option rent spread - cash basis(8)
 
9.9
%
 
12.1
%
New, renewal and option rent spread - GAAP basis(9)
 
18.4
%
 
20.7
%
Net debt to total market capitalization(6)
 
26.0
%
 
26.0
%
Net debt to Adjusted EBITDA(6)
 
5.5
x
 
5.7
x
Adjusted EBITDA to interest expense(7)
 
4.0
x
 
3.9
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 $16.43.
(4) Physical occupancy includes tenants that have access to their leased space and includes dark and paying tenants.
(5) Our retail portfolio includes shopping centers and malls and excludes warehouses.
(6) See computation on page 16.
(7) See computation on page 14.
(8) Rents have not been calculated on a straight-line basis. Previous/expiring rent is that as of time of expiration and includes any percentage rent paid as well. New rent is that which is paid at commencement.
(9) Rents are calculated on a straight-line ("GAAP") basis. See computation on page 19.


10



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

Real estate, at cost:
 

 
 

Land
$
384,217

 
$
389,080

Buildings and improvements
1,650,054

 
1,630,539

Construction in progress
99,236

 
61,147

Furniture, fixtures and equipment
4,993

 
3,876

Total
2,138,500

 
2,084,642

Accumulated depreciation and amortization
(541,077
)
 
(509,112
)
Real estate, net
1,597,423

 
1,575,530

Cash and cash equivalents
131,654

 
168,983

Restricted cash
8,532

 
9,042

Tenant and other receivables, net of allowance for doubtful accounts of $2,332 and $1,926, respectively
9,340

 
10,364

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $261 and $148, respectively
87,695

 
88,778

Identified intangible assets, net of accumulated amortization of $22,361 and $22,090, respectively
30,875

 
33,953

Deferred leasing costs, net of accumulated amortization of $13,909 and $12,987, respectively
19,241

 
18,455

Deferred financing costs, net of accumulated amortization of $726 and $709, respectively
1,936

 
2,838

Prepaid expenses and other assets
17,442

 
10,988

Total assets
$
1,904,138

 
$
1,918,931

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,197,513

 
$
1,233,983

Identified intangible liabilities, net of accumulated amortization of $72,528 and $65,220, respectively
146,991

 
154,855

Accounts payable and accrued expenses
48,842

 
45,331

Other liabilities
14,675

 
13,308

Total liabilities
1,408,021

 
1,447,477

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 99,754,900 and 99,290,952 shares issued and outstanding, respectively
997

 
993

Additional paid-in capital
488,375

 
475,369

Accumulated deficit
(29,066
)
 
(38,442
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
35,451

 
33,177

Noncontrolling interest in consolidated subsidiaries
360

 
357

Total equity
496,117

 
471,454

Total liabilities and equity
$
1,904,138

 
$
1,918,931


11



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
 
 
For the three and twelve months ended December 31, 2016 and 2015 (unaudited)
 
(in thousands, except share and per share amounts)
 
 
 
 
 

 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2016
 
2015
 
2016
 
2015
REVENUE
 
 
 
 
 
 
 
Property rentals
$
60,048

 
$
58,790

 
$
236,798

 
$
231,867

Tenant expense reimbursements
22,647

 
20,675

 
84,921

 
84,617

Management and development fees
403

 
482

 
1,759

 
2,261

Other income
380

 
675

 
2,498

 
4,200

Total revenue
83,478

 
80,622

 
325,976

 
322,945

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
14,237

 
15,685

 
56,145

 
57,253

Real estate taxes
12,728

 
11,743

 
51,429

 
49,311

Property operating
12,684

 
12,593

 
45,280

 
50,595

General and administrative
6,565

 
6,541

 
27,438

 
32,044

Ground rent
2,518

 
2,523

 
10,047

 
10,129

Transaction costs
1,098

 
1,574

 
1,405

 
24,011

Provision for doubtful accounts
220

 
387

 
1,214

 
1,526

Total expenses
50,050

 
51,046

 
192,958

 
224,869

Operating income
33,428

 
29,576

 
133,018

 
98,076

Gain on sale of real estate

 

 
15,618

 

Interest income
159

 
49

 
679

 
150

Interest and debt expense
(12,866
)
 
(13,563
)
 
(51,881
)
 
(55,584
)
Income before income taxes
20,721

 
16,062

 
97,434

 
42,642

Income tax (expense) benefit
(455
)
 
105

 
(804
)
 
