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Section 1: 8-K (8-K)

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false0001611547 0001611547 srt:SubsidiariesMember 2019-07-31 2019-07-31 0001611547 2019-07-31 2019-07-31


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):
July 31, 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.):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Urban Edge Properties
Title of class of registered securities
Trading symbol
Name of exchange on which registered
Common shares of beneficial interest, par value $0.01 per share
UE
The New York Stock Exchange
Urban Edge Properties LP
Title of class of registered securities
Trading symbol
Name of exchange on which registered
None
N/A
N/A

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).
Urban Edge Properties                    Urban Edge Properties LP 
 
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.  
Urban Edge Properties o                   Urban Edge Properties LP o   





Item 2.02 Results of Operations and Financial Condition

On July 31, 2019, Urban Edge Properties (the "Company") announced its financial results for the three and six months ended June 30, 2019. 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 into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the "Exchange Act") regardless of any general incorporation language in any such filing.

Item 7.01 Regulation FD Disclosure

On July 31, 2019, the Company announced its financial results for the three and six months ended June 30, 2019 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 into any filing under the Securities Act or the Exchange Act regardless of any general incorporation language in any such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits:
99.1 - Earnings Press Release of Urban Edge Properties dated July 31, 2019.
99.2 - Supplemental Disclosure Package of Urban Edge Properties as of June 30, 2019.






INDEX TO EXHIBITS

Exhibit Number
 
Document
 
 
 
 
 
101.SCH
 
Inline XBRL Taxonomy Extension Schema
101.CAL
 
Inline XBRL Extension Calculation Linkbase
101.LAB
 
Inline XBRL Extension Labels Linkbase
101.PRE
 
Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF
 
Inline XBRL Taxonomy Extension Definition Linkbase
104
 
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)







SIGNATURE

Pursuant to the requirements of the Exchange Act, the registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
URBAN EDGE PROPERTIES
 
 
(Registrant)
 
 
 
 
 
 
Date: July 31, 2019
By:
/s/ Mark Langer
 
 
Mark Langer, Executive Vice President and Chief Financial Officer

 
 
URBAN EDGE PROPERTIES LP
 
 
By: Urban Edge Properties, General Partner
 
 
 
 
 
 
Date: July 31, 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


 
398990242_image2a52.jpg
Exhibit 99.1
 
 
 
 
Urban Edge Properties
For additional information:
888 Seventh Avenue
Mark Langer, EVP and
New York, NY 10019
Chief Financial Officer
212-956-2556
 
 
 
 
 
 
 
 
 
FOR IMMEDIATE RELEASE:
 
 
 
 
Urban Edge Properties Reports Second Quarter 2019 Results
                    
NEW YORK, NY, July 31, 2019 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the quarter ended June 30, 2019.

Financial Results(1)(2) 
Generated net income of $28.1 million, or $0.22 per diluted share, for the quarter compared to net income of $59.8 million, or $0.47 per diluted share for the second quarter of 2018 and $56.0 million, or $0.44 per diluted share, for the six months ended June 30, 2019 compared to $82.8 million, or $0.65 per diluted share, for the six months ended June 30, 2018.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $57.6 million, or $0.45 per share, for the quarter compared to $39.6 million, or $0.31 per share, for the second quarter of 2018 and $94.1 million, or $0.74 per share, for the six months ended June 30, 2019 compared to $83.7 million, or $0.66 per share, for the six months ended June 30, 2018.
Generated FFO as Adjusted of $37.4 million, or $0.30 per share, for the quarter compared to $41.6 million, or $0.33 per share, for the second quarter of 2018 and $74.6 million, or $0.59 per share, for the six months ended June 30, 2019 compared to $82.9 million, or $0.65 per share, for the six months ended June 30, 2018.
Operating Results(1)(3) 
Reported a decline in same-property cash Net Operating Income ("NOI") including properties in redevelopment of 0.3% compared to the second quarter of 2018 and a decline of 0.2% compared to the six months ended June 30, 2018. Excluding the impact of anchor bankruptcies, same-property cash NOI including properties in redevelopment for the quarter and for the six months ended June 30, 2019 would have increased by 4.4% and 4.2%, respectively.
Reported a decline in same-property cash NOI excluding properties in redevelopment of 1.8% compared to the second quarter of 2018 and of 1.9% compared to the six months ended June 30, 2018. Excluding the impact of anchor bankruptcies, same-property cash NOI excluding properties in redevelopment for the quarter and for the six months ended June 30, 2019 would have increased by 2.8% and 2.4%, respectively.
Bankruptcy settlement proceeds of $0.8 million received during the second quarter are excluded from same-property cash NOI and FFO as Adjusted.
Reported same-property portfolio occupancy of 92.5%, a decrease of 190 basis points compared to March 31, 2019 and a decrease of 540 basis points compared to June 30, 2018. During the second quarter, two spaces previously occupied by Kmart totaling approximately 225,000 sf were recaptured.
Reported consolidated portfolio occupancy of 92.1%, a decrease of 180 basis points compared to March 31, 2019 and a decrease of 510 basis points compared to June 30, 2018, primarily due to anchor bankruptcies.
Executed 22 new leases, renewals and options totaling 362,000 square feet ("sf") during the quarter. Same-space leases totaled 362,000 sf and generated average rent spreads of 12.9% on a GAAP basis and 6.5% on a cash basis.
“2019 is a transition year for our company as we execute on our strategy to drive long term growth,” said Jeff Olson, Chairman and CEO. “Our results reflect the temporary loss of income from a handful of retailers including Toys "R" Us and Kmart. We are confident these spaces will be replaced with leading discounters, grocers, fitness clubs, entertainment concepts and other uses resulting in significant increases to tenant quality, occupancy, same-property

1



NOI and earnings growth in 2020 and beyond. We look forward to hosting an investor day later this year to provide details on the leasing, redevelopment, acquisition and disposition initiatives that will drive growth over the next several years.”
Development and Redevelopment
During the second quarter, the Company invested $18.1 million in redevelopment projects and completed the anchor retenanting at Woodbridge Commons in Woodbridge, NJ and the ShopRite expansion at Rockaway River Commons in Rockaway, NJ.

