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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):
November 1, 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 November 1, 2017, Urban Edge Properties (the "Company") announced its financial results for the three and nine months ended September 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 November 1, 2017, the Company announced its financial results for the three and nine months ended September 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 November 1, 2017.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of September 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: November 1, 2017
By:
/s/ Mark Langer
 
 
Mark Langer, Executive Vice President and Chief Financial Officer







INDEX TO EXHIBITS

Exhibit Number
 
Document
 
 
 
 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
390897152_image2a11.jpg
Exhibit 99.1
 
 
 
 
Urban Edge Properties
For additional information:
888 Seventh Avenue
Mark Langer, EVP and
New York, NY 10019
Chief Financial Officer
212-956-2556
 
 
 
 
 
 
 
 
 
FOR IMMEDIATE RELEASE:
 
 
 
 
Urban Edge Properties Reports Third Quarter 2017 Results



                                    
NEW YORK, NY, November 1, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the three and nine months ended September 30, 2017.

Financial Results(1)(2) 
Generated net income of $19.2 million, or $0.15 per diluted share, for the quarter and $88.8 million, or $0.77 per diluted share, for the nine months ended September 30, 2017.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $40.0 million, or $0.32 per share, for the quarter and $152.1 million, or $1.32 per share, for the nine months ended September 30, 2017.
Generated FFO as Adjusted of $0.34 per share for the quarter and $1.00 per share for the nine months ended September 30, 2017, an increase of 6.3% per share compared to the third quarter of 2016 and an increase of 6.4% per share compared to the nine months ended September 30, 2016. FFO as Adjusted for the three and nine months ended September 30, 2017 excludes $2.2 million of casualty and impairment charges related to Hurricane Maria.(3)

Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 3.9% compared to the third quarter of 2016 and by 4.7% compared to the nine months ended September 30, 2016 primarily due to rent commencements at Garfield Commons, Hackensack Commons, West End Commons and Brunswick Commons and higher recovery revenue.
Increased same-property cash NOI including properties in redevelopment by 4.1% compared to the third quarter of 2016 and by 5.5% compared to the nine months ended September 30, 2016. Rent commencements at Walnut Creek and East Hanover warehouses contributed to this growth.
Increased same-property retail portfolio occupancy by 60 basis points to 98.3% compared to September 30, 2016 and reported a decrease of 10 basis points compared to June 30, 2017.
Reported a decline in consolidated retail portfolio occupancy of 70 basis points to 95.9% compared to September 30, 2016. This metric remained the same compared to June 30, 2017. The decline from the prior year resulted from acquiring centers with lower occupancy than our existing portfolio in the second quarter of 2017.
Executed 35 new leases, renewals and options totaling 416,000 square feet (sf) during the quarter. Same-space leases totaled 310,000 sf and generated average rent spreads of 18.6% on a GAAP basis and 13.3% on a cash basis.

Financing Activity
On August 4, 2017, the Company issued 6.25 million common shares to a large institutional investor priced at $24.80 per share, generating net cash proceeds of $155 million.




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Development, Redevelopment and Anchor Repositioning Activity
Completed Projects:
Completed redevelopment projects at Turnersville and Hackensack for $6.8 million.
Over the past 12 months, the Company has completed six projects totaling $36.5 million generating a 20% unleveraged return.
Active Projects:
Advanced five projects from pipeline to active with total expected costs of $31.4 million:
Bergen Town Center - building 40,000 sf Best Buy on vacant pad;
Rockaway River Commons - expanding ShopRite by 8,000 sf and developing new outparcel for Popeye's;
Morris Plains - renovating facade, repositioning anchor and developing new pad for fast food user;
Cherry Hill - developing outparcel to accommodate fast food restaurant; and
Huntington - converting 11,000 sf of basement space into street-front retail space.
The Company has 16 active projects totaling $199.4 million in costs expected to generate a 9% unleveraged return.
Pipeline Projects:
Added the Plaza at Woodbridge to the pipeline for total expected costs of $5 million related to the development of a 60,000 sf self-storage facility in previously unused below grade space.
The Company has 11 pipeline projects with approximately $56 - 68 million in total estimated costs expected to generate a 9% unleveraged return.

