NEW YORK--(BUSINESS WIRE)--
Urban Edge Properties (NYSE:UE) (the "Company") today announced its
results for the quarter ended September 30, 2018.
Financial Results(1)(2)
-
Generated net income of $26.9 million, or $0.21 per diluted share, for
the quarter and $109.7 million, or $0.86 per diluted share, for the
nine months ended September 30, 2018.
-
Generated Funds from Operations applicable to diluted common
shareholders ("FFO") of $48.5 million, or $0.38 per share, for the
quarter compared to $40.0 million, or $0.32 per share, for the third
quarter of 2017 and $132.2 million, or $1.04 per share, for the nine
months ended September 30, 2018 compared to $152.1 million, or $1.32
per share, for the nine months ended September 30, 2017.
-
Generated FFO as Adjusted of $41.9 million, or $0.33 per share, for
the quarter compared to $41.9 million, or $0.34 per share, for the
third quarter of 2017 and $124.7 million, or $0.98 per share, for the
nine months ended September 30, 2018 compared to $115.8 million, or
$1.00 per share, for the nine months ended September 30, 2017.
-
FFO as Adjusted for the quarter excludes the $7.0 million net impact
of Toys "R" Us lease terminations resulting from $16.5 million of
income for the write-off of below market intangible liabilities
partially offset by a $9.5 million lease termination payment, a $2.2
million gain on sale of land, $1.9 million of executive transition
costs and $0.4 million of transaction costs. FFO as Adjusted for the
nine months ended September 30, 2018 excludes the factors above as
well as a $1.9 million net expense from the Toys "R" Us lease
terminations, $2.5 million gain on extinguishment of debt, a $0.7
million hurricane related casualty gain and $0.6 million of
environmental remediation costs.
Operating Results(1)
-
Increased same-property cash Net Operating Income ("NOI") including
properties in redevelopment by 2.2% compared to the third quarter of
2017 and by 1.9% compared to the nine months ended September 30, 2017.
Third quarter and nine months ended September 30, 2018 results were
negatively impacted by 150 basis points and 70 basis points,
respectively, as a result of Toys "R" Us store closures.
-
Increased same-property cash NOI excluding properties in redevelopment
by 0.7% over the third quarter of 2017 and by 1.2% compared to the
nine months ended September 30, 2017. Third quarter and nine months
ended September 30, 2018 results were negatively impacted by 140 basis
points and 60 basis points, respectively, as a result of Toys "R" Us
store closures.
-
Reported same-property retail portfolio occupancy of 95.2%, a decrease
of 140 basis points compared to September 30, 2017, which includes a
170 basis point decline attributable to the Toys "R" Us vacancies.
-
Reported consolidated retail portfolio occupancy of 94.4%, a decrease
of 140 basis points compared to September 30, 2017, which includes a
180 basis point decline attributable to the Toys "R" Us vacancies.
-
Executed 39 new leases, renewals and options totaling 429,000 square
feet ("sf") during the quarter. Same-space leases totaled 410,000 sf
and generated average rent spreads of 19.9% on a GAAP basis and 6.1%
on a cash basis.
Toys "R" Us
The Company views the Toys "R" Us bankruptcy as an opportunity to
upgrade its spaces with more vibrant retailers and to redevelop certain
centers. The Company previously had nine Toys "R" Us leases comprising
approximately 400,000 sf that paid an average base rent of $13 per sf,
significantly below our estimate of current market rent.
The status of the nine leases is as follows:
-
One lease was assumed by Raymour & Flanigan.
-
The Company paid $15.5 million to recapture the leases at Bruckner
Commons and Hudson Mall to accelerate the redevelopment of each
property.
-
The Company is actively negotiating letters of intent with national
value retailers for four vacancies.
-
Two vacancies are being marketed.
Development, Redevelopment and Anchor Repositioning Activity
During the third quarter, the Company completed two redevelopment
projects totaling $20.2 million at The Outlets at Montehiedra Town
Center in Puerto Rico and Lawnside Commons in New Jersey, which are
expected to generate an unleveraged yield of 12%.
The Company also commenced three new redevelopment projects with
estimated gross costs of $15.9 million expected to generate an
unleveraged yield of 9%. The projects include (i) expanding Kearny
Commons by 22,000 sf to accommodate Ulta, Starbucks and other tenants,
(ii) repurposing 82,000 sf of vacant basement space at The Plaza at
Woodbridge into a self-storage facility, and (iii) converting a former
sit-down restaurant at Mt. Kisco Commons into Chipotle and another quick
service restaurant.
The Company has $202 million of active redevelopment projects under way
expected to generate a 7% unleveraged yield. Approximately $74 million
of that amount remains to be funded.
Balance Sheet Highlights at September 30, 2018(1)(3)(4)
-
Total market capitalization of approximately $4.4 billion comprised of
127.1 million fully-diluted common shares valued at $2.8 billion and
$1.6 billion of debt.
-
Net debt to total market capitalization of 25%.