In July 2019, Burlington opened its new 43,000 sf store at Bergen Town Center. Burlington joins other recently opened stores and restaurants, including Express, Lands' End, Ruth's Chris, Sticky's Finger Joint and Cava Grill. Chopt is scheduled to open in August.

The Company has $120.8 million of active redevelopment projects under way, which are expected to generate a 7% unleveraged yield. Approximately $20.9 million of that amount remains to be funded.

The Company is advancing its plans to redevelop and further densify its flagship assets including Bergen Town Center, Bruckner Commons, Hudson Mall, and Yonkers Gateway Center.

Anchor Leasing(6) 
The Company has 12 anchor (>30,000 sf) vacancies accounting for approximately 790,000 sf of gross leasable area with a market rent of approximately $19 million a year. Eleven of these vacancies occurred in the last year resulting from the Toys “R” Us, Sears (Kmart), National Wholesale Liquidators and Fallas bankruptcies.

The Company has executed leases with Burlington for two of these spaces which are expected to commence rent during the fourth quarter of 2019. The Company expects to lease three of these spaces during the third quarter and is in active discussions to lease four other spaces. The remaining three vacancies are situated at Bruckner Commons in the Bronx and Hudson Mall in Jersey City, where the spaces will likely be incorporated into larger scale redevelopments, and at Las Catalinas in Puerto Rico.
 
Disposition Activity
The Company sold its property in Glen Burnie, MD for $16.2 million during the quarter and its property in Springfield, MA for $10.2 million in July 2019, bringing year-to-date total sales to $45.0 million. Nine additional non-core properties are under contract or letter of intent to sell for approximately $140 million. The weighted average cap rate on properties sold and under contract or letter of intent to sell is approximately 7.3%. Proceeds are expected to be used for acquisitions, redevelopment and potentially a special dividend.

Balance Sheet Highlights at June 30, 2019(1)(4)(5) 
Total market capitalization of approximately $3.8 billion comprised of 127.4 million fully-diluted common shares valued at $2.2 billion and $1.6 billion of debt.
Net debt to total market capitalization of 29%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization for real estate ("EBITDAre") of 5.1x.
$463.6 million of cash and cash equivalents, including restricted cash.

Financing Activity
Subsequent to June 30, 2019, the Company amended its $600 million revolving credit facility, extending the maturity date from March 2021 to January 2024 with two six-month extension options. The amended facility contains terms and conditions materially consistent with the prior agreement except that borrowing rates are generally lower by 5 basis points depending on the Company's leverage level. No amounts have been drawn on the 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 ended June 30, 2019.
(3) Refer to page 9 for a reconciliation of Net Income to Cash NOI and Same-Property Cash NOI for the quarter ended June 30, 2019.
(4) Refer to page 10 for a reconciliation of net income to EBITDAre and annualized Adjusted EBITDAre for the quarter ended June 30, 2019.
(5) Net debt as of June 30, 2019 is calculated as total consolidated debt of $1.6 billion less total cash and cash equivalents, including restricted cash, of $463.6 million.
(6) Excludes an anchor vacancy for one property currently under contract for sale, expected to close in the third quarter.

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 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 non-cash rental income and expense, and income or expenses that we do not believe are representative of ongoing operating results, if any. In addition, the Company uses cash NOI margin, calculated as cash NOI divided by total revenue, which the Company believes is useful to investors for similar reasons.
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 82 properties for the three and six months ended June 30, 2019 and 2018, respectively. 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 or 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 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 June 30, 2019, 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 portfolio occupancy includes properties that have been owned and operated for the entirety of the reporting periods being compared totaling 82 properties for the three and six months ended June 30, 2019 and 2018, respectively. Occupancy metrics presented for the Company's same-property 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 or properties 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.

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 86 properties totaling 15.9 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) 
 
June 30,
 
December 31,
 
2019
 
2018
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
516,177

 
$
525,819

Buildings and improvements
2,155,036

 
2,156,113

Construction in progress
78,320

 
80,385

Furniture, fixtures and equipment
7,066

 
6,675

Total
2,756,599

 
2,768,992

Accumulated depreciation and amortization
(661,909
)
 
(645,872
)
Real estate, net
2,094,690

 
2,123,120

Right-of-use assets
85,404

 

Cash and cash equivalents
412,126

 
440,430

Restricted cash
51,473

 
17,092

Tenant and other receivables, net of allowance for doubtful accounts of $6,486 as of December 31, 2018
32,643

 
28,563

Receivable arising from the straight-lining of rents, net of $134 as of December 31, 2018
77,189

 
84,903

Identified intangible assets, net of accumulated amortization of $29,479 and $39,526, respectively
51,618

 
68,422

Deferred leasing costs, net of accumulated amortization of $16,615 and $16,826, respectively
20,667

 
21,277

Deferred financing costs, net of accumulated amortization of $3,276 and $2,764, respectively
1,723

 
2,219

Prepaid expenses and other assets
30,886

 
12,968

Total assets
$
2,858,419

 
$
2,798,994

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,548,944

 
$
1,550,242

Lease liabilities
83,050

 

Accounts payable, accrued expenses and other liabilities
85,034

 
98,517

Identified intangible liabilities, net of accumulated amortization of $66,613 and $65,058, respectively
131,705

 
144,258

Total liabilities
1,848,733

 
1,793,017

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 121,171,003 and 114,345,565 shares issued and outstanding, respectively
1,212

 
1,143

Additional paid-in capital
1,015,470

 
956,420

Accumulated deficit
(56,580
)
 
(52,857
)
Noncontrolling interests:
 
 
 
