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Section 1: 8-K (8-K)

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

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 14, 2018

URBAN EDGE PROPERTIES
URBAN EDGE PROPERTIES LP
(Exact name of Registrant as specified in its charter)
Maryland (Urban Edge Properties)
 
001-36523 (Urban Edge Properties)

 
47-6311266
Delaware (Urban Edge Properties LP)
 
333-212951-01 (Urban Edge Properties LP)

 
36-4791544
(State or other jurisdiction of incorporation or organization)
 
(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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o






Item 2.02 Results of Operations and Financial Condition

On February 14, 2018, Urban Edge Properties (the "Company") announced its financial results for the three and twelve months ended December 31, 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 February 14, 2018, the Company announced its financial results for the three and twelve months ended December 31, 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 February 14, 2018.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of December 31, 2017.






INDEX TO EXHIBITS

Exhibit Number
 
Document
 
 
 
 
 






SIGNATURE

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

 
 
URBAN EDGE PROPERTIES
 
 
(Registrant)
 
 
 
 
 
 
Date: February 14, 2018
By:
/s/ Mark Langer
 
 
Mark Langer, Executive Vice President and Chief Financial Officer




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


 
392196418_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 Fourth Quarter and Full Year 2017 Results




                                    
NEW YORK, NY, February 14, 2018 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the quarter and year ended December 31, 2017.

Financial Results(1)(2) 
Reported a net loss of $15.9 million, or $0.13 per diluted share, for the quarter and net income of $72.9 million, or $0.61 per diluted share, for the year.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $5.6 million, or $0.04 per share, for the quarter and $157.8 million, or $1.33 per share, for the year.
Generated FFO as Adjusted of $0.34 per share for the quarter and $1.34 per share for the year, an increase of 3.0% per share over the fourth quarter of 2016 and an increase of 5.5% per share over the year ended December 31, 2016.
Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 4.9% over the fourth quarter of 2016 and by 4.7% over the year ended December 31, 2016 primarily due to rent commencements and higher recovery revenue.
Increased same-property cash NOI including properties in redevelopment by 5.4% over both the fourth quarter and year ended December 31, 2016.
Increased same-property retail portfolio occupancy by 10 basis points to 98.3% compared to December 31, 2016 and unchanged compared to September 30, 2017.
Reported a decline in consolidated retail portfolio occupancy of 120 basis points to 96.0% compared to December 31, 2016 as a result of the acquisition of centers with lower occupancy than our existing portfolio in the second quarter of 2017. This metric increased by 10 basis points compared to September 30, 2017.
Executed 24 new leases, renewals and options totaling 505,000 square feet (sf) during the quarter. Same-space leases totaled 408,000 sf and generated average rent spreads of 12.4% on a GAAP basis and 9.0% on a cash basis.
Financing Activity(1)(3)(4) 
During the fourth quarter, completed $710 million in individual, non-recourse mortgages with an average interest rate of 4.0% and a weighted average term to maturity of 10 years. Proceeds were used to defease and prepay a $544 million, 4.2% cross-collateralized mortgage scheduled to mature in 2020. The Company generated $120 million of additional cash proceeds net of costs and recognized a $34.1 million loss on debt extinguishment.
During the year, completed approximately $1.5 billion of financing transactions including $1 billion in individual, non-recourse mortgages and $500 million in equity at a weighted average net price of $25.62 per share. These transactions resulted in the following benefits:
Reduced net debt to total market capitalization to 22% and net debt to adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") to 4.6x;
Increased cash balance by $361 million to $501 million at year end;

1



Increased line of credit to $600 million and extended maturity date to March 2021, with no borrowings outstanding;
Grew unencumbered asset base by $500 million to $1.4 billion and eliminated all cross-collateralized mortgages; and
Increased weighted average term to maturity on outstanding debt from 5 years to 8 years with no debt maturing until 2021.
Development, Redevelopment and Anchor Repositioning Activity
During the fourth quarter, the Company completed three redevelopment projects totaling $22 million at a blended yield of 11%.
Expanded Garfield Commons by 85,000 square feet to accommodate new stores for Burlington, PetSmart and Ulta.
Renovated and remerchandised Hanover Commons to include Saks Off Fifth, Forever 21 Red and The Paper Store.
Added fast food outparcel at Rockaway River Commons.
In addition, the Company commenced a $4.5 million anchor repositioning project at Goucher Commons with a national organic grocer replacing hhgregg.
The Company has 15 active projects with total estimated costs of $195.5 million expected to generate an 8% return.
Hurricane Casualty Loss(5) 
During the fourth quarter and for the year, the Company incurred $3.9 million and $6.1 million, respectively, of casualty-related losses from Hurricane Maria on its two properties in Puerto Rico. The Company expects its property and business interruption insurance will cover a significant portion of these losses subject to deductibles of approximately $2.3 million. Casualty-related losses are excluded from FFO as Adjusted and same-property cash NOI for the quarter and the year. Currently, 86% of all stores previously occupied prior to the hurricane (measured by gross leasable area) are open and another 10% are expected to open later this year.
Disposition Activity
During the fourth quarter, the Company executed a contract to sell its property in Allentown, PA for $55.3 million. The sale is expected to close in the second quarter of 2018.


