Balance Sheet Highlights at September 30, 2017(1)(4) 
Total market capitalization of approximately $4.5 billion comprising 126.5 million, fully diluted common shares valued at $3.1 billion and $1.4 billion of debt.
Net debt to total market capitalization of 23%.
Net debt to adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") of 4.5x.
$380 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 nine months ended September 30, 2017.
(3) The Company estimates it will spend approximately $6.5 million repairing its properties and expects insurance proceeds to cover these costs in addition to business interruption losses, subject to applicable deductibles estimated to be approximately $2.5 million. For further details, refer to our Form 10-Q for the quarter ended September 30, 2017.
(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 75 properties for the three and nine months ended September 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. 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 75 properties for the three and nine months ended September 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 16.7 million square feet of gross leasable area.

FORWARD-LOOKING STATEMENTS
Certain statements contained in this Press Release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Press Release. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict; these factors include, among others, the Company's ability to complete its active development, redevelopment and anchor repositioning projects, the Company's ability to pursue, finance and complete acquisition opportunities, the Company's ability to engage in the projects in its planned expansion and redevelopment pipeline, the Company's ability to achieve the estimated unleveraged returns for such projects and acquisitions, the estimated remediation and repair costs related to Hurricane Maria and the timing of re-opening and resumption of full operations at the affected properties. 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.


5



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

Real estate, at cost:
 

 
 

Land
$
522,085

 
$
384,217

Buildings and improvements
2,013,767

 
1,650,054

Construction in progress
117,830

 
99,236

Furniture, fixtures and equipment
7,129

 
4,993

Total
2,660,811

 
2,138,500

Accumulated depreciation and amortization
(586,187
)
 
(541,077
)
Real estate, net
2,074,624

 
1,597,423

Cash and cash equivalents
380,395

 
131,654

Restricted cash
8,363

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $3,469 and $2,332, respectively
24,063

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $260 and $261, respectively
85,853

 
87,695

Identified intangible assets, net of accumulated amortization of $29,771 and $22,361, respectively
91,305

 
30,875

Deferred leasing costs, net of accumulated amortization of $15,556 and $13,909, respectively
20,500

 
19,241

Deferred financing costs, net of accumulated amortization of $1,484 and $726, respectively
4,492

 
1,936

Prepaid expenses and other assets
16,917

 
17,442

Total assets
$
2,706,512

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,408,066

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $63,468 and $72,528, respectively
184,061

 
146,991

Accounts payable and accrued expenses
65,769

 
48,842

Other liabilities
16,542

 
14,675

Total liabilities
1,674,438

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 113,817,429 and 99,754,900 shares issued and outstanding, respectively
1,138

 
997

Additional paid-in capital
945,047

 
488,375

Accumulated deficit
(18,322
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
103,818

 
35,451

Noncontrolling interest in consolidated subsidiaries
393

 
360

Total equity
1,032,074

 
496,117

Total liabilities and equity
$
2,706,512

 
$
1,904,138


6



URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
2017
 
2016
 
2017
 
2016
REVENUE
 
 
 
 
 
 
 
Property rentals
$
69,625

 
$
59,138

 
$
196,831

 
$
176,750

Tenant expense reimbursements
23,938

 
19,888

 
71,590

 
62,274

Management and development fees
369

 
375

 
1,199

 
1,356

Income from acquired leasehold interest

 

 
39,215

 

Other income
169

 
572

 
831

 
2,118

Total revenue
94,101

 
79,973

 
309,666

 
242,498

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
20,976

 
14,435

 
60,505

 
41,908

Real estate taxes
15,872

 
12,729

 
43,975

 
38,701

Property operating
11,402

 
9,897

 
35,858

 
32,596

General and administrative
6,930

 
6,618

 
22,720

 
20,873

Casualty and impairment loss
2,170

 

 
5,637

 

Ground rent
2,891

 
2,508

 
7,997

 
7,529

Transaction costs
95

 
223

 
278

 
307

Provision for doubtful accounts
575

 
149

 
1,674

 
994

Total expenses
60,911

 
46,559

 
178,644

 
142,908

Operating income
33,190

 
33,414

 
131,022

 
99,590

Gain on sale of real estate
202

 

 
202

 
15,618

Interest income
719

 
176

 
1,182

 
520

Interest and debt expense
(14,637
)
 
(12,766
)
 
(41,379
)
 
(39,015
)
Loss on extinguishment of debt

 

 
(1,274
)
 