Operating partnership
49,157

 
100,822

Consolidated subsidiaries
427

 
449

Total equity
1,009,686

 
1,005,977

Total liabilities and equity
$
2,858,419

 
$
2,798,994


6



URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
101,488

 
$
100,768

 
$
198,796

 
$
199,162

Management and development fees
308

 
347

 
660

 
689

Other income
951

 
855

 
1,023

 
1,172

Total revenue
102,747

 
101,970

 
200,479

 
201,023

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
22,567

 
30,441

 
44,397

 
51,711

Real estate taxes
15,221

 
15,587

 
30,698

 
31,362

Property operating
14,416

 
21,765

 
31,477

 
39,668

General and administrative
10,010

 
8,236

 
20,590

 
15,877

Casualty and impairment loss (gain), net
5,112

 
35

 
9,070

 
(1,306
)
Lease expense
3,896

 
2,752

 
7,551

 
5,488

Total expenses
71,222

 
78,816

 
143,783

 
142,800

Gain on sale of real estate
11,550

 
50,440

 
28,503

 
50,440

Interest income
2,458

 
2,031

 
4,964

 
3,555

Interest and debt expense
(16,472
)
 
(15,659
)
 
(33,008
)
 
(31,303
)
Gain on extinguishment of debt

 

 

 
2,524

Income before income taxes
29,061

 
59,966

 
57,155

 
83,439

Income tax expense
(994
)
 
(192
)
 
(1,196
)
 
(626
)
Net income
28,067

 
59,774

 
55,959

 
82,813

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,518
)
 
(6,025
)
 
(3,873
)
 
(8,353
)
Consolidated subsidiaries
22

 
(12
)
 
22

 
(23
)
Net income attributable to common shareholders
$
26,571

 
$
53,737

 
$
52,108

 
$
74,437

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.22

 
$
0.47

 
$
0.44

 
$
0.65

Earnings per common share - Diluted:
$
0.22

 
$
0.47

 
$
0.44

 
$
0.65

Weighted average shares outstanding - Basic
120,364

 
113,739

 
118,330

 
113,708

Weighted average shares outstanding - Diluted
120,461

 
113,942

 
118,436

 
114,151



7



Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and FFO as Adjusted for the three and six months ended June 30, 2019 and 2018, 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.

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
28,067

 
$
59,774

 
$
55,959

 
$
82,813

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,518
)
 
(6,025
)
 
(3,873
)
 
(8,353
)
Consolidated subsidiaries
22

 
(12
)
 
22

 
(23
)
Net income attributable to common shareholders
26,571

 
53,737

 
52,108

 
74,437

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
22,348

 
30,258

 
43,971

 
51,330

Gain on sale of real estate
(11,550
)
 
(50,440
)
 
(28,503
)
 
(50,440
)
Real estate impairment loss
18,695

 

 
22,653

 

Limited partnership interests in operating partnership
1,518

 
6,025

 
3,873

 
8,353

FFO Applicable to diluted common shareholders
57,582

 
39,580

 
94,102

 
83,680

FFO per diluted common share(1)
0.45

 
0.31

 
0.74

 
0.66

Adjustments to FFO:
 
 
 
 
 
 
 
Casualty gain, net(2)
(13,583
)
 
(108
)
 
(13,583
)
 
(688
)
Impact from tenant bankruptcies(3)
(7,366
)
 
1,875

 
(7,366
)
 
1,875

Tenant bankruptcy settlement income
(835
)
 
(114
)
 
(862
)
 
(278
)
Tax impact from Hurricane Maria
1,111

 
58

 
1,111

 
226

Severance expenses
466

 

 
466

 

Transaction costs
70

 

 
318

 

Executive transition costs

 

 
375

 

Environmental remediation costs

 
334

 

 
584

Gain on extinguishment of debt

 

 

 
(2,524
)
FFO as Adjusted applicable to diluted common shareholders
$
37,445

 
$
41,625

 
$
74,561

 
$
82,875

FFO as Adjusted per diluted common share(1)
$
0.30

 
$
0.33

 
$
0.59

 
$
0.65

 
 
 
 
 
 
 
 
Weighted Average diluted common shares(1)
126,580

 
126,602

 
126,554

 
126,594

(1) Weighted average diluted shares used to calculate FFO per share and FFO as Adjusted per share for the three and six months ended June 30, 2019 and June 30, 2018, respectively 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 shares.
(2) Amount for the three and six months ended June 30, 2019 reflects insurance proceeds for Hurricane Maria at our two malls in Puerto Rico and tornado damage at our shopping center in Wilkes-Barre, PA.
(3) Amount for the three and six months ended June 30, 2019 reflects a write-off of the below-market intangible liability connected with the rejection of our Kmart lease in Huntington, NY.

8



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

The following table reflects the reconciliation of net income to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the three and six months ended June 30, 2019 and 2018, 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.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Amounts in thousands)
2019
 
2018
 
2019
 
2018
Net income
$
28,067

 
$
59,774

 
$
55,959

 
$
82,813

Management and development fee income from non-owned properties
(308
)
 
(347
)
 
(660
)
 
(689
)
Other expense (income)
318

 
4

 
548

 
(73
)
Depreciation and amortization
22,567

 
30,441

 
44,397

 
51,711

General and administrative expense
10,010

 
8,236

 
20,590

 
15,877

Casualty and impairment loss (gain), net(1)
5,112

 
35

 
9,070

 
(1,306
)
Gain on sale of real estate
(11,550
)
 
(50,440
)
 
(28,503
)
 
(50,440
)
Interest income
(2,458
)
 
(2,031
)
 
(4,964
)
 
(3,555
)
Interest and debt expense
16,472

 
15,659

 
33,008

 
31,303

Gain on extinguishment of debt

 

 

 
(2,524
)
Income tax expense
994

 
192

 
1,196

 
626

Non-cash revenue and expenses
(9,089
)
 
(6,792
)
 
(11,163
)
 
(9,081
)
Cash NOI
60,135

 
54,731

 
119,478

 
114,662

Adjustments:
 