(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 quarter and year ended December 31, 2017.
(3) The tables accompanying this press release provide the calculation of fully diluted common shares and a reconciliation of net income (loss) to EBITDA and annualized Adjusted EBITDA.
(4) Net debt as of December 31, 2017 is calculated as total consolidated debt of $1.6 billion less total cash and cash equivalents, including restricted cash, of $500.8 million.
(5) For additional information on the Hurricane Casualty Loss refer to footnote 3 on page 8 of this Press Release and Note 11 to our consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017.


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 shareholders 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 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 months ended December 31, 2017 and 2016 and 74 properties for the twelve months ended December 31, 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. Same-property cash NOI may include other adjustments as detailed in the Reconciliation of Net Income (Loss) to cash NOI and same-property cash NOI included in the tables accompanying this press release.

3



EBITDA and Adjusted EBITDA: EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized by us in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation of REITs, as a measure of the Company's operational performance as they exclude various items that do not relate to or are not indicative of our operating performance and because they approximate key performance measures in our debt covenants. Accordingly, the Company believes that the use of EBITDA and Adjusted EBITDA, as opposed to income before income taxes in various ratios, provides meaningful performance measures related to the Company's ability to meet various coverage tests for the stated periods. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDA for the fourth quarter of 2017, and net debt (net of cash) to total market capitalization, 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 months ended December 31, 2017 and 2016 and 74 properties for the twelve months ended December 31, 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, 2017 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) 
 
December 31,
 
December 31,
 
2017
 
2016
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
521,669

 
$
384,217

Buildings and improvements
2,010,527

 
1,650,054

Construction in progress
133,761

 
99,236

Furniture, fixtures and equipment
5,897

 
4,993

Total
2,671,854

 
2,138,500

Accumulated depreciation and amortization
(587,127
)
 
(541,077
)
Real estate, net
2,084,727

 
1,597,423

Cash and cash equivalents
490,279

 
131,654

Restricted cash
10,562

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $4,937 and $2,332, respectively
20,078

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $494 and $261, respectively
85,843

 
87,695

Identified intangible assets, net of accumulated amortization of $33,827 and $22,361, respectively
87,249

 
30,875

Deferred leasing costs, net of accumulated amortization of $14,796 and $13,909, respectively
20,268

 
19,241

Deferred financing costs, net of accumulated amortization of $1,740 and $726, respectively
3,243

 
1,936

Prepaid expenses and other assets
18,559

 
17,442

Total assets
$
2,820,808

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,564,542

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $65,832 and $72,528, respectively
180,959

 
146,991

Accounts payable and accrued expenses
69,595

 
48,842

Other liabilities
15,171

 
14,675

Total liabilities
1,830,267

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 113,827,529 and 99,754,900 shares issued and outstanding, respectively
1,138

 
997

Additional paid-in capital
946,402

 
488,375

Accumulated deficit
(57,621
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Operating partnership
100,218

 
35,451

Consolidated subsidiaries
404

 
360

Total equity
990,541

 
496,117

Total liabilities and equity
$
2,820,808

 
$
1,904,138


6



URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
 
Quarter Ended
December 31,
 
Year Ended
December 31,
 
2017
 
2016
 
2017
 
2016
REVENUE
 
 
 
 
 
 
 
Property rentals
$
69,153

 
$
60,048

 
$
265,984

 
$
236,798

Tenant expense reimbursements
27,508

 
22,647

 
99,098

 
84,921

Management and development fees
336

 
403

 
1,535

 
1,759

Income from acquired leasehold interest

 

 
39,215

 

Other income
379

 
380

 
1,210

 
2,498

Total revenue
97,376

 
83,478

 
407,042

 
325,976

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
21,776

 
14,237

 
82,281

 
56,145

Real estate taxes
15,762

 
12,728

 
59,737

 
51,429

Property operating
15,036

 
12,684

 
50,894

 
45,280

General and administrative
7,693

 
6,565

 
30,413

 
27,438

Casualty and impairment loss
1,745

 

 
7,382

 

Ground rent
2,851

 
2,518

 
10,848

 
10,047

Transaction costs

 
1,098

 
278

 
1,405

Provision for doubtful accounts
1,771

 
220

 
3,445

 
1,214

Total expenses
66,634

 
50,050

 
245,278

 
192,958

Operating income
30,742

 
33,428

 
161,764

 
133,018

Gain on sale of real estate

 

 
202

 
15,618

Interest income
1,066

 
159

 
2,248

 
679

Interest and debt expense
(14,839
)
 
(12,866
)
 
(56,218
)
 
(51,881
)
Loss on extinguishment of debt
(34,062
)
 

 
(35,336
)
 

Income (loss) before income taxes
(17,093
)
 
20,721

 
72,660

 
97,434

Income tax benefit (expense)
1,220

 
(455
)
 
278

 
(804
)
Net income (loss)
(15,873
)
 
20,266

 
72,938

 
96,630

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
1,607

 
(1,218
)
 
(5,824
)
 
(5,812
)
Consolidated subsidiaries
(11
)
 
(4
)
 
(44
)
 
(3
)
Net income (loss) attributable to common shareholders
$
(14,277
)
 
$
19,044

 
$
67,070

 
$
90,815

 
 
 
 
 
 
 
 
Earnings (loss) per common share - Basic:
$
(0.13
)
 
$
0.19

 
$
0.62

 
$
0.91

Earnings (loss) earnings per common share - Diluted:
$
(0.13
)
 
$
0.19

 
$
0.61

 
$
0.91

Weighted average shares outstanding - Basic
113,642

 
99,609

 
107,132

 
99,364

Weighted average shares outstanding - Diluted
113,642

 
99,988

 
118,390

 
99,794



7



Reconciliation of Net (Loss) Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net (loss) income to FFO and FFO as Adjusted for the quarter and year ended December 31, 2017. Net (loss) 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.
 