-
Net debt to Adjusted Earnings before interest, tax, depreciation and
amortization for real estate ("EBITDAre") of 4.7x.
- $465.6 million of cash and cash equivalents, including restricted
cash, and no amounts drawn on the $600 million revolving credit
facility.
| (1) |
|
Refer to "Non-GAAP Financial Measures" and "Operating Metrics" for
definitions and additional detail.
| |
| (2) | |
Refer to page 8 for a reconciliation of net income to FFO and FFO as
Adjusted for the quarter and nine months ended September 30, 2018.
| |
| (3) | |
Refer to page 10 for a reconciliation of net income to EBITDAre and
annualized Adjusted EBITDAre for the quarter and nine months ended
September 30, 2018.
| |
| (4) | |
Net debt as of September 30, 2018 is calculated as total
consolidated debt of $1.6 billion less total cash and cash
equivalents, including restricted cash, of $465.6 million.
| |
| | |
|
Non-GAAP Financial Measures
The Company uses certain non-GAAP performance measures, in addition to
the primary GAAP presentations, as we believe these measures improve the
understanding of the Company's operational results. We continually
evaluate the usefulness, relevance, limitations, and calculation of our
reported non-GAAP performance measures to determine how best to provide
relevant information to the investing public, and thus such reported
measures are subject to change. The Company's non-GAAP performance
measures have limitations as they do not include all items of income and
expense that affect operations, and accordingly, should always be
considered as supplemental financial results. The following non-GAAP
measures are commonly used by the Company and investing public to
understand and evaluate our operating results and performance:
-
FFO: The Company believes FFO is a useful, supplemental measure of its
operating performance that is a recognized metric used extensively by
the real estate industry and, in particular REITs. FFO, as defined by
the National Association of Real Estate Investment Trusts ("NAREIT")
and the Company, is net income (computed in accordance with GAAP),
excluding gains (or losses) from sales of depreciated real estate
assets, impairments on depreciable real estate, rental property
depreciation and amortization expense. The Company believes that
financial analysts, investors and shareholders are better served by
the presentation of comparable period operating results generated from
FFO primarily because it excludes the assumption that the value of
real estate assets diminish predictably. FFO does not represent cash
flows from operating activities in accordance with GAAP, should not be
considered an alternative to net income as an indication of our
performance, and is not indicative of cash flow as a measure of
liquidity or our ability to make cash distributions.
-
FFO as Adjusted: The Company provides disclosure of FFO as Adjusted
because it believes it is a useful supplemental measure of its core
operating performance that facilitates comparability of historical
financial periods. FFO as Adjusted is calculated by making certain
adjustments to FFO to account for items the Company does not believe
are representative of ongoing core operating results, including
non-comparable revenues and expenses. The Company's method of
calculating FFO as Adjusted may be different from methods used by
other REITs and, accordingly, may not be comparable to such other
REITs.
-
Cash NOI: The Company uses cash NOI internally to make investment and
capital allocation decisions and to compare the unlevered performance
of our properties to our peers. The Company believes cash NOI is
useful to investors as a performance measure because, when compared
across periods, cash NOI reflects the impact on operations from trends
in occupancy rates, rental rates, operating costs and acquisition and
disposition activity on an unleveraged basis, providing perspective
not immediately apparent from operating income or net income. The
Company calculates cash NOI using net income as defined by GAAP
reflecting only those income and expense items that are incurred at
the property level, adjusted for the following items: lease
termination fees, bankruptcy settlement income, non-cash rental income
and ground rent expense, and income or expenses that we do not believe
are representative of ongoing operating results, if any.
-
Same-property Cash NOI: The Company provides disclosure of cash NOI on
a same-property basis, which includes the results of properties that
were owned and operated for the entirety of the reporting periods
being compared totaling 83 properties for the three months ended
September 30, 2018 and 2017 and 75 properties for the nine months
ended September 30, 2018 and 2017. Information provided on a
same-property basis excludes properties under development,
redevelopment or that involve anchor repositioning where a substantial
portion of the gross leasable area ("GLA") is taken out of service and
also excludes properties acquired, sold, or under contract to be sold
during the periods being compared. As such, same-property cash NOI
assists in eliminating disparities in net income due to the
development, redevelopment, acquisition or disposition of properties
during the periods presented, and thus provides a more consistent
performance measure for the comparison of the operating performance of
the Company's properties. While there is judgment surrounding changes
in designations, a property is removed from the same-property pool
when it is designated as a redevelopment property because it is
undergoing significant renovation or retenanting pursuant to a formal
plan that is expected to have a significant impact on its operating
income. A development or redevelopment property is moved back to the
same-property pool once a substantial portion of the NOI growth
expected from the development or redevelopment is reflected in both
the current and comparable prior year period, generally one year after
at least 80% of the expected NOI from the project is realized on a
cash basis. Acquisitions are moved into the same-property pool once we
have owned the property for the entirety of the comparable periods and
the property is not under significant development or redevelopment.