Income before income taxes
19,474

 
20,824

 
89,753

 
76,713

Income tax expense
(318
)
 
(319
)
 
(942
)
 
(349
)
Net income
19,156

 
20,505

 
88,811

 
76,364

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,967
)
 
(1,239
)
 
(7,431
)
 
(4,594
)
Consolidated subsidiaries
(11
)
 
(1
)
 
(33
)
 
1

Net income attributable to common shareholders
$
17,178

 
$
19,265

 
$
81,347

 
$
71,771

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.15

 
$
0.19

 
$
0.77

 
$
0.72

Earnings per common share - Diluted:
$
0.15

 
$
0.19

 
$
0.77

 
$
0.72

Weighted average shares outstanding - Basic
110,990

 
99,304

 
104,938

 
99,281

Weighted average shares outstanding - Diluted
111,260

 
99,870

 
115,323

 
99,711



7



Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and FFO as Adjusted for the three and nine months ended September 30, 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
September 30, 2017
 
Nine Months Ended
September 30, 2017
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net income
$
19,156

 
$
0.15

 
$
88,811

 
$
0.77

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,967
)
 
(0.02
)
 
(7,431
)
 
(0.06
)
Consolidated subsidiaries
(11
)
 

 
(33
)
 

Net income attributable to common shareholders
17,178

 
0.13

 
81,347

 
0.71

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
20,855

 
0.17

 
59,886

 
0.52

Real estate impairment loss

 

 
3,467

 
0.03

Limited partnership interests in operating partnership
1,967

 
0.02

 
7,431

 
0.06

FFO applicable to diluted common shareholders(1)
40,000

 
0.32

 
152,131

 
1.32

 
 
 
 
 
 
 
 
Casualty loss
2,170

 
0.02

 
2,170

 
0.02

Transaction costs
95

 

 
278

 

Loss on extinguishment of debt

 

 
1,274

 
0.01

Gain on sale of land
(202
)
 

 
(202
)
 

Tenant bankruptcy settlement income
(115
)
 

 
(628
)
 
(0.01
)
Income from acquired leasehold interest(2)

 

 
(39,215
)
 
(0.34
)
FFO as Adjusted applicable to diluted common shareholders(1)
$
41,948

 
$
0.34

 
$
115,808


$
1.00

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
123,989

 
 
 
115,654

 
 
(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
September 30, 2017
 
Nine Months Ended
September 30, 2017
Weighted average diluted shares used to calculate EPS
111,260

 
115,323

Assumed conversion of OP and LTIP Units to common stock(1)
12,729

 
331

Weighted average diluted common shares used to calculate
FFO per share
123,989

 
115,654

(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 September 30, 2017, because their inclusion is anti-dilutive and included for the nine months ended September 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 nine months ended September 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
September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
19,156

 
$
20,505

 
$
88,811

 
$
76,364

Add: income tax expense
318

 
319

 
942

 
349

Income before income taxes
19,474

 
20,824

 
89,753

 
76,713

  Interest income
(719
)
 
(176
)
 
(1,182
)
 
(520
)
  Gain on sale of real estate
(202
)
 

 
(202
)
 
(15,618
)
  Interest and debt expense
14,637

 
12,766

 
41,379

 
39,015

  Loss on extinguishment of debt

 

 
1,274

 

Operating income
33,190

 
33,414

 
131,022

 
99,590

Depreciation and amortization
20,976

 
14,435

 
60,505

 
41,908

Casualty and impairment loss
2,170

 

 
5,637

 

General and administrative expense
6,930

 
6,618

 
22,720

 
20,873

Transaction costs
95

 
223

 
278

 
307

NOI
63,361

 
54,690

 
220,162

 
162,678

    Less: non-cash revenue and expenses
(2,554
)
 
(1,823
)
 
(44,807
)
 
(5,088
)
Cash NOI(1)
60,807

 
52,867

 
175,355

 
157,590

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(6,158
)
 
(5,809
)
 
(18,580
)
 
(16,667
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(6,357
)
 
(164
)
 
(11,987
)
 
(1,134
)
Management and development fee income from non-owned properties
(369
)
 
(375
)
 
(1,199
)
 
(1,356
)
Tenant bankruptcy settlement income
(115
)
 
(545
)
 
(628
)
 
(2,035
)
Other(2)
4

 
43

 
17

 
129

    Subtotal adjustments
(12,995
)
 
