x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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 |
Large Accelerated Filer x | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company o | Emerging Growth Company o |
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer x | Smaller Reporting Company o | Emerging Growth Company o |
Financial Statements | ||||
Consolidated Financial Statements of Urban Edge Properties: | ||||
Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 (unaudited) | ||||
Consolidated Statements of Income for the Three Months Ended March 31, 2018 and 2017 (unaudited) | ||||
Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2018 (unaudited) | ||||
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 (unaudited) | ||||
Consolidated Financial Statements of Urban Edge Properties LP: | ||||
Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 (unaudited) | ||||
Consolidated Statements of Income for the Three Months Ended March 31, 2018 and 2017 (unaudited) | ||||
Consolidated Statement of Changes in Equity for the Three Months Ended March 31, 2018 (unaudited) | ||||
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 (unaudited) | ||||
Urban Edge Properties and Urban Edge Properties LP | ||||
Notes to Consolidated Financial Statements (unaudited) | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | |||
Item 4. | Controls and Procedures | |||
PART II | ||||
Item 1. | Legal Proceedings | |||
Item 1A. | Risk Factors | |||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||
Item 3. | Defaults Upon Senior Securities | |||
Item 4. | Mine Safety Disclosures | |||
Item 5. | Other Information | |||
Item 6. | Exhibits | |||
Signatures | ||||
• | 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, | ||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Real estate, at cost: | |||||||
Land | $ | 523,798 | $ | 521,669 | |||
Buildings and improvements | 2,005,590 | 2,010,527 | |||||
Construction in progress | 165,403 | 133,761 | |||||
Furniture, fixtures and equipment | 5,996 | 5,897 | |||||
Total | 2,700,787 | 2,671,854 | |||||
Accumulated depreciation and amortization | (601,729 | ) | (587,127 | ) | |||
Real estate, net | 2,099,058 | 2,084,727 | |||||
Cash and cash equivalents | 462,774 | 490,279 | |||||
Restricted cash | 10,817 | 10,562 | |||||
Tenant and other receivables, net of allowance for doubtful accounts of $5,854 and $4,937, respectively | 21,564 | 20,078 | |||||
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $528 and $494, respectively | 85,727 | 85,843 | |||||
Identified intangible assets, net of accumulated amortization of $36,629 and $33,827, respectively | 82,787 | 87,249 | |||||
Deferred leasing costs, net of accumulated amortization of $15,390 and $14,796, respectively | 20,422 | 20,268 | |||||
Deferred financing costs, net of accumulated amortization of $1,998 and $1,740, respectively | 2,985 | 3,243 | |||||
Prepaid expenses and other assets | 17,244 | 18,559 | |||||
Total assets | $ | 2,803,378 | $ | 2,820,808 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Mortgages payable, net | $ | 1,552,543 | $ | 1,564,542 | |||
Identified intangible liabilities, net of accumulated amortization of $66,866 and $65,832, respectively | 176,770 | 180,959 | |||||
Accounts payable and accrued expenses | 71,061 | 69,595 | |||||
Other liabilities | 15,574 | 15,171 | |||||
Total liabilities | 1,815,948 | 1,830,267 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common shares: $0.01 par value; 500,000,000 shares authorized and 113,923,724 and 113,827,529 shares issued and outstanding, respectively | 1,139 | 1,138 | |||||
Additional paid-in capital | 947,815 | 946,402 | |||||
Accumulated deficit | (61,975 | ) | (57,621 | ) | |||
Noncontrolling interests: | |||||||
Operating partnership | 100,036 | 100,218 | |||||
Consolidated subsidiaries | 415 | 404 | |||||
Total equity | 987,430 | 990,541 | |||||
Total liabilities and equity | $ | 2,803,378 | $ | 2,820,808 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
REVENUE | |||||||
Property rentals | $ | 69,722 | $ | 62,498 | |||
Tenant expense reimbursements | 28,672 | 23,771 | |||||
Management and development fees | 342 | 479 | |||||
Income from acquired leasehold interest | — | 39,215 | |||||
Other income | 317 | 101 | |||||
Total revenue | 99,053 | 126,064 | |||||
EXPENSES | |||||||
Depreciation and amortization | 21,270 | 15,828 | |||||
Real estate taxes | 15,775 | 13,392 | |||||
Property operating | 16,667 | 13,368 | |||||
General and administrative | 7,641 | 8,132 | |||||
Casualty and impairment (gain) loss, net | (1,341 | ) | 3,164 | ||||
Ground rent | 2,736 | 2,670 | |||||
Provision for doubtful accounts | 1,236 | 193 | |||||
Total expenses | 63,984 | 56,747 | |||||
Operating income | 35,069 | 69,317 | |||||
Interest income | 1,524 | 127 | |||||
Interest and debt expense | (15,644 | ) | (13,115 | ) | |||
Gain (loss) on extinguishment of debt | 2,524 | (1,274 | ) | ||||
Income before income taxes | 23,473 | 55,055 | |||||
Income tax expense | (434 | ) | (320 | ) | |||
Net income | 23,039 | 54,735 | |||||
Less net income attributable to noncontrolling interests in: | |||||||
Operating partnership | (2,328 | ) | (4,138 | ) | |||
Consolidated subsidiaries | (11 | ) | (11 | ) | |||
Net income attributable to common shareholders | $ | 20,700 | $ | 50,586 | |||
Earnings per common share - Basic: | $ | 0.18 | $ | 0.51 | |||
Earnings per common share - Diluted: | $ | 0.18 | $ | 0.50 | |||
Weighted average shares outstanding - Basic | 113,677 | 99,639 | |||||
Weighted average shares outstanding - Diluted | 113,864 | 100,093 |
Common Shares | Noncontrolling Interests (“NCI”) | |||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Accumulated Earnings (Deficit) | Operating Partnership | Consolidated Subsidiaries | Total Equity | ||||||||||||||||||||
Balance, December 31, 2017 | 113,827,529 | $ | 1,138 | $ | 946,402 | $ | (57,621 | ) | $ | 100,218 | $ | 404 | $ | 990,541 | ||||||||||||
Net income attributable to common shareholders | — | — | — | 20,700 | — | — | 20,700 | |||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | 2,328 | 11 | 2,339 | |||||||||||||||||||
Limited partnership interests: | ||||||||||||||||||||||||||
Units redeemed for common shares | 10,000 | — | 79 | — | — | — | 79 | |||||||||||||||||||
Reallocation of noncontrolling interests | — | — | 484 | — | (563 | ) | — | (79 | ) | |||||||||||||||||
Common shares issued | 102,353 | 1 | 40 | (65 | ) | — | — | (24 | ) | |||||||||||||||||
Dividends on common shares ($0.22 per share) | — | — | — | (24,997 | ) | — | — | (24,997 | ) | |||||||||||||||||
Distributions to redeemable NCI ($0.22 per unit) | — | — | — | — | (2,786 | ) | — | (2,786 | ) | |||||||||||||||||
Share-based compensation expense | — | — | 1,173 | 8 | 839 | — | 2,020 | |||||||||||||||||||
Share-based awards retained for taxes | (16,158 | ) | — | (363 | ) | — | — | — | (363 | ) | ||||||||||||||||
Balance, March 31, 2018 | 113,923,724 | $ | 1,139 | $ | 947,815 | $ | (61,975 | ) | $ | 100,036 | $ | 415 | $ | 987,430 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 23,039 | $ | 54,735 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 21,430 | 16,160 | |||||
Income from acquired leasehold interest | — | (39,215 | ) | ||||
Casualty and impairment loss | — | 3,164 | |||||
(Gain) loss on extinguishment of debt | (2,524 | ) | 1,274 | ||||
Amortization of deferred financing costs | 722 | 864 | |||||
Amortization of below market leases, net | (2,633 | ) | (2,036 | ) | |||
Straight-lining of rent | 66 | 144 | |||||
Share-based compensation expense | 2,020 | 1,484 | |||||
Provision for doubtful accounts | 1,236 | 193 | |||||
Change in operating assets and liabilities: | |||||||
Tenant and other receivables | (5,320 | ) | (2,748 | ) | |||
Deferred leasing costs | (938 | ) | (669 | ) | |||
Prepaid and other assets | 1,295 | (1,336 | ) | ||||
Accounts payable and accrued expenses | (4,777 | ) | 3,786 | ||||
Other liabilities | 385 | 1,426 | |||||
Net cash provided by operating activities | 34,001 | 37,226 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Real estate development and capital improvements | (29,272 | ) | (11,151 | ) | |||
Acquisition of real estate | (3,965 | ) | (36,552 | ) | |||
Insurance proceeds received | 1,000 | — | |||||
Net cash used in investing activities | (32,237 | ) | (47,703 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Debt repayments | (844 | ) | (79,428 | ) | |||
Dividends paid to shareholders | (24,997 | ) | (21,869 | ) | |||
Distributions to noncontrolling interests in operating partnership | (2,786 | ) | (1,770 | ) | |||
Debt issuance costs | — | (3,567 | ) | ||||
Taxes withheld for vested restricted shares | (363 | ) | (260 | ) | |||
Payments related to the issuance of common shares | (24 | ) | (29 | ) | |||
Proceeds from borrowings | — | 100,000 | |||||
Net cash used in financing activities | (29,014 | ) | (6,923 | ) | |||
Net decrease in cash and cash equivalents and restricted cash | (27,250 | ) | (17,400 | ) | |||
Cash and cash equivalents and restricted cash at beginning of period | 500,841 | 140,186 | |||||
Cash and cash equivalents and restricted cash at end of period | $ | 473,591 | $ | 122,786 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Cash payment for interest, includes amounts capitalized of $1,154 and $940, respectively | $ | 17,253 | $ | 13,119 | |||
Cash payments for income taxes | 618 | 22 | |||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
Accrued capital expenditures included in accounts payable and accrued expenses | 23,074 | 12,270 | |||||
Mortgage debt forgiven in foreclosure sale | 11,537 | — | |||||
Write-off of fully depreciated assets | 689 | — | |||||
Acquisition of real estate through issuance of OP units | — | 48,800 | |||||
Acquisition of real estate through assumption of debt | — | 36,492 | |||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | |||||||
Cash and cash equivalents at beginning of period | $ | 490,279 | $ | 131,654 | |||
Restricted cash at beginning of period | 10,562 | 8,532 | |||||
Cash and cash equivalents and restricted cash at beginning of period | $ | 500,841 | $ | 140,186 | |||
Cash and cash equivalents at end of period | $ | 462,774 | $ | 110,974 | |||
Restricted cash at end of period | 10,817 | 11,812 | |||||
Cash and cash equivalents and restricted cash at end of period | $ | 473,591 | $ | 122,786 |
March 31, | December 31, | ||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Real estate, at cost: | |||||||
Land | $ | 523,798 | $ | 521,669 | |||
Buildings and improvements | 2,005,590 | 2,010,527 | |||||
Construction in progress | 165,403 | 133,761 | |||||
Furniture, fixtures and equipment | 5,996 | 5,897 | |||||
Total | 2,700,787 | 2,671,854 | |||||
Accumulated depreciation and amortization | (601,729 | ) | (587,127 | ) | |||
Real estate, net | 2,099,058 | 2,084,727 | |||||
