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Section 1: 8-K (8-K)

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

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 2, 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 August 2, 2017, Urban Edge Properties (the "Company") announced its financial results for the three and six months ended June 30, 2017. A copy of the Company's Earnings Press Release is furnished as Exhibit 99.1 to this report on Form 8-K. A copy of the Company's Supplemental Disclosure Package is furnished as Exhibit 99.2 to this report on Form 8-K. The information contained in this report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Item 7.01 Regulation FD Disclosure

On August 2, 2017, the Company announced its financial results for the three and six months ended June 30, 2017 and made available on its website the press release and Supplemental Disclosure Package described in Item 2.02 above. The information contained in this report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed "filed" with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:
99.1 - Earnings Press Release of Urban Edge Properties dated August 2, 2017.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of June 30, 2017.






SIGNATURE

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

 
 
URBAN EDGE PROPERTIES
 
 
(Registrant)
 
 
 
 
 
 
Date: August 2, 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 August 2, 2017
99.2
 
Supplemental Disclosure Package of Urban Edge Properties as of June 30, 2017



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
389739137_image2a09.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 Second Quarter 2017 Results



                                    
NEW YORK, NY, August 2, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the three and six months ended June 30, 2017.

Financial Results(1)(2) 
Generated net income of $14.9 million, or $0.13 per diluted share, for the quarter and $69.7 million, or $0.63 per diluted share, for the six months ended June 30, 2017.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $38.7 million, or $0.34 per share, for the quarter and $112.1 million, or $1.01 per share, for the six months ended June 30, 2017.
Generated FFO as Adjusted of $0.33 per share for the quarter and $0.66 per share for the six months ended June 30, 2017, an increase of 6.5% per share compared to both the second quarter of 2016 and the six months ended June 30, 2016.

Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 5.0% compared to the second quarter of 2016 and by 5.3% compared to the six months ended June 30, 2016, primarily due to rent commencements at Garfield Commons, Kearny Commons and Bergen Town Center and higher recoveries.
Increased same-property cash NOI including properties in redevelopment by 5.6% compared to the second quarter of 2016 and by 6.1% compared to the six months ended June 30, 2016. Rent commencements at East Hanover warehouses, Walnut Creek and Montehiedra contributed to this growth.
Reported a decline in consolidated retail portfolio occupancy of 30 basis points to 95.9% compared to June 30, 2016 and 130 basis points compared to March 31, 2017, primarily as a result of acquiring centers with lower occupancy than our existing portfolio.
Increased same-property retail portfolio occupancy by 90 basis points to 98.2% compared to June 30, 2016 and reported a decrease of 10 basis points compared to March 31, 2017.
Executed 31 new leases, renewals and options totaling 373,000 square feet (sf) during the quarter. Same-space leases totaled 338,000 sf and generated average rent spreads of 1.7% on a GAAP basis and (2.7)% on a cash basis.

Acquisition and Disposition Activity
Acquired seven retail assets, predominantly in the New York metro area, totaling $325 million during the quarter. Funding for these acquisitions was comprised of approximately $122 million in UE operating partnership units valued at $27.02 per unit (4.5 million units), approximately $33 million of assumed debt, the issuance of approximately $126 million in non-recourse, mortgage loans and approximately $44 million in cash.






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During the six months ended June 30, 2017, the Company acquired a total of nine retail assets as follows:
Date Acquired
 
Property
 
Location
 
GLA SF
 
Occupancy
 
Purchase Price
 
 
 
 
 
 
 
 
 
 
 
1/17/2017
 
Shops at Bruckner
 
Bronx, NY
 
114,000
 
100%
 
$
32,000

2/2/2017
 
Hudson Mall
 
Jersey City, NJ
 
383,000
 
97%
 
43,700

5/24/2017
 
Yonkers Gateway Center
(2 transactions)(3)
 
Yonkers, NY
 
437,000
 
88%
 
152,388

5/24/2017
 
The Plaza at Cherry Hill
 
Cherry Hill, NJ
 
413,000
 
74%
 
51,348

5/24/2017
 
Manchester Plaza
 
Manchester, MO
 
131,000
 
89%
 
19,794

5/24/2017
 
Millburn Gateway Center
 
Millburn, NJ
 
102,000
 
97%
 
43,748

5/24/2017
 
21 E Broad St/One Lincoln Plaza
 
Westfield, NJ
 
22,000
 
100%
 
9,670

5/25/2017
 
The Plaza at Woodbridge
 
Woodbridge, NJ
 
411,000
 
81%
 
99,752

 
 
 
 
Total
2,013,000
 
87%
 
$
452,400


Completed the sale of a 32,000 sf vacant building located in Eatontown, NJ for $5.0 million on June 30, 2017.

Development, Redevelopment and Anchor Repositioning Activity
Advanced thirteen active projects. Estimated gross cost for active and completed projects totals $203.4 million, a $10.3 million increase over the first quarter of 2017. Increased project costs are primarily offset by increased revenue from new tenant leases. These projects are expected to generate a 10% return. Of the $203.4 million, $96.8 million remains to be funded.
Sixteen additional pipeline projects are expected to earn 9% on the projected investment of $69-86 million.

