-- Raises Outlook for Full-Year 2024 FFO as
Adjusted --
Urban Edge Properties (NYSE: UE) (the "Company") today announced
its results for the quarter ended March 31, 2024 and updated its
outlook for full-year 2024.
“We had an excellent start to 2024, exceeding our plan and
delivering FFO as Adjusted of $0.33 per share in the first quarter
primarily due to higher NOI growth,” said Jeff Olson, Chairman and
CEO. “In addition, we acquired two shopping centers in New Jersey -
Heritage Square and Ledgewood Commons - strengthening our presence
in this core market and providing attractive growth and
redevelopment opportunities. These acquisitions, totaling $117
million at an approximate capitalization rate of 8%, were financed
through a combination of 6.1% mortgage debt, asset sales at a
blended 5% cap rate and equity issued under our ATM program.
Looking ahead, based on our better-than-expected results and our
recent accretive acquisitions, we have increased our 2024 FFO as
Adjusted guidance by $0.03 per share at the midpoint to $1.30 per
share, and we expect 2025 FFO as Adjusted will be towards the high
end of the range that we outlined at our April 2023 Investor
Day.”
Financial Results(1)(2)
(in thousands, except per share
amounts)
1Q24
1Q23
Net income (loss) attributable to common
shareholders
$
2,603
$
(19,118
)
Net income (loss) per diluted share
0.02
(0.16
)
Funds from Operations ("FFO")
39,050
38,602
FFO per diluted share
0.32
0.32
FFO as Adjusted
40,818
38,973
FFO as Adjusted per diluted share
0.33
0.32
Net income for the three months ended March 31, 2024 included a
$1.9 million, or $0.02 per diluted share, gain on sale of real
estate, primarily related to the disposition of a single tenant
property in Hazlet, NJ. FFO and FFO as Adjusted for the three
months ended March 31, 2024 benefited from rent commencements on
new leases and growth from our capital recycling activities.
Same-Property Operating Results Compared to the Prior Year
Period(3)
1Q24
Same-property Net Operating Income ("NOI")
growth
2.2
%
Same-property NOI growth, including
properties in redevelopment
3.7
%
Increases in same-property NOI metrics for the three months
ended March 31, 2024 were primarily driven by rent commencements on
new leases from our signed but not open pipeline.
Operating Results(1)
- Achieved same-property portfolio leased occupancy of 96.2%, an
increase of 140 basis points compared to March 31, 2023 and 30
basis points compared to December 31, 2023.
- Reported consolidated portfolio leased occupancy, excluding
Sunrise Mall and Kingswood Center, of 96.1%, an increase of 140
basis points compared to March 31, 2023 and 20 basis points
compared to December 31, 2023.
- Increased retail shop leased occupancy to 88.4%, up 340 basis
points compared to March 31, 2023 and 70 basis points compared to
December 31, 2023.
- Executed 44 new leases, renewals and options totaling 805,000
sf during the quarter. New leases totaled 70,000 sf, of which
63,000 sf was on a same-space basis and generated an average cash
spread of 22.6%. New leases, renewals and options totaled 570,000
sf on a same-space basis including renewals with Walmart at
Woodbridge Commons for 136,000 sf and Home Depot at Totowa Commons
for 102,000 sf, and generated an average cash spread of 10.3%.
Financing Activity
On January 2, 2024, the Company paid off three variable rate
mortgage loans aggregating $75.7 million that were due to mature in
the fourth quarter of 2024 at interest rates of 7.34%, on the date
of repayment. The mortgages were secured by the following
properties: Hudson Commons, Greenbrook Commons, and Gun Hill
Commons.
On March 28, 2024, the Company refinanced the mortgage secured
by its property, Yonkers Gateway Center, with a new 5-year, $50
million loan with a fixed interest rate of 6.30%. The proceeds from
the refinancing were used to pay off the previous mortgage on the
property, which had an outstanding balance of $22.7 million.
As of March 31, 2024, the Company has limited debt maturities
coming due through December 31, 2026, aggregating $189.3 million,
which represents approximately 11% of outstanding debt.
During the three months ended March 31, 2024, the Company issued
1,082,945 common shares at a weighted average price of $17.31 per
share under its ATM Program, generating net cash proceeds of $18.5
million, used to partially fund the acquisition of Ledgewood
Commons.
Acquisition and Disposition Activity
Since October 2023, the Company has acquired four properties for
a total of $426 million, at a weighted average capitalization rate
of 7.2%, while disposing of non-core and industrial assets of $356
million at a weighted average capitalization rate of 5.2%. The
Company continues to prioritize these efforts, focusing on
additional accretive transactions.
