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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
| | | | | | | | |
☒ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2024
OR
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☐ | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________to__________
Commission File Number: 001-36523 (Urban Edge Properties)
Commission File Number: 333-212951-01 (Urban Edge Properties LP)
URBAN EDGE PROPERTIES
URBAN EDGE PROPERTIES LP
(Exact name of Registrant as specified in its charter)
| | | | | | | | | | | | | | |
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 No.) |
| | | | |
888 Seventh Avenue | New York | New York | | 10019 |
(Address of Principal Executive Offices) | | (Zip Code) |
| | | | | | | | | | | |
Registrant’s telephone number, including area code: | (212) | 956-2556 |
| | | |
Securities registered pursuant to Section 12(b) of the Act: | | | |
Title of class | Trading symbol | Name of exchange on which registered |
Common shares of beneficial interest, par value $0.01 per share | UE | The New York Stock Exchange |
_______________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Urban Edge Properties Yes x NO o Urban Edge Properties LP Yes x NO o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Urban Edge Properties Yes x NO o Urban Edge Properties LP Yes x NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Urban Edge Properties:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large Accelerated Filer | x | Accelerated Filer | ☐ | Non-Accelerated Filer | ☐ | Smaller Reporting Company | ☐ | Emerging Growth Company | ☐ |
Urban Edge Properties LP:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | Non-Accelerated Filer | x | Smaller Reporting Company | ☐ | Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Urban Edge Properties o Urban Edge Properties LP o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Urban Edge Properties YES ☐ NO x Urban Edge Properties LP YES ☐ NO x
As of October 25, 2024, Urban Edge Properties had 124,871,347 common shares outstanding.
URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2024
TABLE OF CONTENTS
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| | | | |
Item 1. | | Financial Statements | | |
| | Consolidated Financial Statements of Urban Edge Properties: | | |
| | Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023 | | |
| | Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) | | |
| | Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) | | |
| | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited) | | |
| | Consolidated Financial Statements of Urban Edge Properties LP: | | |
| | Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023 | | |
| | Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) | | |
| | Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited) | | |
| | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (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 | | |
| | | | |
EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2024 of Urban Edge Properties and Urban Edge Properties LP. Unless stated otherwise or the context otherwise requires, references to “UE”, “Urban Edge” and “the REIT” mean Urban Edge Properties, a Maryland real estate investment trust (“REIT”), and references to “UELP” and the “Operating Partnership” mean Urban Edge Properties LP, a Delaware limited partnership. References to the “Company,” “we,” “us” and “our” mean collectively UE, UELP and those entities/subsidiaries consolidated by UE.
UELP is the entity through which we conduct substantially all of our business and own, either directly or through subsidiaries, substantially all of our assets. UE is the sole general partner and also a limited partner of UELP. As the sole general partner of UELP, UE has exclusive control of UELP’s day-to-day management.
As of September 30, 2024, UE owned an approximate 94.8% interest in UELP. The remaining approximate 5.2% interest is owned by other limited partners. The other limited partners of UELP are members of management, our Board of Trustees and contributors of property interests acquired. Under the limited partnership agreement of UELP, unitholders may present their common units of UELP for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time). Upon presentation of a common unit for redemption, UELP must redeem the unit for cash equal to the then value of a share of UE’s common shares, as defined by the limited partnership agreement. In lieu of cash redemption by UELP, however, UE may elect to acquire any common units so tendered by issuing common shares of UE in exchange for the common units. If UE so elects, its common shares will be exchanged for common units on a one-for-one basis. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. UE generally expects that it will elect to issue its common shares in connection with each such presentation for redemption rather than having UELP pay cash. With each such exchange or redemption, UE’s percentage ownership in UELP will increase. In addition, whenever UE issues common shares other than to acquire common units of UELP, UE must contribute any net proceeds it receives to UELP and UELP must issue to UE an equivalent number of common units of UELP. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.
The Company believes that combining the quarterly reports on Form 10-Q of UE and UELP into this single report provides the following benefits:
•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.
Management operates Urban Edge Properties and the Operating Partnership as one business. The management of Urban Edge Properties consists of the same individuals as the management of the Operating Partnership. These individuals are officers of Urban Edge Properties and employees of the Operating Partnership.