 
 
 
 
 
 
Non-same property cash NOI(2)
(5,608
)
 
(5,780
)
 
(11,929
)
 
(12,059
)
Tenant bankruptcy settlement income and lease termination income
(1,152
)
 
(813
)
 
(1,179
)
 
(977
)
Lease termination payment

 
6,000

 

 
6,000

Natural disaster related operating loss

 
(128
)
 

 
178

Environmental remediation costs

 
334

 

 
584

Same-property cash NOI(3)
$
53,375

 
$
54,344

 
$
106,370

 
$
108,388

Cash NOI related to properties being redeveloped
5,640

 
4,830

 
11,497

 
9,721

Same-property cash NOI including properties in redevelopment(3)
$
59,015

 
$
59,174

 
$
117,867

 
$
118,109

(1) The three and six months ended June 30, 2019 reflect real estate impairment losses, offset by insurance proceeds for Hurricane Maria at our two malls in Puerto Rico and for tornado damage at our shopping center in Wilkes-Barre, PA. The six months ended June 30, 2018 reflect hurricane-related insurance proceeds net of expenses.
(2) Non-same property cash NOI includes cash NOI related to properties being redeveloped and properties acquired or disposed.
(3) The results for the three and six months ended June 30, 2019 were negatively impacted by store closures from anchor bankruptcies. Excluding the impact of the bankruptcies of Toys “R” Us, National Wholesale Liquidators, Fallas and Sears (Kmart), same-property cash NOI would have increased by 2.8% for the three months ended June 30, 2019 and by 2.4% for the six months ended June 30, 2019, and same-property cash NOI including properties in redevelopment would have increased by 4.4% the three months ended June 30, 2019 and by 4.2% for the six months ended June 30, 2019:
 
 
 
Three Months Ended June 30,
 
Percent Change
 
Six Months Ended June 30,
 
Percent Change
 
 
 
2019
 
2018
 
 
2019
 
2018
 
 
Same-property cash NOI
$
53,375

 
$
54,344

 
(1.8)%
 
$
106,370

 
$
108,388

 
(1.9)%
 
Cash NOI lost due to anchor bankruptcies
2,793

 
317

 
 
 
5,598

 
961

 
 
 
Same-property cash NOI including item above
56,168

 
54,661

 
2.8%
 
111,968

 
109,349

 
2.4%
 
Cash NOI related to properties being redeveloped
5,640

 
4,830

 
 
 
11,497

 
9,721

 
 
 
Cash NOI lost due to anchor bankruptcies at properties being redeveloped
324

 

 
 
 
633

 
39

 
 
 
Same-property cash NOI including properties in redevelopment and including item above
$
62,132

 
$
59,491

 
4.4%
 
$
124,098

 
$
119,109

 
4.2%


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 three and six months ended June 30, 2019 and 2018, 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.
 
Three Months Ended
June 30,
 
Six Months Ended
 June 30,
(Amounts in thousands)
2019
 
2018
 
2019
 
2018
Net income
$
28,067

 
$
59,774

 
$
55,959

 
$
82,813

Depreciation and amortization
22,567

 
30,441

 
44,397

 
51,711

Interest and debt expense
16,472

 
15,659

 
33,008

 
31,303

Income tax expense
994

 
192

 
1,196

 
626

Gain on sale of real estate
(11,550
)
 
(50,440
)
 
(28,503
)
 
(50,440
)
Real estate impairment loss
18,695

 

 
22,653

 

EBITDAre
75,245

 
55,626

 
128,710

 
116,013

Adjustments for Adjusted EBITDAre:
 
 
 
 
 
 
 
Casualty gain, net(1)
(13,583
)
 
(108
)
 
(13,583
)
 
(688
)
Impact from tenant bankruptcies(1)
(7,366
)
 
1,875

 
(7,366
)
 
1,875

Tenant bankruptcy settlement income
(835
)
 
(114
)
 
(862
)
 
(278
)
Severance expenses
466

 

 
466

 

Transaction costs
70

 

 
318

 

Executive transition costs

 

 
375

 

Environmental remediation costs

 
334

 

 
584

Gain on extinguishment of debt

 

 

 
(2,524
)
Adjusted EBITDAre
$
53,997

 
$
57,613

 
$
108,058

 
$
114,982

(1) Refer to footnotes on page 8, Reconciliation of Net Income to FFO and FFO as Adjusted, for the adjustments included in these line items.

10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2




 
 
URBAN EDGE PROPERTIES
 
SUPPLEMENTAL DISCLOSURE
PACKAGE
 
June 30, 2019
 
 



398990242_image3a39.jpg




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







URBAN EDGE PROPERTIES
SUPPLEMENTAL DISCLOSURE
June 30, 2019
(unaudited)
 
 
TABLE OF CONTENTS
 
Page
Press Release
 
Second Quarter 2019 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
 
 








 
398990242_image2a45.jpg
 
 
 
 
 
Urban Edge Properties
For additional information:
888 Seventh Avenue
Mark Langer, EVP and
New York, NY 10019
Chief Financial Officer
212-956-2556
 
 
 
 
 
 
 
 
 
FOR IMMEDIATE RELEASE:
 
 
 
 
Urban Edge Properties Reports Second Quarter 2019 Results
        
NEW YORK, NY, July 31, 2019 - Urban Edge Properties (NYSE:UE) (the "Company") today announced its results for the quarter ended June 30, 2019.