(6,850
)
 
(32,377
)
 
(21,063
)
Same-property cash NOI
$
47,812

 
$
46,017

 
$
142,978

 
$
136,527

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
6,158

 
5,809

 
18,580

 
16,667

Same-property cash NOI including properties in redevelopment
$
53,970

 
$
51,826

 
$
161,558

 
$
153,194

(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 nine months ended September 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 EBITDA and Adjusted EBITDA.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
19,156

 
$
20,505

 
$
88,811

 
$
76,364

Depreciation and amortization
20,976

 
14,435

 
60,505

 
41,908

Interest and debt expense
14,637

 
12,766

 
41,379

 
39,015

Income tax expense
318

 
319

 
942

 
349

EBITDA
55,087

 
48,025

 
191,637

 
157,636

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Casualty and impairment loss
2,170

 

 
5,637

 

Transaction costs
95

 
223

 
278

 
307

Loss on extinguishment of debt

 

 
1,274

 

Tenant bankruptcy settlement income
(115
)
 
(545
)
 
(628
)
 
(2,035
)
Gain on sale of real estate
(202
)
 

 
(202
)
 
(15,618
)
Income from acquired leasehold interest

 

 
(39,215
)
 

Adjusted EBITDA
$
57,035

 
$
47,703

 
$
158,781

 
$
140,290

 
 
 
 
 
 
 
 

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
September 30, 2017
Common shares outstanding
113,817,429

OP and LTIP units (dilutive)
12,729,634

Fully diluted common shares
126,547,063




10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
September 30, 2017
 
 



390897152_image3a09.jpg




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







URBAN EDGE PROPERTIES
SUPPLEMENTAL DISCLOSURE
September 30, 2017
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Third 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
 
 








 
390897152_image2a11.jpg
 
 
 
 
 
Urban Edge Properties
For additional information:
888 Seventh Avenue
Mark Langer, EVP and
New York, NY 10019
Chief Financial Officer
212-956-2556
 
 
 
 
 
 
 
 
 
FOR IMMEDIATE RELEASE:
 
 
 
 
Urban Edge Properties Reports Third Quarter 2017 Results


        
NEW YORK, NY, November 1, 2017 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the three and nine months ended September 30, 2017.

Financial Results(1)(2) 
Generated net income of $19.2 million, or $0.15 per diluted share, for the quarter and $88.8 million, or $0.77 per diluted share, for the nine months ended September 30, 2017.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $40.0 million, or $0.32 per share, for the quarter and $152.1 million, or $1.32 per share, for the nine months ended September 30, 2017.
Generated FFO as Adjusted of $0.34 per share for the quarter and $1.00 per share for the nine months ended September 30, 2017, an increase of 6.3% per share compared to the third quarter of 2016 and an increase of 6.4% per share compared to the nine months ended September 30, 2016. FFO as Adjusted for the three and nine months ended September 30, 2017 excludes $2.2 million of casualty and impairment charges related to Hurricane Maria.(3)

Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 3.9% compared to the third quarter of 2016 and by 4.7% compared to the nine months ended September 30, 2016 primarily due to rent commencements at Garfield Commons, Hackensack Commons, West End Commons and Brunswick Commons and higher recovery revenue.
Increased same-property cash NOI including properties in redevelopment by 4.1% compared to the third quarter of 2016 and by 5.5% compared to the nine months ended September 30, 2016. Rent commencements at Walnut Creek and East Hanover warehouses contributed to this growth.
Increased same-property retail portfolio occupancy by 60 basis points to 98.3% compared to September 30, 2016 and reported a decrease of 10 basis points compared to June 30, 2017.
Reported a decline in consolidated retail portfolio occupancy of 70 basis points to 95.9% compared to September 30, 2016. This metric remained the same compared to June 30, 2017. The decline from the prior year resulted from acquiring centers with lower occupancy than our existing portfolio in the second quarter of 2017.
Executed 35 new leases, renewals and options totaling 416,000 square feet (sf) during the quarter. Same-space leases totaled 310,000 sf and generated average rent spreads of 18.6% on a GAAP basis and 13.3% on a cash basis.

Financing Activity
On August 4, 2017, the Company issued 6.25 million common shares to a large institutional investor priced at $24.80 per share, generating net cash proceeds of $155 million.