On February 8, 2024, the Company acquired Heritage Square, an
unencumbered 87,000 sf shopping center located in Watchung, NJ, for
a purchase price of $34 million. The property is anchored by Ulta,
HomeSense and Sierra Trading, and includes three outparcels with a
fourth currently under construction. The initial capitalization
rate on this transaction was 7.8% and was funded using cash on
hand.
On March 14, 2024, the Company closed on the sale of its 95,000
sf property located in Hazlet, NJ for a price of $8.7 million,
representing a 3.7% capitalization rate.
On April 5, 2024, the Company closed on the $83 million
acquisition of Ledgewood Commons, a 448,000 sf grocery anchored
shopping center located in Roxbury Township, NJ. The shopping
center has a strong and diverse tenant mix including national
brands Walmart Supercenter, Marshalls, Burlington, Ulta, Starbucks,
and Chipotle. The initial capitalization rate on the transaction
was 7.9%. Future growth is expected to be achieved from two
pre-approved but undeveloped outparcels totaling 20,000 sf and
lease up of small shop vacancies. On May 3, 2024, a new 5-year, $50
million mortgage loan secured by the property was obtained bearing
interest at a fixed rate of 6.03%. We expect the first-year cash
yield on this investment to exceed 10%.
On April 26, 2024, the Company closed on the sale of its 127,000
sf industrial property located in Lodi, NJ for a price of $29.2
million, reflecting a 5.4% capitalization rate. This transaction
was structured as part of a Section 1031 exchange with the
acquisition of Heritage Square, allowing for the deferral of
capital gains resulting from the sale for income tax purposes.
Leasing, Development and Redevelopment
The Company has $166.4 million of active redevelopment projects
underway, with estimated remaining costs to complete of $99.7
million. The active redevelopment projects are expected to generate
an approximate 15% unleveraged yield. During the quarter, we
stabilized one project aggregating $1.7 million with the rent
commencement of Wren Kitchens at Yonkers Gateway Center in January
2024.
During the quarter, the Company executed 70,000 sf of new
leases, including leases with a national discount department store
at Amherst Commons, Dollar Tree at West Branch Commons, Mattress
Warehouse at Plaza at Woodbridge, and Foot Locker at Shops at
Caguas.
As of March 31, 2024, the Company has signed leases that have
not yet rent commenced that are expected to generate an additional
$27.4 million of future annual gross rent, representing
approximately 10% of current annualized NOI. Approximately $4.2
million of this amount is expected to be recognized in the
remainder of 2024.
Balance Sheet and Liquidity(1)(4)
Balance sheet highlights as of March 31, 2024 include:
- Total liquidity of approximately $712 million, consisting of
$95 million of cash on hand and $617 million available under the
Company's $800 million revolving credit agreement, including
undrawn letters of credit.
- Mortgages payable of $1.5 billion, with a weighted average term
to maturity of five years, all of which is fixed rate or
hedged.
- $153 million drawn on our $800 million revolving credit
agreement that matures on February 9, 2028, including two six-month
extensions.
- Total market capitalization of approximately $3.9 billion,
comprised of 125.4 million fully-diluted common shares valued at
$2.2 billion and $1.7 billion of debt.
- Net debt to total market capitalization of 41%.
2024 Outlook
The Company has updated its 2024 full-year outlook, estimating
net income of $0.12 to $0.17 per diluted share, FFO of $1.22 to
$1.27 per diluted share, and FFO as Adjusted of $1.27 to $1.32 per
diluted share. A reconciliation of the range of estimated earnings,
FFO and FFO as Adjusted, as well as the assumptions used in our
guidance can be found on page 4 of this release.
Earnings Conference Call Information
The Company will host an earnings conference call and audio
webcast on May 7, 2024 at 8:30am ET. All interested parties can
access the earnings call by dialing 1-877-407-9716 (Toll Free) or
1-201-493-6779 (Toll/International) using conference ID 13744877.
The call will also be webcast and available in listen-only mode on
the investors page of our website: www.uedge.com. A replay will be
available at the webcast link on the investors page for one year
following the conclusion of the call. A telephonic replay of the
call will also be available starting May 7, 2024 at 11:30am ET
through May 21, 2024 at 11:59pm ET by dialing 1-844-512-2921 (Toll
Free) or 1-412-317-6671 (Toll/International) using conference ID
13744877.