Cash and cash equivalents | 462,774 | 490,279 | |||||
Restricted cash | 10,817 | 10,562 | |||||
Tenant and other receivables, net of allowance for doubtful accounts of $5,854 and $4,937, respectively | 21,564 | 20,078 | |||||
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $528 and $494, respectively | 85,727 | 85,843 | |||||
Identified intangible assets, net of accumulated amortization of $36,629 and $33,827, respectively | 82,787 | 87,249 | |||||
Deferred leasing costs, net of accumulated amortization of $15,390 and $14,796, respectively | 20,422 | 20,268 | |||||
Deferred financing costs, net of accumulated amortization of $1,998 and $1,740, respectively | 2,985 | 3,243 | |||||
Prepaid expenses and other assets | 17,244 | 18,559 | |||||
Total assets | $ | 2,803,378 | $ | 2,820,808 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Mortgages payable, net | $ | 1,552,543 | $ | 1,564,542 | |||
Identified intangible liabilities, net of accumulated amortization of $66,866 and $65,832, respectively | 176,770 | 180,959 | |||||
Accounts payable and accrued expenses | 71,061 | 69,595 | |||||
Other liabilities | 15,574 | 15,171 | |||||
Total liabilities | 1,815,948 | 1,830,267 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Partners’ capital: | |||||||
General partner: 113,923,724 and 113,827,529 units outstanding, respectively | 948,954 | 947,540 | |||||
Limited partners: 12,840,764 and 12,812,954 units outstanding, respectively | 105,771 | 105,495 | |||||
Accumulated deficit | (67,710 | ) | (62,898 | ) | |||
Total partners’ capital | 987,015 | 990,137 | |||||
Noncontrolling interest in consolidated subsidiaries | 415 | 404 | |||||
Total equity | 987,430 | 990,541 | |||||
Total liabilities and equity | $ | 2,803,378 | $ | 2,820,808 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
REVENUE | |||||||
Property rentals | $ | 69,722 | $ | 62,498 | |||
Tenant expense reimbursements | 28,672 | 23,771 | |||||
Management and development fees | 342 | 479 | |||||
Income from acquired leasehold interest | — | 39,215 | |||||
Other income | 317 | 101 | |||||
Total revenue | 99,053 | 126,064 | |||||
EXPENSES | |||||||
Depreciation and amortization | 21,270 | 15,828 | |||||
Real estate taxes | 15,775 | 13,392 | |||||
Property operating | 16,667 | 13,368 | |||||
General and administrative | 7,641 | 8,132 | |||||
Casualty and impairment (gain) loss, net | (1,341 | ) | 3,164 | ||||
Ground rent | 2,736 | 2,670 | |||||
Provision for doubtful accounts | 1,236 | 193 | |||||
Total expenses | 63,984 | 56,747 | |||||
Operating income | 35,069 | 69,317 | |||||
Interest income | 1,524 | 127 | |||||
Interest and debt expense | (15,644 | ) | (13,115 | ) | |||
Gain (loss) on extinguishment of debt | 2,524 | (1,274 | ) | ||||
Income before income taxes | 23,473 | 55,055 | |||||
Income tax expense | (434 | ) | (320 | ) | |||
Net income | 23,039 | 54,735 | |||||
Less: (net income) attributable to NCI in consolidated subsidiaries | (11 | ) | (11 | ) | |||
Net income attributable to unitholders | $ | 23,028 | $ | 54,724 | |||
Earnings per unit - Basic: | $ | 0.18 | $ | 0.51 | |||
Earnings per unit - Diluted: | $ | 0.18 | $ | 0.50 | |||
Weighted average units outstanding - Basic | 126,123 | 107,483 | |||||
Weighted average units outstanding - Diluted | 126,582 | 108,254 |
Total Units | General Partner | Limited Partners(1) | Accumulated Earnings (Deficit) | NCI in Consolidated Subsidiaries | Total Equity | |||||||||||||||||
Balance, December 31, 2017 | 126,640,483 | $ | 947,540 | $ | 105,495 | $ | (62,898 | ) | $ | 404 | $ | 990,541 | ||||||||||
Net income attributable to unitholders | — | — | — | 23,028 | — | 23,028 | ||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | 11 | 11 | ||||||||||||||||
Common units issued as a result of common shares issued by Urban Edge | 102,353 | 41 | — | (65 | ) | — | (24 | ) | ||||||||||||||
Limited partnership units issued, net | 37,810 | 563 | (563 | ) | — | — | — | |||||||||||||||
Distributions to Partners ($0.22 per unit) | — | — | — | (27,783 | ) | — | (27,783 | ) | ||||||||||||||
Share-based compensation expense | — | 1,173 | 839 | 8 | — | 2,020 | ||||||||||||||||
Share-based awards withheld for taxes | (16,158 | ) | (363 | ) | — | — | — | (363 | ) | |||||||||||||
Balance, March 31, 2018 | 126,764,488 | $ | 948,954 | $ | 105,771 | $ | (67,710 | ) | $ | 415 | $ | 987,430 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 23,039 | $ | 54,735 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 21,430 | 16,160 | |||||
Income from acquired leasehold interest | — | (39,215 | ) | ||||
Casualty and impairment loss | — | 3,164 | |||||
(Gain) loss on extinguishment of debt | (2,524 | ) | 1,274 | ||||
Amortization of deferred financing costs | 722 | 864 | |||||
Amortization of below market leases, net | (2,633 | ) | (2,036 | ) | |||
Straight-lining of rent | 66 | 144 | |||||
Share-based compensation expense | 2,020 | 1,484 | |||||
Provision for doubtful accounts | 1,236 | 193 | |||||
Change in operating assets and liabilities: | |||||||
Tenant and other receivables | (5,320 | ) | (2,748 | ) | |||
Deferred leasing costs | (938 | ) | (669 | ) | |||
Prepaid and other assets | 1,295 | (1,336 | ) | ||||
Accounts payable and accrued expenses | (4,777 | ) | 3,786 | ||||
Other liabilities | 385 | 1,426 | |||||
Net cash provided by operating activities | 34,001 | 37,226 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Real estate development and capital improvements | (29,272 | ) | (11,151 | ) | |||
Acquisition of real estate | (3,965 | ) | (36,552 | ) | |||
Insurance proceeds received | 1,000 | — | |||||
Net cash used in investing activities | (32,237 | ) | (47,703 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Debt repayments | (844 | ) | (79,428 | ) | |||
Distributions to partners | (27,783 | ) | (23,639 | ) | |||
Debt issuance costs | — | (3,567 | ) | ||||
Taxes withheld for vested restricted units | (363 | ) | (260 | ) | |||
Payments related to the issuance of common shares | (24 | ) | (29 | ) | |||
Proceeds from borrowings | — | 100,000 | |||||
Net cash used in financing activities | (29,014 | ) | (6,923 | ) | |||
Net decrease in cash and cash equivalents and restricted cash | (27,250 | ) | (17,400 | ) | |||
Cash and cash equivalents and restricted cash at beginning of period | 500,841 | 140,186 | |||||
Cash and cash equivalents and restricted cash at end of period | $ | 473,591 | $ | 122,786 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||
Cash payment for interest, includes amounts capitalized of $1,154 and $940, respectively | $ | 17,253 | $ | 13,119 | |||
Cash payments for income taxes | 618 | 22 | |||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
Accrued capital expenditures included in accounts payable and accrued expenses | 23,074 | 12,270 | |||||
Mortgage debt forgiven in foreclosure sale | 11,537 | — | |||||
Write-off of fully depreciated assets | 689 | — | |||||
Acquisition of real estate through issuance of OP units | — | 48,800 | |||||
Acquisition of real estate through assumption of debt | — | 36,492 | |||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | |||||||
Cash and cash equivalents at beginning of period | $ | 490,279 | $ | 131,654 | |||
Restricted cash at beginning of period | 10,562 | 8,532 | |||||
Cash and cash equivalents and restricted cash at beginning of period | $ | 500,841 | $ | 140,186 | |||
Cash and cash equivalents at end of period | $ | 462,774 | $ | 110,974 | |||
Restricted cash at end of period | 10,817 | 11,812 | |||||
Cash and cash equivalents and restricted cash at end of period | $ | 473,591 | $ | 122,786 |
1. | ORGANIZATION |
2. | BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION |
4. | REVENUES |
Three Months Ended March 31, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Property rentals | $ | 69,722 | $ | 62,498 | ||||
Tenant expense reimbursements | 28,672 | 23,771 | ||||||
Management and development fees | 342 | 479 | ||||||
Income from acquired leasehold interest | — | 39,215 | ||||||
Other income | 317 | 101 | ||||||
Total Revenue | $ | 99,053 | $ | 126,064 |
5. | ACQUISITIONS AND DISPOSITIONS |
Date Purchased | Property Name | City | State | Square Feet | Purchase Price | |||||||||
(in thousands) | ||||||||||||||
January 26, 2018 | 938 Spring Valley Road | Maywood | NJ | 2,000 | $ | 719 | ||||||||
February 23, 2018 | 116 Sunrise Highway | Freeport | NY | 4,750 | 447 | |||||||||
February 28, 2018 | 197 West Spring Valley Road | Maywood | NJ | 16,300 | 2,799 | |||||||||
Total | $ | 3,965 | (1) |
(1) | The total purchase prices for the properties acquired in the three months ended March 31, 2018 include $0.1 million of transaction costs incurred in relation to the transactions. |
Property Name | Land | Buildings and improvements | Total Purchase Price | |||||||||
(in thousands) | ||||||||||||
938 Spring Valley Road | $ | 519 | $ | 200 | $ | 719 | ||||||
116 Sunrise Highway | 151 | 296 | 447 | |||||||||
197 West Spring Valley Road | 1,768 | 1,031 | 2,799 | |||||||||
Total | $ | 2,438 | $ | 1,527 | $ | 3,965 |
(Amounts in thousands) | Below-Market | Above-Market | Below-Market | |||||||||||||
Year | Operating Lease Income | Operating Lease Expense | In-Place Leases | Ground Leases | ||||||||||||
2019 | $ | 11,544 | $ | 1,294 | $ | 8,556 | $ | 972 | ||||||||
2020 | 11,377 | 1,016 | 7,284 | 972 | ||||||||||||
2021 | 11,185 | 803 | 5,968 | 622 | ||||||||||||
2022 | 10,744 | 426 | 4,176 | 590 | ||||||||||||
2023 | 10,482 | 327 | 3,762 | 590 |
Interest Rate at | March 31, | December 31, | ||||||||||
(Amounts in thousands) | Maturity | March 31, 2018 | 2018 | 2017 | ||||||||
First mortgages secured by: | ||||||||||||
Variable rate | ||||||||||||
Plaza at Cherry Hill(1) | 5/24/2022 | 3.26% | $ | 28,930 | $ | 28,930 | ||||||
Westfield - One Lincoln Plaza(1) | 5/24/2022 | 3.26% | 4,730 | 4,730 | ||||||||
Plaza at Woodbridge(1) | 5/25/2022 | 3.26% | 55,340 | 55,340 | ||||||||
Hudson Commons(2) | 11/15/2024 | 3.56% | 29,000 | 29,000 | ||||||||
Watchung(2) | 11/15/2024 | 3.56% | 27,000 | 27,000 | ||||||||
Bronx (1750-1780 Gun Hill Road)(2) | 12/1/2024 | 3.56% | 24,500 | 24,500 | ||||||||
Total variable rate debt | 169,500 | 169,500 | ||||||||||
Fixed rate | ||||||||||||
Montehiedra Town Center, Senior Loan | 7/6/2021 | 5.33% | 86,094 | 86,236 | ||||||||
Montehiedra Town Center, Junior Loan | 7/6/2021 | 3.00% | 30,000 | 30,000 | ||||||||
Bergen Town Center | 4/8/2023 | 3.56% | 300,000 | 300,000 | ||||||||
Shops at Bruckner | 5/1/2023 | 3.90% | 12,017 | 12,162 | ||||||||
Hudson Mall(5) | 12/1/2023 | 5.07% | 24,832 | 25,004 | ||||||||
Yonkers Gateway Center(6) | 4/6/2024 | 4.16% | 32,848 | 33,227 | ||||||||
Las Catalinas | 8/6/2024 | 4.43% | 130,000 | 130,000 | ||||||||
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) | 4/1/2027 | 4.18% | 100,000 | 100,000 | ||||||||
Manchester Plaza | 6/1/2027 | 4.32% | 12,500 | 12,500 | ||||||||