Quarter Ended
December 31, 2017
 
Year Ended
December 31, 2017
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net (loss) income
$
(15,873
)
 
$
(0.13
)
 
$
72,938

 
$
0.62

Less net loss (income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
1,607

 
0.01

 
(5,824
)
 
(0.05
)
Consolidated subsidiaries
(11
)
 

 
(44
)
 

Net (loss) income attributable to common shareholders
(14,277
)
 
(0.12
)
 
67,070

 
0.57

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
21,515

 
0.17

 
81,401

 
0.68

Real estate impairment loss(3)

 

 
3,467

 
0.03

Limited partnership interests in operating partnership
(1,607
)
 
(0.01
)
 
5,824

 
0.05

FFO applicable to diluted common shareholders
5,631

 
0.04

 
157,762

 
1.33

 
 
 
 
 
 
 
 
Loss on extinguishment of debt
34,062

 
0.27

 
35,336

 
0.30

Casualty loss(3)
3,922

 
0.03

 
6,092

 
0.05

Construction settlement due to tenant
902

 
0.01

 
902

 
0.01

Transaction costs

 

 
278

 

Gain on sale of land

 

 
(202
)
 

Tenant bankruptcy settlement income
(27
)
 

 
(655
)
 
(0.01
)
Income tax benefit from hurricane losses
(1,767
)
 
(0.01
)
 
(1,767
)
 
(0.01
)
Income from acquired leasehold interest(2)

 

 
(39,215
)
 
(0.33
)
FFO as Adjusted applicable to diluted common shareholders
$
42,723

 
$
0.34

 
$
158,531

 
$
1.34

 
 
 
 
 
 
 
 
Weighted average diluted shares used to calculate EPS
113,642

 
 
 
118,390

 
 
Assumed conversion of OP and LTIP Units to common shares(1)
13,023

 
 
 
2

 
 
Weighted average diluted common shares - FFO
126,665

 
 
 
118,392

 
 
(1) Operating Partnership ("OP") and Long-Term Incentive Plan ("LTIP") Units are excluded from the calculation of earnings per diluted share for the quarter because their inclusion is anti-dilutive and are included for the year because their inclusion is dilutive. FFO per share includes units as these units are dilutive.
(2) Income from the 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 to the existing straight-line receivable balance.
(3) Casualty and impairment loss per the consolidated statements of income of $7.4 million for the year includes $1.7 million of hurricane-related expenses, a $2.2 million write-off of net book value of assets damaged and $3.5 million of real estate impairment losses from the sale of our property in Eatontown, NJ. Casualty loss, subject to insurance reimbursement, for the quarter and year ended December 31, 2017 includes:
(in thousands)
Quarter Ended
December 31, 2017
 
Year Ended
December 31, 2017
Write-off of net book value of assets damaged
$

 
$
2,170

Hurricane related expenses
1,745

 
1,745

Provision for doubtful accounts
1,249

 
1,249

Property rental and tenant reimbursement losses
928

 
928

Total Casualty loss
$
3,922

 
$
6,092





8



Reconciliation of Net Income (Loss) to Cash NOI and Same-Property Cash NOI

The following table reflects the reconciliation of net income (loss) to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the quarter and year ended December 31, 2017 and 2016. Net income (loss) 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net (loss) income
$
(15,873
)
 
$
20,266

 
$
72,938

 
$
96,630

Add: income tax (benefit) expense
(1,220
)
 
455

 
(278
)
 
804

Interest income
(1,066
)
 
(159
)
 
(2,248
)
 
(679
)
Gain on sale of real estate

 

 
(202
)
 
(15,618
)
Interest and debt expense
14,839

 
12,866

 
56,218

 
51,881

Loss on extinguishment of debt
34,062

 

 
35,336

 

Management and development fee income from non-owned properties
(336
)
 
(403
)
 
(1,535
)
 
(1,759
)
Other income
(32
)
 
(37
)
 
(235
)
 
(121
)
Depreciation and amortization
21,776

 
14,237

 
82,281

 
56,145

Casualty and impairment loss(6)
1,745

 

 
7,382

 

General and administrative expense
7,693

 
6,565

 
30,413

 
27,438

Transaction costs

 
1,098

 
278

 
1,405

Less: non-cash revenue and expenses
(2,354
)
 
(1,377
)
 
(47,161
)
 
(6,465
)
Cash NOI(1)
59,234

 
53,511

 
233,187

 
209,661

Adjustments:
 
 
 
 
 
 
 
Non-same property cash NOI(1)(2)
(12,473
)
 
(6,873
)
 
(46,766
)
 
(28,164
)
Hurricane related operating loss(4)
1,267

 

 
1,267

 

Construction settlement due to tenant
902

 

 
902

 

Tenant bankruptcy settlement income(3)
(347
)
 
(343
)
 
(975
)
 