(1)
Refer to "Non-GAAP Financial Measures" and
"Operating Metrics" for definitions and additional detail.
(2)
Refer to page 11 for a reconciliation of
net income to FFO and FFO as Adjusted for the quarter ended March
31, 2024.
(3)
Refer to page 12 for a reconciliation of
net income to NOI and Same-Property NOI for the quarter ended March
31, 2024.
(4)
Net debt as of March 31, 2024 is
calculated as total consolidated debt of $1.7 billion less total
cash and cash equivalents, including restricted cash, of $95
million.
2024 Earnings Guidance
The Company has increased its 2024 full-year guidance ranges,
estimating net income of $0.12 to $0.17 per diluted share, FFO of
$1.22 to $1.27 per diluted share, and FFO as Adjusted of $1.27 to
$1.32 per diluted share. Below is a summary of the Company's 2024
outlook, assumptions used in our forecasting, and a reconciliation
of the range of estimated earnings, FFO, and FFO as Adjusted per
diluted share.
Previous Guidance
Revised Guidance
Net income per diluted share
$0.12 - $0.17
$0.12 - $0.17
Net income attributable to common
shareholders per diluted share
$0.11 - $0.16
$0.11 - $0.16
FFO per diluted share
$1.20 - $1.25
$1.22 - $1.27
FFO as Adjusted per diluted share
$1.24 - $1.29
$1.27 - $1.32
The Company's 2024 full year FFO outlook is based on the
following assumptions:
- Same-property NOI growth, including properties in
redevelopment, of 4.0% to 6.0%, an increase from our previous
assumption of 3.0% to 5.0%.
- Acquisitions of $117 million and dispositions of $37 million,
both reflecting activity completed year-to-date.
- Recurring G&A expenses ranging from $35.5 million to $37.5
million, remaining unchanged from our previous assumption.
- Interest and debt expense ranging from $86 million to $88.5
million, an increase from our previous assumption of $83 million to
$85 million.
- Excludes items that impact FFO comparability, including gains
and/or losses on extinguishment of debt, transaction, severance,
litigation, or any one-time items outside of the ordinary course of
business.
Guidance 2024E
Per Diluted Share(1)
(in thousands, except per share
amounts)
Low
High
Low
High
Net income
$
14,700
$
20,700
$
0.12
$
0.17
Less net (income) loss attributable to
noncontrolling interests in:
Operating partnership
(1,400
)
(1,400
)
(0.01
)
(0.01
)
Consolidated subsidiaries
700
700
0.01
0.01
Net income attributable to common
shareholders
14,000
20,000
0.11
0.16
Adjustments:
Rental property depreciation and
amortization
137,300
137,300
1.11
1.11
Gain on sale of real estate
(1,900
)
(1,900
)
(0.02
)
(0.02
)
Limited partnership interests in operating
partnership
1,400
1,400
0.01
0.01
FFO Applicable to diluted common
shareholders
150,800
156,800
1.22
1.27
Adjustments to FFO:
Impact of property in foreclosure
4,700
4,700
0.04
0.04
Write-off of receivables arising from the
straight-lining of rents
600
600
—
—
Transaction, severance, litigation and
other expenses
400
400
—
—
Loss on extinguishment of debt
300
300
—
—
FFO as Adjusted applicable to diluted
common shareholders
$
156,800
$
162,800
$
1.27
$
1.32
The following table is a reconciliation bridging our 2023 FFO
per diluted share to the Company's estimated 2024 FFO per diluted
share:
Per Diluted Share(1)
Low
High
2023 FFO applicable to diluted common
shareholders
$
1.51
$
1.51
2023 Items impacting FFO
comparability(2)
(0.26
)
(0.26
)
2024 Items impacting FFO
comparability(2)
(0.01
)
(0.01
)
2024 impact of property in foreclosure
(0.04
)
(0.04
)
Same-property NOI growth, including
redevelopment
0.07
0.10
Acquisitions net of dispositions NOI
growth
0.08
0.08
Interest and debt expense(3)
(0.10
)
(0.08
)
Recurring general and administrative
(0.01
)
—
Straight-line rent and non-cash items
(0.01
)
(0.01
)
Lease termination and other income
(0.01
)
(0.01
)
2024 FFO applicable to diluted common
shareholders
$
1.22
$
1.27
(1)
Amounts may not foot due to rounding.
(2)
Includes adjustments to FFO for fiscal
year 2023 and expected adjustments for fiscal year 2024 which
impact comparability. See "Reconciliation of net income to FFO and
FFO as Adjusted" on page 11 for more information.