Millburn | 6/1/2027 | 3.97% | 24,000 | 24,000 | ||||||||
Totowa | 12/1/2027 | 4.33% | 50,800 | 50,800 | ||||||||
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 | ||||||||
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 (437 East Sunrise Highway) | 12/10/2029 | 4.07% | 43,100 | 43,100 | ||||||||
Garfield | 12/1/2030 | 4.14% | 40,300 | 40,300 | ||||||||
Mt Kisco -Target(3) | 11/15/2034 | 6.40% | 14,338 | 14,451 | ||||||||
Englewood(7) | — | —% | — | 11,537 | ||||||||
Total fixed rate debt | 1,396,329 | 1,408,817 | ||||||||||
Total mortgages payable | 1,565,829 | 1,578,317 | ||||||||||
Unamortized debt issuance costs | (13,286 | ) | (13,775 | ) | ||||||||
Total mortgages payable, net of unamortized debt issuance costs | $ | 1,552,543 | $ | 1,564,542 |
(1) | Bears interest at one month LIBOR plus 160 bps. |
(2) | Bears interest at one month LIBOR plus 190 bps. |
(3) | The mortgage payable balance on the loan secured by Mount Kisco (Target) includes $1.0 million of unamortized debt discount as of both March 31, 2018 and December 31, 2017, respectively. The effective interest rate including amortization of the debt discount is 7.28% as of March 31, 2018. |
(4) | On March 29, 2017, we refinanced the $74 million, 4.59% mortgage loan secured by our Tonnelle Commons property in North Bergen, NJ, increasing the principal balance to $100 million with a 10-year fixed rate mortgage, at 4.18%. As a result, we recognized a loss on extinguishment of debt of $1.3 million during the three months ended March 31, 2017 comprised of a $1.1 million prepayment penalty and write-off of $0.2 million of unamortized deferred financing fees on the original loan. |
(5) | The mortgage payable balance on the loan secured by Hudson Mall includes $1.4 million and $1.5 million of unamortized debt premium as of March 31, 2018 and December 31, 2017, respectively. The effective interest rate including amortization of the debt premium is 3.76% as of March 31, 2018. |
(6) | The mortgage payable balance on the loan secured by Yonkers Gateway Center includes $0.8 million of unamortized debt premium as of both March 31, 2018 and December 31, 2017, respectively. The effective interest rate including amortization of the debt premium is 3.67% as of March 31, 2018. |
(7) | On January 31, 2018, our property in Englewood, NJ was sold at a foreclosure sale and on February 23, 2018, the court order was received approving the sale and discharging the receiver of all assets and liabilities related to the property. |
(Amounts in thousands) | ||||
Year Ending December 31, | ||||
2018(1) | $ | 2,441 | ||
2019 | 4,244 | |||
2020 | 7,571 | |||
2021 | 124,448 | |||
2022 | 100,899 | |||
2023 | 344,426 | |||
Thereafter | 981,800 |
8. | INCOME TAXES |
As of March 31, 2018 | As of December 31, 2017 | |||||||||||||||
(Amounts in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 462,774 | $ | 462,774 | $ | 490,279 | $ | 490,279 | ||||||||
Liabilities: | ||||||||||||||||
Mortgages payable(1) | $ | 1,565,829 | $ | 1,537,971 | $ | 1,578,317 | $ | 1,579,839 |
March 31, 2018 | December 31, 2017 | ||||||
Low | High | Low | High | ||||
Mortgages payable | 1.7% | 2.1% | 1.7% | 2.1% |
Balance at | |||||||
(Amounts in thousands) | March 31, 2018 | December 31, 2017 | |||||
Real estate held for sale | $ | 3,285 | $ | 3,285 | |||
Other assets | 3,801 | 3,771 | |||||
Deposits for acquisitions | 100 | 406 | |||||
Prepaid expenses: | |||||||
Real estate taxes | 5,088 | 7,094 | |||||
Insurance | 3,342 | 2,793 | |||||
Rent, licenses/fees | 1,628 | 1,210 | |||||
Total Prepaid expenses and other assets | $ | 17,244 | $ | 18,559 |
Balance at | |||||||
(Amounts in thousands) | March 31, 2018 | December 31, 2017 | |||||
Deferred ground rent expense | $ | 6,517 | $ | 6,499 | |||
Deferred tax liability, net | 3,073 | 2,828 | |||||
Deferred tenant revenue | 3,996 | 4,183 | |||||
Environmental remediation costs | 1,482 | 1,232 | |||||
Other liabilities | 506 | 429 | |||||
Total Other liabilities | $ | 15,574 | $ | 15,171 |
Three Months Ended March 31, | |||||||
(Amounts in thousands) | 2018 | 2017 | |||||
Interest expense | $ | 14,922 | $ | 12,251 | |||
Amortization of deferred financing costs | 722 | 864 | |||||
Total Interest and debt expense | $ | 15,644 | $ | 13,115 |
Three Months Ended March 31, | |||||||
(Amounts in thousands) | 2018 | 2017 | |||||
Share-based compensation expense components: | |||||||
Restricted share expense | $ | 587 | $ | 390 | |||
Stock option expense | 585 | 623 | |||||
LTIP expense | 166 | 116 | |||||
Outperformance Plan (“OPP”) expense | 682 | 355 | |||||
Total Share-based compensation expense | $ | 2,020 | $ | 1,484 |
Three Months Ended March 31, | |||||||
(Amounts in thousands, except per share amounts) | 2018 | 2017 | |||||
Numerator: | |||||||
Net income attributable to common shareholders | $ | 20,700 | $ | 50,586 | |||
Less: Earnings allocated to unvested participating securities | (48 | ) | (79 | ) | |||
Net income available for common shareholders - basic | $ | 20,652 | $ | 50,507 | |||
Impact of assumed conversions: | |||||||
OP and LTIP units | — | — | |||||
Net income available for common shareholders - dilutive | $ | 20,652 | $ | 50,507 | |||
Denominator: | |||||||
Weighted average common shares outstanding - basic | 113,677 | 99,639 | |||||
Effect of dilutive securities(1): | |||||||
Stock options using the treasury stock method | — | 314 | |||||
Restricted share awards | 187 | 140 | |||||
Assumed conversion of OP and LTIP units | — | — | |||||
Weighted average common shares outstanding - diluted | 113,864 | 100,093 | |||||
Earnings per share available to common shareholders: | |||||||
Earnings per common share - Basic | $ | 0.18 | $ | 0.51 | |||
Earnings per common share - Diluted | $ | 0.18 | $ | 0.50 |
Three Months Ended March 31, | |||||||
(Amounts in thousands, except per unit amounts) | 2018 | 2017 | |||||
Numerator: | |||||||
Net income attributable to unitholders | $ | 23,028 | $ | 54,724 | |||
Less: net income attributable to participating securities | (48 | ) | (202 | ) | |||
Net income available for unitholders | $ | 22,980 | $ | 54,522 | |||
Denominator: | |||||||
Weighted average units outstanding - basic | 126,123 | 107,483 | |||||
Effect of dilutive securities issued by Urban Edge | 187 | 454 | |||||
Unvested LTIP units | 272 | 317 | |||||
Weighted average units outstanding - diluted | 126,582 | 108,254 | |||||
Earnings per unit available to unitholders: | |||||||
Earnings per unit - Basic | $ | 0.18 | $ | 0.51 | |||
Earnings per unit - Diluted | $ | 0.18 | $ | 0.50 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended March 31, | |||||||
(Amounts in thousands) | 2018 | 2017 | |||||
Net income | $ | 23,039 | $ | 54,735 | |||
FFO applicable to diluted common shareholders(1) | 44,100 | 73,467 | |||||
Cash NOI(2) | 59,931 | 55,097 | |||||
Same-property cash NOI(2) | 47,849 | 46,736 |
For the Three Months ended March 31, | |||||||||||
(Amounts in thousands) | 2018 | 2017 | $ Change | ||||||||
Total revenue | $ | 99,053 | $ | 126,064 | $ | (27,011 | ) | ||||
Depreciation and amortization | 21,270 | 15,828 | 5,442 | ||||||||
Real estate taxes | 15,775 | 13,392 | 2,383 | ||||||||
Property operating expenses | 16,667 | 13,368 | 3,299 | ||||||||
Casualty and impairment (gain) loss, net | (1,341 | ) | 3,164 | (4,505 | ) | ||||||
Gain (loss) on extinguishment of debt | 2,524 | (1,274 | ) | 3,798 | |||||||
Interest income | 1,524 | 127 | 1,397 | ||||||||
Interest and debt expense | 15,644 | 13,115 | 2,529 |
• | $39.2 million income from acquired leasehold interest due to the write-off of the unamortized intangible liability related to the below-market ground lease acquired and existing straight-line receivable balance in connection with the acquisition of the ground lease at Shops at Bruckner in the first quarter of 2017; |
• | $0.6 million of rent abatements, reflected as a reduction of property rentals and tenant expense reimbursements, at our two malls in Puerto Rico as a result of Hurricane Maria; and |
• | $0.1 million decrease in management and development fee income due to a decrease in development activity at managed properties, partially offset by |
• | $9.2 million increase as a result of acquisitions net of dispositions; |
• | $2.3 million net increase in tenant expense reimbursements due to an increase in recoverable expenses and revenue from recoverable capital projects; |
• | $1.2 million increase in property rentals due to rent commencements, lease modifications and contractual rent increases; and |
• | $0.2 million increase in other income due to higher tenant bankruptcy settlement income received during the first quarter of 2018. |
• | $4.9 million increase as a result of acquisitions net of dispositions; and |
• | $0.5 million increase from development projects and tenant improvements placed into service. |
• | $1.6 million increase as a result of acquisitions net of dispositions; and |
• | $0.8 million increase due to higher assessed values and decrease in capitalized real estate taxes due to development projects placed into service. |
• | $1.5 million increase in interest from loans issued and assumed on acquisitions; and |
• | $7.1 million increase in interest due to 18 new individual, non-recourse mortgage financings totaling $710 million closed in the fourth quarter of 2017, partially offset by |
• | $5.9 million net decrease in interest due to principal paydowns and refinancing of the $544 million cross-collateralized mortgage loan in the fourth quarter of 2017; and |
• | $0.2 million increase of interest capitalized related to additional development projects. |
Three Months Ended March 31, | |||||||
(Amounts in thousands) | 2018 | 2017 | |||||
Net income | $ | 23,039 | $ | 54,735 | |||
Management and development fee income from non-owned properties | (342 | ) | (479 | ) | |||
Other income | (77 | ) | (64 | ) | |||
Depreciation and amortization | 21,270 | 15,828 | |||||
General and administrative expense | 7,641 | 8,132 | |||||
Casualty and impairment (gain) loss, net(5) | (1,341 | ) | 3,164 | ||||
Interest income | (1,524 | ) | (127 | ) | |||
Interest and debt expense | 15,644 | 13,115 | |||||
Gain (loss) on extinguishment of debt | (2,524 | ) | 1,274 | ||||
Income tax expense | 434 | 320 | |||||
Non-cash revenue and expenses | (2,289 | ) | (40,801 | ) | |||
Cash NOI(1) | 59,931 | 55,097 | |||||
Adjustments: | |||||||
Non-same property cash NOI(1)(2) | (12,474 | ) | (8,334 | ) | |||
Tenant bankruptcy settlement income | (164 | ) | — | ||||
Hurricane related operating loss(3) | 306 | (27 | ) | ||||
Environmental remediation costs | 250 | — | |||||
Same-property cash NOI | $ | 47,849 | $ | 46,736 | |||
Cash NOI related to properties being redeveloped(4) | 5,983 | 5,693 | |||||
Same-property cash NOI including properties in redevelopment | $ | 53,832 | $ | 52,429 |