(2,378
)
Same-property cash NOI
$
48,583

 
$
46,295

 
$
187,615

 
$
179,119

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(5)
6,199

 
5,690

 
25,304

 
22,846

Same-property cash NOI including properties in redevelopment
$
54,782

 
$
51,985

 
$
212,919

 
$
201,965

(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) Non-same property cash NOI for the quarter and the year includes cash NOI related to properties being redeveloped and properties acquired, disposed, or in foreclosure.
(3) Tenant bankruptcy settlement income includes lease termination fees.
(4) Amount reflects rental and tenant reimbursement losses as well as provisions for outstanding amounts due from tenants at Las Catalinas that are subject to reimbursement from the insurance company.
(5) Excludes $0.9 million of rental and tenant reimbursement losses as well as provisions for outstanding amounts due from tenants at Montehiedra that are subject to reimbursement from the insurance company.
(6) Casualty and impairment loss for the quarter and the year includes $1.7 million of hurricane-related expenses incurred subject to insurance reimbursement. Casualty and impairment loss for the year also includes a $2.2 million write-off of net book value of assets damaged by the hurricane at Montehiedra and $3.5 million of real estate impairment losses incurred in connection with the sale of the Company's property in Eatontown, NJ.





9



Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

The following table reflects the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the quarter and year ended December 31, 2017. Net income (loss) 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income (loss)
$
(15,873
)
 
$
20,266


$
72,938


$
96,630

Depreciation and amortization
21,776

 
14,237

 
82,281

 
56,145

Interest and debt expense
14,839

 
12,866

 
56,218

 
51,881

Income tax (benefit) expense
(1,220
)
 
455

 
(278
)
 
804

EBITDA
19,522

 
47,824

 
211,159

 
205,460

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Casualty loss(1)
3,922

 

 
6,092

 

Construction settlement due to tenant
902

 

 
902

 

Real estate impairment loss

 

 
3,467

 

Transaction costs

 
1,098

 
278

 
1,405

Loss on extinguishment of debt
34,062

 

 
35,336

 

Tenant bankruptcy settlement income
(27
)
 
(343
)
 
(655
)
 
(2,378
)
Gain on sale of real estate

 

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

 

 
(39,215
)
 

Adjusted EBITDA
$
58,381

 
$
48,579

 
$
217,162

 
$
188,869

(1) Refer to footnote 3 on page 8, Reconciliation of Net Income (Loss) to FFO and FFO as Adjusted, for the adjustments included in Casualty loss for the quarter and year ended December 31, 2017.

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
December 31, 2017
Common shares outstanding
113,827,529

OP and LTIP units (dilutive)
12,812,954

Fully diluted common shares
126,640,483




10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
December 31, 2017
 
 



392196418_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
December 31, 2017
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Fourth 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
29
Debt Maturity Schedule
30
 
 








 
392196418_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 Fourth Quarter and Full Year 2017 Results


        
NEW YORK, NY, February 14, 2018 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the quarter and year ended December 31, 2017.

Financial Results(1)(2) 
Reported a net loss of $15.9 million, or $0.13 per diluted share, for the quarter and net income of $72.9 million, or $0.61 per diluted share, for the year.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $5.6 million, or $0.04 per share, for the quarter and $157.8 million, or $1.33 per share, for the year.
Generated FFO as Adjusted of $0.34 per share for the quarter and $1.34 per share for the year, an increase of 3.0% per share over the fourth quarter of 2016 and an increase of 5.5% per share over the year ended December 31, 2016.
Operating Results(1) 
Increased same-property cash Net Operating Income (“NOI”) by 4.9% over the fourth quarter of 2016 and by 4.7% over the year ended December 31, 2016 primarily due to rent commencements and higher recovery revenue.
Increased same-property cash NOI including properties in redevelopment by 5.4% over both the fourth quarter and year ended December 31, 2016.
Increased same-property retail portfolio occupancy by 10 basis points to 98.3% compared to December 31, 2016 and unchanged compared to September 30, 2017.
Reported a decline in consolidated retail portfolio occupancy of 120 basis points to 96.0% compared to December 31, 2016 as a result of the acquisition of centers with lower occupancy than our existing portfolio in the second quarter of 2017. This metric increased by 10 basis points compared to September 30, 2017.
Executed 24 new leases, renewals and options totaling 505,000 square feet (sf) during the quarter. Same-space leases totaled 408,000 sf and generated average rent spreads of 12.4% on a GAAP basis and 9.0% on a cash basis.
Financing Activity(1)(3)(4) 
During the fourth quarter, completed $710 million in individual, non-recourse mortgages with an average interest rate of 4.0% and a weighted average term to maturity of 10 years. Proceeds were used to defease and prepay a $544 million, 4.2% cross-collateralized mortgage scheduled to mature in 2020. The Company generated $120 million of additional cash proceeds net of costs and recognized a $34.1 million loss on debt extinguishment.
During the year, completed approximately $1.5 billion of financing transactions including $1 billion in individual, non-recourse mortgages and $500 million in equity at a weighted average net price of $25.62 per share. These transactions resulted in the following benefits:
Reduced net debt to total market capitalization to 22% and net debt to adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") to 4.6x;
Increased cash balance by $361 million to $501 million at year end;

