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Section 1: 8-K (8-K)

Document


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

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 13, 2019

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 13, 2019, Urban Edge Properties (the "Company") announced its financial results for the three and twelve months ended December 31, 2018. 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 13, 2019, the Company announced its financial results for the three and twelve months ended December 31, 2018 and made available on its website the Earnings 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 13, 2019.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of December 31, 2018.






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 13, 2019
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


 
396734059_image2a27.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 2018 Results
                    
NEW YORK, NY, February 13, 2019 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the quarter and year ended December 31, 2018.

Financial Results(1)(2) 
Generated net income of $7.3 million, or $0.06 per diluted share, for the quarter and $117.0 million, or $0.92 per diluted share, for the year ended December 31, 2018.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $38.5 million, or $0.30 per share, for the quarter compared to $5.6 million, or $0.04 per share, for the fourth quarter of 2017 and $168.5 million, or $1.33 per share, for the year ended December 31, 2018 compared to $157.6 million, or $1.33 per share, for the year ended December 31, 2017.
Generated FFO as Adjusted of $40.7 million, or $0.32 per share, for the quarter compared to $42.7 million, or $0.34 per share, for the fourth quarter of 2017 and $165.4 million, or $1.31 per share, for the year ended December 31, 2018 compared to $158.5 million, or $1.34 per share, for the year ended December 31, 2017.
FFO as Adjusted excludes the effects of natural disasters, write-offs related to tenant bankruptcies and other income and expenses that are not representative of our ongoing core operating results.
Operating Results(1) 
Increased same-property cash Net Operating Income ("NOI") including properties in redevelopment by 0.1% compared to the fourth quarter of 2017 and by 1.4% compared to the year ended December 31, 2017. Fourth quarter and year ended December 31, 2018 results were negatively impacted by 370 basis points and 160 basis points, respectively, as a result of store closures from tenant bankruptcies.
Reported a decline of same-property cash NOI excluding properties in redevelopment of 0.2% over the fourth quarter of 2017. This metric increased by 0.7% compared to the year ended December 31, 2017. Fourth quarter and year ended December 31, 2018 results were negatively impacted by 380 basis points and 160 basis points, respectively, as a result of store closures from tenant bankruptcies.
Reported same-property retail portfolio occupancy of 93.2%, a decrease of 340 basis points compared to December 31, 2017, which includes a 380 basis point decline attributable to vacancies from tenant bankruptcies.
Reported consolidated retail portfolio occupancy of 92.6%, a decrease of 340 basis points compared to December 31, 2017, which includes a 380 basis point decline attributable to vacancies from tenant bankruptcies.
Executed 18 new leases, renewals and options totaling 189,000 square feet ("sf") during the quarter. Same-space leases totaled 169,000 sf and generated average rent spreads of 7.8% on a GAAP basis and 2.3% on a cash basis.
In the past year, the Company has recaptured ten anchor leases due to the bankruptcies of Toys “R” Us, Fallas and National Wholesale Liquidators representing approximately 4% of total gross leasable area ("GLA") that contributed approximately 3% of cash NOI during 2018. The Company views these vacancies as an opportunity to upgrade its spaces with more vibrant retailers and to redevelop certain centers.

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Active discussions are under way to release seven of these spaces primarily to national retailers at comparable average rents. The Company is exploring redevelopment opportunities for the remaining three spaces at Bruckner Commons in the Bronx, NY, Hudson Mall in Jersey City, NJ and Lodi Commons in Lodi, NJ.

Development, Redevelopment and Anchor Repositioning Activity
During the fourth quarter, the Company completed four redevelopment projects totaling $8.9 million at Goucher Commons in Towson, MD, Governors Commons in Glen Burnie, MD, Cherry Hill Commons in Cherry Hill, NJ, and Bergen Town Center in Paramus, NJ, which are expected to collectively generate an unleveraged yield of 7%.
The Company has $197 million of active redevelopment projects under way expected to collectively generate a 7% unleveraged yield. Approximately $51 million of that amount remains to be funded.

Balance Sheet Highlights at December 31, 2018(1)(3)(4) 
Total market capitalization of approximately $3.7 billion comprised of 127.1 million fully-diluted common shares valued at $2.1 billion and $1.6 billion of debt.
Net debt to total market capitalization of 30%.
Net debt to Adjusted Earnings Before Interest, Tax, Depreciation and Amortization for real estate ("EBITDAre") of 4.7x.
$457.5 million of cash and cash equivalents, including restricted cash, 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 net income to FFO and FFO as Adjusted for the quarter and year ended December 31, 2018.
(3) Refer to page 10 for a reconciliation of net income to EBITDAre and Adjusted EBITDAre for the quarter and year ended December 31, 2018.
(4) Net debt as of December 31, 2018 is calculated as total consolidated debt of $1.6 billion less total cash and cash equivalents, including restricted cash, of $457.5 million.

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 depreciable real estate and land when connected to the main business of a REIT, impairments on depreciable real estate or land related to a REIT's main business and 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 83 properties for the quarters ended December 31, 2018 and 2017 and 75 properties for the years ended December 31, 2018 and 2017. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, or under contract to be sold 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 or properties that involve anchor repositioning 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