1


Development, Redevelopment and Anchor Repositioning Activity
Completed Projects:
Completed redevelopment projects at Turnersville and Hackensack for $6.8 million.
Over the past 12 months, the Company has completed six projects totaling $36.5 million generating a 20% unleveraged return.
Active Projects:
Advanced five projects from pipeline to active with total expected costs of $31.4 million:
Bergen Town Center - building 40,000 sf Best Buy on vacant pad;
Rockaway River Commons - expanding ShopRite by 8,000 sf and developing new outparcel for Popeye's;
Morris Plains - renovating facade, repositioning anchor and developing new pad for fast food user;
Cherry Hill - developing outparcel to accommodate fast food restaurant; and
Huntington - converting 11,000 sf of basement space into street-front retail space.
The Company has 16 active projects totaling $199.4 million in costs expected to generate a 9% unleveraged return.
Pipeline Projects:
Added the Plaza at Woodbridge to the pipeline for total expected costs of $5 million related to the development of a 60,000 sf self-storage facility in previously unused below grade space.
The Company has 11 pipeline projects with approximately $56 - 68 million in total estimated costs expected to generate a 9% unleveraged return.

Balance Sheet Highlights at September 30, 2017(1)(4) 
Total market capitalization of approximately $4.5 billion comprising 126.5 million, fully diluted common shares valued at $3.1 billion and $1.4 billion of debt.
Net debt to total market capitalization of 23%.
Net debt to adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") of 4.5x.
$380 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 nine months ended September 30, 2017.
(3) The Company estimates it will spend approximately $6.5 million repairing its properties and expects insurance proceeds to cover these costs in addition to business interruption losses, subject to applicable deductibles estimated to be approximately $2.5 million. For further details, refer to our Form 10-Q for the quarter ended September 30, 2017.
(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 75 properties for the three and nine months ended September 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. 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 75 properties for the three and nine months ended September 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 nine months ended September 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
September 30, 2017
 
Nine Months Ended
September 30, 2017
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net income
$
19,156

 
$
0.15

 
$
88,811

 
$
0.77

Less (net income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,967
)
 
(0.02
)
 
(7,431
)
 
(0.06
)
Consolidated subsidiaries
(11
)
 

 
(33
)
 

Net income attributable to common shareholders
17,178

 
0.13

 
81,347

 
0.71

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
20,855

 
0.17

 
59,886

 
0.52

Real estate impairment loss

 

 
3,467

 
0.03

Limited partnership interests in operating partnership
1,967

 
0.02

 
7,431

 
0.06

FFO applicable to diluted common shareholders(1)
40,000

 
0.32

 
152,131

 
1.32

 
 
 
 
 
 
 
 
Casualty loss
2,170

 
0.02

 
2,170

 
0.02

Transaction costs
95

 

 
278

 

Loss on extinguishment of debt

 

 
1,274

 
0.01

Gain on sale of land
(202
)
 

 
(202
)
 

Tenant bankruptcy settlement income
(115
)
 

 
(628
)
 
(0.01
)
Income from acquired leasehold interest(2)

 

 
(39,215
)
 
(0.34
)
FFO as Adjusted applicable to diluted common shareholders(1)
$
41,948

 
$
0.34

 
$
115,808


$
1.00

 
 
 
 
 
 
 
 
Weighted average diluted common shares - FFO(1)
123,989

 
 
 
115,654

 
 
(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
September 30, 2017
 
Nine Months Ended
September 30, 2017
Weighted average diluted shares used to calculate EPS
111,260

 
115,323

Assumed conversion of OP and LTIP Units to common stock(1)
12,729

 
331

Weighted average diluted common shares used to calculate
FFO per share
123,989

 
115,654

(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 September 30, 2017, because their inclusion is anti-dilutive and included for the nine months ended September 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 nine months ended September 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
September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
19,156

 
$
20,505

 
$
88,811

 
$
76,364

Add: income tax expense
318

 
319

 
942

 
349

Income before income taxes
19,474


20,824


89,753


76,713

  Interest income
(719
)
 
(176
)
 
(1,182
)
 
(520
)
  Gain on sale of real estate
(202
)
 

 
(202
)
 
(15,618
)
  Interest and debt expense
14,637

 
12,766

 
41,379

 
39,015

  Loss on extinguishment of debt

 

 
1,274

 