(3)
Excludes the impact of Kingswood Center, a
property in the process of foreclosure.
The Company is providing a projection of anticipated net income
solely to satisfy the disclosure requirements of the Securities and
Exchange Commission ("SEC"). The Company's projections are based on
management’s current beliefs and assumptions about the Company's
business, and the industry and the markets in which it operates;
there are known and unknown risks and uncertainties associated with
these projections. There can be no assurance that our actual
results will not differ from the guidance set forth above. The
Company assumes no obligation to update publicly any
forward-looking statements, including its 2024 earnings guidance,
whether as a result of new information, future events or otherwise.
Please refer to the “Forward-Looking Statements” disclosures on
page 8 of this document and “Risk Factors” disclosed in the
Company's annual and quarterly reports filed with the SEC for more
information.
Non-GAAP Financial Measures
The Company uses certain non-GAAP performance measures, in
addition to the primary GAAP presentations, as we believe these
measures improve the understanding of the Company's operational
results. We continually evaluate the usefulness, relevance,
limitations, and calculation of our reported non-GAAP performance
measures to determine how best to provide relevant information to
the investing public, and thus such reported measures are subject
to change. The Company's non-GAAP performance measures have
limitations as they do not include all items of income and expense
that affect operations, and accordingly, should always be
considered as supplemental financial results. Additionally, the
Company's computation of non-GAAP metrics may not be comparable to
similarly titled non-GAAP metrics reported by other REITs or real
estate companies that define these metrics differently and, as a
result, it is important to understand the manner in which the
Company defines and calculates each of its non-GAAP metrics. The
following non-GAAP measures are commonly used by the Company and
investing public to understand and evaluate our operating results
and performance:
- FFO: The Company believes FFO is a useful, supplemental measure
of its operating performance that is a recognized metric used
extensively by the real estate industry and, in particular real
estate investment trusts ("REITs"). FFO, as defined by the National
Association of Real Estate Investment Trusts ("Nareit") and the
Company, is net income (computed in accordance with GAAP),
excluding gains (or losses) from sales of depreciable real estate
and land when connected to the main business of a REIT, impairments
on depreciable real estate or land related to a REIT's main
business, earnings from consolidated partially owned entities and
rental property depreciation and amortization expense. The Company
believes that financial analysts, investors and shareholders are
better served by the presentation of comparable period operating
results generated from FFO primarily because it excludes the
assumption that the value of real estate assets diminishes
predictably. FFO does not represent cash flows from operating
activities in accordance with GAAP, should not be considered an
alternative to net income as an indication of our performance, and
is not indicative of cash flow as a measure of liquidity or our
ability to make cash distributions.
- FFO as Adjusted: The Company provides disclosure of FFO as
Adjusted because it believes it is a useful supplemental measure of
its core operating performance that facilitates comparability of
historical financial periods. FFO as Adjusted is calculated by
making certain adjustments to FFO to account for items the Company
does not believe are representative of ongoing core operating
results, including non-comparable revenues and expenses. The
Company's method of calculating FFO as Adjusted may be different
from methods used by other REITs and, accordingly, may not be
comparable to such other REITs.
- NOI: The Company uses NOI internally to make investment and
capital allocation decisions and to compare the unlevered
performance of our properties to our peers. The Company believes
NOI is useful to investors as a performance measure because, when
compared across periods, NOI reflects the impact on operations from
trends in occupancy rates, rental rates, operating costs and
acquisition and disposition activity on an unleveraged basis,
providing perspective not immediately apparent from net income. The
Company calculates NOI using net income as defined by GAAP
reflecting only those income and expense items that are incurred at
the property level, adjusted for non-cash rental income and
expense, impairments on depreciable real estate or land, and income
or expenses that we do not believe are representative of ongoing
operating results, if any. In addition, the Company uses NOI
margin, calculated as NOI divided by total property revenue, which
the Company believes is useful to investors for similar
reasons.