3



Reconciliation of Net Income to cash NOI and same-property cash NOI included in the tables accompanying this press release.
EBITDAre and Adjusted EBITDAre: EBITDAre and Adjusted EBITDAre are supplemental, non-GAAP measures utilized by us in various financial ratios. The White Paper on EBITDAre, approved by NAREIT's Board of Governors in September 2017, defines EBITDAre as net income (computed in accordance with GAAP), adjusted for interest expense, income tax expense, depreciation and amortization, losses and gains on the disposition of depreciated property, impairment write-downs of depreciated property and investments in unconsolidated joint ventures, and adjustments to reflect the entity's share of EBITDAre of unconsolidated joint ventures. EBITDAre and Adjusted EBITDAre 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 EBITDAre and Adjusted EBITDAre, 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. Adjusted EBITDAre may include other adjustments not indicative of operating results as detailed in the Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre included in the tables accompanying this press release. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDAre as of December 31, 2018, 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 presentation of EBITDAre and Adjusted EBITDAre is consistent with EBITDA and Adjusted EBITDA as presented in prior periods.
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 83 properties for the quarters ended December 31, 2018 and 2017 and 75 properties for the years ended December 31, 2018 and 2017. Occupancy metrics presented for the Company's same-property retail portfolio excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired within the past 12 months, properties sold, or under contract to be sold 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 our 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 88 properties totaling 16.3 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 natural disasters at the affected properties and the loss of or bankruptcy of a major tenant and the impact of any such event. 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, 2018 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,
 
2018
 
2017
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
525,819

 
$
521,669

Buildings and improvements
2,156,113

 
2,010,527

Construction in progress
80,385

 
133,761

Furniture, fixtures and equipment
6,675

 
5,897

Total
2,768,992

 
2,671,854

Accumulated depreciation and amortization
(645,872
)
 
(587,127
)
Real estate, net
2,123,120

 
2,084,727

Cash and cash equivalents
440,430

 
490,279

Restricted cash
17,092

 
10,562

Tenant and other receivables, net of allowance for doubtful accounts of $6,486 and $4,937, respectively
28,563

 
20,078

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 and $494, respectively
84,903

 
85,843

Identified intangible assets, net of accumulated amortization of $39,526 and $33,827, respectively
68,422

 
87,249

Deferred leasing costs, net of accumulated amortization of $16,826 and $14,796, respectively
21,277

 
20,268

Deferred financing costs, net of accumulated amortization of $2,764 and $1,740, respectively
2,219

 
3,243

Prepaid expenses and other assets
12,968

 
18,559

Total assets
$
2,798,994

 
$
2,820,808

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,550,242

 
$
1,564,542

Accounts payable, accrued expenses and other liabilities
98,517

 
84,766

Identified intangible liabilities, net of accumulated amortization of $65,058 and $65,832, respectively
144,258

 
180,959

Total liabilities
1,793,017

 
1,830,267

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 114,345,565 and 113,827,529 shares issued and outstanding, respectively
1,143

 
1,138

Additional paid-in capital
956,420

 
946,402

Accumulated deficit
(52,857
)
 
(57,621
)
Noncontrolling interests:
 
 
 
Operating partnership
100,822

 
100,218

Consolidated subsidiaries
449

 
404

Total equity
1,005,977

 
990,541

Total liabilities and equity
$
2,798,994

 
$
2,820,808


6



URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
 
Quarter Ended December 31,
 
Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
100,403

 
$
96,661

 
$
411,298

 
$
365,082

Management and development fees
405

 
336

 
1,469

 
1,535

Income from acquired leasehold interest

 

 

 
39,215

Other income
115

 
379

 
1,393

 
1,210

Total revenue
100,923

 
97,376

 
414,160

 
407,042

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
25,878

 
21,776

 
99,422

 
82,281

Real estate taxes
15,919

 
15,762

 
63,655

 
59,737

Property operating
14,814

 
15,036

 
74,222

 
50,894

General and administrative
9,405

 
7,693

 
34,984

 
30,691

Casualty and impairment loss, net
5,674

 
1,745

 
4,426

 
7,382

Ground rent
3,238

 
2,851

 
11,448

 
10,848

Provision for doubtful accounts
1,550

 
1,771

 
4,138

 
3,445

Total expenses
76,478

 
66,634

 
292,295

 
245,278

Operating income
24,445

 
30,742

 
121,865

 
161,764

Gain on sale of real estate

 

 
52,625

 
202

Interest income
2,393

 
1,066

 
8,336

 
2,248

Interest and debt expense
(16,809
)
 
(14,839
)
 
(64,868
)
 
(56,218
)
Gain (loss) on extinguishment of debt

 
(34,062
)
 
2,524

 
(35,336
)
Income before income taxes
10,029

 
(17,093
)
 
120,482

 
72,660

Income tax (expense) benefit
(2,778
)
 
1,220

 
(3,519
)
 
278

Net income (loss)
7,251

 
(15,873
)
 
116,963

 
72,938

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(727
)
 
1,607

 
(11,768
)
 
(5,824
)
Consolidated subsidiaries
(11
)
 
(11
)
 
(45
)
 
(44
)
Net income (loss) attributable to common shareholders
$
6,513

 
$
(14,277
)
 
$
105,150

 
$
67,070

 
 
 
 
 
 
 
 
Earnings (loss) per common share - Basic:
$
0.06

 
$
(0.13
)
 
$
0.92

 
$
0.62

Earnings (loss) per common share - Diluted:
$
0.06

 
$
(0.13
)
 
$
0.92

 
$
0.61

Weighted average shares outstanding - Basic
114,140

 
113,642

 
113,863

 
107,132

Weighted average shares outstanding - Diluted
114,314

 
113,642

 
114,051

 
118,390



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 quarters and years ended December 31, 2018 and 2017, respectively. 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
7,251

 
$
(15,873
)
 
$
116,963

 
$
72,938

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(727
)
 
1,607

 
(11,768
)
 
(5,824
)
Consolidated subsidiaries
(11
)
 
(11
)
 
(45
)
 
(44
)
Net income (loss) attributable to common shareholders
6,513

 
(14,277
)
 
105,150

 
67,070

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
25,675

 
21,515

 
98,644

 
81,401

Gain on sale of real estate

 

 
(52,625
)
 
(202
)
Real estate impairment loss
5,574

 

 
5,574

 
3,467

Limited partnership interests in operating partnership
727

 
(1,607
)
 