Financial Results(1)(2) 
Generated net income of $28.1 million, or $0.22 per diluted share, for the quarter compared to net income of $59.8 million, or $0.47 per diluted share for the second quarter of 2018 and $56.0 million, or $0.44 per diluted share, for the six months ended June 30, 2019 compared to $82.8 million, or $0.65 per diluted share, for the six months ended June 30, 2018.
Generated Funds from Operations applicable to diluted common shareholders ("FFO") of $57.6 million, or $0.45 per share, for the quarter compared to $39.6 million, or $0.31 per share, for the second quarter of 2018 and $94.1 million, or $0.74 per share, for the six months ended June 30, 2019 compared to $83.7 million, or $0.66 per share, for the six months ended June 30, 2018.
Generated FFO as Adjusted of $37.4 million, or $0.30 per share, for the quarter compared to $41.6 million, or $0.33 per share, for the second quarter of 2018 and $74.6 million, or $0.59 per share, for the six months ended June 30, 2019 compared to $82.9 million, or $0.65 per share, for the six months ended June 30, 2018.
Operating Results(1)(3) 
Reported a decline in same-property cash Net Operating Income ("NOI") including properties in redevelopment of 0.3% compared to the second quarter of 2018 and a decline of 0.2% compared to the six months ended June 30, 2018. Excluding the impact of anchor bankruptcies, same-property cash NOI including properties in redevelopment for the quarter and for the six months ended June 30, 2019 would have increased by 4.4% and 4.2%, respectively.
Reported a decline in same-property cash NOI excluding properties in redevelopment of 1.8% compared to the second quarter of 2018 and of 1.9% compared to the six months ended June 30, 2018. Excluding the impact of anchor bankruptcies, same-property cash NOI excluding properties in redevelopment for the quarter and for the six months ended June 30, 2019 would have increased by 2.8% and 2.4%, respectively.
Bankruptcy settlement proceeds of $0.8 million received during the second quarter are excluded from same-property cash NOI and FFO as Adjusted.
Reported same-property portfolio occupancy of 92.5%, a decrease of 190 basis points compared to March 31, 2019 and a decrease of 540 basis points compared to June 30, 2018. During the second quarter, two spaces previously occupied by Kmart totaling approximately 225,000 sf were recaptured.
Reported consolidated portfolio occupancy of 92.1%, a decrease of 180 basis points compared to March 31, 2019 and a decrease of 510 basis points compared to June 30, 2018, primarily due to anchor bankruptcies.
Executed 22 new leases, renewals and options totaling 362,000 square feet ("sf") during the quarter. Same-space leases totaled 362,000 sf and generated average rent spreads of 12.9% on a GAAP basis and 6.5% on a cash basis.
“2019 is a transition year for our company as we execute on our strategy to drive long term growth,” said Jeff Olson, Chairman and CEO. “Our results reflect the temporary loss of income from a handful of retailers including Toys "R" Us and Kmart. We are confident these spaces will be replaced with leading discounters, grocers, fitness clubs, entertainment concepts and other uses resulting in significant increases to tenant quality, occupancy, same-property

1


NOI and earnings growth in 2020 and beyond. We look forward to hosting an investor day later this year to provide details on the leasing, redevelopment, acquisition and disposition initiatives that will drive growth over the next several years.”
Development and Redevelopment
During the second quarter, the Company invested $18.1 million in redevelopment projects and completed the anchor retenanting at Woodbridge Commons in Woodbridge, NJ and the ShopRite expansion at Rockaway River Commons in Rockaway, NJ.

In July 2019, Burlington opened its new 43,000 sf store at Bergen Town Center. Burlington joins other recently opened stores and restaurants, including Express, Lands' End, Ruth's Chris, Sticky's Finger Joint and Cava Grill. Chopt is scheduled to open in August.

The Company has $120.8 million of active redevelopment projects under way, which are expected to generate a 7% unleveraged yield. Approximately $20.9 million of that amount remains to be funded.

The Company is advancing its plans to redevelop and further densify its flagship assets including Bergen Town Center, Bruckner Commons, Hudson Mall, and Yonkers Gateway Center.

Anchor Leasing(7) 
The Company has 12 anchor (>30,000 sf) vacancies accounting for approximately 790,000 sf of gross leasable area with a market rent of approximately $19 million a year. Eleven of these vacancies occurred in the last year resulting from the Toys “R” Us, Sears (Kmart), National Wholesale Liquidators and Fallas bankruptcies.

The Company has executed leases with Burlington for two of these spaces which are expected to commence rent during the fourth quarter of 2019. The Company expects to lease three of these spaces during the third quarter and is in active discussions to lease four other spaces. The remaining three vacancies are situated at Bruckner Commons in the Bronx and Hudson Mall in Jersey City, where the spaces will likely be incorporated into larger scale redevelopments, and at Las Catalinas in Puerto Rico.
 
Disposition Activity
The Company sold its property in Glen Burnie, MD for $16.2 million during the quarter and its property in Springfield, MA for $10.2 million in July 2019, bringing year-to-date total sales to $45.0 million. Nine additional non-core properties are under contract or letter of intent to sell for approximately $140 million. The weighted average cap rate on properties sold and under contract or letter of intent to sell is approximately 7.3%. Proceeds are expected to be used for acquisitions, redevelopment and potentially a special dividend.

Balance Sheet Highlights at June 30, 2019(1)(4)(5)(6) 
Total market capitalization of approximately $3.8 billion comprised of 127.4 million fully-diluted common shares valued at $2.2 billion and $1.6 billion of debt.
Net debt to total market capitalization of 29%.
Net debt to Adjusted Earnings before interest, tax, depreciation and amortization for real estate ("EBITDAre") of 5.1x.
$463.6 million of cash and cash equivalents, including restricted cash.

Financing Activity
Subsequent to June 30, 2019, the Company amended its $600 million revolving credit facility, extending the maturity date from March 2021 to January 2024 with two six-month extension options. The amended facility contains terms and conditions materially consistent with the prior agreement except that borrowing rates are generally lower by 5 basis points depending on the Company's leverage level. No amounts have been drawn on the 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 ended June 30, 2019.
(3) Refer to page 6 for a reconciliation of Net Income to Cash NOI and Same-Property Cash NOI for the quarter ended June 30, 2019.
(4) Refer to page 7 for a reconciliation of net income to EBITDAre and annualized Adjusted EBITDAre for the quarter ended June 30, 2019.
(5) Net debt as of June 30, 2019 is calculated as total consolidated debt of $1.6 billion less total cash and cash equivalents, including restricted cash, of $463.6 million.
(6) Refer to page 16 for the calculation of market capitalization as of June 30, 2019.
(7) Excludes an anchor vacancy for one property currently under contract for sale, expected to close in the third quarter.