The Company has also provided disclosure of cash NOI on a
same-property basis adjusted to include redevelopment properties.
Same-property cash NOI may include other adjustments as detailed in
the Reconciliation of Net Income to cash NOI and same-property cash
NOI included in the tables accompanying this press release.
-
EBITDAre and Adjusted EBITDAre: EBITDAre and Adjusted EBITDAre are
supplemental, non-GAAP measures utilized by us in various financial
ratios. The White Paper on EBITDAre, approved by NAREIT's Board of
Governors in September 2017, defines EBITDAre as net income (computed
in accordance with GAAP), adjusted for interest expense, income tax
expense, depreciation and amortization, losses and gains on the
disposition of depreciated property, impairment write-downs of
depreciated property and investments in unconsolidated joint ventures,
and adjustments to reflect the entity's share of EBITDAre of
unconsolidated joint ventures. EBITDAre and Adjusted EBITDAre are
presented to assist investors in the evaluation of REITs, as a measure
of the Company's operational performance as they exclude various items
that do not relate to or are not indicative of our operating
performance and because they approximate key performance measures in
our debt covenants. Accordingly, the Company believes that the use of
EBITDAre and Adjusted EBITDAre, as opposed to income before income
taxes in various ratios, provides meaningful performance measures
related to the Company's ability to meet various coverage tests for
the stated periods. Adjusted EBITDAre may include other adjustments
not indicative of operating results as detailed in the Reconciliation
of Net Income to EBITDAre and Adjusted EBITDAre included in the tables
accompanying this press release. The Company also presents the ratio
of net debt (net of cash) to annualized Adjusted EBITDAre as of
September 30, 2018, and net debt (net of cash) to total market
capitalization, which it believes is useful to investors as a
supplemental measure in evaluating the Company's balance sheet
leverage. The presentation of EBITDAre and Adjusted EBITDAre is
consistent with EBITDA and Adjusted EBITDA as presented in prior
periods.
The Company believes net income is the most directly comparable GAAP
financial measure to the non-GAAP performance measures outlined above.
Reconciliations of these measures to net income have been provided in
the tables accompanying this press release.
Operating Metrics
The Company presents certain operating metrics related to our
properties, including occupancy, leasing activity and rental rates.
Operating metrics are used by the Company and are useful to investors in
facilitating an understanding of the operational performance for our
properties.
Occupancy metrics represent the percentage of occupied gross leasable
area based on executed leases (including properties in development and
redevelopment) and includes leases signed, but for which rent has not
yet commenced. Same-property retail portfolio occupancy includes
shopping centers and malls that have been owned and operated for the
entirety of the reporting periods being compared totaling 83 properties
for the three months ended September 30, 2018 and 2017 and 75 properties
for the nine months ended September 30, 2018 and 2017. Occupancy metrics
presented for the Company's same-property retail portfolio excludes
properties under development, redevelopment or that involve anchor
repositioning where a substantial portion of the gross leasable area is
taken out of service and also excludes properties acquired within the
past 12 months, properties sold, or under contract to be sold during the
periods being compared.
Executed new leases, renewals and exercised options are presented on a
same-space basis. Same-space leases represent those leases signed on
spaces for which there was a previous lease with comparable gross
leasable area.
ADDITIONAL INFORMATION
For a copy of the Company’s supplemental disclosure package, please
access the "Investors" section of our website at www.uedge.com.
Our website also includes other financial information, including our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and amendments to those reports.
ABOUT URBAN EDGE
Urban Edge Properties is a NYSE listed real estate investment trust
focused on managing, acquiring, developing, and redeveloping retail real
estate in urban communities, primarily in the New York metropolitan
region. Urban Edge owns 88 properties totaling 16.3 million square feet
of gross leasable area.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Press Release constitute
forward-looking statements as such term is defined in Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements are not
guarantees of future performance. They represent our intentions, plans,
expectations and beliefs and are subject to numerous assumptions, risks
and uncertainties. Our future results, financial condition and business
may differ materially from those expressed in these forward-looking
statements. You can find many of these statements by looking for words
such as “approximates,” “believes,” “expects,” “anticipates,”
“estimates,” “intends,” “plans,” “would,” “may” or other similar
expressions in this Press Release. Many of the factors that will
determine the outcome of these and our other forward-looking statements
are beyond our ability to control or predict; these factors include,
among others, the Company's ability to complete its active development,
redevelopment and anchor repositioning projects, the Company's ability
to pursue, finance and complete acquisition opportunities, the Company's
ability to engage in the projects in its planned expansion and
redevelopment pipeline, the Company's ability to achieve the estimated
unleveraged returns for such projects and acquisitions, the estimated
remediation and repair costs related to natural disasters at the
affected properties and the loss of or bankruptcy of a major tenant and
the impact of any such event. For further discussion of factors that
could materially affect the outcome of our forward-looking statements,
see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K
for the year ended December 31, 2017 and the other documents filed by
the Company with the Securities and Exchange Commission.