1


Increased line of credit to $600 million and extended maturity date to March 2021, with no borrowings outstanding;
Grew unencumbered asset base by $500 million to $1.4 billion and eliminated all cross-collateralized mortgages; and
Increased weighted average term to maturity on outstanding debt from 5 years to 8 years with no debt maturing until 2021.
Development, Redevelopment and Anchor Repositioning Activity
During the fourth quarter, the Company completed three redevelopment projects totaling $22 million at a blended yield of 11%.
Expanded Garfield Commons by 85,000 square feet to accommodate new stores for Burlington, PetSmart and Ulta.
Renovated and remerchandised Hanover Commons to include Saks Off Fifth, Forever 21 Red and The Paper Store.
Added fast food outparcel at Rockaway River Commons.
In addition, the Company commenced a $4.5 million anchor repositioning project at Goucher Commons with a national organic grocer replacing hhgregg.
The Company has 15 active projects with total estimated costs of $195.5 million expected to generate an 8% return.
Hurricane Casualty Loss(5) 
During the fourth quarter and for the year, the Company incurred $3.9 million and $6.1 million, respectively, of casualty-related losses from Hurricane Maria on its two properties in Puerto Rico. The Company expects its property and business interruption insurance will cover a significant portion of these losses subject to deductibles of approximately $2.3 million. Casualty-related losses are excluded from FFO as Adjusted and same-property cash NOI for the quarter and the year. Currently, 86% of all stores previously occupied prior to the hurricane (measured by gross leasable area) are open and another 10% are expected to open later this year.
Disposition Activity
During the fourth quarter, the Company executed a contract to sell its property in Allentown, PA for $55.3 million. The sale is expected to close in the second quarter of 2018.


















(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 quarter and year ended December 31, 2017.
(3) The tables accompanying this press release provide the calculation of fully diluted common shares and a reconciliation of net income (loss) to EBITDA and annualized Adjusted EBITDA.
(4) Net debt as of December 31, 2017 is calculated as total consolidated debt of $1.6 billion less total cash and cash equivalents, including restricted cash, of $500.8 million.
(5) For additional information on the Hurricane Casualty Loss refer to footnote 3 on page 5 of this Press Release and Note 11 to our consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017.

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 shareholders 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 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 months ended December 31, 2017 and 2016 and 74 properties for the twelve months ended December 31, 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. Same-property cash NOI may include other adjustments as detailed in the Reconciliation of Net Income (Loss) to cash NOI and same-property cash NOI included in the tables accompanying this press release.

3


EBITDA and Adjusted EBITDA: EBITDA and Adjusted EBITDA are supplemental, non-GAAP measures utilized by us in various financial ratios. EBITDA and Adjusted EBITDA are presented to assist investors in the evaluation of REITs, as a measure of the Company's operational performance as they exclude various items that do not relate to or are not indicative of our operating performance and because they approximate key performance measures in our debt covenants. Accordingly, the Company believes that the use of EBITDA and Adjusted EBITDA, as opposed to income before income taxes in various ratios, provides meaningful performance measures related to the Company's ability to meet various coverage tests for the stated periods. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDA for the fourth quarter of 2017, and net debt (net of cash) to total market capitalization, 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 months ended December 31, 2017 and 2016 and 74 properties for the twelve months ended December 31, 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 (Loss) Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net (loss) income to FFO and FFO as Adjusted for the quarter and year ended December 31, 2017. Net (loss) 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.
 
Quarter Ended
December 31, 2017
 
Year Ended
December 31, 2017
 
(in thousands)
 
(per share)
 
(in thousands)
 
(per share)
Net (loss) income
$
(15,873
)
 
$
(0.13
)
 
$
72,938

 
$
0.62

Less net loss (income) attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
1,607

 
0.01

 
(5,824
)
 
(0.05
)
Consolidated subsidiaries
(11
)
 

 
(44
)
 

Net (loss) income attributable to common shareholders
(14,277
)
 
(0.12
)
 
67,070

 
0.57

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
21,515

 
0.17

 
81,401

 
0.68

Real estate impairment loss(3)

 

 
3,467

 
0.03

Limited partnership interests in operating partnership
(1,607
)
 
(0.01
)
 
5,824

 
0.05

FFO applicable to diluted common shareholders
5,631

 
0.04

 
157,762

 
1.33

 
 
 
 
 
 
 
 
Loss on extinguishment of debt
34,062

 
0.27

 
35,336

 
0.30

Casualty loss(3)
3,922

 
0.03

 
6,092

 
0.05

Construction settlement due to tenant
902

 
0.01

 
902

 
0.01

Transaction costs

 

 
278

 

Gain on sale of land

 

 
(202
)
 

Tenant bankruptcy settlement income
(27
)
 

 
(655
)
 
(0.01
)
Income tax benefit from hurricane losses
(1,767
)
 
(0.01
)
 
(1,767
)
 
(0.01
)
Income from acquired leasehold interest(2)

 

 
(39,215
)
 
(0.33
)
FFO as Adjusted applicable to diluted common shareholders
$
42,723


$
0.34


$
158,531

 
$
1.34

 
 
 
 
 
 
 
 
Weighted average diluted shares used to calculate EPS
113,642

 
 
 
118,390

 
 
Assumed conversion of OP and LTIP Units to common shares(1)
13,023

 
 
 
2

 
 
Weighted average diluted common shares - FFO
126,665

 
 