The Company believes it is important to understand the few differences between UE and UELP in the context of how UE and UELP operate as a consolidated company. The financial results of UELP are consolidated into the financial statements of UE. UE does not have any other significant assets, liabilities or operations, other than its investment in UELP, nor does it have employees of its own. UELP, not UE, generally executes all significant business relationships other than transactions involving the securities of UE. UELP holds substantially all of the assets of UE and retains the ownership interests in the Company's joint ventures. UELP conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by UE, which are contributed to the capital of UELP in exchange for units of limited partnership in UELP, as applicable, UELP generates all remaining capital required by the Company’s business. These sources may include working capital, net cash provided by operating activities, borrowings under the revolving credit agreement, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.
Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of UE and UELP. The limited partners of UELP are accounted for as partners’ capital in UELP’s financial statements and as noncontrolling interests in UE’s financial statements. The noncontrolling interests in UELP’s financial statements include the interests of unaffiliated partners in consolidated entities. The noncontrolling interests in UE’s financial statements include the same noncontrolling interests at UELP’s level and limited partners of UELP. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at UE and UELP levels.
To help investors better understand the key differences between UE and UELP, certain information for UE and UELP in this report has been separated, as set forth below: Item 1. Financial Statements (unaudited), which includes specific disclosures for UE and UELP, Note 14, Equity and Noncontrolling Interest and Note 16, Earnings Per Share and Unit. This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of UE and UELP in order to establish that the requisite certifications have been made and that UE and UELP are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URBAN EDGE PROPERTIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
| | | | | | | | | | | |
| September 30, | | December 31, |
| 2024 | | 2023 |
ASSETS | | | |
Real estate, at cost: | | | |
Land | $ | 646,276 | | | $ | 635,905 | |
Buildings and improvements | 2,703,798 | | | 2,678,076 | |
Construction in progress | 246,815 | | | 262,275 | |
Furniture, fixtures and equipment | 10,934 | | | 9,923 | |
Total | 3,607,823 | | | 3,586,179 | |
Accumulated depreciation and amortization | (868,892) | | | (819,243) | |
Real estate, net | 2,738,931 | | | 2,766,936 | |
Operating lease right-of-use assets | 56,928 | | | 56,988 | |
Cash and cash equivalents | 67,915 | | | 101,123 | |
Restricted cash | 21,729 | | | 73,125 | |
Tenant and other receivables | 19,567 | | | 14,712 | |
Receivable arising from the straight-lining of rents | 61,045 | | | 60,775 | |
Identified intangible assets, net of accumulated amortization of $61,892 and $51,399, respectively | 105,889 | | | 113,897 | |
Deferred leasing costs, net of accumulated amortization of $21,866 and $21,428, respectively | 27,910 | | | 27,698 | |
Prepaid expenses and other assets | 111,804 | | | 64,555 | |
Total assets | $ | 3,211,718 | | | $ | 3,279,809 | |
| | | |
LIABILITIES AND EQUITY | | | |
Liabilities: | | | |
Mortgages payable, net | $ | 1,515,379 | | | $ | 1,578,110 | |
Unsecured credit facility | — | | | 153,000 | |
Operating lease liabilities | 53,943 | | | 53,863 | |
Accounts payable, accrued expenses and other liabilities | 130,985 | | | 102,997 | |
Identified intangible liabilities, net of accumulated amortization of $50,955 and $46,610, respectively | 172,501 | | | 170,411 | |
Total liabilities | 1,872,808 | | | 2,058,381 | |
Commitments and contingencies (Note 10) | | | |
Shareholders’ equity: | | | |
Common shares: $0.01 par value; 500,000,000 shares authorized and 124,871,347 and 117,652,656 shares issued and outstanding, respectively | 1,247 | | | 1,175 | |
Additional paid-in capital | 1,135,191 | | | 1,011,942 | |
Accumulated other comprehensive (loss) income | (34) | | | 460 | |
Accumulated earnings | 117,880 | | | 137,113 | |
Noncontrolling interests: | | | |
Operating partnership | 69,255 | | | 55,355 | |
Consolidated subsidiaries | 15,371 | | | 15,383 | |
Total equity | 1,338,910 | | | 1,221,428 | |
Total liabilities and equity | $ | 3,211,718 | | | $ | 3,279,809 | |
See notes to consolidated financial statements (unaudited).
URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
REVENUE | | | | | | | |
Rental revenue | $ | 112,262 | | | $ | 101,732 | | | $ | 328,167 | | | $ | 299,859 | |
Other income | 165 | | | 102 | | | 432 | | | 481 | |
Total revenue | 112,427 | | | 101,834 | | | 328,599 | | | 300,340 | |
EXPENSES | | | | | | | |
Depreciation and amortization | 34,653 | | | 26,922 | | | 112,906 | | | 77,519 | |
Real estate taxes | 17,667 | | | 16,182 | | | 52,142 | | | 47,980 | |
Property operating | 18,422 | | | 16,618 | | | 57,188 | | | 49,752 | |
General and administrative | 9,415 | | | 8,938 | | | 27,829 | | | 27,903 | |
Real estate impairment loss | — | | | — | | | — | | | 34,055 | |
Lease expense | 3,433 | | | 3,159 | | | 9,676 | | | 9,470 | |
Total expenses | 83,590 | | | 71,819 | | | 259,741 | | | 246,679 | |
Gain on sale of real estate | — | | | — | | | 15,349 | | | 356 | |
Interest income | 679 | | | 565 | | | 2,028 | | | 1,640 | |
Interest and debt expense | (19,531) | | | (19,006) | | | (62,004) | | | (52,430) | |
Gain on extinguishment of debt, net | — | | | 43,029 | | | 21,427 | | | 42,540 | |
Income before income taxes | 9,985 | | | 54,603 | | | 45,658 | | | 45,767 | |
Income tax expense | (518) | | | (17,063) | | | (1,722) | | | (17,810) | |
Net income | 9,467 | | | 37,540 | | | 43,936 | | | 27,957 | |
Less net (income) loss attributable to NCI in: | | | | | | | |
Operating partnership | (550) | | | (1,555) | | | (2,407) | | | (1,211) | |
Consolidated subsidiaries | 163 | | | 133 | | | 913 | | | 516 | |
Net income attributable to common shareholders | $ | 9,080 | | | $ | 36,118 | | | $ | 42,442 | | | $ | 27,262 | |
| | | | | | | |
Earnings per common share - Basic: | $ | 0.07 | | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.23 | |
Earnings per common share - Diluted: | $ | 0.07 | | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.23 | |
Weighted average shares outstanding - Basic | 123,359 | | | 117,543 | | | 120,109 | | | 117,492 | |
Weighted average shares outstanding - Diluted | 123,471 | | | 122,205 | | | 120,222 | | | 117,627 | |
| | | | | | | |
Net income | $ | 9,467 | | | $ | 37,540 | | | $ | 43,936 | | | $ | 27,957 | |
Effective portion of change in fair value of derivatives | (763) | | | 1,058 | | | (523) | | | 737 | |
Comprehensive income | 8,704 | | | 38,598 | | | 43,413 | | | 28,694 | |
Less comprehensive loss (income) attributable to NCI in: | | | | | | | |
Operating partnership | 40 | | | (45) | | | 29 | | | (32) | |
Less net (income) loss attributable to NCI in: | | | | | | | |
Operating partnership | (550) | | | (1,555) | | | (2,407) | | | (1,211) | |
Consolidated subsidiaries | 163 | | | 133 | | | 913 | | | 516 | |
Comprehensive income attributable to common shareholders | $ | 8,357 | | | $ | 37,131 | | | $ | 41,948 | | | $ | 27,967 | |
See notes to consolidated financial statements (unaudited).
URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
(In thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares | | | | | | | | | | Noncontrolling Interests (“NCI”) | | |
| Shares | | Amount | | Additional Paid-In Capital | | | | Accumulated Other Comprehensive Income | | Accumulated (Deficit) Earnings | | Operating Partnership | | Consolidated Subsidiaries | | Total Equity |
Balance, June 30, 2023 | 117,639,602 | | $ | 1,175 | | | $ | 1,012,825 | | | | | $ | 321 | | | $ | (82,588) | | | $ | 40,021 | | | $ | 14,744 | | | $ | 986,498 | |
Net income attributable to common shareholders | — | | | — | | | — | | | | | — | | | 36,118 | | | — | | | — | | | 36,118 | |
Net income (loss) attributable to NCI | — | | | — | | | — | | | | | — | | | — | | | 1,555 | | | (133) | | | 1,422 | |
Other comprehensive income | — | | | — | | | — | | | | | 1,013 | | | — | | | 45 | | | — | | | 1,058 | |
Limited partnership interests: | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Reallocation of NCI | — | | | — | | | 265 | | | | | — | | | — | | | (265) | | | — | | | — | |
Common shares forfeited | (425) | | | — | | | 22 | | | | | — | | | (22) | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
Dividends to common shareholders ($0.16 per share) | — | | | — | | | — | | | | | — | | | (18,803) | | | — | | | — | | | (18,803) | |
Distributions to redeemable NCI ($0.16 per unit) | — | | | — | | | — | | | | | — | | | — | | | (810) | | | — | | | (810) | |
| | | | | | | | | | | | | | | | | |
Share-based compensation expense | — | | | — | | | 194 | | | | | — | | | — | | | 1,620 | | | — | | | 1,814 | |
| | | | | | | | | | | | | | | | | |
Balance, September 30, 2023 | 117,639,177 | | $ | 1,175 | | | $ | 1,013,306 | | | | | $ | 1,334 | | | $ | (65,295) | | | $ | 42,166 | | | $ | 14,611 | | | $ | 1,007,297 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares | | | | | | | | Noncontrolling Interests (“NCI”) | | |
| Shares | | Amount | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Earnings (Deficit) | | Operating Partnership | | Consolidated Subsidiaries | | Total Equity |
Balance, June 30, 2024 | 120,444,011 | | $ | 1,203 | | | $ | 1,052,199 | | | $ | 689 | | | $ | 130,033 | | | $ | 66,092 | | | $ | 15,534 | | | $ | 1,265,750 | |
Net income attributable to common shareholders | — | | | — | | | — | | | — | | | 9,080 | | | — | | | — | | | 9,080 | |
Net income (loss) attributable to NCI | — | | | — | | | — | | | — | | | — | | | 550 | | | (163) | | | 387 | |
Other comprehensive loss | — | | | — | | | — | | | (723) | | | — | | | (40) | | | — | | | (763) | |
Limited partnership interests: | | | | | | | | | | | | | | | |
Units redeemed for common shares | 21,000 | | | — | | | 208 | | | — | | | — | | | 209 | | | — | | | 417 | |
Reallocation of NCI | — | | | — | | | (1,056) | | | — | | | — | | | 639 | | | — | | | (417) | |
Common shares issued, net | 4,406,336 | | | 44 | | | 83,593 | | | — | | | (23) | | | — | | | — | | | 83,614 | |
Dividends to common shareholders ($0.17 per share) | — | | | — | | | — | | | — | | | (21,210) | | | — | | | — | | | (21,210) | |
Distributions to redeemable NCI ($0.17 per unit) | — | | | — | | | — | | | — | | | — | | | (1,053) | | | — | | | (1,053) | |
| | | | | | | | | | | | | | | |
Share-based compensation expense | — | | | — | | | 247 | | | — | | | — | | | 2,469 | | | — | | | 2,716 | |
Issuance of LTIP Units | — | | | — | | | — | | | — | | | — | | | 389 | | | — | | | 389 | |
| | | | | | | | | | | | | | | |
Balance, September 30, 2024 | 124,871,347 | | $ | 1,247 | | | $ | 1,135,191 | | | $ | (34) | | | $ | 117,880 | | | $ | 69,255 | | | $ | 15,371 | | | $ | 1,338,910 | |