For these statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. You are cautioned not to place undue
reliance on our forward-looking statements, which speak only as of the
date of this Press Release. All subsequent written and oral
forward-looking statements attributable to us or any person acting on
our behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. We do not undertake
any obligation to release publicly any revisions to our forward-looking
statements to reflect events or circumstances occurring after the date
of this Press Release.
|
|
|
|
URBAN EDGE PROPERTIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) |
|
|
|
| |
|
| |
| | | | September 30, | | | December 31, |
| | | | 2018 | | | 2017 |
| ASSETS | | | | | | | |
|
Real estate, at cost:
| | | | | | | |
|
Land
| | | |
$
|
533,859
| | | |
$
|
521,669
| |
|
Buildings and improvements
| | | |
2,132,712
| | | |
2,010,527
| |
|
Construction in progress
| | | |
79,488
| | | |
133,761
| |
|
Furniture, fixtures and equipment
| | | |
6,662
|
| | |
5,897
|
|
|
Total
| | | |
2,752,721
| | | |
2,671,854
| |
|
Accumulated depreciation and amortization
| | | |
(633,675
|
)
| | |
(587,127
|
)
|
|
Real estate, net
| | | |
2,119,046
| | | |
2,084,727
| |
|
Cash and cash equivalents
| | | |
449,307
| | | |
490,279
| |
|
Restricted cash
| | | |
16,269
| | | |
10,562
| |
|
Tenant and other receivables, net of allowance for doubtful accounts
of $6,485 and $4,937, respectively
| | | |
28,799
| | | |
20,078
| |
|
Receivable arising from the straight-lining of rents, net of
allowance for doubtful accounts of $662 and $494, respectively
| | | |
84,828
| | | |
85,843
| |
|
Identified intangible assets, net of accumulated amortization of
$38,905 and $33,827, respectively
| | | |
72,841
| | | |
87,249
| |
|
Deferred leasing costs, net of accumulated amortization of $16,043
and $14,796, respectively
| | | |
21,088
| | | |
20,268
| |
|
Deferred financing costs, net of accumulated amortization of $2,508
and $1,740, respectively
| | | |
2,475
| | | |
3,243
| |
|
Prepaid expenses and other assets
| | | |
16,194
|
| | |
18,559
|
|
|
Total assets
| | | |
$
|
2,810,847
|
| | |
$
|
2,820,808
|
|
| | | | | | |
|
| LIABILITIES AND EQUITY | | | | | | | |
|
Liabilities:
| | | | | | | |
|
Mortgages payable, net
| | | |
$
|
1,550,995
| | | |
$
|
1,564,542
| |
|
Accounts payable and accrued expenses
| | | |
70,227
| | | |
69,595
| |
|
Identified intangible liabilities, net of accumulated amortization
of $64,252 and $65,832, respectively
| | | |
148,715
| | | |
180,959
| |
|
Other liabilities
| | | |
17,656
|
| | |
15,171
|
|
|
Total liabilities
| | | |
1,787,593
|
| | |
1,830,267
|
|
|
Commitments and contingencies
| | | | | | | |
|
Shareholders’ equity:
| | | | | | | |
|
Common shares: $0.01 par value; 500,000,000 shares authorized and
114,175,607 and 113,827,529 shares issued and outstanding,
respectively
| | | |
1,141
| | | |
1,138
| |
|
Additional paid-in capital
| | | |
951,959
| | | |
946,402
| |
|
Accumulated deficit
| | | |
(34,221
|
)
| | |
(57,621
|
)
|
|
Noncontrolling interests:
| | | | | | | |
|
Operating partnership
| | | |
103,937
| | | |
100,218
| |
|
Consolidated subsidiaries
| | | |
438
|
| | |
404
|
|
|
Total equity
| | | |
1,023,254
|
| | |
990,541
|
|
|
Total liabilities and equity
| | | |
$
|
2,810,847
|
| | |
$
|
2,820,808
|
|
|
|
|
|