Three Months Ended March 31, | |||||||
(Amounts in thousands) | 2018 | 2017 | |||||
Net income | $ | 23,039 | $ | 54,735 | |||
Less (net income) attributable to noncontrolling interests in: | |||||||
Operating partnership | (2,328 | ) | (4,138 | ) | |||
Consolidated subsidiaries | (11 | ) | (11 | ) | |||
Net income attributable to common shareholders | 20,700 | 50,586 | |||||
Adjustments: | |||||||
Rental property depreciation and amortization | 21,072 | 15,579 | |||||
Real estate impairment loss | — | 3,164 | |||||
Limited partnership interests in operating partnership(1) | 2,328 | 4,138 | |||||
FFO applicable to diluted common shareholders | $ | 44,100 | $ | 73,467 |
(Amounts in thousands) | March 31, 2018 | ||
ATM equity program(1) | |||
Original offering amount | $ | 250,000 | |
Available capacity | $ | 241,300 | |
Revolving credit agreement(2) | |||
Total commitment amount | $ | 600,000 | |
Available capacity | $ | 600,000 | |
Maturity(3) | March 7, 2021 |
Three Months Ended March 31, | |||||||||||
(Amounts in thousands) | 2018 | 2017 | Increase (Decrease) | ||||||||
Net cash provided by operating activities | $ | 34,001 | $ | 37,226 | $ | (3,225 | ) | ||||
Net cash used in investing activities | (32,237 | ) | (47,703 | ) | 15,466 | ||||||
Net cash used in financing activities | (29,014 | ) | (6,923 | ) | (22,091 | ) |
(Amounts in thousands) | Principal balance at March 31, 2018 | Weighted Average Interest Rate at March 31, 2018 | ||||
Mortgages payable: | ||||||
Fixed rate debt | $ | 1,396,329 | 4.12% | |||
Variable rate debt(1) | 169,500 | 3.41% | ||||
Total mortgages payable | 1,565,829 | 4.04% | ||||
Unamortized debt issuance costs | (13,286 | ) | ||||
Total mortgages payable, net of unamortized debt issuance costs | $ | 1,552,543 |
Three Months Ended March 31, | ||||||||
(Amounts in thousands) | 2018 | 2017 | ||||||
Capital expenditures: | ||||||||
Development and redevelopment costs | $ | 26,579 | $ | 9,248 | ||||
Capital improvements | 643 | 656 | ||||||
Tenant improvements and allowances | 894 | 1,246 | ||||||
Total capital expenditures | $ | 28,116 | $ | 11,150 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
2018 | 2017 | ||||||||||||||
(Amounts in thousands) | March 31, Balance | Weighted Average Interest Rate | Effect of 1% Change in Base Rates | December 31, Balance | Weighted Average Interest Rate | ||||||||||
Variable Rate | $ | 169,500 | 3.41% | $ | 1,695 | $ | 169,500 | 3.10% | |||||||
Fixed Rate | 1,396,329 | 4.12% | — | (2) | 1,408,817 | 4.14% | |||||||||
$ | 1,565,829 | (1) | $ | 1,695 | $ | 1,578,317 | (1) |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | (a) Total Number of Common Shares Purchased | (b) Average Price Paid per Common Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet to be Purchased Under the Plan or Program | |||||||
January 1, 2018 - January 31, 2018 | 2,876 | (1) | $ | 21.98 | N/A | N/A | |||||
February 1, 2018 - February 28, 2018 | 12,825 | (1) | 26.26 | N/A | N/A | ||||||
March 1, 2018 - March 31, 2018 | 457 | (1) | 23.85 | N/A | N/A | ||||||
16,158 | $ | 25.43 | N/A | N/A |
Period | (a) Total Number of Units Purchased | (b) Average Price Paid per Unit | (c) Total Number of Units Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet to be Purchased Under the Plan or Program | |||||||
January 1, 2018 - January 31, 2018 | 2,876 | (1) | $ | 21.98 | N/A | N/A | |||||
February 1, 2018 - February 28, 2018 | 12,825 | (1) | 26.26 | N/A | N/A | ||||||
March 1, 2018 - March 31, 2018 | 457 | (1) | 23.85 | N/A | N/A | ||||||
16,158 | $ | 25.43 | N/A | N/A |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
Exhibit Number | Exhibit Description | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Extension Calculation Linkbase | |
101.LAB | XBRL Extension Labels Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase |
URBAN EDGE PROPERTIES | |
(Registrant) | |
/s/ Mark Langer | |
Mark Langer, Chief Financial Officer | |
Date: May 2, 2018 | |
URBAN EDGE PROPERTIES LP | |
By: Urban Edge Properties, General Partner | |
/s/ Mark Langer | |
Mark Langer, Chief Financial Officer | |
Date: May 2, 2018 | |
1. | I have reviewed this Quarterly Report on Form 10-Q of Urban Edge Properties; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 2, 2018 | ||
/s/ Jeffrey S. Olson | ||
Jeffrey S. Olson | ||
Chairman of the Board of Trustees and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Urban Edge Properties; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 2, 2018 | ||
/s/ Mark Langer | ||
Mark Langer | ||
Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Urban Edge Properties LP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 2, 2018 | ||
/s/ Jeffrey S. Olson | ||
Jeffrey S. Olson | ||
Chairman of the Board of Trustees and Chief Executive Officer of Urban Edge Properties, general partner of registrant |
1. | I have reviewed this Quarterly Report on Form 10-Q of Urban Edge Properties LP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 2, 2018 | ||
/s/ Mark Langer | ||
Mark Langer | ||
Chief Financial Officer of Urban Edge Properties, general partner of registrant |
May 2, 2018 | /s/ Jeffrey S. Olson | ||
Name: | Jeffrey S. Olson | ||
Title: | Chairman of the Board of Trustees and Chief Executive Officer | ||
May 2, 2018 | /s/ Mark Langer | ||
Name: | Mark Langer | ||
Title: | Chief Financial Officer |
May 2, 2018 | /s/ Jeffrey S. Olson | ||
Name: | Jeffrey S. Olson | ||
Title: | Chairman of the Board of Trustees and Chief Executive Officer of Urban Edge Properties, general partner of registrant | ||
May 2, 2018 | /s/ Mark Langer | ||
Name: | Mark Langer | ||
Title: | Chief Financial Officer of Urban Edge Properties, general partner of registrant |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 27, 2018 |
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Document Information [Abstract] | ||
Entity Registrant Name | URBAN EDGE PROPERTIES | |
Entity Central Index Key | 0001611547 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 113,933,724 |
Consolidated and Combined Statements of Changes in Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands |
Total |
Urban Edge Properties LP |
Urban Edge Properties LP
Accumulated Earnings (Deficit)
|
Urban Edge Properties LP
Consolidated Subsidiaries
|
Urban Edge Properties LP
General Partner
|
Urban Edge Properties LP
Limited Partners
|
Common Shares |
Additional Paid-In Capital |
Accumulated Earnings (Deficit) |
Operating Partnership |
Consolidated Subsidiaries |
---|---|---|---|---|---|---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2017 | 113,827,529 | 113,827,529 | 126,640,483 | 113,827,529 | |||||||
Beginning balance at Dec. 31, 2017 | $ 990,541 | $ 990,541 | $ (62,898) | $ 404 | $ 947,540 | $ 105,495 | $ 1,138 | $ 946,402 | $ (57,621) | $ 100,218 | $ 404 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income attributable to common shareholders | 20,700 | 23,028 | 23,028 | 20,700 | |||||||
Net income attributable to noncontrolling interests | 2,339 | 11 | 11 | 2,328 | 11 | ||||||
Units redeemed for common shares (in shares) | 10,000 | ||||||||||
Units redeemed for common shares | 79 | 79 | |||||||||
Common units issued as a result of common shares issued by Urban Edge (in shares) | 102,353 | ||||||||||
Common units issued as a result of common shares issued by Urban Edge | (24) | (65) | $ 41 | ||||||||
Reallocation of noncontrolling interests | (79) | 484 | (563) | ||||||||
Limited partnership units issued, net | 37,810 | ||||||||||
Limited partnership units issued, net | 0 | $ 563 | (563) | ||||||||
Common shares issued (in shares) | 102,353 | ||||||||||
Common shares issued | (24) | $ 1 | 40 | (65) | |||||||
Dividends on common shares ($0.22 per share) | (24,997) | (24,997) | |||||||||
Distributions to redeemable NCI ($0.22 per unit) | (2,786) | (2,786) | |||||||||
Distributions to Partners ($0.22 per unit) | (27,783) | (27,783) | |||||||||
Share-based compensation expense | 2,020 | 2,020 | 8 | $ 1,173 | 839 | 1,173 | 8 | 839 | |||
Share-based awards retained for taxes (in shares) | (16,158) | 16,158 | |||||||||
Share-based awards withheld for taxes | $ (363) | $ (363) | $ (363) | (363) | |||||||
Ending balance (in shares) at Mar. 31, 2018 | 113,923,724 | 113,923,724 | 126,764,488 | 113,923,724 | |||||||
Ending balance at Mar. 31, 2018 | $ 987,430 | $ 987,430 | $ (67,710) | $ 415 | $ 948,954 | $ 105,771 | $ 1,139 | $ 947,815 | $ (61,975) | $ 100,036 | $ 415 |
Consolidated and Combined Statements of Changes in Equity (Parenthetical) |
3 Months Ended |
---|---|
Mar. 31, 2018
$ / shares
| |
Distributions to redeemable NCI (in dollars per unit) | $ 0.22 |
Limited Partners | Urban Edge Properties LP | |
Noncontrolling interest percentage | 10.12962% |
Accumulated Earnings (Deficit) | Urban Edge Properties LP | |
Distributions to redeemable NCI (in dollars per unit) | $ 0.22 |
Accumulated Earnings (Deficit) | |
Dividends on common shares (in dollars per share) | 0.22 |
Operating Partnership | |
Distributions to redeemable NCI (in dollars per unit) | $ 0.22 |
Consolidated and Combined Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
|
Capitalized interest | $ 1,154 | $ 940 |
Urban Edge Properties LP | ||
Capitalized interest | $ 1,154 | $ 940 |
ORGANIZATION |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Urban Edge Properties (“UE”, “Urban Edge” or the “Company”) (NYSE: UE) is a Maryland real estate investment trust focused on managing, developing, redeveloping, and acquiring retail real estate in urban communities, primarily in the New York metropolitan area. Urban Edge Properties LP (“UELP” or the “Operating Partnership”) is a Delaware limited partnership formed to serve as UE’s majority-owned partnership subsidiary and to own, through affiliates, all of our real estate properties and other assets. Unless the context otherwise requires, references to “we”, “us” and “our” refer to Urban Edge Properties and UELP and their consolidated entities/subsidiaries. The Operating Partnership’s capital includes general and common limited partnership interests in the operating partnership (“OP Units”). As of March 31, 2018, Urban Edge owned approximately 89.9% of the outstanding common OP Units with the remaining limited OP Units held by Vornado Realty L.P., members of management, our Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership. The third-party unitholders have limited rights over the Operating Partnership such that they do not have characteristics of a controlling financial interest. As such, the Operating Partnership is considered a variable interest entity (“VIE”), and the Company is the primary beneficiary which consolidates it. The Company’s only investment is the Operating Partnership. The VIE’s assets can be used for purposes other than the settlement of the VIE’s obligations and the Company’s partnership interest is considered a majority voting interest. As of March 31, 2018, our portfolio consisted of 84 shopping centers, four malls and a warehouse park totaling approximately 16.7 million square feet. |