11,768

 
5,824

FFO Applicable to diluted common shareholders
38,489

 
5,631

 
168,511

 
157,560

FFO per diluted common share(1)
0.30

 
0.04

 
1.33

 
1.33

Adjustments to FFO:
 
 
 
 
 
 
 
Tax impact from Hurricane Maria
2,115

 
(1,767
)
 
2,344

 
(1,767
)
Construction rental abatement
127

 
902

 
291

 
902

Transaction costs
95

 

 
491

 
278

Impact of tenant bankruptcies(2)
6

 

 
(5,075
)
 

Tenant bankruptcy settlement income
(24
)
 
(27
)
 
(329
)
 
(655
)
Casualty (gain) loss, net(4)
(86
)
 
3,922

 
(777
)
 
6,092

Executive transition costs(3)

 

 
1,932

 

Environmental remediation costs

 

 
584

 

(Gain) loss on extinguishment of debt

 
34,062

 
(2,524
)
 
35,336

Income from acquired leasehold interest

 

 

 
(39,215
)
FFO as Adjusted applicable to diluted common shareholders
$
40,722

 
$
42,723

 
$
165,448

 
$
158,531

FFO as Adjusted per diluted common share(1)
$
0.32

 
$
0.34

 
$
1.31

 
$
1.34

 
 
 
 
 
 
 
 
Weighted Average diluted common shares(1)
126,537

 
126,665

 
126,584

 
118,392

(1) Weighted average diluted shares used to calculate FFO per share and FFO as Adjusted per share for the quarter and year ended December 31, 2018 and the quarter ended December 31, 2017 are higher than the GAAP weighted average diluted shares as a result of the dilutive impact of LTIP and OP units which may be redeemed for our common stock. These redeemable units are not included in the weighted average diluted share count for GAAP purposes because their inclusion is anti-dilutive. LTIP and OP units are included for the year ended December 31, 2017 as their inclusion is dilutive.
(2) Amount for the quarter ended December 31, 2018 includes the write-off of reserves on receivables from straight-line rents, partially offset by the write-off of below-market intangible liabilities. Amount for the year ended December 31, 2018, comprises write-offs of below-market intangible liabilities, partially offset by lease termination payments and write-offs of reserves on receivables from straight-line rents.
(3) Amount reflects costs associated with hiring a new Chief Operating Officer and a new President of Development and severance expenses related to the termination of a prior executive.
(4) Amounts reflect insurance proceeds net of gains/(losses) as a result of Hurricane Maria in Puerto Rico in September 2017 and a tornado in Wilkes-Barre, PA, in June 2018:
 
Quarter Ended December 31,
 
Year Ended December 31,
(in thousands)
2018
 
2017
 
2018
 
2017
Insurance proceeds, net of casualty related expenses
$
(100
)
 
$
(1,745
)
 
$
1,148

 
$
(1,745
)
Reversal of provision for doubtful accounts on previously reserved balances (provision for doubtful accounts)

 
(1,249
)
 
369

 
(1,249
)
Property rental and tenant reimbursement adjustments (losses)
186

 
(928
)
 
(740
)
 
(928
)
Write-off of net book value of assets damaged

 

 

 
(2,170
)
Casualty gain (loss), net
$
86

 
$
(3,922
)
 
$
777

 
$
(6,092
)

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 quarters and years ended December 31, 2018 and 2017, respectively. 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2018
 
2017
 
2018
 
2017
Net income (loss)
$
7,251

 
$
(15,873
)
 
$
116,963

 
$
72,938

Management and development fee income from non-owned properties
(405
)
 
(336
)
 
(1,469
)
 
(1,535
)
Other (income) expense
(27
)
 
6

 
(146
)
 
(118
)
Depreciation and amortization
25,878

 
21,776

 
99,422

 
82,281

General and administrative expense
9,405

 
7,693

 
34,984

 
30,691

Casualty and impairment loss, net(1)
5,674

 
1,745

 
4,426

 
7,382

Gain on sale of real estate

 

 
(52,625
)
 
(202
)
Interest income
(2,393
)
 
(1,066
)
 
(8,336
)
 
(2,248
)
Interest and debt expense
16,809

 
14,839

 
64,868

 
56,218

(Gain) loss on extinguishment of debt

 
34,062

 
(2,524
)
 
35,336

Income tax expense (benefit)
2,778

 
(1,220
)
 
3,519

 
(278
)
Non-cash revenue and expenses
(3,522
)
 
(2,354
)
 
(32,117
)
 
(47,161
)
Cash NOI(2)
61,448

 
59,272

 
226,965

 
233,304

Adjustments:
 
 
 
 
 
 
 
Non-same property cash NOI(2)(3)
(6,878
)
 
(6,427
)
 
(51,132
)
 
(44,623
)
Tenant bankruptcy settlement and lease termination income
(24
)
 
(347
)
 
(1,028
)
 
(975
)
Natural disaster related operating (gain) loss(4)
(132
)
 
1,267

 
40

 
1,267

Lease termination payments

 

 
15,500

 

Construction rental abatement
127

 
902

 
291

 
902

Environmental remediation costs

 

 
584

 