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 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 non-cash rental income and expense, and income or expenses that we do not believe are representative of ongoing operating results, if any. In addition, the Company uses cash NOI margin, calculated as cash NOI divided by total revenue, which the Company believes is useful to investors for similar reasons.
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 82 properties for the three and six months ended June 30, 2019 and 2018, respectively. 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 or 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 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 June 30, 2019, 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 portfolio occupancy includes properties that have been owned and operated for the entirety of the reporting periods being compared totaling 82 properties for the three and six months ended June 30, 2019 and 2018, respectively. Occupancy metrics presented for the Company's same-property 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 or properties 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.









4


Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and FFO as Adjusted for the three and six months ended June 30, 2019 and 2018, 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.
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Net income
$
28,067

 
$
59,774

 
$
55,959

 
$
82,813

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,518
)
 
(6,025
)
 
(3,873
)
 
(8,353
)
Consolidated subsidiaries
22

 
(12
)
 
22

 
(23
)
Net income attributable to common shareholders
26,571

 
53,737


52,108


74,437

Adjustments:
 
 
 
 
 
 
 
Rental property depreciation and amortization
22,348

 
30,258

 
43,971

 
51,330

Gain on sale of real estate
(11,550
)
 
(50,440
)
 
(28,503
)
 
(50,440
)
Real estate impairment loss
18,695

 

 
22,653

 

Limited partnership interests in operating partnership
1,518

 
6,025

 
3,873

 
8,353

FFO Applicable to diluted common shareholders
57,582


39,580


94,102


83,680

FFO per diluted common share(1)
0.45

 
0.31


0.74


0.66

Adjustments to FFO:
 
 
 
 
 
 
 
Casualty gain, net(2)
(13,583
)
 
(108
)
 
(13,583
)
 
(688
)
Impact from tenant bankruptcies(3)
(7,366
)
 
1,875

 
(7,366
)
 
1,875

Tenant bankruptcy settlement income
(835
)
 
(114
)
 
(862
)
 
(278
)
Tax impact from Hurricane Maria
1,111

 
58

 
1,111

 
226

Severance expenses
466

 

 
466

 

Transaction costs
70

 

 
318

 

Executive transition costs

 

 
375

 

Environmental remediation costs

 
334

 

 
584

Gain on extinguishment of debt

 

 

 
(2,524
)
FFO as Adjusted applicable to diluted common shareholders
$
37,445


$
41,625


$
74,561


$
82,875

FFO as Adjusted per diluted common share(1)
$
0.30

 
$
0.33


$
0.59


$
0.65

 
 
 
 
 
 
 
 
Weighted Average diluted common shares(1)
126,580

 
126,602

 
126,554

 
126,594

(1) Weighted average diluted shares used to calculate FFO per share and FFO as Adjusted per share for the three and six months ended June 30, 2019 and June 30, 2018, respectively 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 shares.
(2) Amount for the three and six months ended June 30, 2019 reflects insurance proceeds for Hurricane Maria at our two malls in Puerto Rico and tornado damage at our shopping center in Wilkes-Barre, PA.
(3) Amount for the three and six months ended June 30, 2019 reflects a write-off of the below-market intangible liability connected with the rejection of our Kmart lease in Huntington, NY.

5


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

The following table reflects the reconciliation of net income to cash NOI, same-property cash NOI and same-property cash NOI including properties in redevelopment for the three and six months ended June 30, 2019 and 2018, 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.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Amounts in thousands)
2019
 
2018
 
2019
 
2018
Net income
$
28,067

 
$
59,774

 
$
55,959

 
$
82,813

Management and development fee income from non-owned properties
(308
)
 
(347
)
 
(660
)
 
(689
)
Other expense (income)
318

 
4

 
548

 
(73
)
Depreciation and amortization
22,567

 
30,441

 
44,397

 
51,711

General and administrative expense
10,010

 
8,236

 
20,590

 
15,877

Casualty and impairment loss (gain), net(1)
5,112

 
35

 
9,070

 
(1,306
)
Gain on sale of real estate
(11,550
)
 
(50,440
)
 
(28,503
)
 
(50,440
)
Interest income
(2,458
)
 
(2,031
)
 
(4,964
)
 
(3,555
)
Interest and debt expense
16,472

 
15,659

 
33,008

 
31,303

Gain on extinguishment of debt

 

 

 
(2,524
)
Income tax expense
994

 
192

 
1,196

 
626

Non-cash revenue and expenses
(9,089
)
 
(6,792
)
 
(11,163
)
 
(9,081
)
Cash NOI
60,135


54,731


119,478


114,662

Adjustments:
 
 
 
 
 
 
 
Non-same property cash NOI(2)
(5,608
)
 
(5,780
)
 
(11,929
)
 
(12,059
)
Tenant bankruptcy settlement income and lease termination income
(1,152
)
 
(813
)
 
(1,179
)
 
(977
)
Lease termination payment

 
6,000

 

 
6,000

Natural disaster related operating loss

 
(128
)
 

 
178

Environmental remediation costs

 
334

 