- Same-property NOI: The Company provides disclosure of NOI on a
same-property basis, which includes the results of properties that
were owned and operated for the entirety of the reporting periods
being compared, which total 66 properties for the three months
ended March 31, 2024 and 2023. Information provided on a
same-property basis excludes properties under development,
redevelopment or that involve anchor repositioning where a
substantial portion of the gross leasable area ("GLA") is taken out
of service and also excludes properties acquired, sold, or that are
in the foreclosure process during the periods being compared. As
such, same-property NOI assists in eliminating disparities in net
income due to the development, redevelopment, acquisition,
disposition, or foreclosure of properties during the periods
presented, and thus provides a more consistent performance measure
for the comparison of the operating performance of the Company's
properties. While there is judgment surrounding changes in
designations, a property is removed from the same-property pool
when it is designated as a redevelopment property because it is
undergoing significant renovation or retenanting pursuant to a
formal plan that is expected to have a significant impact on its
operating income. A development or redevelopment property is moved
back to the same-property pool once a substantial portion of the
NOI growth expected from the development or redevelopment is
reflected in both the current and comparable prior year period,
generally one year after at least 80% of the expected NOI from the
project is realized on a cash basis. Acquisitions are moved into
the same-property pool once we have owned the property for the
entirety of the comparable periods and the property is not under
significant development or redevelopment. The Company has also
provided disclosure of NOI on a same-property basis adjusted to
include redevelopment properties. Same-property NOI may include
other adjustments as detailed in the Reconciliation of Net Income
to NOI and same-property NOI included in the tables accompanying
this press release. We also present this metric excluding the
collection of amounts previously deemed uncollectible.
- EBITDAre and Adjusted EBITDAre: EBITDAre and Adjusted EBITDAre
are supplemental, non-GAAP measures utilized by us in various
financial ratios. The White Paper on EBITDAre, approved by Nareit's
Board of Governors in September 2017, defines EBITDAre as net
income (computed in accordance with GAAP), adjusted for interest
expense, income tax (benefit) expense, depreciation and
amortization, losses and gains on the disposition of depreciated
property, impairment write-downs of depreciated property and
investments in unconsolidated joint ventures, and adjustments to
reflect the entity's share of EBITDAre of unconsolidated joint
ventures. EBITDAre and Adjusted EBITDAre are presented to assist
investors in the evaluation of REITs, as a measure of the Company's
operational performance as they exclude various items that do not
relate to or are not indicative of our operating performance and
because they approximate key performance measures in our debt
covenants. Accordingly, the Company believes that the use of
EBITDAre and Adjusted EBITDAre, as opposed to income before income
taxes, in various ratios provides meaningful performance measures
related to the Company's ability to meet various coverage tests for
the stated periods. Adjusted EBITDAre may include other adjustments
not indicative of operating results as detailed in the
Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre
included in the tables accompanying this press release. The Company
also presents the ratio of net debt (net of cash) to annualized
Adjusted EBITDAre as of March 31, 2024, and net debt (net of cash)
to total market capitalization, which it believes is useful to
investors as a supplemental measure in evaluating the Company's
balance sheet leverage. The presentation of EBITDAre and Adjusted
EBITDAre is consistent with EBITDA and Adjusted EBITDA as presented
in prior periods.
The Company believes net income is the most directly comparable
GAAP financial measure to the non-GAAP performance measures
outlined above. Reconciliations of these measures to net income
have been provided in the tables accompanying this press
release.
Operating Metrics
The Company presents certain operating metrics related to our
properties, including occupancy, leasing activity and rental rates.
Operating metrics are used by the Company and are useful to
investors in facilitating an understanding of the operational
performance for our properties.
Occupancy metrics represent the percentage of occupied gross
leasable area based on executed leases (including properties in
development and redevelopment) and include leases signed, but for
which rent has not yet commenced. Same-property portfolio leased
occupancy includes properties that have been owned and operated for
the entirety of the reporting periods being compared, which total
66 properties for the three months ended March 31, 2024 and 2023.
Occupancy metrics presented for the Company's same-property
portfolio exclude properties under development, redevelopment or
that involve anchor repositioning where a substantial portion of
the gross leasable area is taken out of service and also excludes
properties acquired within the past 12 months or properties sold,
and properties that are in the foreclosure process during the
periods being compared.
Executed new leases, renewals and exercised options are
presented on a same-space basis. Same-space leases represent those
leases signed on spaces for which there was a previous lease.
The Company occasionally provides disclosures by tenant
categories which include anchors, shops and
industrial/self-storage. Anchors and shops are further broken down
by local, regional and national tenants. We define anchor tenants
as those who have a leased area of >10,000 sf. Local tenants are
defined as those with less than five locations. Regional tenants
are those with five or more locations in a single region. National
tenants are defined as those with five or more locations and
operate in two or more regions.
ADDITIONAL INFORMATION
For a copy of the Company’s supplemental disclosure package,
please access the "Investors" section of our website at
www.uedge.com. Our website also includes other financial
information, including our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any
amendments to those reports.