URBAN EDGE PROPERTIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) |
|
|
|
| |
|
| |
| | | | Three Months Ended September 30, | | | Nine Months Ended September 30, |
| | | | 2018 |
| 2017 | | | 2018 |
| 2017 |
| REVENUE | | | | | | | | | | | |
|
Property rentals
| | | |
$
|
85,949
| | |
$
|
69,625
| | | |
$
|
230,217
| | |
$
|
196,831
| |
|
Tenant expense reimbursements
| | | |
25,784
| | |
23,938
| | | |
80,678
| | |
71,590
| |
|
Management and development fees
| | | |
375
| | |
369
| | | |
1,064
| | |
1,199
| |
|
Income from acquired leasehold interest
| | | |
—
| | |
—
| | | |
—
| | |
39,215
| |
|
Other income
| | | |
106
|
| |
169
|
| | |
1,278
|
| |
831
|
|
|
Total revenue
| | | |
112,214
|
| |
94,101
|
| | |
313,237
|
| |
309,666
|
|
| EXPENSES | | | | | | | | | | | |
|
Depreciation and amortization
| | | |
21,833
| | |
20,976
| | | |
73,544
| | |
60,505
| |
|
Real estate taxes
| | | |
16,374
| | |
15,872
| | | |
47,736
| | |
43,975
| |
|
Property operating
| | | |
22,249
| | |
11,402
| | | |
59,408
| | |
35,858
| |
|
General and administrative
| | | |
9,702
| | |
7,025
| | | |
25,579
| | |
22,998
| |
|
Casualty and impairment loss (gain), net
| | | |
58
| | |
2,170
| | | |
(1,248
|
)
| |
5,637
| |
|
Ground rent
| | | |
2,722
| | |
2,891
| | | |
8,210
| | |
7,997
| |
|
Provision for doubtful accounts
| | | |
79
|
| |
575
|
| | |
2,588
|
| |
1,674
|
|
|
Total expenses
| | | |
73,017
|
| |
60,911
|
| | |
215,817
|
| |
178,644
|
|
|
Operating income
| | | |
39,197
| | |
33,190
| | | |
97,420
| | |
131,022
| |
|
Gain on sale of real estate
| | | |
2,185
| | |
202
| | | |
52,625
| | |
202
| |
|
Interest income
| | | |
2,388
| | |
719
| | | |
5,943
| | |
1,182
| |
|
Interest and debt expense
| | | |
(16,756
|
)
| |
(14,637
|
)
| | |
(48,059
|
)
| |
(41,379
|
)
|
|
Gain (loss) on extinguishment of debt
| | | |
—
|
| |
—
|
| | |
2,524
|
| |
(1,274
|
)
|
|
Income before income taxes
| | | |
27,014
| | |
19,474
| | | |
110,453
| | |
89,753
| |
|
Income tax expense
| | | |
(115
|
)
| |
(318
|
)
| | |
(741
|
)
| |
(942
|
)
|
|
Net income
| | | |
26,899
| | |
19,156
| | | |
109,712
| | |
88,811
| |
|
Less net income attributable to noncontrolling interests in:
| | | | | | | | | | | |
|
Operating partnership
| | | |
(2,688
|
)
| |
(1,967
|
)
| | |
(11,041
|
)
| |
(7,431
|
)
|
|
Consolidated subsidiaries
| | | |
(11
|
)
| |
(11
|
)
| | |
(34
|
)
| |
(33
|
)
|
|
Net income attributable to common shareholders
| | | |
$
|
24,200
|
| |
$
|
17,178
|
| | |
$
|
98,637
|
| |
$
|
81,347
|
|
| | | | | | | | | | |
|
|
Earnings per common share - Basic:
| | | |
$
|
0.21
|
| |
$
|
0.15
|
| | |
$
|
0.87
|
| |
$
|
0.77
|
|
|
Earnings per common share - Diluted:
| | | |
$
|
0.21
|
| |
$
|
0.15
|
| | |
$
|
0.86
|
| |
$
|
0.77
|
|
|
Weighted average shares outstanding - Basic
| | | |
113,890
|
| |
110,990
|
| | |
113,769
|
| |
104,938
|
|
|
Weighted average shares outstanding - Diluted
| | | |
114,156
|
| |
111,260
|
| | |
114,236
|
| |
115,323
|
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
Reconciliation of Net Income to FFO and FFO as Adjusted
The following table reflects the reconciliation of net income to FFO and
FFO as Adjusted for the three and nine months ended September 30, 2018
and 2017, respectively. Net income is considered the most directly
comparable GAAP measure. Refer to "Non-GAAP Financial Measures" on page
3 for a description of FFO and FFO as Adjusted.