Financing Activity
On May 10, 2017, issued 7.7 million common shares through an underwritten public offering generating cash proceeds of $193.5 million. The Company intends to use the net proceeds of this offering for development and redevelopment projects and for general corporate purposes including potential acquisitions that may be identified in the future.

Balance Sheet Highlights at June 30, 2017(1)(4) 
Total market capitalization of approximately $4.3 billion comprising 120.4 million, fully diluted common shares valued at $2.9 billion and $1.4 billion of debt.
Net debt to total market capitalization of 27%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") of 5.6x.
$248 million of cash and cash equivalents and no amounts drawn on the $600 million revolving credit facility.



















(1) Refer to "Non-GAAP Financial Measures" and "Operating Metrics" for definitions and additional detail.
(2) Refer to page 8 for a reconciliation of FFO to FFO as Adjusted for the three and six months ended June 30, 2017.
(3) The acquisition of Yonkers Gateway Center closed in two transactions. On January 4, 2017, the Company acquired fee and leasehold interests for $51.7 million. On May 24, 2017, the Company acquired the remaining fee and leasehold interests not previously acquired for $100.7 million.
(4) The tables accompanying this press release provide the calculation of fully diluted common shares and a reconciliation of net income to EBITDA and Adjusted EBITDA.

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. The Company calculates cash NOI using net income as defined by GAAP reflecting only those income and expense items that are incurred at the property level, adjusted for the following items: lease termination fees, bankruptcy settlement income, non-cash rental income and ground rent expense and income or expenses that we do not believe are representative of ongoing operating results, if any.
Same-property Cash NOI: The Company provides disclosure of cash NOI on a same-property basis, which includes the results of properties that were owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three and six months ended June 30, 2017 and 2016. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, under contract to be sold, or that are in the foreclosure process during the periods being compared. As such, same-property cash NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition or disposition of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company's properties. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when it is designated as a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan that is expected to have a significant impact on its operating income. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally one year after at least 80% of the expected NOI from the project is realized on a cash basis for a full quarter. Acquisitions are moved into the same-property pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment. The Company has also provided disclosure of cash NOI on a same-property basis adjusted to include redevelopment properties.
EBITDA and Adjusted EBITDA: EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized by us in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation

3



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

Operating Metrics

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

Occupancy metrics represent the percentage of occupied gross leasable area based on executed leases (including properties in development and redevelopment) and includes leases signed, but for which rent has not yet commenced. Same-property retail portfolio occupancy includes shopping centers and malls that have been owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three and six months ended June 30, 2017 and 2016. Occupancy metrics presented for the Company's same-property retail portfolio excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired within the past 12 months, properties sold, under contract to be sold, or that are in the foreclosure process during the periods being compared.

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








4



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

ABOUT URBAN EDGE
Urban Edge Properties is a NYSE listed real estate investment trust focused on managing, acquiring, developing, and redeveloping retail real estate in urban communities, primarily in the New York metropolitan region. Urban Edge owns 90 properties totaling 16.6 million square feet of gross leasable area.

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

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


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URBAN EDGE PROPERTIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts) 
 
June 30,
 
December 31,
 
2017
 
2016
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
522,098

 
$
384,217

Buildings and improvements
1,992,386

 
1,650,054

Construction in progress
123,009

 
99,236

Furniture, fixtures and equipment
5,591

 
4,993

Total
2,643,084

 
2,138,500

Accumulated depreciation and amortization
(568,980
)
 
(541,077
)
Real estate, net
2,074,104

 
1,597,423

Cash and cash equivalents
248,407

 
131,654

Restricted cash
14,422

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $2,947 and $2,332, respectively
13,299

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $324 and $261, respectively
85,737

 
87,695

Identified intangible assets, net of accumulated amortization of $26,140 and $22,361, respectively
94,964

 
30,875

Deferred leasing costs, net of accumulated amortization of $14,910 and $13,909, respectively
19,771

 
19,241

Deferred financing costs, net of accumulated amortization of $1,228 and $726, respectively
3,755

 
1,936

Prepaid expenses and other assets
9,245

 
17,442

Total assets
$
2,563,704

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,412,397

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $60,937 and $72,528, respectively
187,223

 
146,991

Accounts payable and accrued expenses
63,388

 
48,842

Other liabilities
16,627

 
14,675

Total liabilities
1,679,635

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 107,564,687 and 99,754,900 shares issued and outstanding, respectively
1,075

 
997

Additional paid-in capital
683,889

 
488,375

Accumulated deficit
(10,479
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
209,202

 
35,451

Noncontrolling interest in consolidated subsidiaries
382

 
360

Total equity
884,069

 
496,117

Total liabilities and equity
$
2,563,704

 
$
1,904,138


6



URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
REVENUE
 
 
 
 
 
 
 
Property rentals
$
64,708

 
$
58,683

 
$
127,206

 
$
117,612

Tenant expense reimbursements
23,881

 
19,879

 
47,652

 
42,386

Income from acquired leasehold interest

 

 
39,215

 