(1,294
)
Net income
20,266

 
16,167

 
96,630

 
41,348

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,218
)
 
(942
)
 
(5,812
)
 
(2,547
)
Consolidated subsidiaries
(4
)
 
1

 
(3
)
 
(16
)
Net income attributable to common shareholders
$
19,044

 
$
15,226

 
$
90,815

 
$
38,785

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.19

 
$
0.15

 
$
0.91

 
$
0.39

Earnings per common share - Diluted:
$
0.19

 
$
0.15

 
$
0.91

 
$
0.39

Weighted average shares outstanding - Basic
99,609

 
99,256

 
99,364

 
99,252

Weighted average shares outstanding - Diluted
99,988

 
99,291

 
99,794

 
99,278



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME
 
 
For the three and twelve months ended December 31, 2016 and 2015
 
(in thousands)
 
 
 
 
 
 
Three Months Ended
December 31,
 
Percent Change
 
Twelve Months Ended
December 31,
 
Percent Change
 
2016
 
2015
 
 
2016
 
2015
 
Total cash NOI(1)
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$
81,435

 
$
78,469

 
3.8%
 
$316,300
 
$312,558
 
1.2%
Total property operating expenses
(27,924
)
 
(26,831
)
 
4.1%
 
(106,639)
 
(109,735)
 
(2.8)%
Cash NOI - total portfolio
$
53,511

 
$
51,638

 
3.6%
 
$
209,661

 
$
202,823

 
3.4%
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin (NOI / Total revenue)
65.7
%
 
65.8
%
 
 
 
66.3
%
 
64.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-property cash NOI(2)
 
 
 
 
 
 
 
 
 
 
 
Property rentals
$
52,064

 
$
50,600

 
 
 
$
205,337

 
$
199,792

 
 
Tenant expense reimbursements
20,844

 
19,003

 
 
 
77,409

 
77,550

 
 
Percentage rent
229

 
469

 
 
 
640

 
1,024

 
 
Total revenue
73,137

 
70,072

 
4.4%
 
283,386

 
278,366

 
1.8%
Real estate taxes
(11,784
)
 
(11,382
)
 
 
 
(47,448
)
 
(46,161
)
 
 
Property operating
(10,768
)
 
(10,639
)
 
 
 
(38,377
)
 
(41,847
)
 
 
Ground rent
(2,217
)
 
(2,192
)
 
 
 
(8,829
)
 
(8,783
)
 
 
Provision for doubtful accounts(4)
(207
)
 
(273
)
 
 
 
(733
)
 
(984
)
 
 
Total property operating expenses
(24,976
)
 
(24,486
)
 
2.0%
 
(95,387
)
 
(97,775
)
 
(2.4)%
Same-property cash NOI(3)
$
48,161

 
$
45,586

 
5.6%
 
$
187,999

 
$
180,591

 
4.1%
 
 
 
 
 
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
$
4,681

 
$
4,230

 
 
 
$
17,315

 
$
17,497

 
 
Same-property cash NOI including properties in redevelopment
$
52,842

 
$
49,816

 
6.1%
 
$
205,314

 
$
198,088

 
3.6%
 
 
 
 
 
 
 
 
 
 
 
 
Same-property physical occupancy(3)
96.1
%
 
95.8
%
 
 
 
 
 
 
 
 
Same-property leased occupancy(3)
98.0
%
 
97.2
%
 
 
 
 
 
 
 
 
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, $0.1 million, $0.1 million and $0.5 million of bad debt expense (benefit) related to non-cash straight-line rents for the three months ended December 31, 2016 and 2015 and the twelve months ended December 31, 2016 and 2015, respectively.

13



URBAN EDGE PROPERTIES
 
 
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION and AMORTIZATION (EBITDA)
For the three and twelve months ended December 31, 2016 and 2015
 
(in thousands)
 
 
 
 
 

 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
2016
 
2015
 
2016
 
2015
Net income
$
20,266

 
$
16,167

 
$
96,630

 
$
41,348

Depreciation and amortization
14,237

 
15,685

 
56,145

 
57,253

Interest expense
12,142

 
12,904

 
49,051

 
52,846

Amortization of deferred financing costs
724

 
659

 
2,830

 
2,738

Income tax expense (benefit)
455

 
(105
)
 
804

 
1,294

EBITDA
47,824

 
45,310

 
205,460

 
155,479

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Tenant bankruptcy settlement income
(343
)
 
(704
)
 
(2,378