 
118,392

 
 
(1) Operating Partnership ("OP") and Long-Term Incentive Plan ("LTIP") Units are excluded from the calculation of earnings per diluted share for the quarter because their inclusion is anti-dilutive and are included for the year because their inclusion is dilutive. FFO per share includes units as these units are dilutive.
(2) Income from the 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 to the existing straight-line receivable balance.
(3) Casualty and impairment loss per the consolidated statements of income of $7.4 million for the year includes $1.7 million of hurricane-related expenses, a $2.2 million write-off of net book value of assets damaged and $3.5 million of real estate impairment losses from the sale of our property in Eatontown, NJ. Casualty loss, subject to insurance reimbursement, for the quarter and year ended December 31, 2017 includes:
(in thousands)
Quarter Ended
December 31, 2017
 
Year Ended
December 31, 2017
Write-off of net book value of assets damaged
$

 
$
2,170

Hurricane related expenses
1,745

 
1,745

Provision for doubtful accounts
1,249

 
1,249

Property rental and tenant reimbursement losses
928

 
928

Total Casualty loss
$
3,922


$
6,092


5


Reconciliation of Net Income (Loss) to Cash NOI and Same-Property Cash NOI

The following table reflects the reconciliation of net income (loss) to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the quarter and year ended December 31, 2017 and 2016. Net income (loss) 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net (loss) income
$
(15,873
)
 
$
20,266

 
$
72,938

 
$
96,630

Add: income tax (benefit) expense
(1,220
)
 
455

 
(278
)
 
804

Interest income
(1,066
)
 
(159
)
 
(2,248
)
 
(679
)
Gain on sale of real estate

 

 
(202
)
 
(15,618
)
Interest and debt expense
14,839

 
12,866

 
56,218

 
51,881

Loss on extinguishment of debt
34,062

 

 
35,336

 

Management and development fee income from non-owned properties
(336
)
 
(403
)
 
(1,535
)
 
(1,759
)
Other income
(32
)
 
(37
)
 
(235
)
 
(121
)
Depreciation and amortization
21,776

 
14,237

 
82,281

 
56,145

Casualty and impairment loss(6)
1,745

 

 
7,382

 

General and administrative expense
7,693

 
6,565

 
30,413

 
27,438

Transaction costs

 
1,098

 
278

 
1,405

Less: non-cash revenue and expenses
(2,354
)
 
(1,377
)
 
(47,161
)
 
(6,465
)
Cash NOI(1)
59,234


53,511


233,187


209,661

Adjustments:
 
 
 
 
 
 
 
Non-same property cash NOI(1)(2)
(12,473
)
 
(6,873
)
 
(46,766
)
 
(28,164
)
Hurricane related operating loss(4)
1,267

 

 
1,267

 

Construction settlement due to tenant
902

 

 
902

 

Tenant bankruptcy settlement income(3)
(347
)
 
(343
)
 
(975
)
 
(2,378
)
Same-property cash NOI
$
48,583

 
$
46,295


$
187,615


$
179,119

Adjustments:
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped(5)
6,199

 
5,690

 
25,304

 
22,846

Same-property cash NOI including properties in redevelopment
$
54,782

 
$
51,985


$
212,919


$
201,965

(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) Non-same property cash NOI for the quarter and the year includes cash NOI related to properties being redeveloped and properties acquired, disposed, or in foreclosure.
(3) Tenant bankruptcy settlement income includes lease termination fees.
(4) Amount reflects rental and tenant reimbursement losses as well as provisions for outstanding amounts due from tenants at Las Catalinas that are subject to reimbursement from the insurance company.
(5) Excludes $0.9 million of rental and tenant reimbursement losses as well as provisions for outstanding amounts due from tenants at Montehiedra that are subject to reimbursement from the insurance company.
(6) Casualty and impairment loss for the quarter and the year includes $1.7 million of hurricane-related expenses incurred subject to insurance reimbursement. Casualty and impairment loss for the year also includes a $2.2 million write-off of net book value of assets damaged by the hurricane at Montehiedra and $3.5 million of real estate impairment losses incurred in connection with the sale of the Company's property in Eatontown, NJ.

6


Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

The following table reflects the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the quarter and year ended December 31, 2017. Net income (loss) 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2017
 
2016
 
2017
 
2016
Net income (loss)
$
(15,873
)
 
$
20,266


$
72,938


$
96,630

Depreciation and amortization
21,776

 
14,237

 
82,281

 
56,145

Interest and debt expense
14,839

 
12,866

 
56,218

 
51,881

Income tax (benefit) expense
(1,220
)
 
455

 
(278
)
 
804

EBITDA
19,522

 
47,824

 
211,159

 
205,460

Adjustments for Adjusted EBITDA:
 
 
 
 
 
 
 
Casualty loss(1)
3,922

 

 
6,092

 

Construction settlement due to tenant
902

 

 
902

 

Real estate impairment loss

 

 
3,467

 

Transaction costs

 
1,098

 
278

 
1,405

Loss on extinguishment of debt
34,062

 

 
35,336

 

Tenant bankruptcy settlement income
(27
)
 
(343
)
 
(655
)
 
(2,378
)
Gain on sale of real estate

 

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

 

 
(39,215
)
 

Adjusted EBITDA
$
58,381

 
$
48,579


$
217,162


$
188,869

(1) Refer to footnote 3 on page 5, Reconciliation of Net Income (Loss) to FFO and FFO as Adjusted, for the adjustments included in Casualty loss for the quarter and year ended December 31, 2017.