Operating income
33,190


33,414


131,022


99,590

Depreciation and amortization
20,976

 
14,435

 
60,505

 
41,908

Casualty and impairment loss
2,170

 

 
5,637

 

General and administrative expense
6,930

 
6,618

 
22,720

 
20,873

Transaction costs
95

 
223

 
278

 
307

NOI
63,361


54,690


220,162


162,678

    Less: non-cash revenue and expenses
(2,554
)
 
(1,823
)
 
(44,807
)
 
(5,088
)
Cash NOI(1)
60,807


52,867


175,355


157,590

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(1)
(6,158
)
 
(5,809
)
 
(18,580
)
 
(16,667
)
Cash NOI related to properties acquired, disposed, or in foreclosure(1)
(6,357
)
 
(164
)
 
(11,987
)
 
(1,134
)
Management and development fee income from non-owned properties
(369
)
 
(375
)
 
(1,199
)
 
(1,356
)
Tenant bankruptcy settlement income
(115
)
 
(545
)
 
(628
)
 
(2,035
)
Other(2)
4

 
43

 
17

 
129

    Subtotal adjustments
(12,995
)
 
(6,850
)

(32,377
)

(21,063
)
Same-property cash NOI
$
47,812

 
$
46,017


$
142,978


$
136,527

Adjustments:

 

 
 
 
 
Cash NOI related to properties being redeveloped
6,158

 
5,809


18,580


16,667

Same-property cash NOI including properties in redevelopment
$
53,970

 
$
51,826


$
161,558


$
153,194

(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 nine months ended September 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 EBITDA and Adjusted EBITDA.
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income
$
19,156

 
$
20,505

 
$
88,811

 
$
76,364

Depreciation and amortization
20,976

 
14,435

 
60,505

 
41,908

Interest and debt expense
14,637

 
12,766

 
41,379

 
39,015

Income tax expense
318

 
319

 
942

 
349

EBITDA
55,087

 
48,025

 
191,637

 
157,636

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Casualty and impairment loss
2,170

 

 
5,637

 

Transaction costs
95

 
223

 
278

 
307

Loss on extinguishment of debt

 

 
1,274

 

Tenant bankruptcy settlement income
(115
)
 
(545
)
 
(628
)
 
(2,035
)
Gain on sale of real estate
(202
)
 

 
(202
)
 
(15,618
)
Income from acquired leasehold interest

 

 
(39,215
)
 

Adjusted EBITDA
$
57,035

 
$
47,703


$
158,781


$
140,290

 
 
 
 
 
 
 
 

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
September 30, 2017
Common shares outstanding
113,817,429

OP and LTIP units (dilutive)
12,729,634

Fully diluted common shares
126,547,063




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 16.7 million square feet of gross leasable area.

FORWARD-LOOKING STATEMENTS
Certain statements contained in this Press Release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Press Release. Many of the factors that will determine the outcome of these and our other forward-looking statements are beyond our ability to control or predict; these factors include, among others, the Company's ability to complete its active development, redevelopment and anchor repositioning projects, the Company's ability to pursue, finance and complete acquisition opportunities, the Company's ability to engage in the projects in its planned expansion and redevelopment pipeline, the Company's ability to achieve the estimated unleveraged returns for such projects and acquisitions, the estimated remediation and repair costs related to Hurricane Maria and the timing of re-opening and resumption of full operations at the affected properties. 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 September 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 nine months ended September 30, 2017 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
 
 
September 30, 2017
 
September 30, 2017
Summary Financial Results
 
 
 
 
Total revenue
 
$
94,101

 
$
309,666

General & administrative expenses (G&A)(10)
 
$
6,930

 
$
22,720

Adjusted EBITDA(7)
 
$
57,035

 
$
158,781

Net income attributable to common shareholders
 
$
17,178

 
$
81,347

Earnings per diluted share
 
$
0.15

 
$
0.77

Funds from operations (FFO)
 
$
40,000

 
$
152,131

FFO per diluted common share
 
$
0.32

 
$
1.32

FFO as Adjusted
 
$
41,948

 
$
115,808

FFO as Adjusted per diluted common share
 
$
0.34

 
$
1.00

Total dividends paid per share
 
$
0.22

 
$
0.66

Stock closing price low-high range (NYSE)
 
$23.64 to $25.64

 
$23.44 to $28.85

Weighted average diluted shares used in EPS computations(1)
 