Management and development fees
351

 
526

 
830

 
981

Other income
561

 
369

 
662

 
1,546

Total revenue
89,501

 
79,457

 
215,565

 
162,525

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
23,701

 
13,558

 
39,529

 
27,473

Real estate taxes
14,711

 
12,723

 
28,103

 
25,972

Property operating
11,088

 
9,840

 
24,456

 
22,699

General and administrative
7,709

 
7,535

 
15,790

 
14,255

Real estate impairment loss
303

 

 
3,467

 

Ground rent
2,436

 
2,483

 
5,106

 
5,021

Transaction costs
132

 
34

 
183

 
84

Provision for doubtful accounts
906

 
494

 
1,099

 
845

Total expenses
60,986

 
46,667

 
117,733

 
96,349

Operating income
28,515

 
32,790

 
97,832

 
66,176

Gain on sale of real estate

 
15,618

 

 
15,618

Interest income
336

 
177

 
463

 
344

Interest and debt expense
(13,627
)
 
(12,820
)
 
(26,742
)
 
(26,249
)
Loss on extinguishment of debt

 

 
(1,274
)
 

Income before income taxes
15,224

 
35,765

 
70,279

 
55,889

Income tax benefit (expense)
(304
)
 
306

 
(624
)
 
(30
)
Net income
14,920

 
36,071

 
69,655

 
55,859

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,326
)
 
(2,201
)
 
(5,464
)
 
(3,355
)
Consolidated subsidiaries
(11
)
 
(2
)
 
(22
)
 
2

Net income attributable to common shareholders
$
13,583

 
$
33,868

 
$
64,169

 
$
52,506

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.13

 
$
0.34

 
$
0.63

 
$
0.53

Earnings per common share - Diluted:
$
0.13

 
$
0.34

 
$
0.63

 
$
0.53

Weighted average shares outstanding - Basic
104,063

 
99,274

 
101,863

 
99,270

Weighted average shares outstanding - Diluted
104,260

 
99,668

 
111,224

 
99,592



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Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and FFO as Adjusted for the three and six months ended June 30, 2017. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of FFO and FFO as Adjusted.
 
Three Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2017
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net income
$
14,920

 
$
0.13

 
$
69,655

 
$
0.63

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,326
)
 
(0.01
)
 
(5,464
)
 
(0.05
)
Consolidated subsidiaries
(11
)
 

 
(22
)
 

Net income attributable to common shareholders
13,583

 
0.12

 
64,169

 
0.58

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
23,452

 
0.21

 
39,031

 
0.35

Real estate impairment loss
303

 

 
3,467

 
0.03

Limited partnership interests in operating partnership
1,326

 
0.01

 
5,464

 
0.05

FFO applicable to diluted common shareholders(1)
38,664

 
0.34

 
112,131

 
1.01

 
 
 
 
 
 
 
 
Transaction costs
132

 

 
183

 

Loss on extinguishment of debt

 

 
1,274

 
0.01

Tenant bankruptcy settlement income
(486
)
 
(0.01
)
 
(513
)
 
(0.01
)
Income from acquired leasehold interest(2)

 

 
(39,215
)
 
(0.35
)
FFO as Adjusted applicable to diluted common shareholders(1)
$
38,310

 
$
0.33

 
$
73,860

 
$
0.66

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
114,433

 
 
 
111,224

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

The following table reflects the reconciliation of weighted average diluted shares used in EPS calculations and weighted average diluted common shares used in FFO per share calculations.
(in thousands)
Three Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2017
Weighted average diluted shares used to calculate EPS
104,260

 
111,224

Assumed conversion of OP and LTIP Units to common stock(1)
10,173

 

Weighted average diluted common shares used to calculate
FFO per share
114,433

 
111,224

(1) Operating Partnership ("OP") and Long-Term Incentive Plan ("LTIP") Units are excluded from the calculation of earnings per diluted share for the three months ended June 30, 2017, because their inclusion is anti-dilutive and included for the six months ended June 30, 2017, because their inclusion is dilutive. FFO includes earnings allocated to unitholders as the inclusion of these units is dilutive to FFO per share.



8



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

The following table reflects the reconciliation of net income to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the three and six months ended June 30, 2017 and 2016. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of cash NOI and same-property cash NOI.

 
Three Months Ended June 30, 2017
 
Six Months Ended
June 30, 2017
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
14,920

 
$
36,071

 
$
69,655

 
$
55,859

Add: income tax expense (benefit)
304

 
(306
)
 
624

 
30

Income before income taxes
15,224

 
35,765

 
70,279

 
55,889

  Interest income
(336
)
 
(177
)
 
(463
)
 
(344
)
  Gain on sale of real estate

 
(15,618
)
 

 
(15,618
)
  Interest and debt expense
13,627

 
12,820

 
26,742

 
26,249

  Loss on extinguishment of debt

 

 
1,274

 

Operating income
28,515

 
32,790

 
97,832

 
66,176

Depreciation and amortization
23,701

 
13,558

 
39,529

 
27,473

Real estate impairment loss
303

 

 
3,467

 

General and administrative expense
7,709

 
7,535

 
15,790

 
14,255

Transaction costs
132

 
34

 
183

 
84

NOI
60,360

 
53,917

 
156,801

 
107,988

    Less: non-cash revenue and expenses
(1,452
)
 
(1,454
)
 
(42,253
)
 