 
584

Same-property cash NOI(3)
$
53,375

 
$
54,344


$
106,370


$
108,388

Cash NOI related to properties being redeveloped
5,640

 
4,830

 
11,497

 
9,721

Same-property cash NOI including properties in redevelopment(3)
$
59,015

 
$
59,174


$
117,867


$
118,109

(1) The three and six months ended June 30, 2019 reflect real estate impairment losses, offset by insurance proceeds for Hurricane Maria at our two malls in Puerto Rico and for tornado damage at our shopping center in Wilkes-Barre, PA. The six months ended June 30, 2018 reflect hurricane-related insurance proceeds net of expenses.
(2) Non-same property cash NOI includes cash NOI related to properties being redeveloped and properties acquired or disposed.
(3) The results for the three and six months ended June 30, 2019 were negatively impacted by store closures from anchor bankruptcies. Excluding the impact of the bankruptcies of Toys “R” Us, National Wholesale Liquidators, Fallas and Sears (Kmart), same-property cash NOI would have increased by 2.8% for the three months ended June 30, 2019 and by 2.4% for the six months ended June 30, 2019, and same-property cash NOI including properties in redevelopment would have increased by 4.4% the three months ended June 30, 2019 and by 4.2% for the six months ended June 30, 2019:
 
 
 
Three Months Ended June 30,
 
Percent Change
 
Six Months Ended June 30,
 
Percent Change
 
 
 
2019
 
2018
 
 
2019
 
2018
 
 
Same-property cash NOI
$
53,375

 
$
54,344

 
(1.8)%
 
$
106,370

 
$
108,388

 
(1.9)%
 
Cash NOI lost due to anchor bankruptcies
2,793

 
317

 
 
 
5,598

 
961

 
 
 
Same-property cash NOI including item above
56,168

 
54,661

 
2.8%
 
111,968

 
109,349

 
2.4%
 
Cash NOI related to properties being redeveloped
5,640

 
4,830

 
 
 
11,497

 
9,721

 
 
 
Cash NOI lost due to anchor bankruptcies at properties being redeveloped
324

 

 
 
 
633

 
39

 
 
 
Same-property cash NOI including properties in redevelopment and including item above
$
62,132


$
59,491

 
4.4%
 
$
124,098

 
$
119,109

 
4.2%

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 three and six months ended June 30, 2019 and 2018, 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.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Amounts in thousands)
2019
 
2018
 
2019
 
2018
Net income
$
28,067

 
$
59,774

 
$
55,959

 
$
82,813

Depreciation and amortization
22,567

 
30,441

 
44,397

 
51,711

Interest and debt expense
16,472

 
15,659

 
33,008

 
31,303

Income tax expense
994

 
192

 
1,196

 
626

Gain on sale of real estate
(11,550
)
 
(50,440
)
 
(28,503
)
 
(50,440
)
Real estate impairment loss
18,695

 

 
22,653

 

EBITDAre
75,245


55,626

 
128,710

 
116,013

Adjustments for Adjusted EBITDAre:
 
 
 
 
 
 
 
Casualty gain, net(1)
(13,583
)

(108
)

(13,583
)

(688
)
Impact from tenant bankruptcies(1)
(7,366
)

1,875


(7,366
)

1,875

Tenant bankruptcy settlement income
(835
)

(114
)

(862
)

(278
)
Severance expenses
466




466



Transaction costs
70

 

 
318

 

Executive transition costs




375



Environmental remediation costs


334




584

Gain on extinguishment of debt






(2,524
)
Adjusted EBITDAre
$
53,997


$
57,613


$
108,058


$
114,982

(1) Refer to footnotes on page 5, Reconciliation of Net Income to FFO and FFO as Adjusted, for the adjustments included in these line items.

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 86 properties totaling 15.9 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 June 30, 2019
 
 
 
 
 
 
 

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 and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. 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 three and six months ended June 30, 2019 (unaudited)
 
(in thousands, except per share, sf, rent psf and financial ratio data)
 
 
 
 
 
 
 
Three months ended
 
Six months ended
Summary Financial Results
 
June 30, 2019
 
June 30, 2019
Total revenue
 
$
102,747

 
$
200,479

General & administrative expenses (G&A)
 
$
10,010

 
$
20,590

Net income attributable to common shareholders
 
$
26,571

 
$
52,108

Earnings per diluted share
 
$
0.22

 
$
0.44

Adjusted EBITDAre(7)
 
$
53,997

 
$
108,058

Funds from operations (FFO)
 
$
57,582

 
$
94,102

FFO per diluted common share
 
$
0.45

 
$
0.74

FFO as Adjusted
 
$
37,445

 
$
74,561

FFO as Adjusted per diluted common share
 
$
0.30

 
$
0.59

Total dividends paid per share
 
$
0.22

 
$
0.44

Stock closing price low-high range (NYSE)
 
$17.01 to $19.51

 
$16.59 to $20.73

Weighted average diluted shares used in EPS computations(1)
 
120,461

 
118,436

Weighted average diluted common shares used in FFO computations(1)
 
126,580

 
126,554

 
 
 
 
 
Summary Property, Operating and Financial Data
 
 
 
 
# of Total properties / # of Retail properties
 
86 / 85

 
 
Gross leasable area (GLA) sf - retail portfolio(3)(5)
 
14,990,000

 
 
Weighted average annual rent psf - retail portfolio(3)(5)
 
$
18.53

 
 
Consolidated occupancy at end of period
 
92.1
 %
 
 
Consolidated retail portfolio occupancy at end of period(5)
 
91.8
 %
 
 
Same-property portfolio occupancy at end of period(2)
 
92.5
 %
 
 
Same-property portfolio physical occupancy at end of period(4)(2)
 
91.4
 %
 
 
Same-property cash NOI growth(2)
 
(1.8
)%
 
(1.9
)%
Same-property cash NOI growth, including redevelopment properties
 
(0.3
)%
 
(0.2
)%
Cash NOI margin - total portfolio
 
64.6
 %
 
63.5
 %
Expense recovery ratio - total portfolio
 
95.5
 %
 
95.4
 %
New, renewal and option rent spread - cash basis(8)
 
6.5
 %
 
5.0
 %
New, renewal and option rent spread - GAAP basis(8)
 
12.9
 %
 
12.1
 %
Net debt to total market capitalization(6)
 
29.1
 %
 
29.1
 %
Net debt to Adjusted EBITDAre(6)
 
5.1
x
 
5.1
x
Adjusted EBITDAre to interest expense(7)
 
3.4
x
 
3.4
x
Adjusted EBITDAre to fixed charges(7)
 
3.2
x
 
3.2
x
 
 
 
 
 
(1) Weighted average diluted shares used to calculate FFO per share and FFO as Adjusted per share for the three and six months ended June 30, 2019, respectively 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 shares.
(2) The same-property pool for both cash NOI and occupancy includes properties the Company consolidated, owned and operated for the entirety of both periods being compared and excludes properties under development and redevelopment and acquired or sold during the periods being compared.
(3) GLA - retail portfolio excludes 942,000 square feet of warehouses and 74,000 square feet of self-storage. Weighted average annual rent per square foot for our retail portfolio and warehouses was $17.72.
(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 and self-storage.
(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) See computation on page 19.