The following table reflects the Company's fully diluted common shares outstanding which is the total number of shares that would be outstanding assuming all possible conversions. Fully diluted common shares outstanding are utilized to calculate our equity market capitalization to allow investors the ability to assess our market value. The sum of the total equity market capitalization and total debt, as calculated in accordance with GAAP, represents the Company's total market capitalization.
 
December 31, 2017
Common shares outstanding
113,827,529

OP and LTIP units (dilutive)
12,812,954

Fully diluted common shares
126,640,483




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, 2017 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 December 31, 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 quarter and year ended December 31, 2017 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Quarter ended
 
Year ended
 
 
December 31, 2017
 
December 31, 2017
Summary Financial Results
 
 
 
 
Total revenue
 
$
97,376

 
$
407,042

General & administrative expenses (G&A)(10)
 
$
7,693

 
$
30,413

Net income (loss) attributable to common shareholders
 
$
(14,277
)
 
$
67,070

Earnings (loss) per diluted share
 
$
(0.13
)
 
$
0.61

Adjusted EBITDA(7)
 
$
58,381

 
$
217,162

Funds from operations (FFO)
 
$
5,631

 
$
157,762

FFO per diluted common share
 
$
0.04

 
$
1.33

FFO as Adjusted
 
$
42,723

 
$
158,531

FFO as Adjusted per diluted common share
 
$
0.34

 
$
1.34

Total dividends paid per share
 
$
0.22

 
$
0.88

Stock closing price low-high range (NYSE)
 
$23.46 to $26.09

 
$23.44 to $28.85

Weighted average diluted shares used in EPS computations(1)
 
113,642

 
118,390

Weighted average diluted common shares used in FFO computations(1)
 
126,665

 
118,392

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

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
15,743,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
17.38

 
 
Consolidated occupancy at end of period
 
96.3
%
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
96.0
%
 
 
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)
 
97.9
%
 
 
Same-property cash NOI growth(2)
 
4.9
%
 
4.7
%
Same-property cash NOI growth, including redevelopment properties
 
5.4
%
 
5.4
%
Cash NOI margin - total portfolio
 
62.9
%
 
65.4
%
Expense recovery ratio - total portfolio(11)
 
97.7
%
 
98.1
%
New, renewal and option rent spread - cash basis(8)
 
9.0
%
 
5.5
%
New, renewal and option rent spread - GAAP basis(9)
 
12.4
%
 
9.8
%
Net debt to total market capitalization(6)
 
22.4
%
 
22.4
%
Net debt to Adjusted EBITDA(6)
 
4.6
x
 
5.0
x
Adjusted EBITDA to interest expense(7)
 
4.1
x
 
4.1
x
Adjusted EBITDA to fixed charges(7)
 
3.3
x
 
3.1
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 because their inclusion is anti-dilutive and included for the year because their inclusion is dilutive. FFO per share includes units as these units are dilutive.
(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 and redevelopment, acquired, sold, under contract to be sold, or 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. Adjusted EBITDA is annualized for purposes of calculating net debt to Adjusted EBITDA for the fourth quarter of 2017.
(7) See computation on page 14.
(8) Rents have not been calculated on a straight-line basis. Previous/expiring rent is the rent at expiry and includes any percentage rent paid. New rent is the rent 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 year ended December 31, 2017.
(11) The expense recovery ratios for the total portfolio excluding the impact of the hurricane on our Puerto Rico properties are 99.2% and 98.6% for the quarter and the year.


10



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

Real estate, at cost:
 

 
 

Land
$
521,669

 
$
384,217

Buildings and improvements
2,010,527

 
1,650,054

Construction in progress
133,761

 
99,236

Furniture, fixtures and equipment
5,897

 
4,993

Total
2,671,854

 
2,138,500

Accumulated depreciation and amortization
(587,127
)
 
(541,077
)
Real estate, net
2,084,727

 
1,597,423

Cash and cash equivalents
490,279

 
131,654

Restricted cash
10,562

 
8,532

Tenant and other receivables, net of allowance for doubtful accounts of $4,937 and $2,332, respectively
20,078

 
9,340

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $494 and $261, respectively
85,843

 
87,695

Identified intangible assets, net of accumulated amortization of $33,827 and $22,361, respectively
87,249

 
30,875

Deferred leasing costs, net of accumulated amortization of $14,796 and $13,909, respectively
20,268

 
19,241

Deferred financing costs, net of accumulated amortization of $1,740 and $726, respectively
3,243

 
1,936

Prepaid expenses and other assets
18,559

 
17,442

Total assets
$
2,820,808

 
$
1,904,138

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,564,542

 
$
1,197,513

Identified intangible liabilities, net of accumulated amortization of $65,832 and $72,528, respectively
180,959

 
146,991

Accounts payable and accrued expenses
69,595

 
48,842

Other liabilities
15,171

 
14,675

Total liabilities
1,830,267

 
1,408,021

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 113,827,529 and 99,754,900 shares issued and outstanding, respectively
1,138

 
997

Additional paid-in capital
946,402

 
488,375

Accumulated deficit
(57,621
)
 