Same-property cash NOI(6)
$
54,541

 
$
54,667

 
$
191,220

 
$
189,875

Cash NOI related to properties being redeveloped(5)
5,269

 
5,066

 
20,431

 
18,937

Same-property cash NOI including properties in redevelopment(6)
$
59,810

 
$
59,733

 
$
211,651

 
$
208,812

(1) The quarter ended December 31, 2018 reflects impairment losses recognized at our properties in Salem, NH and West Babylon, NY and hurricane-related expenses. The year ended December 31, 2018 reflects these items, partially offset by insurance proceeds, net of casualty-related expenses. The quarter ended December 31, 2017 includes hurricane-related expenses. The year ended December 31, 2017 also includes a write-off of net book value of assets damaged and real estate impairment losses.
(2) 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 but includes bad debt expense.
(3) Non-same property cash NOI includes cash NOI related to properties being redeveloped and properties acquired or disposed.
(4) The quarter ended December 31, 2018 excludes rental and tenant reimbursement adjustments pertaining to Hurricane Maria at Las Catalinas. The year ended December 31, 2018 reflects rental and tenant reimbursement losses, offset by reversals of provisions for payments received from tenants at Las Catalinas. The quarter and year ended December 31, 2017 reflect rental and tenant reimbursement losses and provisions for outstanding amounts due from tenants at Las Catalinas.
(5) The quarter ended December 31, 2018 excludes rental and tenant reimbursement adjustments pertaining to Hurricane Maria at Montehiedra. The year ended December 31, 2018 excludes rental and tenant reimbursement losses, partially offset by a reversal of provisions for payments received from tenants at Montehiedra. The quarter and year ended December 31, 2017 excludes rental and tenant reimbursement losses as well as provisions for outstanding amounts due from tenants at Montehiedra.
(6) The results for the quarter and year ended December 31, 2018 were negatively impacted by store closures from tenant bankruptcies. Excluding these amounts, same-property cash NOI would have increased by 3.6% for the quarter and by 2.3% for the year ended December 31, 2018, and same-property cash NOI including properties in redevelopment would have increased by 3.8% for the quarter and by 3.0% for the year ended December 31, 2018:
 
 
 
Quarter Ended
December 31,
 
Percent Change
 
Year Ended
December 31,
 
Percent Change
 
 
 
2018
 
2017
 
 
2018
 
2017
 
 
Same-property cash NOI
$
54,541

 
$
54,667

 
(0.2)%
 
$
191,220

 
$
189,875

 
0.7%
 
Cash NOI lost due to tenant bankruptcies
2,084

 

 
 
 
3,087

 

 
 
 
Same-property cash NOI including item above
56,625

 
54,667

 
3.6%
 
194,307

 
189,875

 
2.3%
 
Cash NOI related to properties being redeveloped
5,269

 
5,066

 
 
 
20,431

 
18,937

 
 
 
Cash NOI lost due to tenant bankruptcies at properties being redeveloped
120

 

 
 
 
300

 

 
 
 
Same-property cash NOI including properties in redevelopment and including item above
$
62,014

 
$
59,733

 
3.8%
 
$
215,038

 
$
208,812

 
3.0%

9



Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre

The following table reflects the reconciliation of net income to EBITDAre and Adjusted EBITDAre for the quarter and year ended December 31, 2018 and 2017, respectively. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of EBITDAre and Adjusted EBITDAre.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2018
 
2017
 
2018
 
2017
Net income (loss)
$
7,251

 
$
(15,873
)
 
$
116,963

 
$
72,938

Depreciation and amortization
25,878

 
21,776

 
99,422

 
82,281

Interest and debt expense
16,809

 
14,839

 
64,868

 
56,218

Income tax expense (benefit)
2,778

 
(1,220
)
 
3,519

 
(278
)
Gain on sale of real estate

 

 
(52,625
)
 
(202
)
Real estate impairment loss
5,574

 

 
5,574

 
3,467

EBITDAre
58,290

 
19,522

 
237,721

 
214,424

Adjustments for Adjusted EBITDAre:
 
 
 
 
 
 
 
Construction rental abatement
127

 
902

 
291

 
902

Transaction costs
95

 

 
491

 
278

Impact of tenant bankruptcies(2)
6

 

 
(5,075
)
 

Tenant bankruptcy settlement income
(24
)
 
(27
)
 
(329
)
 
(655
)
Casualty (gain) loss, net(1)
(86
)
 
3,922

 
(777
)
 
6,092

Executive transition costs(3)

 

 
1,932

 

Environmental remediation costs

 

 
584

 

(Gain) loss on extinguishment of debt

 
34,062

 
(2,524
)
 
35,336

Income from acquired leasehold interest

 

 

 
(39,215
)
Adjusted EBITDAre
$
58,408

 
$
58,381

 
$
232,314

 
$
217,162

((1) Refer to footnote 4 on page 8, Reconciliation of Net Income to FFO and FFO as Adjusted, for the adjustments included in this line item.
(2) Refer to footnote 2 on page 8, Reconciliation of Net Income to FFO and FFO as Adjusted, for the adjustments included in this line item.
(3) Amount reflects costs associated with hiring a new Chief Operating Officer and a new President of Development and severance expenses related to the termination of a prior executive.

10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
December 31, 2018
 
 



396734059_image3a23.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, 2018
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Fourth Quarter 2018 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 for Real Estate (EBITDAre)
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
 
 








 
396734059_image2a25.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 2018 Results
        
NEW YORK, NY, February 13, 2019 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the quarter and year ended December 31, 2018.

