Urban Edge Properties 10-Q for FY2020 Q1

Urban Edge Properties (UE)

10-Q 2020-04-29 For: 2020-03-31

Added on April 08, 2026

About this 10-Q

Urban Edge Properties filed this 10-Q on April 29, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $93.36M; down 4.5% from $97.73M a year earlier
Net income: $48.98M; up 91.8% from net income of $25.54M a year earlier
Diluted EPS: $0.40; up 81.8% from $0.22 a year earlier

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Maryland	(Urban Edge Properties)		47-6311266
Delaware	(Urban Edge Properties LP)		36-4791544
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

888 Seventh Avenue	New York	New York	10019
(Address of Principal Executive Offices)			(Zip Code)



Registrant’s telephone number including area code:		(212)	956‑2556

Securities registered pursuant to Section 12(b) of the Act:
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



Large Accelerated Filer	x	Accelerated Filer o	Non-Accelerated Filer o	Smaller Reporting Company	☐	Emerging Growth Company	☐



Large Accelerated Filer o	Accelerated Filer o	Non-Accelerated Filer	x	Smaller Reporting Company	☐	Emerging Growth Company	☐



	PART I

Item 1.	Financial Statements
	Consolidated Financial Statements of Urban Edge Properties:
	Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 (unaudited)	1
	Consolidated Statements of Income for the Three Months Ended March 31, 2020 and 2019 (unaudited)	2
	Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2020 and 2019 (unaudited)	3
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)	4
	Consolidated Financial Statements of Urban Edge Properties LP:
	Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019 (unaudited)	6
	Consolidated Statements of Income for the Three Months Ended March 31, 2020 and 2019 (unaudited)	7
	Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2020 and 2019 (unaudited)	8
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)	9
	Urban Edge Properties and Urban Edge Properties LP
	Notes to Consolidated Financial Statements (unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37
Item 4.	Controls and Procedures	38

	PART II

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	42
Item 6.	Exhibits	42
	Signatures	43



☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


•	enhances investors’ understanding of UE and UELP by enabling investors to view the business as a whole in the same manner as management views and operates the business;


•	eliminates duplicative disclosure and provides a more streamlined and readable presentation because a substantial portion of the disclosure applies to both UE and UELP; and


•	creates time and cost efficiencies throughout the preparation of one combined report instead of two separate reports.



	March 31,			December 31,
	2020			2019
ASSETS
Real estate, at cost:
Land	$	529,809		$	515,621
Buildings and improvements	2,336,405			2,197,076
Construction in progress	28,629			28,522
Furniture, fixtures and equipment	7,016			7,566
Total	2,901,859			2,748,785
Accumulated depreciation and amortization	(686,139		)	(671,946		)
Real estate, net	2,215,720			2,076,839
Right-of-use assets	79,962			81,768
Cash and cash equivalents	622,667			432,954
Restricted cash	19,976			52,182
Tenant and other receivables	19,006			21,565
Receivable arising from the straight-lining of rents	74,348			73,878
Identified intangible assets, net of accumulated amortization of $32,359 and $30,942, respectively	59,810			48,121
Deferred leasing costs, net of accumulated amortization of $16,291 and $16,560, respectively	21,105			21,474
Deferred financing costs, net of accumulated amortization of $4,008 and $3,765, respectively	3,634			3,877
Prepaid expenses and other assets	27,372			33,700
Total assets	$	3,143,600		$	2,846,358

LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net	$	1,616,853		$	1,546,195
Unsecured credit facility borrowings	250,000			—
Lease liabilities	78,334			79,913
Accounts payable, accrued expenses and other liabilities	69,350			76,644
Identified intangible liabilities, net of accumulated amortization of $65,074 and $62,610, respectively	130,840			128,830
Total liabilities	2,145,377			1,831,582
Commitments and contingencies
Shareholders’ equity:
Common shares: $0.01 par value; 500,000,000 shares authorized and 117,956,031 and 121,370,125 shares issued and outstanding, respectively	1,179			1,213
Additional paid-in capital	986,489			1,019,149
Accumulated deficit	(30,243		)	(52,546		)
Noncontrolling interests:
Operating partnership	40,374			46,536
Consolidated subsidiaries	424			424
Total equity	998,223			1,014,776
Total liabilities and equity	$	3,143,600		$	2,846,358