10



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED BALANCE SHEETS
 
 
As of June 30, 2019 (unaudited) and December 31, 2018
 
 
(in thousands, except share and per share amounts)
 
 
 
 
 
 
June 30,
 
December 31,
 
2019
 
2018
ASSETS
 
 
 

Real estate, at cost:
 

 
 

Land
$
516,177

 
$
525,819

Buildings and improvements
2,155,036

 
2,156,113

Construction in progress
78,320

 
80,385

Furniture, fixtures and equipment
7,066

 
6,675

Total
2,756,599

 
2,768,992

Accumulated depreciation and amortization
(661,909
)
 
(645,872
)
Real estate, net
2,094,690

 
2,123,120

Right-of-use assets
85,404

 

Cash and cash equivalents
412,126

 
440,430

Restricted cash
51,473

 
17,092

Tenant and other receivables, net of allowance for doubtful accounts of $6,486 as of December 31, 2018
32,643

 
28,563

Receivable arising from the straight-lining of rents, net of $134 as of December 31, 2018
77,189

 
84,903

Identified intangible assets, net of accumulated amortization of $29,479 and $39,526, respectively
51,618

 
68,422

Deferred leasing costs, net of accumulated amortization of $16,615 and $16,826, respectively
20,667

 
21,277

Deferred financing costs, net of accumulated amortization of $3,276 and $2,764, respectively
1,723

 
2,219

Prepaid expenses and other assets
30,886

 
12,968

Total assets
$
2,858,419

 
$
2,798,994

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 
 
 
Mortgages payable, net
$
1,548,944

 
$
1,550,242

Lease liabilities
83,050

 

Accounts payable, accrued expenses and other liabilities
85,034

 
98,517

Identified intangible liabilities, net of accumulated amortization of $66,613 and $65,058, respectively
131,705

 
144,258

Total liabilities
1,848,733

 
1,793,017

Commitments and contingencies
 
 
 
Shareholders’ equity:
 
 
 
Common shares: $0.01 par value; 500,000,000 shares authorized and 121,171,003 and 114,345,565 shares issued and outstanding, respectively
1,212

 
1,143

Additional paid-in capital
1,015,470

 
956,420

Accumulated deficit
(56,580
)
 
(52,857
)
Noncontrolling interests:
 
 
 
Operating partnership
49,157

 
100,822

Consolidated subsidiaries
427

 
449

Total equity
1,009,686

 
1,005,977

Total liabilities and equity
$
2,858,419

 
$
2,798,994


11



URBAN EDGE PROPERTIES
 
 
CONSOLIDATED STATEMENTS OF INCOME
 
 
For the three and six months ended June 30, 2019 and 2018 (unaudited)
 
(in thousands, except share and per share amounts)
 
 
 
 
 

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
REVENUE
 
 
 
 
 
 
 
Rental revenue
$
101,488

 
$
100,768

 
$
198,796

 
$
199,162

Management and development fees
308

 
347

 
660

 
689

Other income
951

 
855

 
1,023

 
1,172

Total revenue
102,747

 
101,970

 
200,479

 
201,023

EXPENSES
 
 
 
 
 
 
 
Depreciation and amortization
22,567

 
30,441

 
44,397

 
51,711

Real estate taxes
15,221

 
15,587

 
30,698

 
31,362

Property operating
14,416

 
21,765

 
31,477

 
39,668

General and administrative
10,010

 
8,236

 
20,590

 
15,877

Casualty and impairment loss (gain), net
5,112

 
35

 
9,070

 
(1,306
)
Lease expense
3,896

 
2,752

 
7,551

 
5,488

Total expenses
71,222

 
78,816

 
143,783

 
142,800

Gain on sale of real estate
11,550

 
50,440

 
28,503

 
50,440

Interest income
2,458

 
2,031

 
4,964

 
3,555

Interest and debt expense
(16,472
)
 
(15,659
)
 
(33,008
)
 
(31,303
)
Gain on extinguishment of debt

 

 

 
2,524

Income before income taxes
29,061

 
59,966

 
57,155

 
83,439

Income tax expense
(994
)
 
(192
)
 
(1,196
)
 
(626
)
Net income
28,067

 
59,774

 
55,959

 
82,813

Less net (income) loss attributable to noncontrolling interests in:
 
 
 
 
 
 
 
Operating partnership
(1,518
)
 
(6,025
)
 
(3,873
)
 
(8,353
)
Consolidated subsidiaries
22

 
(12
)
 
22

 
(23
)
Net income attributable to common shareholders
$
26,571

 
$
53,737

 
$
52,108

 
$
74,437

 
 
 
 
 
 
 
 
Earnings per common share - Basic:
$
0.22

 
$
0.47

 
$
0.44

 
$
0.65

Earnings per common share - Diluted:
$
0.22

 
$
0.47

 
$
0.44

 
$
0.65

Weighted average shares outstanding - Basic
120,364

 
113,739

 
118,330

 
113,708

Weighted average shares outstanding - Diluted
120,461

 
113,942

 
118,436

 
114,151


 



12



URBAN EDGE PROPERTIES
 
 
SUPPLEMENTAL SCHEDULE OF NET OPERATING INCOME