(3,265
)
Cash NOI(1)
58,908

 
52,463

 
114,548

 
104,723

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(5,414
)
 
(4,851
)
 
(10,868
)
 
(9,525
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(4,050
)
 
(477
)
 
(5,628
)
 
(970
)
Management and development fee income from non-owned properties
(351
)
 
(526
)
 
(830
)
 
(981
)
Tenant bankruptcy settlement income
(486
)
 
(340
)
 
(513
)
 
(1,490
)
Other(2)
20

 
36

 
12

 
84

    Subtotal adjustments
(10,281
)
 
(6,158
)
 
(17,827
)
 
(12,882
)
Same-property cash NOI
$
48,627

 
$
46,305

 
$
96,721

 
$
91,841

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
5,414

 
4,851

 
10,868

 
9,525

Same-property cash NOI including properties in redevelopment
$
54,041

 
$
51,156

 
$
107,589

 
$
101,366

(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.



9



Reconciliation of Net Income to EBITDA and Adjusted EBITDA

The following table reflects the reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2017 and 2016. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of EBITDA and Adjusted EBITDA.
 
Three Months Ended June 30, 2017
 
Six Months Ended June 30, 2017
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
14,920

 
$
36,071

 
$
69,655

 
$
55,859

Depreciation and amortization
23,701

 
13,558

 
39,529

 
27,473

Interest and debt expense
13,627

 
12,820

 
26,742

 
26,249

Income tax expense (benefit)
304

 
(306
)
 
624

 
30

EBITDA
52,552

 
62,143

 
136,550

 
109,611

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Real estate impairment loss
303

 

 
3,467

 

Transaction costs
132

 
34

 
183

 
84

Loss on extinguishment of debt

 

 
1,274

 

Tenant bankruptcy settlement income
(486
)
 
(340
)
 
(513
)
 
(1,490
)
Gain on sale of real estate

 
(15,618
)
 

 
(15,618
)
Income from acquired leasehold interest

 

 
(39,215
)
 

Adjusted EBITDA
$
52,501

 
$
46,219

 
$
101,746

 
$
92,587

 
 
 
 
 
 
 
 

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
June 30, 2017
Common shares outstanding
107,564,687

OP and LTIP units (dilutive)
12,830,232

Fully diluted common shares
120,394,919




10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
June 30, 2017
 
 



389739137_image3a07.jpg




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







URBAN EDGE PROPERTIES
SUPPLEMENTAL DISCLOSURE
June 30, 2017
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Second Quarter 2017 Earnings Press Release
1
 
 
Overview
 
Summary Financial Results and Ratios
10
 
 
Consolidated Financial Statements
 
Consolidated Balance Sheets
11
Consolidated Statements of Income
12
 
 
Non-GAAP Financial Measures and Supplemental Data
 
Supplemental Schedule of Net Operating Income
13
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
14
Funds from Operations
15
Market Capitalization, Debt Ratios and Liquidity
16
Additional Disclosures
17
 
 
Leasing Data
 
Tenant Concentration - Top Twenty-Five Tenants
18
Leasing Activity
19
Retail Portfolio Lease Expiration Schedules
20
 
 
Property Data
 
Property Status Report
22
Property Acquisitions and Dispositions
25
Development, Redevelopment and Anchor Repositioning Projects
26
 
 
Debt Schedules
 
Debt Summary
28
Mortgage Debt Summary and Debt Maturity Schedule
29
 
 








 
389739137_image2a09.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 Second Quarter 2017 Results


        
NEW YORK, NY, August 2, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the three and six months ended June 30, 2017.

Financial Results(1)(2) 
Generated net income of $14.9 million, or $0.13 per diluted share, for the quarter and $69.7 million, or $0.63 per diluted share, for the six months ended June 30, 2017.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $38.7 million, or $0.34 per share, for the quarter and $112.1 million, or $1.01 per share, for the six months ended June 30, 2017.
Generated FFO as Adjusted of $0.33 per share for the quarter and $0.66 per share for the six months ended June 30, 2017, an increase of 6.5% per share compared to both the second quarter of 2016 and the six months ended June 30, 2016.

Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 5.0% compared to the second quarter of 2016 and by 5.3% compared to the six months ended June 30, 2016, primarily due to rent commencements at Garfield Commons, Kearny Commons and Bergen Town Center and higher recoveries.
Increased same-property cash NOI including properties in redevelopment by 5.6% compared to the second quarter of 2016 and by 6.1% compared to the six months ended June 30, 2016. Rent commencements at East Hanover warehouses, Walnut Creek and Montehiedra contributed to this growth.
Reported a decline in consolidated retail portfolio occupancy of 30 basis points to 95.9% compared to June 30, 2016 and 130 basis points compared to March 31, 2017, primarily as a result of acquiring centers with lower occupancy than our existing portfolio.
Increased same-property retail portfolio occupancy by 90 basis points to 98.2% compared to June 30, 2016 and reported a decrease of 10 basis points compared to March 31, 2017.
Executed 31 new leases, renewals and options totaling 373,000 square feet (sf) during the quarter. Same-space leases totaled 338,000 sf and generated average rent spreads of 1.7% on a GAAP basis and (2.7)% on a cash basis.