	Three Months Ended March 31,
	2020			2019
REVENUE
Rental revenue	$	93,000		$	97,308
Management and development fees	314			352
Other income	46			72
Total revenue	93,360			97,732
EXPENSES
Depreciation and amortization	23,471			21,830
Real estate taxes	14,966			15,477
Property operating	14,537			17,061
General and administrative	9,847			10,580
Casualty and impairment loss	—			3,958
Lease expense	3,434			3,655
Total expenses	66,255			72,561
Gain on sale of real estate	39,775			16,953
Interest income	1,683			2,506
Interest and debt expense	(17,175		)	(16,536		)
Income before income taxes	51,388			28,094
Income tax expense	(100		)	(202		)
Net income	51,288			27,892
Less net income attributable to noncontrolling interests in:
Operating partnership	(2,308		)	(2,355		)
Consolidated subsidiaries	—			—
Net income attributable to common shareholders	$	48,980		$	25,537

Earnings per common share - Basic:	$	0.40		$	0.22
Earnings per common share - Diluted:	$	0.40		$	0.22
Weighted average shares outstanding - Basic	120,966			116,274
Weighted average shares outstanding - Diluted	121,051			126,504



	Common Shares										Noncontrolling Interests (“NCI”)
	Shares		Amount		Additional Paid-In Capital			Accumulated Earnings (Deficit)			Operating Partnership			Consolidated Subsidiaries		Total Equity
Balance, December 31, 2018	114,345,565		$	1,143	$	956,420		$	(52,857	)	$	100,822		$	449	$	1,005,977
Net income attributable to common shareholders	—		—		—			25,537			—			—		25,537
Net income attributable to noncontrolling interests	—		—		—			—			2,355			—		2,355
Impact of ASC 842 adoption	—		—		—			(2,918		)	—			—		(2,918		)
Limited partnership interests:
Units redeemed for common shares	5,762,184		57		46,090			—			—			—		46,147
Reallocation of noncontrolling interests	—		—		1,250			—			(47,397		)	—		(46,147		)
Common shares issued	20,657		1		69			(35		)	—			—		35
Dividends to common shareholders ($0.22 per share)	—		—		—			(26,390		)	—			—		(26,390		)
Distributions to redeemable NCI ($0.22 per unit)	—		—		—			—			(1,576		)	—		(1,576		)
Share-based compensation expense	—		—		1,892			—			1,772			—		3,664
Share-based awards retained for taxes	(29,112	)	—		(592		)	—			—			—		(592		)
Balance, March 31, 2019	120,099,294		$	1,201	$	1,005,129		$	(56,663	)	$	55,976		$	449	$	1,006,092



	Total Shares		General Partner			Total Units		Limited Partners⁽¹⁾			Accumulated Earnings (Deficit)			NCI in Consolidated Subsidiaries		Total Equity
Balance, December 31, 2018	114,345,565		$	957,563		12,736,633		$	105,447		$	(57,482	)	$	449	$	1,005,977
Net income attributable to unitholders	—		—			—		—			27,892			—		27,892
Impact of ASC 842 adoption	—		—			—		—			(2,918		)	—		(2,918		)
Common units issued as a result of common shares issued by Urban Edge	20,657		70			—		—			(35		)	—		35
Equity redemption of OP units	5,762,184		46,147			(5,762,184	)	—			—			—		46,147
Limited partnership units issued, net	—		—			135,337		—			—			—		—
Reallocation of noncontrolling interests	—		1,250			—		(47,397		)	—			—		(46,147		)
Distributions to Partners ($0.22 per unit)	—		—			—		—			(27,966		)	—		(27,966		)
Share-based compensation expense	—		1,892			—		1,772			—			—		3,664
Share-based awards retained for taxes	(29,112	)	(592		)	—		—			—			—		(592		)
Balance, March 31, 2019	120,099,294		$	1,006,330		7,109,786		$	59,822		$	(60,509	)	$	449	$	1,006,092



Property Name	Land		Buildings and improvements		Identified intangible assets⁽¹⁾		Identified intangible liabilities⁽¹⁾			Debt premium			Total Purchase Price
(in thousands)
Kingswood Center	$	15,690	$	76,766	$	9,263	$	(4,534	)	$	(6,973	)	$	90,212
Kingswood Crossing	8,150		64,159		4,768		—			—			77,077
2020 Total	$	23,840	$	140,925	$	14,031	$	(4,534	)	$	(6,973	)	$	167,289