Financial Results(1)(2) 
Generated net income of $7.3 million, or $0.06 per diluted share, for the quarter and $117.0 million, or $0.92 per diluted share, for the year ended December 31, 2018.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $38.5 million, or $0.30 per share, for the quarter compared to $5.6 million, or $0.04 per share, for the fourth quarter of 2017 and $168.5 million, or $1.33 per share, for the year ended December 31, 2018 compared to $157.6 million, or $1.33 per share, for the year ended December 31, 2017.
Generated FFO as Adjusted of $40.7 million, or $0.32 per share, for the quarter compared to $42.7 million, or $0.34 per share, for the fourth quarter of 2017 and $165.4 million, or $1.31 per share, for the year ended December 31, 2018 compared to $158.5 million, or $1.34 per share, for the year ended December 31, 2017.
FFO as Adjusted excludes the effects of natural disasters, write-offs related to tenant bankruptcies and other income and expenses that are not representative of our ongoing core operating results.
Operating Results(1) 
Increased same-property cash Net Operating Income ("NOI") including properties in redevelopment by 0.1% compared to the fourth quarter of 2017 and by 1.4% compared to the year ended December 31, 2017. Fourth quarter and year ended December 31, 2018 results were negatively impacted by 370 basis points and 160 basis points, respectively, as a result of store closures from tenant bankruptcies.
Reported a decline of same-property cash NOI excluding properties in redevelopment of 0.2% over the fourth quarter of 2017. This metric increased by 0.7% compared to the year ended December 31, 2017. Fourth quarter and year ended December 31, 2018 results were negatively impacted by 380 basis points and 160 basis points, respectively, as a result of store closures from tenant bankruptcies.
Reported same-property retail portfolio occupancy of 93.2%, a decrease of 340 basis points compared to December 31, 2017, which includes a 380 basis point decline attributable to vacancies from tenant bankruptcies.
Reported consolidated retail portfolio occupancy of 92.6%, a decrease of 340 basis points compared to December 31, 2017, which includes a 380 basis point decline attributable to vacancies from tenant bankruptcies.
Executed 18 new leases, renewals and options totaling 189,000 square feet ("sf") during the quarter. Same-space leases totaled 169,000 sf and generated average rent spreads of 7.8% on a GAAP basis and 2.3% on a cash basis.
In the past year, the Company has recaptured ten anchor leases due to the bankruptcies of Toys “R” Us, Fallas and National Wholesale Liquidators representing approximately 4% of total gross leasable area ("GLA") that contributed approximately 3% of cash NOI during 2018. The Company views these vacancies as an opportunity to upgrade its spaces with more vibrant retailers and to redevelop certain centers.

1


Active discussions are under way to release seven of these spaces primarily to national retailers at comparable average rents. The Company is exploring redevelopment opportunities for the remaining three spaces at Bruckner Commons in the Bronx, NY, Hudson Mall in Jersey City, NJ and Lodi Commons in Lodi, NJ.

Development, Redevelopment and Anchor Repositioning Activity
During the fourth quarter, the Company completed four redevelopment projects totaling $8.9 million at Goucher Commons in Towson, MD, Governors Commons in Glen Burnie, MD, Cherry Hill Commons in Cherry Hill, NJ, and Bergen Town Center in Paramus, NJ, which are expected to collectively generate an unleveraged yield of 7%.
The Company has $197 million of active redevelopment projects under way expected to collectively generate a 7% unleveraged yield. Approximately $51 million of that amount remains to be funded.

Balance Sheet Highlights at December 31, 2018(1)(3)(4)(5) 
Total market capitalization of approximately $3.7 billion comprised of 127.1 million fully-diluted common shares valued at $2.1 billion and $1.6 billion of debt.
Net debt to total market capitalization of 30%.
Net debt to Adjusted Earnings Before Interest, Tax, Depreciation and Amortization for real estate ("EBITDAre") of 4.7x.
$457.5 million of cash and cash equivalents, including restricted cash, 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 net income to FFO and FFO as Adjusted for the quarter and year ended December 31, 2018.
(3) Refer to page 7 for a reconciliation of net income to EBITDAre and Adjusted EBITDAre for the quarter and year ended December 31, 2018.
(4) Net debt as of December 31, 2018 is calculated as total consolidated debt of $1.6 billion less total cash and cash equivalents, including restricted cash, of $457.5 million.
(5) Refer to page 16 for the calculation of market capitalization as of December 31, 2018.

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 depreciable real estate and land when connected to the main business of a REIT, impairments on depreciable real estate or land related to a REIT's main business and 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 83 properties for the quarters ended December 31, 2018 and 2017 and 75 properties for the years ended December 31, 2018 and 2017. Information provided on a same-property basis excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area ("GLA") is taken out of service and also excludes properties acquired, sold, or under contract to be sold 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 or properties that involve anchor repositioning 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

3


Reconciliation of Net Income to cash NOI and same-property cash NOI included in the tables accompanying this press release.
EBITDAre and Adjusted EBITDAre: EBITDAre and Adjusted EBITDAre are supplemental, non-GAAP measures utilized by us in various financial ratios. The White Paper on EBITDAre, approved by NAREIT's Board of Governors in September 2017, defines EBITDAre as net income (computed in accordance with GAAP), adjusted for interest expense, income tax expense, depreciation and amortization, losses and gains on the disposition of depreciated property, impairment write-downs of depreciated property and investments in unconsolidated joint ventures, and adjustments to reflect the entity's share of EBITDAre of unconsolidated joint ventures. EBITDAre and Adjusted EBITDAre 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 EBITDAre and Adjusted EBITDAre, 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. Adjusted EBITDAre may include other adjustments not indicative of operating results as detailed in the Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre included in the tables accompanying this press release. The Company also presents the ratio of net debt (net of cash) to annualized Adjusted EBITDAre as of December 31, 2018, 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 presentation of EBITDAre and Adjusted EBITDAre is consistent with EBITDA and Adjusted EBITDA as presented in prior periods.
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 83 properties for the quarters ended December 31, 2018 and 2017 and 75 properties for the years ended December 31, 2018 and 2017. Occupancy metrics presented for the Company's same-property retail portfolio excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired within the past 12 months, properties sold, or under contract to be sold 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 quarters and years ended December 31, 2018 and 2017, respectively. 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
7,251

 
$
(15,873
)
 
$
116,963

 
$
72,938

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(727
)
 
1,607

 
(11,768
)
 
(5,824
)
Consolidated subsidiaries
(11
)
 
(11
)
 
(45
)
 
(44
)
Net income (loss) attributable to common shareholders
6,513

 
(14,277
)

105,150


67,070

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
25,675

 
21,515

 
98,644

 
81,401

Gain on sale of real estate

 

 
(52,625
)
 