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION AND COMBINATION |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION AND COMBINATION | BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions of Form 10-Q. Certain information and footnote disclosures included in our annual financial statements have been condensed or omitted. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and the Operating Partnership and the results of operations and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018. Accordingly, these consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities Exchange Commission (“SEC”). The consolidated balance sheets as of March 31, 2018 and December 31, 2017 reflect the consolidation of wholly-owned subsidiaries and those entities in which we have a controlling financial interest. The consolidated statements of income for the three months ended March 31, 2018 and 2017 include the consolidated accounts of the Company and the Operating Partnership. All intercompany transactions have been eliminated in consolidation. Our primary business is the ownership, management, redevelopment, development and operation of retail shopping centers and malls. We do not distinguish our primary business or group our operations on a geographical basis for purposes of measuring performance. The Company’s chief operating decision maker reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. None of our tenants accounted for more than 10% of our revenue or property operating income. We aggregate all of our properties into one reportable segment due to their similarities with regard to the nature and economics of the properties, tenants and operations, as well as long-term average financial performance. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Recently Issued Accounting Literature In May 2017, the FASB issued an update (“ASU 2017-09”) Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting will not apply if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU 2017-09 is effective for annual periods beginning after December 15, 2017, with early adoption permitted. We adopted the standard on January 1, 2018, which resulted in no impact. If we encounter a change to the terms or conditions of any of our share-based payment awards we will evaluate the need to apply modification accounting based on the new guidance. The general treatment for modifications of share-based payment awards is to record the incremental value arising from the change as additional compensation cost. In February 2017, the FASB issued an updated (“ASU 2017-05”) Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, to clarify the scope and accounting for derecognition of nonfinancial assets. ASU 2017-05 eliminated the guidance specific to real estate sales and partial sales. ASU 2017-05 defines “in-substance nonfinancial assets” and includes guidance on partial sales of nonfinancial assets. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. We adopted the standard on January 1, 2018, which resulted in no impact to our consolidated financial statements. In February 2016, the FASB issued an update (“ASU 2016-02”) Leases, which revises the accounting related to lease accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The provisions of ASU 2016-02 are effective for fiscal years beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We expect to adopt the standard beginning January 1, 2019. This standard will impact our consolidated financial statements by the recording of right-of-use assets and lease liabilities on our consolidated balance sheets for operating and finance leases where we are the lessee. We are currently in the process of evaluating the inputs required to calculate the amount that will be recorded on our consolidated balance sheets for these leases. In addition, leases where we are the lessor that meet the criteria of a finance lease will be amortized using the effective interest method with corresponding charges to interest expense and amortization expense. Leases where we are the lessor that meet the criteria of an operating lease will continue to be amortized on a straight-line basis. Further, internal leasing department costs previously capitalized will be expensed within general and administrative expenses. Historical capitalization of internal leasing costs were $0.2 million for each of the three months ended March 31, 2018 and March 31, 2017, respectively. ASU 2016-02 originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, the FASB issued an exposure draft in January 2018 (2018 Exposure Draft) which, if adopted as written, would allow lessors a practical expedient by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. ASU 2016-02 originally required a modified retrospective method of adoption, however, the 2018 Exposure Draft indicates that companies may be permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company will continue to evaluate the impact of this guidance until it becomes effective. In May 2014, the FASB issued an update (“ASU 2014-09”) Revenue from Contracts with Customers to ASC Topic 606, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. During the year ended December 31, 2016, the FASB issued the following updates to ASC Topic 606 to clarify and/or amend the guidance in ASU 2014-09: (i) ASU 2016-08 Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations, (ii) ASU 2016-10 Identifying Performance Obligations and Licensing, which clarifies guidance related to identifying performance obligations and licensing implementation guidance and (iii) ASU 2016-12 Narrow-Scope Improvements and Practical Expedients, which amends certain aspects of ASU 2014-09. We adopted this standard effective January 1, 2018 using the modified retrospective approach which requires applying the new standard to all existing contracts not yet completed as of the effective date. We have completed our evaluation of the standard’s impact on the Company’s revenue streams, specifically management and development fee income. The adoption of this standard did not have a material impact on our consolidated financial statements but has resulted in additional qualitative disclosures for the three months ended March 31, 2018 and 2017 (refer to Note 4 Revenues). Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company or the Operating Partnership, or they are not expected to have a material impact on our consolidated financial statements. |
REVENUES |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUES | REVENUES We have the following revenue sources and revenue recognition policies. The table below presents our revenues disaggregated by revenue source for the quarters ended March 31, 2018 and 2017, respectively:
Property Rentals We generate revenue from minimum lease payments from tenant operating leases. These rents are recognized over the noncancelable terms of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases in accordance with ASC 840. We satisfy our performance obligations over time, under the noncancelable lease term, commencing when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a lease incentive to tenants, we recognize the incentive as a reduction of rental revenue on a straight-line basis over the remaining term of the lease. The underlying leased asset remains on our consolidated balance sheet and continues to depreciate. Tenant expense reimbursements In accordance with ASC 840, revenue arises from tenant leases, which provide for the recovery of all or a portion of the operating expenses, real estate taxes and capital improvements of the respective property. This revenue is accrued in the same periods as the expenses are incurred. Other Income Other income is generated in connection with certain services provided to tenants for which we earn a fee. This revenue is recognized as the services are transferred in accordance with ASC 606. Management and development fees We generate management and development fee income from contractual property management agreements with third parties. |
ACQUISITIONS AND DISPOSITIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS AND DISPOSITIONS | ACQUISITIONS AND DISPOSITIONS During the three months ended March 31, 2018, we closed the following acquisitions:
The properties purchased during the quarter are all adjacent to existing centers owned by the Company. Consideration for these purchases consisted of cash. The aggregate purchase prices of the above property acquisitions have been allocated as follows:
Real Estate Held for Sale At March 31, 2018, our property in Allentown, PA was classified as held for sale based on the executed contract of sale with a third-party buyer and our intent to dispose of the property. The carrying amount of this property is $3.3 million, net of accumulated depreciation of $14.3 million, which is included in prepaid expenses and other assets in our consolidated balance sheets as of March 31, 2018 and December 31, 2017, respectively. We completed the sale of the property on April 26, 2018 for $54.3 million, net of selling costs. |
IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES |
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IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES | IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES Our identified intangible assets (acquired in-place and above and below-market leases) and liabilities (acquired below-market leases), net of accumulated amortization were $82.8 million and $176.8 million as of March 31, 2018, respectively, and $87.2 million and $181.0 million as of December 31, 2017, respectively. Amortization of acquired below-market leases, net of acquired above-market leases resulted in additional rental income of $2.6 million for the three months ended March 31, 2018 and $2.0 million and for the same period in 2017. Amortization of acquired in-place leases and customer relationships resulted in additional depreciation and amortization expense of $2.8 million for the three months ended March 31, 2018 and $0.9 million for the same period in 2017. Certain shopping centers are subject to ground leases or ground and building leases. Amortization of these acquired below-market leases resulted in additional rent expense of $0.2 million for the three months ended March 31, 2018 and $0.4 million for the same period in 2017. The following table sets forth the estimated annual amortization expense related to intangible assets and liabilities for the five succeeding years commencing January 1, 2019:
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGES PAYABLE | MORTGAGES PAYABLE The following is a summary of mortgages payable as of March 31, 2018 and December 31, 2017.