1.	ORGANIZATION


2.	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION


4.	ACQUISITIONS AND DISPOSITIONS



(Amounts in thousands)	Below-Market		Above-Market
Year	Operating Lease Amortization		Operating Lease Amortization			In-Place Leases
2020⁽¹⁾	$	7,367	$	(778	)	$	(6,565	)
2021	9,703		(860		)	(7,612		)
2022	9,627		(495		)	(6,005		)
2023	9,575		(386		)	(4,859		)
2024	9,339		(321		)	(4,366		)
2025	9,167		(142		)	(3,732		)



		Interest Rate at	March 31,			December 31,
(Amounts in thousands)	Maturity	March 31, 2020	2020			2019
First mortgages secured by:
Variable rate
Cherry Hill (Plaza at Cherry Hill)⁽¹⁾	5/24/2022	3.18%	$	28,930		$	28,930
Westfield (One Lincoln Plaza)⁽¹⁾	5/24/2022	3.18%	4,730			4,730
Woodbridge (Plaza at Woodbridge)⁽¹⁾	5/25/2022	3.18%	55,340			55,340
Jersey City (Hudson Commons)⁽²⁾	11/15/2024	3.48%	28,862			29,000
Watchung⁽²⁾	11/15/2024	3.48%	26,871			27,000
Bronx (1750-1780 Gun Hill Road)⁽²⁾	12/1/2024	3.48%	24,418			24,500
Total variable rate debt			169,151			169,500
Fixed rate
Montehiedra (senior loan)	7/6/2021	5.33%	82,876			83,202
Montehiedra (junior loan)	7/6/2021	3.00%	30,000			30,000
Bergen Town Center - West, Paramus	4/8/2023	3.56%	300,000			300,000
Bronx (Shops at Bruckner)	5/1/2023	3.90%	10,823			10,978
Jersey City (Hudson Mall)⁽⁴⁾	12/1/2023	5.07%	23,445			23,625
Yonkers Gateway Center⁽⁵⁾	4/6/2024	4.16%	29,717			30,122
Las Catalinas	8/6/2024	4.43%	128,822			129,335
Brick	12/10/2024	3.87%	50,000			50,000
North Plainfield	12/10/2025	3.99%	25,100			25,100
Middletown	12/1/2026	3.78%	31,400			31,400
Rockaway	12/1/2026	3.78%	27,800			27,800
East Hanover (200 - 240 Route 10 West)	12/10/2026	4.03%	63,000			63,000
North Bergen (Tonnelle Ave)	4/1/2027	4.18%	100,000			100,000
Manchester	6/1/2027	4.32%	12,500			12,500
Millburn	6/1/2027	3.97%	23,694			23,798
Totowa	12/1/2027	4.33%	50,800			50,800
Woodbridge (Woodbridge Commons)	12/1/2027	4.36%	22,100			22,100
East Brunswick	12/6/2027	4.38%	63,000			63,000
East Rutherford	1/6/2028	4.49%	23,000			23,000
Brooklyn (Kingswood Center)⁽⁶⁾	2/6/2028	5.07%	72,356			—
Hackensack	3/1/2028	4.36%	66,400			66,400
Marlton	12/1/2028	3.86%	37,400			37,400
East Hanover Warehouses	12/1/2028	4.09%	40,700			40,700
Union (2445 Springfield Ave)	12/10/2028	4.01%	45,600			45,600
Freeport (Freeport Commons)	12/10/2029	4.07%	43,100			43,100
Garfield	12/1/2030	4.14%	40,300			40,300
Mt Kisco⁽³⁾	11/15/2034	6.40%	13,359			13,488
Total fixed rate debt			1,457,292			1,386,748
	Total mortgages payable		1,626,443			1,556,248
	Unamortized debt issuance costs		(9,590		)	(10,053		)
Total mortgages payable, net of unamortized debt issuance costs			1,616,853			1,546,195
Unsecured credit facilities:
Revolving credit agreement⁽⁷⁾	1/29/2024	2.00%	250,000			—
	Total unsecured credit facilities		250,000			—
Total debt outstanding			$	1,866,853		$	1,546,195


⁽³⁾	The mortgage payable balance on the loan secured by Mt Kisco includes $0.9 million of unamortized debt discount as of both March 31, 2020 and December 31, 2019. The effective interest rate including amortization of the debt discount is 7.30% as of March 31, 2020.