Acquisition and Disposition Activity
Acquired seven retail assets, predominantly in the New York metro area, totaling $325 million during the quarter. Funding for these acquisitions was comprised of approximately $122 million in UE operating partnership units valued at $27.02 per unit (4.5 million units), approximately $33 million of assumed debt, the issuance of approximately $126 million in non-recourse, mortgage loans and approximately $44 million in cash.






1


During the six months ended June 30, 2017, the Company acquired a total of nine retail assets as follows:
Date Acquired
 
Property
 
Location
 
GLA SF
 
Occupancy
 
Purchase Price
 
 
 
 
 
 
 
 
 
 
 
1/17/2017
 
Shops at Bruckner
 
Bronx, NY
 
114,000
 
100%
 
$
32,000

2/2/2017
 
Hudson Mall
 
Jersey City, NJ
 
383,000
 
97%
 
43,700

5/24/2017
 
Yonkers Gateway Center
(2 transactions)(3)
 
Yonkers, NY
 
437,000
 
88%
 
152,388

5/24/2017
 
The Plaza at Cherry Hill
 
Cherry Hill, NJ
 
413,000
 
74%
 
51,348

5/24/2017
 
Manchester Plaza
 
Manchester, MO
 
131,000
 
89%
 
19,794

5/24/2017
 
Millburn Gateway Center
 
Millburn, NJ
 
102,000
 
97%
 
43,748

5/24/2017
 
21 E Broad St/One Lincoln Plaza
 
Westfield, NJ
 
22,000
 
100%
 
9,670

5/25/2017
 
The Plaza at Woodbridge
 
Woodbridge, NJ
 
411,000
 
81%
 
99,752

 
 
 
 
Total
2,013,000
 
87%
 
$
452,400


Completed the sale of a 32,000 sf vacant building located in Eatontown, NJ for $5.0 million on June 30, 2017.

Development, Redevelopment and Anchor Repositioning Activity
Advanced thirteen active projects. Estimated gross cost for active and completed projects totals $203.4 million, a $10.3 million increase over the first quarter of 2017. Increased project costs are primarily offset by increased revenue from new tenant leases. These projects are expected to generate a 10% return. Of the $203.4 million, $96.8 million remains to be funded.
Sixteen additional pipeline projects are expected to earn 9% on the projected investment of $69-86 million.

Financing Activity
On May 10, 2017, issued 7.7 million common shares through an underwritten public offering generating cash proceeds of $193.5 million. The Company intends to use the net proceeds of this offering for development and redevelopment projects and for general corporate purposes including potential acquisitions that may be identified in the future.

Balance Sheet Highlights at June 30, 2017(1)(4) 
Total market capitalization of approximately $4.3 billion comprising 120.4 million, fully diluted common shares valued at $2.9 billion and $1.4 billion of debt.
Net debt to total market capitalization of 27%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization ("EBITDA") of 5.6x.
$248 million of cash and cash equivalents and no amounts drawn on the $600 million revolving credit facility.


















(1) Refer to "Non-GAAP Financial Measures" and "Operating Metrics" for definitions and additional detail.
(2) Refer to page 5 for a reconciliation of FFO to FFO as Adjusted for the three and six months ended June 30, 2017.
(3) The acquisition of Yonkers Gateway Center closed in two transactions. On January 4, 2017, the Company acquired fee and leasehold interests for $51.7 million. On May 24, 2017, the Company acquired the remaining fee and leasehold interests not previously acquired for $100.7 million.
(4) The tables accompanying this press release provide the calculation of fully diluted common shares and a reconciliation of net income to EBITDA and Adjusted EBITDA.

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. The Company calculates cash NOI using net income as defined by GAAP reflecting only those income and expense items that are incurred at the property level, adjusted for the following items: lease termination fees, bankruptcy settlement income, non-cash rental income and ground rent expense and income or expenses that we do not believe are representative of ongoing operating results, if any.
Same-property Cash NOI: The Company provides disclosure of cash NOI on a same-property basis, which includes the results of properties that were owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three and six months ended June 30, 2017 and 2016. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, under contract to be sold, or that are in the foreclosure process during the periods being compared. As such, same-property cash NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition or disposition of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company's properties. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when it is designated as a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan that is expected to have a significant impact on its operating income. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally one year after at least 80% of the expected NOI from the project is realized on a cash basis for a full quarter. Acquisitions are moved into the same-property pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment. The Company has also provided disclosure of cash NOI on a same-property basis adjusted to include redevelopment properties.
EBITDA and Adjusted EBITDA: EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized by us in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation

3


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

Operating Metrics

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

Occupancy metrics represent the percentage of occupied gross leasable area based on executed leases (including properties in development and redevelopment) and includes leases signed, but for which rent has not yet commenced. Same-property retail portfolio occupancy includes shopping centers and malls that have been owned and operated for the entirety of the reporting periods being compared totaling 76 properties for the three and six months ended June 30, 2017 and 2016. Occupancy metrics presented for the Company's same-property retail portfolio excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired within the past 12 months, properties sold, under contract to be sold, or that are in the foreclosure process during the periods being compared.

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









4


Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and FFO as Adjusted for the three and six months ended June 30, 2017. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of FFO and FFO as Adjusted.