The Company uses, and intends to continue to use, the
“Investors” page of its website, which can be found at
www.uedge.com as a means of disclosing material nonpublic
information and of complying with its disclosure obligations under
Regulation FD, including, without limitation, through the posting
of investor presentations that may include material nonpublic
information. Accordingly, investors should monitor the “Investors”
page, in addition to following the Company's press releases, SEC
filings, public conference calls, presentations and webcasts. The
information contained on, or that may be accessed through, our
website is not incorporated by reference into, and is not a part
of, this document.
ABOUT URBAN EDGE
Urban Edge Properties is a NYSE listed real estate investment
trust focused on owning, managing, acquiring, developing, and
redeveloping retail real estate in urban communities, primarily in
the Washington, D.C. to Boston corridor. Urban Edge owns 76
properties totaling 17.4 million square feet of gross leasable
area.
FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward-looking
statements as such term is defined in Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Forward-looking statements are not
guarantees of future performance. They represent our intentions,
plans, expectations and beliefs and are subject to numerous
assumptions, risks and uncertainties. Our future results, financial
condition, business and targeted occupancy may differ materially
from those expressed in these forward-looking statements. You can
identify many of these statements by words such as “approximates,”
“believes,” “expects,” “anticipates,” “estimates,” “intends,”
“plans,” “would,” “may” or other similar expressions in this Press
Release. Many of the factors that will determine the outcome of
forward-looking statements are beyond our ability to control or
predict and include, among others: (i) macroeconomic conditions,
including geopolitical conditions and instability, which may lead
to rising inflation and disruption of, or lack of access to, the
capital markets, as well as potential volatility in the Company’s
share price; (ii) the economic, political and social impact of, and
uncertainty relating to, epidemics and pandemics; (iii) the loss or
bankruptcy of major tenants; (iv) the ability and willingness of
the Company’s tenants to renew their leases with the Company upon
expiration and the Company’s ability to re-lease its properties on
the same or better terms, or at all, in the event of non-renewal or
in the event the Company exercises its right to replace an existing
tenant; (v) the impact of e-commerce on our tenants’ business; (vi)
the Company’s success in implementing its business strategy and its
ability to identify, underwrite, finance, consummate and integrate
diversifying acquisitions and investments; (vii) changes in general
economic conditions or economic conditions in the markets in which
the Company competes, and their effect on the Company’s revenues,
earnings and funding sources, and on those of its tenants; (viii)
increases in the Company’s borrowing costs as a result of changes
in interest rates, rising inflation, and other factors; (ix) the
Company’s ability to pay down, refinance, hedge, restructure or
extend its indebtedness as it becomes due and potential limitations
on the Company’s ability to borrow funds under its existing credit
facility as a result of covenants relating to the Company’s
financial results; (x) potentially higher costs associated with the
Company’s development, redevelopment and anchor repositioning
projects, and the Company’s ability to lease the properties at
projected rates; (xi) the Company’s liability for environmental
matters; (xii) damage to the Company’s properties from catastrophic
weather and other natural events, and the physical effects of
climate change; (xiii) the Company’s ability and willingness to
maintain its qualification as a REIT in light of economic, market,
legal, tax and other considerations; (xiv) information technology
security breaches; (xv) the loss of key executives; and (xvi) the
accuracy of methodologies and estimates regarding our
environmental, social and governance (“ESG”) metrics, goals and
targets, tenant willingness and ability to collaborate towards
reporting ESG metrics and meeting ESG goals and targets, and the
impact of governmental regulation on our ESG efforts. For further
discussion of factors that could materially affect the outcome of
our forward-looking statements, see “Risk Factors” in Part I, Item
1A, of the Company's Annual Report on Form 10-K for the year ended
December 31, 2023.
We claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995 for any forward-looking statements included in this
Press Release. You are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this
Press Release. All subsequent written and oral forward-looking
statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. We do not
undertake any obligation to release publicly any revisions to our
forward-looking statements to reflect events or circumstances
occurring after the date of this Press Release.