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| | | 2018 |
| 2017 | | | 2018 |
| 2017 |
|
Net income
| | |
$
|
26,899
| | |
$
|
19,156
| | | |
$
|
109,712
| | |
$
|
88,811
| |
|
Less net income attributable to noncontrolling interests in:
| | | | | | | | | | |
|
Operating partnership
| | |
(2,688
|
)
| |
(1,967
|
)
| | |
(11,041
|
)
| |
(7,431
|
)
|
|
Consolidated subsidiaries
| | |
(11
|
)
| |
(11
|
)
| | |
(34
|
)
| |
(33
|
)
|
|
Net income attributable to common shareholders
| | |
24,200
| | |
17,178
| | | |
98,637
| | |
81,347
| |
|
Adjustments:
| | | | | | | | | | |
|
Rental property depreciation and amortization
| | |
21,639
| | |
20,855
| | | |
72,969
| | |
59,886
| |
|
Gain on sale of real estate
| | |
—
| | |
—
| | | |
(50,440
|
)
| |
—
| |
|
Real estate impairment loss
| | |
—
| | |
—
| | | |
—
| | |
3,467
| |
|
Limited partnership interests in operating partnership
| | |
2,688
|
| |
1,967
|
| | |
11,041
|
| |
7,431
|
|
|
FFO Applicable to diluted common shareholders
| | |
48,527
|
| |
40,000
|
| | |
132,207
|
| |
152,131
|
|
|
FFO per diluted common share(1) | | |
0.38
|
| |
0.32
|
| | |
1.04
|
| |
1.32
|
|
|
Adjustments to FFO:
| | | | | | | | | | |
|
Impact of Toys "R" Us, Inc. lease terminations(2) | | |
(6,956
|
)
| |
—
| | | |
(5,081
|
)
| |
—
| |
|
Gain on sale of land
| | |
(2,185
|
)
| |
(202
|
)
| | |
(2,185
|
)
| |
(202
|
)
|
|
Tenant bankruptcy settlement income
| | |
(27
|
)
| |
(115
|
)
| | |
(305
|
)
| |
(628
|
)
|
|
Casualty (gain) loss, net(4) | | |
(3
|
)
| |
2,170
| | | |
(691
|
)
| |
2,170
| |
|
Executive transition costs(3) | | |
1,932
| | |
—
| | | |
1,932
| | |
—
| |
|
Transaction costs
| | |
396
| | |
95
| | | |
396
| | |
278
| |
|
Construction rental abatement
| | |
164
| | |
—
| | | |
164
| | |
—
| |
|
Tax impact from hurricane
| | |
3
| | |
—
| | | |
229
| | |
—
| |
|
Environmental remediation costs
| | |
—
| | |
—
| | | |
584
| | |
—
| |
|
(Gain) loss on extinguishment of debt
| | |
—
| | |
—
| | | |
(2,524
|
)
| |
1,274
| |
|
Income from acquired leasehold interest
| | |
—
|
| |
—
|
| | |
—
|
| |
(39,215
|
)
|
|
FFO as Adjusted applicable to diluted common shareholders
| | |
$
|
41,851
|
| |
$
|
41,948
|
| | |
$
|
124,726
|
| |
$
|
115,808
|
|
|
FFO as Adjusted per diluted common share(1) | | |
$
|
0.33
|
| |
$
|
0.34
|
| | |
$
|
0.98
|
| |
$
|
1.00
|
|
| | | | | | | | | |
|
|
Weighted Average diluted common shares(1) | | |
126,709
| | |
123,989
| | | |
126,644
| | |
115,654
| |
(1) |
|
Weighted average diluted shares used to calculate FFO per share and
FFO as Adjusted per share for the three and nine months ended
September 30, 2018 and the three months ended September 30, 2017 are
higher than the GAAP weighted average diluted shares as a result of
the dilutive impact of LTIP and OP units which may be redeemed for
our common stock. These redeemable units are not included in the
weighted average diluted share count for GAAP purposes because their
inclusion is anti-dilutive. LTIP and OP units are included for the
nine months ended September 30, 2017 as their inclusion is dilutive.
| |
| (2) | |
Amount for the three months ended September 30, 2018 reflects the
write-off of $16.5 million of below-market intangible liabilities
(classified within property rental revenue), partially offset by a
$9.5 million lease termination payment (classified within property
operating expense). The amount for the nine months ended September
30, 2018 includes the write-off of $21.6 million of below-market
intangible liabilities, partially offset by $15.5 million of lease
termination payments and $1.0 million of a provision for doubtful
accounts for reserves recorded on straight-line rents.
| |
| (3) | |
Amount reflects costs associated with hiring a new Chief Operating
Officer and a new President of Development and severance expenses
related to the termination of a prior executive.
| |
| (4) | |
The amount reflects insurance proceeds net of losses as a result of
Hurricane Maria in Puerto Rico in September 2017 and a tornado in
Wilkes-Barre, PA, in June 2018:
| |
|
| |
|
| |
| (in thousands) | | Three Months Ended September 30, 2018 | | | Nine Months Ended September 30, 2018 |
|
Insurance proceeds, net of casualty related expenses
| |
$
|
(58
|
)
| | |
$
|
1,248
| |
|
Reversal of provision for doubtful accounts on previously reserved
balances
| |
142
| | | |
369
| |
|
Property rental and tenant reimbursement losses
| |
(81
|
)
| | |
(926
|
)
|
|
Casualty gain, net
| |
$
|
3
|
| | |
$
|
691
|
|
| | | | | | | | |
|
| | | | | | | | |
|
Reconciliation of Net Income to Cash NOI and Same-Property Cash NOI
The following table reflects the reconciliation of net income to cash
NOI, same-property cash NOI and same-property cash NOI including
properties in redevelopment for the three and nine months ended
September 30, 2018 and 2017, respectively. Net income is considered the
most directly comparable GAAP measure. Refer to "Non-GAAP Financial
Measures" on page 3 for a description of cash NOI and same-property cash
NOI.