 
Three Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2017
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net income
$
14,920

 
$
0.13

 
$
69,655

 
$
0.63

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,326
)
 
(0.01
)
 
(5,464
)
 
(0.05
)
Consolidated subsidiaries
(11
)
 

 
(22
)
 

Net income attributable to common shareholders
13,583

 
0.12

 
64,169

 
0.58

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
23,452

 
0.21

 
39,031

 
0.35

Real estate impairment loss
303

 

 
3,467

 
0.03

Limited partnership interests in operating partnership
1,326

 
0.01

 
5,464

 
0.05

FFO applicable to diluted common shareholders(1)
38,664

 
0.34

 
112,131

 
1.01

 
 
 
 
 
 
 
 
Transaction costs
132

 

 
183

 

Loss on extinguishment of debt

 

 
1,274

 
0.01

Tenant bankruptcy settlement income
(486
)
 
(0.01
)
 
(513
)
 
(0.01
)
Income from acquired leasehold interest(2)

 

 
(39,215
)
 
(0.35
)
FFO as Adjusted applicable to diluted common shareholders(1)
$
38,310

 
$
0.33

 
$
73,860


$
0.66

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
114,433

 
 
 
111,224

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

The following table reflects the reconciliation of weighted average diluted shares used in EPS calculations and weighted average diluted common shares used in FFO per share calculations.
(in thousands)
Three Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2017
Weighted average diluted shares used to calculate EPS
104,260

 
111,224

Assumed conversion of OP and LTIP Units to common stock(1)
10,173

 

Weighted average diluted common shares used to calculate
FFO per share
114,433

 
111,224

(1) Operating Partnership ("OP") and Long-Term Incentive Plan ("LTIP") Units are excluded from the calculation of earnings per diluted share for the three months ended June 30, 2017, because their inclusion is anti-dilutive and included for the six months ended June 30, 2017, because their inclusion is dilutive. FFO includes earnings allocated to unitholders as the inclusion of these units is dilutive to FFO per share.



5


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

The following table reflects the reconciliation of net income to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the three and six months ended June 30, 2017 and 2016. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of cash NOI and same-property cash NOI.

 
Three Months Ended June 30, 2017
 
Six Months Ended
June 30, 2017
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
14,920

 
$
36,071

 
$
69,655

 
$
55,859

Add: income tax expense (benefit)
304

 
(306
)
 
624

 
30

Income before income taxes
15,224

 
35,765

 
70,279

 
55,889

  Interest income
(336
)
 
(177
)
 
(463
)
 
(344
)
  Gain on sale of real estate

 
(15,618
)
 

 
(15,618
)
  Interest and debt expense
13,627

 
12,820

 
26,742

 
26,249

  Loss on extinguishment of debt

 

 
1,274

 

Operating income
28,515

 
32,790


97,832


66,176

Depreciation and amortization
23,701

 
13,558

 
39,529

 
27,473

Real estate impairment loss
303

 

 
3,467

 

General and administrative expense
7,709

 
7,535

 
15,790

 
14,255

Transaction costs
132

 
34

 
183

 
84

NOI
60,360

 
53,917


156,801


107,988

    Less: non-cash revenue and expenses
(1,452
)
 
(1,454
)
 
(42,253
)
 
(3,265
)
Cash NOI(1)
58,908

 
52,463


114,548


104,723

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(5,414
)
 
(4,851
)
 
(10,868
)
 
(9,525
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(4,050
)
 
(477
)
 
(5,628
)
 
(970
)
Management and development fee income from non-owned properties
(351
)
 
(526
)
 
(830
)
 
(981
)
Tenant bankruptcy settlement income
(486
)
 
(340
)
 
(513
)
 
(1,490
)
Other(2)
20

 
36

 
12

 
84

    Subtotal adjustments
(10,281
)
 
(6,158
)

(17,827
)

(12,882
)
Same-property cash NOI
$
48,627

 
$
46,305


$
96,721


$
91,841

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
5,414

 
4,851


10,868


9,525

Same-property cash NOI including properties in redevelopment
$
54,041

 
$
51,156


$
107,589


$
101,366

(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.





6


Reconciliation of Net Income to EBITDA and Adjusted EBITDA

The following table reflects the reconciliation of net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2017 and 2016. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of EBITDA and Adjusted EBITDA.
 
Three Months Ended June 30, 2017
 
Six Months Ended June 30, 2017
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
14,920

 
$
36,071

 
$
69,655

 
$
55,859

Depreciation and amortization
23,701

 
13,558

 
39,529

 
27,473

Interest and debt expense
13,627

 
12,820

 
26,742

 
26,249

Income tax expense (benefit)
304

 
(306
)
 
624

 
30

EBITDA
52,552

 
62,143

 
136,550

 
109,611

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Real estate impairment loss
303

 

 
3,467

 

Transaction costs
132

 
34

 
183

 
84

Loss on extinguishment of debt

 

 
1,274

 

Tenant bankruptcy settlement income
(486
)
 
(340
)
 
(513
)
 
(1,490
)
Gain on sale of real estate

 
(15,618
)
 

 
(15,618
)
Income from acquired leasehold interest

 

 
(39,215
)
 

Adjusted EBITDA
$
52,501

 
$
46,219


$
101,746


$
92,587

 
 
 
 
 
 
 
 

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
June 30, 2017
Common shares outstanding
107,564,687

OP and LTIP units (dilutive)
12,830,232

Fully diluted common shares
120,394,919




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 90 properties totaling 16.6 million square feet of gross leasable area.