111,260

 
115,323

Weighted average diluted common shares used in FFO computations(1)
 
123,989

 
115,654

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

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
15,727,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
17.34

 
 
Consolidated occupancy at end of period
 
95.6
%
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
95.9
%
 
 
Same-property retail portfolio occupancy at end of period(5)(2)
 
98.3
%
 
 
Same-property retail portfolio physical occupancy at end of period(4)(5)(2)
 
98.0
%
 
 
Same-property cash NOI growth(2)
 
3.9
%
 
4.7
%
Same-property cash NOI growth, including redevelopment properties
 
4.1
%
 
5.5
%
Cash NOI margin - total portfolio
 
67.9
%
 
66.8
%
Expense recovery ratio - total portfolio
 
98.1
%
 
98.3
%
New, renewal and option rent spread - cash basis(8)
 
13.3
%
 
3.4
%
New, renewal and option rent spread - GAAP basis(9)
 
18.6
%
 
8.3
%
Net debt to total market capitalization(6)
 
23.2
%
 
23.2
%
Net debt to Adjusted EBITDA(6)
 
4.5
x
 
4.9
x
Adjusted EBITDA to interest expense(7)
 
4.1
x
 
4.1
x
Adjusted EBITDA to fixed charges(7)
 
3.1
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 September 30, 2017, because their inclusion is anti-dilutive and included for the nine months ended September 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 $16.67.
(4) Physical occupancy includes tenants that have access to their leased space and includes dark and paying tenants.
(5) Our retail portfolio includes shopping centers and malls and excludes warehouses.
(6) See computation on page 16.
(7) See computation on page 14.
(8) Rents have not been calculated on a straight-line basis. Previous/expiring rent is that as of time of expiration and includes any percentage rent paid as well. New rent is that which is paid at commencement.
(9) Rents are calculated on a straight-line ("GAAP") basis. See computation on page 19.
(10) Includes $0.5 million of severance expense incurred in the nine months ended September 30, 2017.


10



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

Real estate, at cost:
 

 
 

Land
$
522,085

 
$
384,217

Buildings and improvements
2,013,767

 
1,650,054

Construction in progress
117,830

 
99,236

Furniture, fixtures and equipment
7,129

 
4,993

Total
2,660,811

 
2,138,500

Accumulated depreciation and amortization
(586,187
)
 
(541,077
)
Real estate, net
2,074,624

 
1,597,423

Cash and cash equivalents
380,395

 
131,654

Restricted cash
8,363

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $3,469 and $2,332, respectively
24,063

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $260 and $261, respectively
85,853

 
87,695

Identified intangible assets, net of accumulated amortization of $29,771 and $22,361, respectively
91,305

 
30,875

Deferred leasing costs, net of accumulated amortization of $15,556 and $13,909, respectively
20,500

 
19,241

Deferred financing costs, net of accumulated amortization of $1,484 and $726, respectively
4,492

 
1,936

Prepaid expenses and other assets
16,917

 
17,442

Total assets
$
2,706,512

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,408,066

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $63,468 and $72,528, respectively
184,061

 
146,991

Accounts payable and accrued expenses
65,769

 
48,842

Other liabilities
16,542

 
14,675

Total liabilities
1,674,438

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 113,817,429 and 99,754,900 shares issued and outstanding, respectively
1,138

 
997

Additional paid-in capital
945,047

 
488,375

Accumulated deficit
(18,322
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Redeemable noncontrolling interests
103,818

 
35,451

Noncontrolling interest in consolidated subsidiaries
393

 
360

Total equity
1,032,074

 
496,117

Total liabilities and equity
$
2,706,512

 
$
1,904,138


11



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

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
REVENUE
 
 
 
 
 
 
 
Property rentals
$
69,625

 
$
59,138

 
$
196,831

 
$
176,750

Tenant expense reimbursements
23,938

 
19,888

 
71,590

 
62,274

Management and development fees
369

 
375

 
1,199

 
1,356

Income from acquired leasehold interest

 

 
39,215

 

Other income
169

 
572

 
831

 
2,118

Total revenue
94,101

 
79,973

 
309,666

 
242,498

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
20,976

 
14,435

 
60,505

 
41,908

Real estate taxes
15,872

 
12,729

 
43,975

 
38,701

Property operating
11,402

 
9,897

 
35,858

 
32,596

General and administrative
6,930

 
6,618

 
22,720

 
20,873

Casualty and impairment loss
2,170

 