(202
)
Real estate impairment loss
5,574

 

 
5,574

 
3,467

Limited partnership interests in operating partnership
727

 
(1,607
)
 
11,768

 
5,824

FFO Applicable to diluted common shareholders
38,489


5,631


168,511


157,560

FFO per diluted common share(1)
0.30

 
0.04


1.33


1.33

Adjustments to FFO:
 
 
 
 
 
 
 
Tax impact from Hurricane Maria
2,115

 
(1,767
)
 
2,344

 
(1,767
)
Construction rental abatement
127

 
902

 
291

 
902

Transaction costs
95

 

 
491

 
278

Impact of tenant bankruptcies(2)
6

 

 
(5,075
)
 

Tenant bankruptcy settlement income
(24
)
 
(27
)
 
(329
)
 
(655
)
Casualty (gain) loss, net(4)
(86
)
 
3,922

 
(777
)
 
6,092

Executive transition costs(3)

 

 
1,932

 

Environmental remediation costs

 

 
584

 

(Gain) loss on extinguishment of debt

 
34,062

 
(2,524
)
 
35,336

Income from acquired leasehold interest

 

 

 
(39,215
)
FFO as Adjusted applicable to diluted common shareholders
$
40,722


$
42,723


$
165,448


$
158,531

FFO as Adjusted per diluted common share(1)
$
0.32

 
$
0.34


$
1.31


$
1.34

 
 
 
 
 
 
 
 
Weighted Average diluted common shares(1)
126,537

 
126,665

 
126,584

 
118,392

(1) Weighted average diluted shares used to calculate FFO per share and FFO as Adjusted per share for the quarter and year ended December 31, 2018 and the quarter ended December 31, 2017 are higher than the GAAP weighted average diluted shares as a result of the dilutive impact of LTIP and OP units which may be redeemed for our common stock. These redeemable units are not included in the weighted average diluted share count for GAAP purposes because their inclusion is anti-dilutive. LTIP and OP units are included for the year ended December 31, 2017 as their inclusion is dilutive.
(2) Amount for the quarter ended December 31, 2018 includes the write-off of reserves on receivables from straight-line rents, partially offset by the write-off of below-market intangible liabilities. Amount for the year ended December 31, 2018, comprises write-offs of below-market intangible liabilities, partially offset by lease termination payments and write-offs of reserves on receivables from straight-line rents.
(3) Amount reflects costs associated with hiring a new Chief Operating Officer and a new President of Development and severance expenses related to the termination of a prior executive.
(4) Amounts reflect insurance proceeds net of gains/(losses) as a result of Hurricane Maria in Puerto Rico in September 2017 and a tornado in Wilkes-Barre, PA, in June 2018:

Quarter Ended December 31,
 
Year Ended December 31,
(in thousands)
2018
 
2017
 
2018
 
2017
Insurance proceeds, net of casualty related expenses
$
(100
)
 
$
(1,745
)
 
$
1,148

 
$
(1,745
)
Reversal of provision for doubtful accounts on previously reserved balances (provision for doubtful accounts)

 
(1,249
)
 
369

 
(1,249
)
Property rental and tenant reimbursement adjustments (losses)
186

 
(928
)
 
(740
)
 
(928
)
Write-off of net book value of assets damaged

 

 

 
(2,170
)
Casualty gain (loss), net
$
86

 
$
(3,922
)
 
$
777

 
$
(6,092
)

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 quarters and years ended December 31, 2018 and 2017, respectively. 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.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2018
 
2017
 
2018
 
2017
Net income (loss)
$
7,251

 
$
(15,873
)
 
$
116,963

 
$
72,938

Management and development fee income from non-owned properties
(405
)
 
(336
)
 
(1,469
)
 
(1,535
)
Other (income) expense
(27
)
 
6

 
(146
)
 
(118
)
Depreciation and amortization
25,878

 
21,776

 
99,422

 
82,281

General and administrative expense
9,405

 
7,693

 
34,984

 
30,691

Casualty and impairment loss, net(1)
5,674

 
1,745

 
4,426

 
7,382

Gain on sale of real estate

 

 
(52,625
)
 
(202
)
Interest income
(2,393
)
 
(1,066
)
 
(8,336
)
 
(2,248
)
Interest and debt expense
16,809

 
14,839

 
64,868

 
56,218

(Gain) loss on extinguishment of debt

 
34,062

 
(2,524
)
 
35,336

Income tax expense (benefit)
2,778

 
(1,220
)
 
3,519

 
(278
)
Non-cash revenue and expenses
(3,522
)
 
(2,354
)
 
(32,117
)
 
(47,161
)
Cash NOI(2)
61,448


59,272


226,965


233,304

Adjustments:
 
 
 
 
 
 
 
Non-same property cash NOI(2)(3)
(6,878
)
 
(6,427
)
 
(51,132
)
 
(44,623
)
Tenant bankruptcy settlement and lease termination income
(24
)
 
(347
)
 
(1,028
)
 
(975
)
Natural disaster related operating (gain) loss(4)
(132
)
 
1,267

 
40

 
1,267

Lease termination payments

 

 
15,500

 

Construction rental abatement
127

 
902

 
291

 
902

Environmental remediation costs

 

 
584

 