URBAN EDGE PROPERTIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share amounts)
March 31,
December 31,
2024
2023
ASSETS
Real estate, at cost:
Land
$
645,435
$
635,905
Buildings and improvements
2,692,470
2,678,076
Construction in progress
254,525
262,275
Furniture, fixtures and equipment
10,200
9,923
Total
3,602,630
3,586,179
Accumulated depreciation and
amortization
(837,790
)
(819,243
)
Real estate, net
2,764,840
2,766,936
Operating lease right-of-use assets
50,711
56,988
Cash and cash equivalents
67,303
101,123
Restricted cash
27,748
73,125
Tenant and other receivables
16,373
14,712
Receivable arising from the
straight-lining of rents
60,062
60,775
Identified intangible assets, net of
accumulated amortization of $55,976 and $51,399, respectively
110,486
113,897
Deferred leasing costs, net of accumulated
amortization of $21,074 and $21,428, respectively
27,333
27,698
Prepaid expenses and other assets
89,209
64,555
Total assets
$
3,214,065
$
3,279,809
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net
$
1,525,345
$
1,578,110
Unsecured credit facility
153,000
153,000
Operating lease liabilities
47,639
53,863
Accounts payable, accrued expenses and
other liabilities
97,385
102,997
Identified intangible liabilities, net of
accumulated amortization of $46,397 and $46,610, respectively
168,313
170,411
Total liabilities
1,991,682
2,058,381
Commitments and contingencies
Shareholders’ equity:
Common shares: $0.01 par value;
500,000,000 shares authorized and 118,815,093 and 117,652,656
shares issued and outstanding, respectively
1,186
1,175
Additional paid-in capital
1,022,710
1,011,942
Accumulated other comprehensive income
739
460
Accumulated earnings
119,513
137,113
Noncontrolling interests:
Operating partnership
63,128
55,355
Consolidated subsidiaries
15,107
15,383
Total equity
1,222,383
1,221,428
Total liabilities and equity
$
3,214,065
$
3,279,809
URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share amounts)
Three Months Ended March
31,
2024
2023
REVENUE
Rental revenue
$
109,547
$
99,354
Other income
79
87
Total revenue
109,626
99,441
EXPENSES
Depreciation and amortization
38,574
25,084
Real estate taxes
17,003
15,677
Property operating
20,506
17,426
General and administrative
9,046
9,058
Real estate impairment loss
—
34,055
Lease expense
3,128
3,155
Total expenses
88,257
104,455
Gain on sale of real estate
1,902
356
Interest income
688
511
Interest and debt expense
(20,577
)
(15,293
)
Loss on extinguishment of debt
(272
)
—
Income (loss) before income taxes
3,110
(19,440
)
Income tax expense
(665
)
(706
)
Net income (loss)
2,445
(20,146
)
Less net (income) loss attributable to
noncontrolling interests in:
Operating partnership
(118
)
788
Consolidated subsidiaries
276
240
Net income (loss) attributable to common
shareholders
$
2,603
$
(19,118
)
Earnings (loss) per common share -
Basic:
$
0.02
$
(0.16
)
Earnings (loss) per common share -
Diluted:
$
0.02
$
(0.16
)
Weighted average shares outstanding -
Basic
118,072
117,450
Weighted average shares outstanding -
Diluted
122,814
117,450
Reconciliation of Net Income to FFO and FFO as
Adjusted
The following table reflects the reconciliation of net income to
FFO and FFO as Adjusted for the three months ended March 31, 2024
and 2023. Net income is considered the most directly comparable
GAAP measure. Refer to "Non-GAAP Financial Measures" on page 5 for
a description of FFO and FFO as Adjusted.
Three Months Ended March
31,
(in thousands, except per share
amounts)
2024
2023
Net income (loss)
$
2,445
$
(20,146
)
Less net (income) loss attributable to
noncontrolling interests in:
Consolidated subsidiaries
276
240
Operating partnership
(118
)
788
Net income (loss) attributable to common
shareholders
2,603
(19,118
)
Adjustments:
Rental property depreciation and
amortization
38,231
24,809
Limited partnership interests in operating
partnership
118
(788
)
Gain on sale of real estate
(1,902
)
(356
)
Real estate impairment loss(2)
—
34,055
FFO Applicable to diluted common
shareholders
39,050
38,602
FFO per diluted common share(1)
0.32
0.32
Adjustments to FFO:
Impact of property in foreclosure(3)
821
—
Non-cash adjustments(4)
576
(36
)
Loss on extinguishment of debt(5)
272
—
Transaction, severance and litigation
expenses
109
407
Tenant bankruptcy settlement income
(10
)
—
FFO as Adjusted applicable to diluted
common shareholders
$
40,818
$
38,973
FFO as Adjusted per diluted common
share(1)
$
0.33
$
0.32
Weighted Average diluted common
shares(1)
122,814
122,447
(1)
Weighted average diluted shares used to
calculate FFO per share and FFO as Adjusted per share for the three
months ended March 31, 2023, are higher than the GAAP weighted
average diluted shares as a result of the dilutive impact of LTIP
and OP units which may be redeemed for our common shares.