(29,066
)
Noncontrolling interests:
 
 
 
Operating partnership
100,218

 
35,451

Consolidated subsidiaries
404

 
360

Total equity
990,541

 
496,117

Total liabilities and equity
$
2,820,808

 
$
1,904,138


11



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
For the three and twelve months ended December 31, 2017 and 2016 (unaudited)
 
(in thousands, except share and per share amounts)
 
 
 
 
 

 
Quarter Ended
December 31,
 
Year Ended
December 31,
 
2017
 
2016
 
2017
 
2016
REVENUE
 
 
 
 
 
 
 
Property rentals
$
69,153

 
$
60,048

 
$
265,984

 
$
236,798

Tenant expense reimbursements
27,508

 
22,647

 
99,098

 
84,921

Management and development fees
336

 
403

 
1,535

 
1,759

Income from acquired leasehold interest

 

 
39,215

 

Other income
379

 
380

 
1,210

 
2,498

Total revenue
97,376

 
83,478

 
407,042

 
325,976

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
21,776

 
14,237

 
82,281

 
56,145

Real estate taxes
15,762

 
12,728

 
59,737

 
51,429

Property operating
15,036

 
12,684

 
50,894

 
45,280

General and administrative
7,693

 
6,565

 
30,413

 
27,438

Casualty and impairment loss
1,745

 

 
7,382

 

Ground rent
2,851

 
2,518

 
10,848

 
10,047

Transaction costs

 
1,098

 
278

 
1,405

Provision for doubtful accounts
1,771

 
220

 
3,445

 
1,214

Total expenses
66,634

 
50,050

 
245,278

 
192,958

Operating income
30,742

 
33,428

 
161,764

 
133,018

Gain on sale of real estate

 

 
202

 
15,618

Interest income
1,066

 
159

 
2,248

 
679

Interest and debt expense
(14,839
)
 
(12,866
)
 
(56,218
)
 
(51,881
)
Loss on extinguishment of debt
(34,062
)
 

 
(35,336
)
 

Income (loss) before income taxes
(17,093
)
 
20,721

 
72,660

 
97,434

Income tax benefit (expense)
1,220

 
(455
)
 
278

 
(804
)
Net income (loss)
(15,873
)
 
20,266

 
72,938

 
96,630

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
1,607

 
(1,218
)
 
(5,824
)
 
(5,812
)
Consolidated subsidiaries
(11
)
 
(4
)
 
(44
)
 
(3
)
Net income (loss) attributable to common shareholders
$
(14,277
)
 
$
19,044

 
$
67,070

 
$
90,815

 
 
 
 
 
 
 
 
Earnings (loss) per common share - Basic:
$
(0.13
)
 
$
0.19

 
$
0.62

 
$
0.91

Earnings (loss) earnings per common share - Diluted:
$
(0.13
)
 
$
0.19

 
$
0.61

 
$
0.91

Weighted average shares outstanding - Basic
113,642

 
99,609

 
107,132

 
99,364

Weighted average shares outstanding - Diluted
113,642

 
99,988

 
118,390

 
99,794



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME
 
 
For the three and twelve months ended December 31, 2017 and 2016
 
(in thousands)
 
 
 
 
 
 
Quarter Ended
December 31,
 
Percent Change
 
Year Ended
December 31,
 
Percent Change
 
2017
 
2016
 
 
2017
 
2016
 
Total cash NOI(1)
 
 
 
 
 
 
 
 
 
 
 
Total revenue
$
94,124

 
$
81,435

 
15.6%
 
$
356,691

 
$
316,300

 
12.8%
Total property operating expenses
(34,890
)
 
(27,924
)
 
24.9%
 
(123,504
)
 
(106,639
)
 
15.8%
Cash NOI - total portfolio
$
59,234

 
$
53,511

 
10.7%
 
$
233,187

 
$
209,661

 
11.2%
 
 
 
 
 
 
 
 
 
 
 
 
NOI margin (NOI / Total revenue)
62.9
%
 
65.7
%
 
 
 
65.4
%
 
66.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-property cash NOI(2)
 
 
 
 
 
 
 
 
 
 
 
Property rentals
$
52,051

 
$
50,548

 
 
 
$
202,894

 
$
196,772

 
 
Tenant expense reimbursements
22,045

 
20,090

 
 
 
81,644

 
74,969

 
 
Total revenue
74,096

 
70,638

 

 
284,538

 
271,741

 

Real estate taxes
(12,521
)
 
(11,579
)
 
 
 
(49,160
)
 
(46,327
)
 
 
Property operating
(10,484
)
 
(10,388
)
 
 
 
(37,297
)
 
(36,944
)
 
 
Ground rent
(2,351
)
 
(2,217
)
 
 
 
(9,105
)
 
(8,829
)
 
 
Provision for doubtful accounts
(157
)
 
(159
)
 
 
 
(1,361
)
 
(522
)
 
 
Total property operating expenses
(25,513
)
 
(24,343
)
 

 
(96,923
)
 
(92,622
)
 

Same-property cash NOI(3)(4)
$
48,583

 
$
46,295

 
4.9%
 
$
187,615

 
$
179,119

 
4.7%
 
 
 
 
 
 
 
 
 
 
 
 
Cash NOI related to properties being redeveloped
$
6,199

 
$
5,690