 
5,637

 

Ground rent
2,891

 
2,508

 
7,997

 
7,529

Transaction costs
95

 
223

 
278

 
307

Provision for doubtful accounts
575

 
149

 
1,674

 
994

Total expenses
60,911

 
46,559

 
178,644

 
142,908

Operating income
33,190

 
33,414

 
131,022

 
99,590

Gain on sale of real estate
202

 

 
202

 
15,618

Interest income
719

 
176

 
1,182

 
520

Interest and debt expense
(14,637
)
 
(12,766
)
 
(41,379
)
 
(39,015
)
Loss on extinguishment of debt

 

 
(1,274
)
 

Income before income taxes
19,474

 
20,824

 
89,753

 
76,713

Income tax expense
(318
)
 
(319
)
 
(942
)
 
(349
)
Net income
19,156

 
20,505

 
88,811

 
76,364

Less (net income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,967
)
 
(1,239
)
 
(7,431
)
 
(4,594
)
Consolidated subsidiaries
(11
)
 
(1
)
 
(33
)
 
1

Net income attributable to common shareholders
$
17,178

 
$
19,265

 
$
81,347

 
$
71,771

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.15

 
$
0.19

 
$
0.77

 
$
0.72

Earnings per common share - Diluted:
$
0.15

 
$
0.19

 
$
0.77

 
$
0.72

Weighted average shares outstanding - Basic
110,990

 
99,304

 
104,938

 
99,281

Weighted average shares outstanding - Diluted
111,260

 
99,870

 
115,323

 
99,711



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME
 
 
For the three and nine months ended September 30, 2017 and 2016
 
(in thousands)
 
 
 
 
 
 
Three Months Ended
September 30,
 
Percent Change
 
Nine Months Ended
September 30,
 
Percent Change
 
2017
 
2016
 
 
2017
 
2016
 
Total cash NOI(1)
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$
90,891

 
$
77,486

 
17.3%
 
$
262,567

 
$
234,865

 
11.8%
Total property operating expenses
(29,171)
 
(25,022)
 
16.6%
 
(87,278)
 
(78,715)
 
10.9%
Cash NOI - total portfolio
$
61,720

 
$
52,464

 
17.6%
 
$
175,289

 
$
156,150

 
12.3%
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin (NOI / Total revenue)
67.9
%
 
67.7
%
 
 
 
66.8
%
 
66.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-property cash NOI(2)
 
 
 
 
 
 
 
 
 
 
 
Property rentals
$
51,963

 
$
50,250

 
 
 
$
154,364

 
$
149,609

 
 
Tenant expense reimbursements
19,327

 
17,901

 
 
 
60,735

 
55,848

 
 
Percentage rent
44

 
104

 
 
 
460

 
411

 
 
Total revenue
71,334

 
68,255

 
4.5%
 
215,559

 
205,868

 
4.7%
Real estate taxes
(12,782
)
 
(11,771
)
 
 
 
(37,204
)
 
(35,315
)
 
 
Property operating
(8,011
)
 
(8,150
)
 
 
 
(27,419
)
 
(27,051
)
 
 
Ground rent
(2,254
)
 
(2,213
)
 
 
 
(6,754
)
 
(6,612
)
 
 
Provision for doubtful accounts
(475
)
 
(104
)
 
 
 
(1,204
)
 
(363
)
 
 
Total property operating expenses
(23,522
)
 
(22,238
)
 
5.8%
 
(72,581
)
 
(69,341
)
 
4.7%
Same-property cash NOI(3)
$
47,812

 
$
46,017

 
3.9%
 
$
142,978

 
$
136,527

 
4.7%
 
 
 
 
 
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
$
6,158

 
$
5,809

 
 
 
$
18,580

 
$
16,667

 
 
Same-property cash NOI including properties in redevelopment
$
53,970

 
$
51,826

 
4.1%
 
$
161,558

 
$
153,194

 
5.5%
 
 
 
 
 
 
 
 
 
 
 
 
Same-property physical occupancy(3)
98.0
%
 
96.5
%
 
 
 
 
 
 
 
 
Same-property leased occupancy(3)
98.3
%
 
97.7
%
 
 
 
 
 
 
 
 
Number of properties included in same-property analysis
75