During 2017, our property in Englewood, NJ was transferred to a receiver. On January 31, 2018, our property in Englewood, NJ was sold at a foreclosure sale and on February 23, 2018, the court order was received approving the sale and discharging the receiver of all assets and liabilities related to the property. We recognized a gain on extinguishment of debt of $2.5 million as a result of the forgiveness of outstanding mortgage debt of $11.5 million, which is included in gain (loss) on extinguishment of debt in the consolidated statements of income for the three months ended March 31, 2018. The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately $1.2 billion as of March 31, 2018. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and in certain circumstances require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. As of March 31, 2018, we were in compliance with all debt covenants. As of March 31, 2018, the principal repayments for the next five years and thereafter are as follows:
(1) Remainder of 2018. On January 15, 2015, we entered into a $500 million Revolving Credit Agreement (the “Agreement”) with certain financial institutions. On March 7, 2017, we amended and extended the Agreement. The amendment increased the credit facility size by $100 million to $600 million and extended the maturity date to March 7, 2021 with two six-month extension options. Borrowings under the Agreement are subject to interest at LIBOR plus 1.10% to 1.55% and an annual facility fee of 15 to 35 basis points. Both the spread over LIBOR and the facility fee are based on our current leverage ratio and are subject to increase if our leverage ratio increases above predefined thresholds. The Agreement contains customary financial covenants including a maximum leverage ratio of 60% and a minimum fixed charge coverage ratio of 1.5x. No amounts have been drawn to date under the Agreement. Financing fees associated with the Agreement of $3.0 million and $3.2 million as of March 31, 2018 and December 31, 2017, respectively, are included in deferred financing fees in the consolidated balance sheets. |
INCOME TAXES |
3 Months Ended |
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Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company has elected to qualify as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended, commencing with the filing of our tax return for the 2015 fiscal year. Under those sections, a REIT that distributes at least 90% of its REIT taxable income as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. As a REIT, we generally will not be subject to federal income taxes, provided that we distribute 100% of taxable income. It is our intention to adhere to the organizational and operational requirements to maintain our REIT status. If we fail to qualify as a REIT for any taxable year, we will be subject to federal income taxes at regular corporate rates (including any alternative minimum tax) and may not be able to qualify as a REIT for the four subsequent taxable years. On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. Effective January 1, 2018, for businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. Since UE has elected to qualify as a REIT under sections 856-860 of the Internal Revenue Code with intent to distribute 100% of its taxable income and did not have any activities in a Taxable REIT Subsidiary (“TRS”) prior to January 1, 2018, there was no impact to the Company’s financial statements. On December 31, 2017, the Company elected, for tax purposes, to treat the wholly-owned limited partnership that holds its Allentown property as a taxable REIT subsidiary (“TRS”). A TRS is a corporation, other than a REIT, in which we directly or indirectly hold stock, which has made a joint election with us to be treated as a TRS under Section 856(l) of the Code. A TRS is required to pay regular U.S. federal income tax, and state and local income tax where applicable, as a non-REIT “C” corporation. The Company’s consolidated financial statements for the quarter ended March 31, 2018 reflect the TRS’ federal and state corporate income taxes associated with the operating activities at its Allentown property. The tax expense recorded in association with the operating activities of Allentown was $0.2 million for the quarter ended March 31, 2018. The REIT and the other minority members are partners in the Operating Partnership. As such, the partners are required to report their share of taxable income on their tax returns. We are also subject to certain other taxes, including state and local taxes and franchise taxes which are included in general and administrative expenses in the consolidated statements of income. Our two Puerto Rico malls are subject to a 29% non-resident withholding tax which is included in income tax expense in the consolidated statements of income. The Puerto Rico tax expense recorded was $0.2 million and $0.3 million for the quarters ended March 31, 2018 and 2017, respectively. Both properties are held in a special partnership for Puerto Rico tax reporting (the general partner being a qualified REIT subsidiary or “QRS”). |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 - observable prices based on inputs not quoted in active markets, but corroborated by market data; and Level 3 - unobservable inputs used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Financial Assets and Liabilities Measured at Fair Value on a Recurring or Non-Recurring Basis There were no financial assets or liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2018 and December 31, 2017. Financial Assets and Liabilities not Measured at Fair Value Financial assets and liabilities that are not measured at fair value on the consolidated balance sheets include cash and cash equivalents and mortgages payable. Cash and cash equivalents are carried at cost, which approximates fair value. The fair value of mortgages payable is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist. The fair value of cash and cash equivalents is classified as Level 1 and the fair value of mortgages payable is classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of March 31, 2018 and December 31, 2017.
(1) Carrying amounts exclude unamortized debt issuance costs of $13.3 million and $13.8 million as of March 31, 2018 and December 31, 2017, respectively. The following market spreads were used by the Company to estimate the fair value of mortgages payable:
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES There are various legal actions against us in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters will not have a material adverse effect on our financial condition, results of operations or cash flows. Redevelopment As of March 31, 2018, we had approximately $205.9 million of active development, redevelopment and anchor repositioning projects underway of which $100.3 million remains to be funded. Based on current plans and estimates we anticipate the remaining amounts will be expended over the next two years. Insurance The Company maintains (i) general liability insurance with limits of $200 million for properties in the U.S. and Puerto Rico and (ii) all-risk property insurance with limits of $500 million per occurrence and in the aggregate for properties in the U.S. and $139 million for properties in Puerto Rico, subject to the terms, conditions, exclusions, deductibles and sub-limits when applicable for certain perils such as floods and earthquakes and (iii) numerous other insurance policies including trustees’ and officers’ insurance, workers’ compensation and automobile-related liabilities insurance. The Company’s insurance includes coverage for certified acts of terrorism acts but excludes coverage for nuclear, biological, chemical or radiological terrorism events as defined by the Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. In addition, the Company maintains coverage for certain cybersecurity losses with limits of $5 million per occurrence and in the aggregate providing first and third-party coverage including network interruption, event management, cyber extortion and claims for media content, security and privacy liability. Insurance premiums are typically charged directly to each of the retail properties and warehouses but not all of the cost of such premiums are recovered. The Company is responsible for deductibles, losses in excess of insurance coverage, and the portion of premiums not covered from retail properties, which could be material. We continue to monitor the state of the insurance market and the scope and costs of coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future and expect premiums across most property coverage lines to increase in light of recent events. The incurrence of uninsured losses, costs or uncovered premiums could materially and adversely affect our business, results of operations and financial condition. Certain of our loans and other agreements contain customary covenants requiring the maintenance of insurance coverage. Although we believe that we currently have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders or other counterparties insist on greater coverage than we are able to obtain, such requirement could materially and adversely affect our ability to finance our properties and expand our portfolio. Hurricane-Related Charges On September 20, 2017, Hurricane Maria made landfall, damaging our two properties in Puerto Rico. During the three months ended March 31, 2018, the Company received $1.5 million in insurance proceeds which were partially offset by $0.2 million of hurricane related costs, resulting in net casualty gains of $1.3 million included in casualty and impairment (gain) loss, net on the accompanying consolidated statements of income. During the three months ended March 31, 2018, the Company recognized $0.8 million of business interruption losses. Losses of $0.6 million pertained to rent abatements due to tenants that have not reopened since the hurricane, recorded as a reduction of property rentals and tenant expense reimbursements, and $0.2 million was recorded as a provision for doubtful accounts for unpaid rents. As of May 2, 2018, approximately 95% of all stores previously occupied prior to the hurricane (as measured by GLA) are open, including Marshalls, which opened on April 12, 2018. To the extent future insurance proceeds exceed the difference between the hurricane related expenses incurred and/or business interruption losses recognized, the excess will be reflected as a gain in the period those amounts are received or when receipt is deemed probable. No determination has been made as to the total amount or timing of insurance payments that may be received as a result of the hurricane. Environmental Matters Each of our properties has been subjected to varying degrees of environmental assessment at various times. Based on these assessments and the projected remediation costs, we have accrued costs of $1.5 million and $1.2 million on our consolidated balance sheets as of March 31, 2018 and December 31, 2017, respectively, for potential remediation costs for environmental contamination at certain properties. While this accrual reflects our best estimates of the potential costs of remediation at these properties, $0.3 million has currently been accrued during the quarter ended March 31, 2018 and there can be no assurance that the actual costs will not exceed this amount. With respect to our other properties, the environmental assessments did not reveal any material environmental contamination. However, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us. |
PREPAID EXPENSES AND OTHER ASSETS |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREPAID EXPENSES AND OTHER ASSETS | PREPAID EXPENSES AND OTHER ASSETS The following is a summary of the composition of the prepaid expenses and other assets in the consolidated balance sheets:
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OTHER LIABILITIES |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER LIABILITIES | OTHER LIABILITIES The following is a summary of the composition of other liabilities in the consolidated balance sheets:
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INTEREST AND DEBT EXPENSE |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTEREST AND DEBT EXPENSE | 13. INTEREST AND DEBT EXPENSE The following table sets forth the details of interest and debt expense:
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EQUITY AND NONCONTROLLING INTEREST |
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Mar. 31, 2018 | |
Noncontrolling Interest [Abstract] | |