|
|
| |
|
| |
| | | Three Months Ended September 30, 2018 | | | Nine Months Ended September 30, 2018 |
| (Amounts in thousands) | | | 2018 |
| 2017 | | | 2018 |
| 2017 |
|
Net income
| | |
$
|
26,899
| | |
$
|
19,156
| | | |
$
|
109,712
| | |
$
|
88,811
| |
|
Management and development fee income from non-owned properties
| | |
(375
|
)
| |
(369
|
)
| | |
(1,064
|
)
| |
(1,199
|
)
|
|
Other income
| | |
(46
|
)
| |
(38
|
)
| | |
(119
|
)
| |
(124
|
)
|
|
Depreciation and amortization
| | |
21,833
| | |
20,976
| | | |
73,544
| | |
60,505
| |
|
General and administrative expense
| | |
9,702
| | |
7,025
| | | |
25,579
| | |
22,998
| |
|
Casualty and impairment loss (gain), net(5) | | |
58
| | |
2,170
| | | |
(1,248
|
)
| |
5,637
| |
|
Gain on sale of real estate
| | |
(2,185
|
)
| |
(202
|
)
| | |
(52,625
|
)
| |
(202
|
)
|
|
Interest income
| | |
(2,388
|
)
| |
(719
|
)
| | |
(5,943
|
)
| |
(1,182
|
)
|
|
Interest and debt expense
| | |
16,756
| | |
14,637
| | | |
48,059
| | |
41,379
| |
|
(Gain) loss on extinguishment of debt
| | |
—
| | |
—
| | | |
(2,524
|
)
| |
1,274
| |
|
Income tax expense
| | |
115
| | |
318
| | | |
741
| | |
942
| |
|
Non-cash revenue and expenses
| | |
(19,514
|
)
| |
(2,554
|
)
| | |
(28,595
|
)
| |
(44,807
|
)
|
|
Cash NOI(1) | | |
50,855
|
| |
60,400
|
| | |
165,517
|
| |
174,032
|
|
|
Adjustments:
| | | | | | | | | | |
|
Non-same property cash NOI(1)(2) | | |
(6,627
|
)
| |
(6,807
|
)
| | |
(38,027
|
)
| |
(32,149
|
)
|
|
Tenant bankruptcy settlement and lease termination income
| | |
(27
|
)
| |
(115
|
)
| | |
(1,004
|
)
| |
(628
|
)
|
|
Natural disaster related operating (gain) loss(3) | | |
(6
|
)
| |
—
| | | |
172
| | |
—
| |
|
Lease termination payment
| | |
9,500
| | |
—
| | | |
15,500
| | |
—
| |
|
Construction rental abatement
| | |
164
| | |
—
| | | |
164
| | |
—
| |
|
Environmental remediation costs
| | |
—
|
| |
—
|
| | |
584
|
| |
—
|
|
|
Same-property cash NOI(6) | | |
$
|
53,859
|
| |
$
|
53,478
|
| | |
$
|
142,906
|
| |
$
|
141,255
|
|
|
Cash NOI related to properties being redeveloped(4) | | |
5,441
|
| |
4,562
|
| | |
15,162
|
| |
13,871
|
|
|
Same-property cash NOI including properties in redevelopment(6) | | |
$
|
59,300
|
| |
$
|
58,040
|
| | |
$
|
158,068
|
| |
$
|
155,126
|
|
| (1) |
|
Cash NOI is calculated as total property revenues less property
operating expenses excluding the net effects of non-cash rental
income and non-cash ground rent expense but includes bad debt
expense.
| |
| (2) | |
Non-same property cash NOI includes cash NOI related to properties
being redeveloped and properties acquired or disposed.
| |
| (3) | |
Amount reflects rental and tenant reimbursement losses, and
reversals of provisions for payments received from tenants at Las
Catalinas in Puerto Rico and Wilkes-Barre, PA. | |
| (4) | |
The third quarter of 2018 excludes a $0.1 million reversal of
provisions for payments received from tenants at Montehiedra. The
nine months ended September 30, 2018 excludes $0.6 million of rental
and tenant reimbursement losses, partially offset by a $0.2 million
reversal of provisions for payments received from tenants at
Montehiedra.
| |
| (5) | |
The three and nine months ended September 30, 2018 reflect insurance
proceeds offset by hurricane-related expenses. The three and nine
months ended September 30, 2017 reflect a casualty charge of $2.2
million to write-off the estimated net book value of the fixed
assets damaged by Hurricane Maria and the nine months ended
September 30, 2017 also include $3.5 million real estate impairment
losses recorded as a result of the sale of our property in
Eatontown, NJ.