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

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


8



URBAN EDGE PROPERTIES
 
 
 
ADDITIONAL DISCLOSURES
 
 
 
As of June 30, 2017
 
 
 
 
 
 
 

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




9



URBAN EDGE PROPERTIES
 
 
SUMMARY FINANCIAL RESULTS AND RATIOS
 
 
For the three and six months ended June 30, 2017 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Three months ended
 
Six months ended
 
 
June 30, 2017
 
June 30, 2017
Summary Financial Results
 
 
 
 
Total revenue
 
$
89,501

 
$
215,565

General & administrative expenses (G&A)(10)
 
$
7,709

 
$
15,790

Adjusted EBITDA(7)
 
$
52,501

 
$
101,746

Net income attributable to common shareholders
 
$
13,583

 
$
64,169

Earnings per diluted share
 
$
0.13

 
$
0.63

Funds from operations (FFO)
 
$
38,664

 
$
112,131

FFO per diluted common share
 
$
0.34

 
$
1.01

FFO as Adjusted
 
$
38,310

 
$
73,860

FFO as Adjusted per diluted common share
 
$
0.33

 
$
0.66

Total dividends paid per share
 
$
0.22

 
$
0.44

Stock closing price low-high range (NYSE)
 
$23.44 to $27.65

 
$23.44 to $28.85

Weighted average diluted shares used in EPS computations(1)
 
104,260

 
111,224

Weighted average diluted common shares used in FFO computations(1)
 
114,433

 
111,224

 
 
 
 
 
Summary Property, Operating and Financial Data
 
 
 
 
# of Total properties / # of Retail properties
 
90 / 89

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
15,702,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
17.25

 
 
Consolidated occupancy at end of period
 
95.7
 %
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
95.9
 %
 
 
Same-property retail portfolio occupancy at end of period(5)(2)
 
98.2
 %
 
 
Same-property retail portfolio physical occupancy at end of period(4)(5)(2)
 
97.4
 %
 
 
Same-property cash NOI growth(2)
 
5.0
 %
 
5.3
 %
Same-property cash NOI growth, including redevelopment properties
 
5.6
 %
 
6.1
 %
Cash NOI margin - total portfolio
 
67.0
 %
 
66.2
 %
Expense recovery ratio - total portfolio
 
99.3
 %
 
98.4
 %
New, renewal and option rent spread - cash basis(8)
 
(2.7
)%
 
(1.8
)%
New, renewal and option rent spread - GAAP basis(9)
 
1.7
 %
 
2.8
 %
Net debt to total market capitalization(6)
 
27.4
 %
 
27.4
 %
Net debt to Adjusted EBITDA(6)
 
5.6
x
 
5.8
x
Adjusted EBITDA to interest expense(7)
 
4.0
x
 
4.0
x
Adjusted EBITDA to fixed charges(7)
 
3.0
x
 
3.0
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 LTIP Units, which are excluded from the calculation of earnings per diluted share for the quarter ended June 30, 2017, because their inclusion is anti-dilutive and included for the six months ended June 30, 2017, because their inclusion is dilutive. FFO includes earnings allocated to unit holders as the inclusion of these units is dilutive to FFO per share.
(2) The same-property pool for both cash NOI and occupancy includes retail properties the Company consolidated, owned and operated for the entirety of both periods being compared and excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and excludes properties acquired, sold, under contract to be sold, or that are in the foreclosure process during the periods being compared.
(3) GLA - retail portfolio excludes 942,000 square feet of warehouses. Weighted average annual rent per square foot for our retail portfolio and warehouses was $16.57.
(4) Physical occupancy includes tenants that have access to their leased space and includes dark and paying tenants.
(5) Our retail portfolio includes shopping centers and malls and excludes warehouses.
(6) See computation on page 16.
(7) See computation on page 14.
(8) Rents have not been calculated on a straight-line basis. Previous/expiring rent is that as of time of expiration and includes any percentage rent paid as well. New rent is that which is paid at commencement.
(9) Rents are calculated on a straight-line ("GAAP") basis. See computation on page 19.
(10) Includes $40 thousand and $0.5 million of severance expense incurred in the three and six months ended June 30, 2017, respectively.