EQUITY AND NONCONTROLLING INTEREST | NONCONTROLLING INTEREST At-The-Market Program In 2016, the Company established an at-the-market (“ATM”) equity program, pursuant to which the Company may offer and sell from time to time its common shares, par value $0.01 per share, with an aggregate gross sales price of up to $250.0 million through a consortium of broker dealers acting as sales agents. As of March 31, 2018, $241.3 million of common shares remained available for issuance under this ATM equity program and there were no common shares issued under the ATM equity program during the three months ended March 31, 2018 and 2017, respectively. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common shares and our capital needs. We have no obligation to sell the remaining shares available under the active ATM equity program. Dividends and Distributions During each of the three months ended March 31, 2018 and 2017, the Company declared dividends on our common shares and OP unit distributions of $0.22 per share/unit. Noncontrolling Interests in Operating Partnership Redeemable noncontrolling interests reflected on the consolidated balance sheets of the Company are comprised of OP units and limited partnership interests in the Operating Partnership in the form of LTIP unit awards. In connection with the separation, the Company issued 5.7 million OP units, representing a 5.4% interest in the Operating Partnership to Vornado Realty L.P. (“VRLP”) in exchange for interests in VRLP properties contributed by VRLP. LTIP unit awards were granted to certain executives pursuant to our 2015 Omnibus Share Plan (the “Omnibus Share Plan”). OP units were issued to contributors in exchange for their property interests in connection with the Company’s acquisition of Yonkers Gateway Center and the Portfolio acquisition. The total of the OP units and LTIP units represent a 10.1% weighted-average interest in the Operating Partnership for the three months ended March 31, 2018. Holders of outstanding vested LTIP units may, from and after two years from the date of issuance, redeem their LTIP units for cash, or for the Company’s common shares on a one-for-one basis, solely at our election. Holders of outstanding OP units may, at a determinable date, redeem their units for cash or the Company’s common shares on a one-for-one basis, solely at our election. Noncontrolling Interest in Consolidated Subsidiaries The noncontrolling interest relates to the 5% interest held by others in our property in Walnut Creek, CA (Mount Diablo). The net income attributable to noncontrolling interest is presented separately in our consolidated statements of income. |
SHARE-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION 2018 Long-Term Incentive Plan On February 22, 2018, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2018 Long-Term Incentive Plan ("2018 LTI Plan"), a multi-year equity compensation program, comprised of both performance-based and time-based vesting awards. Equity awards granted under the 2018 LTI Plan are weighted, in terms of grant date and fair value, 80% performance-based and 20% time-based. For the performance-based awards under the 2018 LTI Plan, participants, have the opportunity to earn awards in the form of LTIP Units if, and only if, Urban Edge’s absolute and relative total shareholder return (“TSR”) meets certain criteria over the three-year performance measurement period (the “Performance Period”) beginning on February 22, 2018 and ending on February 21, 2021. The Company issued 328,107 LTIP Units under the 2018 LTI Plan. Under the Absolute TSR component (25% of the performance-based awards), 40% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 18%, 100% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 27%, and 165% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to or greater than 36%. The Relative TSR component is based on the Company’s performance compared to a peer group comprised of 14 companies. Under the Relative TSR Component (75% of the performance-based awards), 40% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to the 35th percentile of the peer group, 100% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to the 55th percentile of the peer group, and 165% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to or above the 75th percentile of the peer group, with earning determined using linear interpolation if between such relative TSR thresholds. The fair value of the performance-based award portion of the 2018 LTI Plan on the date of grant was $3.6 million using a Monte Carlo simulation to estimate the fair value through a risk-neutral premise. The time-based awards under the 2018 LTI Plan, also granted in the form of LTIP Units, vest ratably over three years or four years in the case of our Chairman and Chief Executive Officer. The Company granted time-based awards under the 2018 LTI Plan that represent 33,172 LTIP units with a grant date fair value of $0.7 million. Share-Based Compensation Expense Share-based compensation expense, which is included in general and administrative expenses in our consolidated statements of income, is summarized as follows:
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EARNINGS PER SHARE AND UNIT |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE AND UNIT | EARNINGS PER SHARE AND UNIT Urban Edge Earnings per Share We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of Urban Edge common shares and participating securities is calculated according to dividends declared and participating rights in undistributed earnings. Restricted shares issued pursuant to our share-based compensation program are considered participating securities, and as such have non-forfeitable rights to receive dividends. The following table sets forth the computation of our basic and diluted earnings per share:
(1) For the three months ended March 31, 2017 and the three months ended March 31, 2018 the effect of the redemption of OP and LTIP units for Urban Edge common shares would have an anti-dilutive effect on the calculation of diluted EPS. Accordingly, the impact of such redemption has not been included in the determination of diluted EPS for these periods. Operating Partnership Earnings per Unit The following table sets forth the computation of basic and diluted earnings per unit:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions of Form 10-Q. Certain information and footnote disclosures included in our annual financial statements have been condensed or omitted. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and the Operating Partnership and the results of operations and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018. Accordingly, these consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities Exchange Commission (“SEC”). |
Consolidation and Noncontrolling Interests | The consolidated balance sheets as of March 31, 2018 and December 31, 2017 reflect the consolidation of wholly-owned subsidiaries and those entities in which we have a controlling financial interest. The consolidated statements of income for the three months ended March 31, 2018 and 2017 include the consolidated accounts of the Company and the Operating Partnership. All intercompany transactions have been eliminated in consolidation. |
Recently Issued Accounting Literature | Recently Issued Accounting Literature In May 2017, the FASB issued an update (“ASU 2017-09”) Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting will not apply if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU 2017-09 is effective for annual periods beginning after December 15, 2017, with early adoption permitted. We adopted the standard on January 1, 2018, which resulted in no impact. If we encounter a change to the terms or conditions of any of our share-based payment awards we will evaluate the need to apply modification accounting based on the new guidance. The general treatment for modifications of share-based payment awards is to record the incremental value arising from the change as additional compensation cost. In February 2017, the FASB issued an updated (“ASU 2017-05”) Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, to clarify the scope and accounting for derecognition of nonfinancial assets. ASU 2017-05 eliminated the guidance specific to real estate sales and partial sales. ASU 2017-05 defines “in-substance nonfinancial assets” and includes guidance on partial sales of nonfinancial assets. ASU 2017-05 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017, with early adoption permitted. We adopted the standard on January 1, 2018, which resulted in no impact to our consolidated financial statements. In February 2016, the FASB issued an update (“ASU 2016-02”) Leases, which revises the accounting related to lease accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The provisions of ASU 2016-02 are effective for fiscal years beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We expect to adopt the standard beginning January 1, 2019. This standard will impact our consolidated financial statements by the recording of right-of-use assets and lease liabilities on our consolidated balance sheets for operating and finance leases where we are the lessee. We are currently in the process of evaluating the inputs required to calculate the amount that will be recorded on our consolidated balance sheets for these leases. In addition, leases where we are the lessor that meet the criteria of a finance lease will be amortized using the effective interest method with corresponding charges to interest expense and amortization expense. Leases where we are the lessor that meet the criteria of an operating lease will continue to be amortized on a straight-line basis. Further, internal leasing department costs previously capitalized will be expensed within general and administrative expenses. Historical capitalization of internal leasing costs were $0.2 million for each of the three months ended March 31, 2018 and March 31, 2017, respectively. ASU 2016-02 originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, the FASB issued an exposure draft in January 2018 (2018 Exposure Draft) which, if adopted as written, would allow lessors a practical expedient by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. ASU 2016-02 originally required a modified retrospective method of adoption, however, the 2018 Exposure Draft indicates that companies may be permitted to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company will continue to evaluate the impact of this guidance until it becomes effective. In May 2014, the FASB issued an update (“ASU 2014-09”) Revenue from Contracts with Customers to ASC Topic 606, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. During the year ended December 31, 2016, the FASB issued the following updates to ASC Topic 606 to clarify and/or amend the guidance in ASU 2014-09: (i) ASU 2016-08 Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations, (ii) ASU 2016-10 Identifying Performance Obligations and Licensing, which clarifies guidance related to identifying performance obligations and licensing implementation guidance and (iii) ASU 2016-12 Narrow-Scope Improvements and Practical Expedients, which amends certain aspects of ASU 2014-09. We adopted this standard effective January 1, 2018 using the modified retrospective approach which requires applying the new standard to all existing contracts not yet completed as of the effective date. We have completed our evaluation of the standard’s impact on the Company’s revenue streams, specifically management and development fee income. The adoption of this standard did not have a material impact on our consolidated financial statements but has resulted in additional qualitative disclosures for the three months ended March 31, 2018 and 2017 (refer to Note 4 Revenues). Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company or the Operating Partnership, or they are not expected to have a material impact on our consolidated financial statements. |
Revenues | Property Rentals We generate revenue from minimum lease payments from tenant operating leases. These rents are recognized over the noncancelable terms of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases in accordance with ASC 840. We satisfy our performance obligations over time, under the noncancelable lease term, commencing when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a lease incentive to tenants, we recognize the incentive as a reduction of rental revenue on a straight-line basis over the remaining term of the lease. The underlying leased asset remains on our consolidated balance sheet and continues to depreciate. Tenant expense reimbursements In accordance with ASC 840, revenue arises from tenant leases, which provide for the recovery of all or a portion of the operating expenses, real estate taxes and capital improvements of the respective property. This revenue is accrued in the same periods as the expenses are incurred. Other Income Other income is generated in connection with certain services provided to tenants for which we earn a fee. This revenue is recognized as the services are transferred in accordance with ASC 606. Management and development fees We generate management and development fee income from contractual property management agreements with third parties. |
REVENUES (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenues Disaggregated by Revenue Source | for the quarters ended March 31, 2018 and 2017, respectively:
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ACQUISITIONS AND DISPOSITIONS (Tables) |
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Schedule of Closed Acquisitions | During the three months ended March 31, 2018, we closed the following acquisitions:
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Schedule of Aggregate Purchase Price Allocations | The aggregate purchase prices of the above property acquisitions have been allocated as follows:
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IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of estimated annual amortization expense | The following table sets forth the estimated annual amortization expense related to intangible assets and liabilities for the five succeeding years commencing January 1, 2019:
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MORTGAGES PAYABLE (Tables) |
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Schedule of mortgages payable | The following is a summary of mortgages payable as of March 31, 2018 and December 31, 2017.