(2)
During the three months ended March 31,
2023, the Company recognized an impairment charge reducing the
carrying value of Kingswood Center, an office and retail property
located in Brooklyn, NY.
(3)
In April 2023, the Company notified the
lender of its mortgage secured by Kingswood Center that the cash
flows generated by the property are insufficient to cover the debt
service and that the Company is unwilling to fund future
shortfalls. As such, the Company defaulted on the loan and adjusted
for the default interest incurred for the second quarter of 2023.
The Company determined it is appropriate to exclude the operating
results of Kingswood Center from FFO as Adjusted as the property is
in the foreclosure process.
(4)
Includes the acceleration and write-off of
lease intangibles related to tenant terminations, and write-offs
and reinstatements of receivables arising from the straight-lining
of rents for tenants moved to and from the cash basis of
accounting.
(5)
The loss on extinguishment of debt relates
to the prepayment of three variable rate mortgage loans that were
due to mature in the fourth quarter of 2024 and had interest rates
of 7.34% on the pay off date.
Reconciliation of Net Income to NOI and Same-Property
NOI
The following table reflects the reconciliation of net income to
NOI, same-property NOI and same-property NOI including properties
in redevelopment for the three months ended March 31, 2024 and
2023. Net income is considered the most directly comparable GAAP
measure. Refer to "Non-GAAP Financial Measures" on page 5 for a
description of NOI and same-property NOI.
Three Months Ended March
31,
(in thousands)
2024
2023
Net income (loss)
$
2,445
$
(20,146
)
Depreciation and amortization
38,574
25,084
Interest and debt expense
20,577
15,293
General and administrative expense
9,046
9,058
Loss on extinguishment of debt
272
—
Other expense
225
226
Income tax expense
665
706
Gain on sale of real estate
(1,902
)
(356
)
Real estate impairment loss
—
34,055
Interest income
(688
)
(511
)
Non-cash revenue and expenses
(2,522
)
(2,263
)
NOI
66,692
61,146
Adjustments:
Sunrise Mall net operating loss
522
1,014
Tenant bankruptcy settlement income and
lease termination income
(47
)
(8
)
Non-same property NOI and other(1)
(12,494
)
(8,654
)
Same-property NOI
$
54,673
$
53,498
NOI related to properties being
redeveloped
5,813
4,803
Same-property NOI including properties in
redevelopment
$
60,486
$
58,301
(1)
Non-same property NOI includes NOI related
to properties being redeveloped and properties acquired, disposed,
or that are in the foreclosure process during the periods being
compared.
Reconciliation of Net Income to EBITDAre and Adjusted
EBITDAre
The following table reflects the reconciliation of net income to
EBITDAre and Adjusted EBITDAre for the three months ended March 31,
2024 and 2023. Net income is considered the most directly
comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on
page 5 for a description of EBITDAre and Adjusted EBITDAre.
Three Months Ended March
31,
(in thousands)
2024
2023
Net income (loss)
$
2,445
$
(20,146
)
Depreciation and amortization
38,574
25,084
Interest and debt expense
20,577
15,293
Income tax expense
665
706
Gain on sale of real estate
(1,902
)
(356
)
Real estate impairment loss
—
34,055
EBITDAre
60,359
54,636
Adjustments for Adjusted EBITDAre:
Non-cash adjustments(2)
698
(36
)
Transaction, severance and litigation
expenses
109
407
Loss on extinguishment of debt
272
—
Tenant bankruptcy settlement income
(10
)
—
Impact of property in foreclosure(1)
(625
)
—
Adjusted EBITDAre
$
60,803
$
55,007
(1)
Adjustment reflects the operating income
for Kingswood Center, excluding $1.4 million of interest and debt
expense and $0.4 million of depreciation and amortization expense
that is already adjusted for the purposes of calculating EBITDAre.
See footnote 3 on page 11 for additional information.
(2)
Includes the acceleration and write-off of
lease intangibles related to tenant terminations, and write-offs
and reinstatements of receivables arising from the straight-lining
of rents for tenants moved to and from the cash basis of
accounting. The adjustment to EBITDAre in calculating Adjusted
EBITDAre is inclusive of the portion attributable to the
noncontrolling interest in Sunrise Mall.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240507863391/en/
Mark Langer, EVP and Chief Financial Officer 212-956-2556
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