10



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED BALANCE SHEETS
 
 
As of June 30, 2017 (unaudited) and December 31, 2016
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
June 30,
 
December 31,
 
2017
 
2016
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
522,098

 
$
384,217

Buildings and improvements
1,992,386

 
1,650,054

Construction in progress
123,009

 
99,236

Furniture, fixtures and equipment
5,591

 
4,993

Total
2,643,084

 
2,138,500

Accumulated depreciation and amortization
(568,980
)
 
(541,077
)
Real estate, net
2,074,104

 
1,597,423

Cash and cash equivalents
248,407

 
131,654

Restricted cash
14,422

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $2,947 and $2,332, respectively
13,299

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $324 and $261, respectively
85,737

 
87,695

Identified intangible assets, net of accumulated amortization of $26,140 and $22,361, respectively
94,964

 
30,875

Deferred leasing costs, net of accumulated amortization of $14,910 and $13,909, respectively
19,771

 
19,241

Deferred financing costs, net of accumulated amortization of $1,228 and $726, respectively
3,755

 
1,936

Prepaid expenses and other assets
9,245

 
17,442

Total assets
$
2,563,704

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,412,397

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $60,937 and $72,528, respectively
187,223

 
146,991

Accounts payable and accrued expenses
63,388

 
48,842

Other liabilities
16,627

 
14,675

Total liabilities
1,679,635

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 107,564,687 and 99,754,900 shares issued and outstanding, respectively
1,075

 
997

Additional paid-in capital
683,889

 
488,375

Accumulated deficit
(10,479
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
209,202

 
35,451

Noncontrolling interest in consolidated subsidiaries
382

 
360

Total equity
884,069

 
496,117

Total liabilities and equity
$
2,563,704

 
$
1,904,138


11



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
For the three and six months ended June 30, 2017 and 2016 (unaudited)
 
(in thousands, except share and per share amounts)
 
 
 
 
 

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
REVENUE
 
 
 
 
 
 
 
Property rentals
$
64,708

 
$
58,683

 
$
127,206

 
$
117,612

Tenant expense reimbursements
23,881

 
19,879

 
47,652

 
42,386

Income from acquired leasehold interest

 

 
39,215

 

Management and development fees
351

 
526

 
830

 
981

Other income
561

 
369

 
662

 
1,546

Total revenue
89,501

 
79,457

 
215,565

 
162,525

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
23,701

 
13,558

 
39,529

 
27,473

Real estate taxes
14,711

 
12,723

 
28,103

 
25,972

Property operating
11,088

 
9,840

 
24,456

 
22,699

General and administrative
7,709

 
7,535

 
15,790

 
14,255

Real estate impairment loss
303

 

 
3,467

 

Ground rent
2,436

 
2,483

 
5,106

 
5,021

Transaction costs
132

 
34

 
183

 
84

Provision for doubtful accounts
906

 
494

 
1,099

 
845

Total expenses
60,986

 
46,667

 
117,733

 
96,349

Operating income
28,515

 
32,790

 
97,832

 
66,176

Gain on sale of real estate

 
15,618

 

 
15,618

Interest income
336

 
177

 
463

 
344

Interest and debt expense
(13,627
)
 
(12,820
)
 
(26,742
)
 
(26,249
)
Loss on extinguishment of debt

 

 
(1,274
)
 

Income before income taxes
15,224

 
35,765

 
70,279

 
55,889

Income tax benefit (expense)
(304
)
 
306

 
(624
)
 
(30
)
Net income
14,920

 
36,071

 
69,655

 
55,859

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,326
)
 
(2,201
)
 
(5,464
)
 
(3,355
)
Consolidated subsidiaries
(11
)
 
(2
)
 
(22
)
 
2

Net income attributable to common shareholders
$
13,583

 
$
33,868

 
$
64,169

 
$
52,506

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.13

 
$
0.34

 
$
0.63

 
$
0.53

Earnings per common share - Diluted:
$
0.13

 
$
0.34

 
$
0.63

 
$
0.53

Weighted average shares outstanding - Basic
104,063

 
99,274

 
101,863

 
99,270

Weighted average shares outstanding - Diluted
104,260

 
99,668

 
111,224

 
99,592



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME
 
 
For the three and six months ended June 30, 2017 and 2016
 
(in thousands)
 
 
 
 
 
 
Three Months Ended
June 30,
 
Percent Change
 
Six Months Ended
June 30,
 
Percent Change
 
2017
 
2016
 
 
2017
 
2016
 
Total cash NOI(1)
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$87,326
 
$76,968
 
13.5%
 
$171,676
 
$157,379
 
9.1%
Total property operating expenses
(28,843)
 
(25,061)
 
15.1%
 
(58,107)
 
(53,693)
 
8.2%
Cash NOI - total portfolio
$
58,483

 
$
51,907

 
12.7%
 
$
113,569

 
$
103,686

 
9.5%
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin (NOI / Total revenue)
67.0
%
 
67.4
%
 
 
 
66.2
%
 
65.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-property cash NOI(2)
 
 
 
 
 
 
 
 
 
 
 
Property rentals
$
52,192

 
$
50,664

 
 
 
$
104,067

 
$
101,038

 
 
Tenant expense reimbursements
20,562

 
17,966

 
 
 
41,948

 
38,442

 
 
Percentage rent
31

 
48

 
 
 
416

 
307

 
 
Total revenue
72,785

 
68,678

 
6.0%
 
146,431

 
139,787

 
4.8%
Real estate taxes
(12,670
)
 
(11,759
)
 
 
 
(24,755
)
 
(23,889
)
 
 
Property operating
(8,568
)
 
(8,251
)
 
 
 
(19,703
)
 
(19,212
)
 
 
Ground rent
(2,253
)
 
(2,193
)
 
 
 
(4,500
)
 
(4,399
)