Same-property cash NOI(6)
$
54,541

 
$
54,667


$
191,220


$
189,875

Cash NOI related to properties being redeveloped(5)
5,269

 
5,066

 
20,431

 
18,937

Same-property cash NOI including properties in redevelopment(6)
$
59,810

 
$
59,733


$
211,651


$
208,812

(1) The quarter ended December 31, 2018 reflects impairment losses recognized at our properties in Salem, NH and West Babylon, NY and hurricane-related expenses. The year ended December 31, 2018 reflects these items, partially offset by insurance proceeds, net of casualty-related expenses. The quarter ended December 31, 2017 includes hurricane-related expenses. The year ended December 31, 2017 also includes a write-off of net book value of assets damaged and real estate impairment losses.
(2) 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 but includes bad debt expense.
(3) Non-same property cash NOI includes cash NOI related to properties being redeveloped and properties acquired or disposed.
(4) The quarter ended December 31, 2018 excludes rental and tenant reimbursement adjustments pertaining to Hurricane Maria at Las Catalinas. The year ended December 31, 2018 reflects rental and tenant reimbursement losses, offset by reversals of provisions for payments received from tenants at Las Catalinas. The quarter and year ended December 31, 2017 reflect rental and tenant reimbursement losses and provisions for outstanding amounts due from tenants at Las Catalinas.
(5) The quarter ended December 31, 2018 excludes rental and tenant reimbursement adjustments pertaining to Hurricane Maria at Montehiedra. The year ended December 31, 2018 excludes rental and tenant reimbursement losses, partially offset by a reversal of provisions for payments received from tenants at Montehiedra. The quarter and year ended December 31, 2017 excludes rental and tenant reimbursement losses as well as provisions for outstanding amounts due from tenants at Montehiedra.
(6) The results for the quarter and year ended December 31, 2018 were negatively impacted by store closures from tenant bankruptcies. Excluding these amounts, same-property cash NOI would have increased by 3.6% for the quarter and by 2.3% for the year ended December 31, 2018, and same-property cash NOI including properties in redevelopment would have increased by 3.8% for the quarter and by 3.0% for the year ended December 31, 2018:
 
 
 
Quarter Ended
December 31,
 
Percent Change
 
Year Ended
December 31,
 
Percent Change
 
 
 
2018
 
2017
 
 
2018
 
2017
 
 
Same-property cash NOI
$
54,541

 
$
54,667

 
(0.2)%
 
$
191,220

 
$
189,875

 
0.7%
 
Cash NOI lost due to tenant bankruptcies
2,084

 

 
 
 
3,087

 

 
 
 
Same-property cash NOI including item above
56,625

 
54,667

 
3.6%
 
194,307

 
189,875

 
2.3%
 
Cash NOI related to properties being redeveloped
5,269

 
5,066

 
 
 
20,431

 
18,937

 
 
 
Cash NOI lost due to tenant bankruptcies at properties being redeveloped
120

 

 
 
 
300

 

 
 
 
Same-property cash NOI including properties in redevelopment and including item above
$
62,014


$
59,733

 
3.8%
 
$
215,038

 
$
208,812

 
3.0%

6


Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre

The following table reflects the reconciliation of net income to EBITDAre and Adjusted EBITDAre for the quarter and year ended December 31, 2018 and 2017, respectively. Net income is considered the most directly comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a description of EBITDAre and Adjusted EBITDAre.
 
Quarter Ended
December 31,
 
Year Ended
December 31,
(Amounts in thousands)
2018
 
2017
 
2018
 
2017
Net income (loss)
$
7,251

 
$
(15,873
)
 
$
116,963

 
$
72,938

Depreciation and amortization
25,878

 
21,776

 
99,422

 
82,281

Interest and debt expense
16,809

 
14,839

 
64,868

 
56,218

Income tax expense (benefit)
2,778

 
(1,220
)
 
3,519

 
(278
)
Gain on sale of real estate

 

 
(52,625
)
 
(202
)
Real estate impairment loss
5,574

 

 
5,574

 
3,467

EBITDAre
58,290


19,522


237,721


214,424

Adjustments for Adjusted EBITDAre:
 
 
 
 
 
 
 
Construction rental abatement
127

 
902

 
291

 
902

Transaction costs
95

 

 
491

 
278

Impact of tenant bankruptcies(2)
6

 

 
(5,075
)
 

Tenant bankruptcy settlement income
(24
)
 
(27
)
 
(329
)
 
(655
)
Casualty (gain) loss, net(1)
(86
)
 
3,922

 
(777
)
 
6,092

Executive transition costs(3)

 

 
1,932

 

Environmental remediation costs

 

 
584

 

(Gain) loss on extinguishment of debt

 
34,062

 
(2,524
)
 
35,336

Income from acquired leasehold interest

 

 

 
(39,215
)
Adjusted EBITDAre
$
58,408

 
$
58,381


$
232,314


$
217,162

(1) Refer to footnote 4 on page 5, Reconciliation of Net Income to FFO and FFO as Adjusted, for the adjustments included in this line item.
(2) Refer to footnote 2 on page 5, Reconciliation of Net Income to FFO and FFO as Adjusted, for the adjustments included in this line item.
(3) Amount reflects costs associated with hiring a new Chief Operating Officer and a new President of Development and severance expenses related to the termination of a prior executive.

7


ADDITIONAL INFORMATION
For a copy of the Company’s supplemental disclosure package, please access the "Investors" section of our 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 88 properties totaling 16.3 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 natural disasters at the affected properties and the loss of or bankruptcy of a major tenant and the impact of any such event. 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, 2018 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, 2018
 
 
 
 
 
 
 

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 Annual Report on Form 10-K for the year ended December 31, 2018. The results of operations of any property acquired are included in the Company's financial statements since the date of 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, 2018 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Quarter ended
 
Year ended
 
 
December 31, 2018
 
December 31, 2018
Summary Financial Results
 
 
 
 
Total revenue
 
$
100,923

 
$
414,160

General & administrative expenses (G&A)
 
$
9,405

 
$
34,984

Net income attributable to common shareholders
 
$
6,513

 
$
105,150

Earnings per diluted share
 
$
0.06

 
$
0.92

Adjusted EBITDAre(7)
 
$
58,408

 
$
232,314

Funds from operations (FFO)
 