| |
| (6) | |
The results for the three and nine months ended September 30, 2018
were negatively impacted by Toys "R" Us store closures. Excluding
these amounts, same-property cash NOI would have increased by 2.1%
for the quarter and by 1.8% for the nine months ended September 30,
2018, and same-property cash NOI including properties in
redevelopment would have increased by 3.7% for the quarter and by
2.6% for the nine months ended September 30, 2018:
| |
|
|
|
| |
| |
| |
| |
| | | | Three Months Ended September 30, | | Percent Change | | Nine Months Ended September 30, | | Percent Change |
| | | | 2018 |
| 2017 | | | 2018 |
| 2017 | |
|
Same-property cash NOI
| | | |
$
|
53,859
| |
$
|
53,478
| |
0.7%
| |
$
|
142,906
| |
$
|
141,255
| |
1.2%
|
|
Cash NOI lost due to Toys "R" Us
| | | |
761
| |
—
| |
| |
865
| |
—
| |
|
|
Same-property cash NOI including item above
| | | |
54,620
| |
53,478
| |
2.1%
| |
143,771
| |
141,255
| |
1.8%
|
|
Cash NOI related to properties being redeveloped
| | | |
5,441
| |
4,562
| | | |
15,162
| |
13,871
| | |
|
Cash NOI lost due to Toys "R" Us at properties being redeveloped
| | | |
142
| |
—
| |
| |
200
| |
—
| |
|
|
Same-property cash NOI including properties in redevelopment and
including item above
| | | |
$
|
60,203
| |
$
|
58,040
| |
3.7%
| |
$
|
159,133
| |
$
|
155,126
| |
2.6%
|
| | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | |
|
Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre
The following table reflects the reconciliation of net income to
EBITDAre and Adjusted EBITDAre for the three and nine months ended
September 30, 2018 and 2017, respectively. Net income is considered the
most directly comparable GAAP measure. Refer to "Non-GAAP Financial
Measures" on page 3 for a description of EBITDAre and Adjusted EBITDAre.
|
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| (Amounts in thousands) | | | | 2018 |
| 2017 | | | 2018 |
| 2017 |
|
Net income
| | | |
$
|
26,899
| | |
$
|
19,156
| | | |
$
|
109,712
| | |
$
|
88,811
| |
|
Depreciation and amortization
| | | |
21,833
| | |
20,976
| | | |
73,544
| | |
60,505
| |
|
Interest and debt expense
| | | |
16,756
| | |
14,637
| | | |
48,059
| | |
41,379
| |
|
Income tax expense
| | | |
115
| | |
318
| | | |
741
| | |
942
| |
|
Gain on sale of real estate
| | | |
—
| | |
—
| | | |
(50,440
|
)
| |
—
| |
|
Real estate impairment loss
| | | |
—
|
| |
—
|
| | |
—
|
| |
3,467
|
|
|
EBITDAre
| | | |
65,603
|
| |
55,087
|
| | |
181,616
|
| |
195,104
|
|
|
Adjustments for Adjusted EBITDAre:
| | | | | | | | | | | |
|
Impact of Toys "R" Us, Inc. lease terminations(2) | | | |
(6,956
|
)
| |
—
| | | |
(5,081
|
)
| |
—
| |
|
Gain on sale of land
| | | |
(2,185
|
)
| |
(202
|
)
| | |
(2,185
|
)
| |
(202
|
)
|
|
Tenant bankruptcy settlement income
| | | |
(27
|
)
| |
(115
|
)
| | |
(305
|
)
| |
(628
|
)
|
|
Casualty gain, net(1) | | | |
(3
|
)
| |
2,170
| | | |
(691
|
)
| |
2,170
| |
|
Executive transition costs(3) | | | |
1,932
| | |
—
| | | |
1,932
| | |
—
| |
|
Construction rental abatement
| | | |
164
| | |
—
| | | |
164
| | |
—
| |
|
Environmental remediation costs
| | | |
—
| | |
—
| | | |
584
| | |
—
| |
|
(Gain) loss on extinguishment of debt
| | | |
—
| | |
—
| | | |
(2,524
|
)
| |
1,274
| |
|
Transaction costs
| | | |
396
| | |
95
| | | |
396
| | |
278
| |
|
Income from acquired leasehold interest
| | | |
—
|
| |
—
|
| | |
—
|
| |
(39,215
|
)
|
|
Adjusted EBITDAre
| | | |
$
|
58,924
|
| |
$
|
57,035
|
| | |
$
|
173,906
|
| |
$
|
158,781
|
|
|
| | |
| (1) | |
Refer to footnote 4 on page 8, Reconciliation of Net Income to FFO
and FFO as Adjusted, for the adjustments included in this line item.
| |
| (2) | |
Amount for the three months ended September 30, 2018 reflects the
write-off of $16.5 million of below-market intangible liabilities,
partially offset by a $9.5 million lease termination payment. The
amount for the nine months ended September 30, 2018 includes the
write-off of $21.6 million of below-market intangible liabilities,
partially offset by $15.5 million of lease termination payments and
$1.0 million of a provision for doubtful accounts for reserves
recorded on straight-line rents.
| |
| (3) | |
Amount reflects costs associated with hiring a new Chief Operating
Officer and a new President of Development and severance expenses
related to the termination of a prior executive.
| |
View source version on businesswire.com: https://www.businesswire.com/news/home/20181031005803/en/
Urban Edge Properties
Mark Langer, 212-956-2556
EVP and Chief
Financial Officer
Source: Urban Edge Properties