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Schedule of principal repayments | As of March 31, 2018, the principal repayments for the next five years and thereafter are as follows:
(1) Remainder of 2018. |
FAIR VALUE MEASUREMENTS (Tables) |
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Schedule of financial instrument carrying amounts and fair values | The table below summarizes the carrying amounts and fair value of these financial instruments as of March 31, 2018 and December 31, 2017.
(1) Carrying amounts exclude unamortized debt issuance costs of $13.3 million and $13.8 million as of March 31, 2018 and December 31, 2017, respectively. |
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Schedule of interest rates used for fair value of mortgages payable | The following market spreads were used by the Company to estimate the fair value of mortgages payable:
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PREPAID EXPENSES AND OTHER ASSETS (Tables) |
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Schedule of the composition of prepaid expenses and other assets | The following is a summary of the composition of the prepaid expenses and other assets in the consolidated balance sheets:
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OTHER LIABILITIES (Tables) |
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Schedule of the composition of other liabilities | The following is a summary of the composition of other liabilities in the consolidated balance sheets:
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INTEREST AND DEBT EXPENSE (Tables) |
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Schedule of interest and debt expense | The following table sets forth the details of interest and debt expense:
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SHARE-BASED COMPENSATION (Tables) |
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Summary of share-based compensation expense | Share-based compensation expense, which is included in general and administrative expenses in our consolidated statements of income, is summarized as follows:
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EARNINGS PER SHARE AND UNIT (Tables) |
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Schedule of computation of basic and diluted earnings per share | The following table sets forth the computation of our basic and diluted earnings per share:
(1) For the three months ended March 31, 2017 and the three months ended March 31, 2018 the effect of the redemption of OP and LTIP units for Urban Edge common shares would have an anti-dilutive effect on the calculation of diluted EPS. Accordingly, the impact of such redemption has not been included in the determination of diluted EPS for these periods. Operating Partnership Earnings per Unit The following table sets forth the computation of basic and diluted earnings per unit:
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ORGANIZATION (Details) ft² in Millions |
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Jan. 15, 2015 |
Mar. 31, 2018
ft²
property
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Real Estate Properties [Line Items] | ||
Area of real estate property (in sq ft) | ft² | 16.7 | |
Noncontrolling interest percentage | 10.1097% | |
Vornado | ||
Real Estate Properties [Line Items] | ||
Noncontrolling interest percentage | 5.40% | 89.90% |
Warehouses | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | 1 | |
Wholly owned properties | Shopping Center | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | 84 | |
Wholly owned properties | Mall | ||
Real Estate Properties [Line Items] | ||
Number of real estate properties | 4 |
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION AND COMBINATION (Details) |
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segment
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Millions |
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Mar. 31, 2018
USD ($)
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Accounting Policies [Abstract] | |
Capitalized internal leasing overhead | $ 0.2 |
REVENUES (Details) - USD ($) $ in Thousands |
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Mar. 31, 2018 |
Mar. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 99,053 | $ 126,064 |
Transferred over Time | Property rentals | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 69,722 | 62,498 |
Transferred over Time | Tenant expense reimbursements | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 28,672 | 23,771 |
Transferred over Time | Management and development fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 342 | 479 |
Transferred over Time | Income from acquired leasehold interest | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 39,215 |
Transferred over Time | Other income | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 317 | $ 101 |
ACQUISITIONS AND DISPOSITIONS - Summary of Acquisition Activity (Details) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Feb. 28, 2018
USD ($)
ft²
|
Feb. 23, 2018
USD ($)
ft²
|
Jan. 26, 2018
USD ($)
ft²
|
Mar. 31, 2018
USD ($)
|
|
Business Acquisition [Line Items] | ||||
Purchase Price | $ 3,965 | |||
Transaction costs | $ 100 | |||
938 Spring Valley Road | ||||
Business Acquisition [Line Items] | ||||
Square Feet (in sq ft/acres) | ft² | 2,000 | |||
Purchase Price | $ 719 | |||
116 Sunrise Highway | ||||
Business Acquisition [Line Items] | ||||
Square Feet (in sq ft/acres) | ft² | 4,750 | |||
Purchase Price | $ 447 | |||
197 West Spring Valley Road | ||||
Business Acquisition [Line Items] | ||||
Square Feet (in sq ft/acres) | ft² | 16,300 | |||
Purchase Price | $ 2,799 |
ACQUISITIONS AND DISPOSITIONS - Aggregate Purchase Price Allocations (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Land | $ 2,438 |
Buildings and improvements | 1,527 |
Total Purchase Price | 3,965 |
938 Spring Valley Road | |
Business Acquisition [Line Items] | |
Land | 519 |
Buildings and improvements | 200 |
Total Purchase Price | 719 |
116 Sunrise Highway | |
Business Acquisition [Line Items] | |
Land | 151 |
Buildings and improvements | 296 |
Total Purchase Price | 447 |
197 West Spring Valley Road | |
Business Acquisition [Line Items] | |
Land | 1,768 |
Buildings and improvements | 1,031 |
Total Purchase Price | $ 2,799 |
ACQUISITIONS AND DISPOSITIONS - Narrative (Details) - USD ($) $ in Thousands |
Apr. 23, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Carrying amount of property, net | $ 2,099,058 | $ 2,084,727 | |
Accumulated depreciation and amortization of real estate property | (601,729) | (587,127) | |
Allentown, PA | Disposal Group, Disposed of by Sale, Not Discontinued Operations | Subsequent Event | |||
Business Acquisition [Line Items] | |||
Consideration received on sale or property | $ 54,300 | ||
Allentown, PA | Disposal Group, Held-for-sale, Not Discontinued Operations | |||
Business Acquisition [Line Items] | |||
Carrying amount of property, net | 3,300 | 3,300 | |
Accumulated depreciation and amortization of real estate property | $ (14,300) | $ (14,300) |
IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Identified intangible assets, net of accumulated amortization | $ 82,787 | $ 87,249 | |
Identified intangible liabilities, net of accumulated amortization | 176,770 | $ 180,959 | |
Amortization of acquired below-market leases, net of above-market leases | 2,600 | $ 2,000 | |
Amortization expense of intangible assets | 2,800 | 900 | |
Amortization of below-market Lease | $ 200 | $ 400 |
IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES - Schedule of Estimated Annual Amortization Expense (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Below-Market Operating Leases | |
2018 | $ 11,544 |
2019 | 11,377 |
2020 | 11,185 |
2021 | 10,744 |
2022 | 10,482 |
Below-Market Ground Leases | |
2018 | 972 |
2019 | 972 |
2020 | 622 |
2021 | 590 |
2022 | 590 |
Above-Market Operating Leases | |
Operating Leases | |
2018 | 1,294 |
2019 | 1,016 |
2020 | 803 |
2021 | 426 |
2022 | 327 |
In-Place Leases | |
Operating Leases | |
2018 | 8,556 |
2019 | 7,284 |
2020 | 5,968 |
2021 | 4,176 |
2022 | $ 3,762 |
MORTGAGES PAYABLE - Schedule of Maturities (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Remainder of 2018 | $ 2,441 |
2019 | 4,244 |
2020 | 7,571 |
2021 | 124,448 |
2022 | 100,899 |
2023 | 344,426 |
Thereafter | $ 981,800 |
INCOME TAXES (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
USD ($)
mall
|
Mar. 31, 2017
USD ($)
|
|
Income Tax Contingency [Line Items] | ||
Income tax expense | $ 434 | $ 320 |
Puerto Rico | ||
Income Tax Contingency [Line Items] | ||
Number of malls | mall | 2 | |
Commonwealth of Puerto Rico | ||
Income Tax Contingency [Line Items] | ||
Income tax expense | $ (200) | $ (300) |
Non-resident withholding tax percentage | 29.00% | |
Allentown, PA | ||
Income Tax Contingency [Line Items] | ||
Income tax expense | $ (200) | |
Vornado | ||
Income Tax Contingency [Line Items] | ||
Percentage of taxable income distributed as dividends to stockholders | 100.00% |
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Financial assets measured at fair value on recurring basis | $ 0 | $ 0 |
Financial liabilities measured at fair value on recurring basis | 0 | 0 |
Financial assets measured at fair value on nonrecurring basis | 0 | 0 |
Financial liabilities measured at fair value on nonrecurring basis | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Balance Sheet Grouping (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Cash and cash equivalents | $ 462,774 | $ 490,279 | $ 110,974 | $ 131,654 |
Mortgages payable, net | 1,552,543 | 1,564,542 | ||
Mortgages | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Unamortized debt issuance costs | (13,300) | |||
Carrying Amount | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Cash and cash equivalents | 462,774 | 490,279 | ||
Mortgages payable | 1,565,829 | 1,578,317 | ||
Fair Value | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Cash and cash equivalents | 462,774 | 490,279 | ||
Mortgages payable | $ 1,537,971 | $ 1,579,839 |
FAIR VALUE MEASUREMENTS - Interest Rates Used for Fair Value of Mortgages Payable (Details) - Mortgages |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Low | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value input, interest rate | 1.70% | 1.70% |
High | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value input, interest rate | 2.05% | 2.05% |
PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Real estate held for sale | $ 3,285 | $ 3,285 |
Other assets | 3,801 | 3,771 |
Deposits for acquisitions | 100 | 406 |
Prepaid expenses: | ||
Real estate taxes | 5,088 | 7,094 |
Insurance | 3,342 | 2,793 |
Rent, licenses/fees | 1,628 | 1,210 |
Total Prepaid expenses and other assets | $ 17,244 | $ 18,559 |
OTHER LIABILITIES (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Deferred tax liability, net | $ 6,517 | $ 6,499 |
Deferred ground rent expense | 3,073 | 2,828 |
Deferred tenant revenue | 3,996 | 4,183 |
Environmental remediation costs | 1,482 | 1,232 |
Other liabilities | 506 | 429 |
Total Other liabilities | $ 15,574 | $ 15,171 |
INTEREST AND DEBT EXPENSE (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Other Income and Expenses [Abstract] | ||
Interest expense | $ 14,922 | $ 12,251 |
Amortization of deferred financing costs | 722 | 864 |
Total Interest and debt expense | $ 15,644 | $ 13,115 |
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