$
38,489

 
$
168,511

FFO per diluted common share
 
$
0.30

 
$
1.33

FFO as Adjusted
 
$
40,722

 
$
165,448

FFO as Adjusted per diluted common share
 
$
0.32

 
$
1.31

Total dividends paid per share
 
$
0.22

 
$
0.88

Stock closing price low-high range (NYSE)
 
$16.40 to $22.12

 
$16.40 to $25.59

Weighted average diluted shares used in EPS computations(1)
 
114,314

 
114,051

Weighted average diluted common shares used in FFO computations(1)
 
126,537

 
126,584

 
 
 
 
 
Summary Property, Operating and Financial Data
 
 
 
 
# of Total properties / # of Retail properties
 
88 / 87

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
15,407,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
17.90

 
 
Consolidated occupancy at end of period
 
93.1
 %
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
92.6
 %
 
 
Same-property retail portfolio occupancy at end of period(5)(2)
 
93.2
 %
 
 
Same-property retail portfolio physical occupancy at end of period(4)(5)(2)
 
92.3
 %
 
 
Same-property cash NOI growth(2)
 
(0.2
)%
 
0.7
%
Same-property cash NOI growth, including redevelopment properties
 
0.1
 %
 
1.4
%
Cash NOI margin - total portfolio
 
64.4
 %
 
60.2
%
Expense recovery ratio - total portfolio
 
98.7
 %
 
97.7
%
New, renewal and option rent spread - cash basis(8)
 
2.3
 %
 
3.5
%
New, renewal and option rent spread - GAAP basis(9)
 
7.8
 %
 
11.2
%
Net debt to total market capitalization(6)
 
30.1
 %
 
30.1
%
Net debt to Adjusted EBITDAre(6)
 
4.7
x
 
4.8
x
Adjusted EBITDAre to interest expense(7)
 
3.6
x
 
3.7
x
Adjusted EBITDAre to fixed charges(7)
 
3.4
x
 
3.5
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 periods presented because their inclusion is anti-dilutive. FFO includes earnings allocated to unit holders as the inclusion of these units is dilutive to FFO per share.
(2) The same-property pool for both cash NOI and occupancy includes retail properties the Company consolidated, owned and operated for the entirety of both periods being compared and excludes properties under development and redevelopment, acquired, sold, or under contract to be sold 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 $17.12.
(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 EBITDAre is annualized for purposes of calculating net debt to Adjusted EBITDAre.
(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



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED BALANCE SHEETS
 
 
As of December 31, 2018 (unaudited) and December 31, 2017
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
December 31,
 
December 31,
 
2018
 
2017
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
525,819

 
$
521,669

Buildings and improvements
2,156,113

 
2,010,527

Construction in progress
80,385

 
133,761

Furniture, fixtures and equipment
6,675

 
5,897

Total
2,768,992

 
2,671,854

Accumulated depreciation and amortization
(645,872
)
 
(587,127
)
Real estate, net
2,123,120

 
2,084,727

Cash and cash equivalents
440,430

 
490,279

Restricted cash
17,092

 
10,562

Tenant and other receivables, net of allowance for doubtful accounts of $6,486 and $4,937, respectively
28,563

 
20,078

Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 and $494, respectively
84,903

 
85,843

Identified intangible assets, net of accumulated amortization of $39,526 and $33,827, respectively
68,422

 
87,249

Deferred leasing costs, net of accumulated amortization of $16,826 and $14,796, respectively
21,277

 
20,268

Deferred financing costs, net of accumulated amortization of $2,764 and $1,740, respectively
2,219

 
3,243

Prepaid expenses and other assets
12,968

 
18,559

Total assets
$
2,798,994

 
$
2,820,808

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,550,242

 
$
1,564,542

Accounts payable, accrued expenses and other liabilities
98,517

 
84,766

Identified intangible liabilities, net of accumulated amortization of $65,058 and $65,832, respectively
144,258

 
180,959

Total liabilities
1,793,017

 
1,830,267

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 114,345,565 and 113,827,529 shares issued and outstanding, respectively
1,143

 
1,138

Additional paid-in capital
956,420

 
946,402

Accumulated deficit
(52,857
)
 
(57,621
)
Noncontrolling interests:
 
 
 
Operating partnership
100,822

 
100,218

Consolidated subsidiaries
449

 
404

Total equity
1,005,977

 
990,541

Total liabilities and equity
$
2,798,994

 
$
2,820,808


11



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
For the quarter and year ended December 31, 2018 and 2017 (unaudited)
 
(in thousands, except share and per share amounts)
 
 
 
 
 

 
Quarter Ended December 31,
 
Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
100,403

 
$
96,661

 
$
411,298

 
$
365,082

Management and development fees
405

 
336

 
1,469

 
1,535

Income from acquired leasehold interest

 

 

 
39,215

Other income
115

 
379

 
1,393

 
1,210

Total revenue
100,923

 
97,376

 
414,160

 
407,042

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
25,878

 
21,776

 
99,422

 
82,281

Real estate taxes
15,919

 
15,762

 
63,655

 
59,737

Property operating
14,814

 
15,036

 
74,222

 
50,894

General and administrative
9,405

 
7,693

 
34,984

 
30,691

Casualty and impairment loss, net
5,674

 
1,745

 
4,426

 
7,382

Ground rent
3,238

 
2,851

 
11,448

 
10,848

Provision for doubtful accounts
1,550

 
1,771

 
4,138

 
3,445

Total expenses
76,478

 
66,634

 
292,295

 
245,278

Operating income
24,445

 
30,742

 
121,865

 
161,764

Gain on sale of real estate

 

 
52,625

 
202

Interest income
2,393

 
1,066

 
8,336

 
2,248

Interest and debt expense
(16,809
)
 
(14,839
)
 
(64,868
)
 
(56,218
)
Gain (loss) on extinguishment of debt

 
(34,062
)
 
2,524

 
(35,336
)
Income before income taxes