⁽⁴⁾	The mortgage payable balance on the loan secured by Hudson Mall includes $0.9 million and $1.0 million of unamortized debt premium as of March 31, 2020 and December 31, 2019, respectively. The effective interest rate including amortization of the debt premium is 3.85% as of March 31, 2020.


⁽⁵⁾	The mortgage payable balance on the loan secured by Yonkers Gateway Center includes $0.5 million and $0.6 million of unamortized debt premium as of March 31, 2020 and December 31, 2019, respectively. The effective interest rate including amortization of the debt premium is 3.70% as of March 31, 2020.


⁽⁶⁾	The mortgage payable balance on the loan secured by Kingswood Center includes $6.9 million of unamortized debt premium as of March 31, 2020. The effective interest rate including amortization of the debt premium is 3.44% as of March 31, 2020.


⁽⁷⁾	Bears interest at one month LIBOR plus 1.05% as of March 31, 2020.



(Amounts in thousands)
Year Ending December 31,
2020⁽¹⁾	$	6,335
2021	123,177
2022	100,586
2023	345,242
2024	525,191
2025	33,181
Thereafter	742,731



	As of March 31, 2020				As of December 31, 2019
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	622,667	$	622,667	$	432,954	$	432,954
Liabilities:
Mortgages payable⁽¹⁾	$	1,626,443	$	1,627,178	$	1,556,248	$	1,590,503
Unsecured credit facility	250,000		250,000		—		—



	Balance at
(Amounts in thousands)	March 31, 2020		December 31, 2019
Other assets	$	7,179	$	7,460
Real estate held for sale	—		6,574
Deposits for acquisitions	—		10,000
Prepaid expenses:
Real estate taxes	12,986		6,491
Insurance	5,401		1,520
Licenses/fees	1,806		1,655
Total Prepaid expenses and other assets	$	27,372	$	33,700



	Three Months Ended March 31,
(Amounts in thousands, except per share amounts)	2020			2019
Numerator:
Net income attributable to common shareholders	$	48,980		$	25,537
Less: Earnings allocated to unvested participating securities	(34		)	(23		)
Net income available for common shareholders - basic	$	48,946		$	25,514
Impact of assumed conversions:
OP and LTIP units	—			2,245
Net income available for common shareholders - dilutive	$	48,946		$	27,759

Denominator:
Weighted average common shares outstanding - basic	120,966			116,274
Effect of dilutive securities⁽¹⁾:
Restricted share awards	85			114
Assumed conversion of OP and LTIP units	—			10,116
Weighted average common shares outstanding - diluted	121,051			126,504

Earnings per share available to common shareholders:
Earnings per common share - Basic	$	0.40		$	0.22
Earnings per common share - Diluted	$	0.40		$	0.22



	Three Months Ended March 31,
(Amounts in thousands, except per unit amounts)	2020			2019
Numerator:
Net income attributable to unitholders	$	51,288		$	27,892
Less: net income attributable to participating securities	(34		)	(25		)
Net income available for unitholders	$	51,254		$	27,867

Denominator:
Weighted average units outstanding - basic	125,844			126,391
Effect of dilutive securities issued by Urban Edge	85			114
Unvested LTIP units	826			—
Weighted average units outstanding - diluted	126,755			126,505

Earnings per unit available to unitholders:
Earnings per unit - Basic	$	0.41		$	0.22
Earnings per unit - Diluted	$	0.40		$	0.22


•	$2.7 million as a result of property dispositions net of acquisitions since the first quarter of 2019;


•	$1.8 million decrease in tenant reimbursement income due to lower common area maintenance expenses; and


•	$1.0 million increase in credit losses related to operating lease receivables, partially offset by


•	$1.1 million increase in property rentals due to rent commencements and contractual rent increases.


•	$1.0 million increase as a result of acquisitions net of dispositions since the first quarter of 2019; and


•	$0.6 million increase from completed development projects and tenant improvements.


•	$0.8 million as a result of dispositions net of acquisitions since the first quarter of 2019, partially offset by


•	$0.3 million due to higher assessed values and a decrease in capitalized taxes.


•	$2.2 million decrease in common area maintenance expenses primarily related to snow; and