See notes to consolidated financial statements (unaudited).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares | | | | | | | | | | Noncontrolling Interests (“NCI”) | | |
| Shares | | Amount | | Additional Paid-In Capital | | | | Accumulated Other Comprehensive Income | | Accumulated (Deficit) Earnings | | Operating Partnership | | Consolidated Subsidiaries | | Total Equity |
Balance, December 31, 2022 | 117,450,951 | | | $ | 1,173 | | | $ | 1,011,293 | | | | | $ | 629 | | | $ | (36,104) | | | $ | 39,209 | | | $ | 13,906 | | | $ | 1,030,106 | |
Net income attributable to common shareholders | — | | | — | | | — | | | | | — | | | 27,262 | | | — | | | — | | | 27,262 | |
Net income (loss) attributable to NCI | — | | | — | | | — | | | | | — | | | — | | | 1,211 | | | (516) | | | 695 | |
Other comprehensive income | — | | | — | | | — | | | | | 705 | | | — | | | 32 | | | — | | | 737 | |
Limited partnership interests: | | | | | | | | | | | | | | | | | |
Units redeemed for common shares | 70,000 | | | 1 | | | 572 | | | | | — | | | — | | | 572 | | | — | | | 1,145 | |
Reallocation of NCI | — | | | — | | | 610 | | | | | — | | | — | | | (1,755) | | | — | | | (1,145) | |
Common shares issued | 125,863 | | | 1 | | | 260 | | | | — | | | (66) | | | — | | | — | | | 195 | |
Dividends to common shareholders ($0.48 per share) | — | | | — | | | — | | | | | — | | | (56,387) | | | — | | | — | | | (56,387) | |
Distributions to redeemable NCI ($0.48 per unit) | — | | | — | | | — | | | | | — | | | — | | | (2,436) | | | — | | | (2,436) | |
Contributions from NCI | — | | | — | | | — | | | | | — | | | — | | | — | | | 1,221 | | | 1,221 | |
Share-based compensation expense | — | | | — | | | 690 | | | | | — | | | — | | | 5,333 | | | — | | | 6,023 | |
Share-based awards retained for taxes | (7,637) | | | — | | | (119) | | | | | — | | | — | | | — | | | — | | | (119) | |
Balance, September 30, 2023 | 117,639,177 | | $ | 1,175 | | | $ | 1,013,306 | | | | | $ | 1,334 | | | $ | (65,295) | | | $ | 42,166 | | | $ | 14,611 | | | $ | 1,007,297 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares | | | | | | | | Noncontrolling Interests (“NCI”) | | |
| Shares | | Amount | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Earnings (Deficit) | | Operating Partnership | | Consolidated Subsidiaries | | Total Equity |
Balance, December 31, 2023 | 117,652,656 | | | $ | 1,175 | | | $ | 1,011,942 | | | $ | 460 | | | $ | 137,113 | | | $ | 55,355 | | | $ | 15,383 | | | $ | 1,221,428 | |
Net income attributable to common shareholders | — | | | — | | | — | | | — | | | 42,442 | | | — | | | — | | | 42,442 | |
Net income (loss) attributable to NCI | — | | | — | | | — | | | — | | | — | | | 2,407 | | | (913) | | | 1,494 | |
Other comprehensive loss | — | | | — | | | — | | | (494) | | | — | | | (29) | | | — | | | (523) | |
Limited partnership interests: | | | | | | | | | | | | | | | |
Units redeemed for common shares | 59,833 | | | — | | | 576 | | | — | | | — | | | 577 | | | — | | | 1,153 | |
Reallocation of NCI | — | | | — | | | (7,637) | | | — | | | — | | | 6,484 | | | — | | | (1,153) | |
Common shares issued, net | 7,169,975 | | | 72 | | | 129,778 | | | — | | | (69) | | | — | | | — | | | 129,781 | |
Dividends to common shareholders ($0.51 per share) | — | | | — | | | — | | | — | | | (61,606) | | | — | | | — | | | (61,606) | |
Distributions to redeemable NCI ($0.51 per unit) | — | | | — | | | — | | | — | | | — | | | (3,389) | | | — | | | (3,389) | |
Contributions from NCI | — | | | — | | | — | | | — | | | — | | | — | | | 901 | | | 901 | |
Share-based compensation expense | — | | | — | | | 727 | | | — | | | — | | | 6,852 | | | — | | | 7,579 | |
Issuance of LTIP Units | — | | | — | | | — | | | — | | | — | | | 998 | | | — | | | 998 | |
Share-based awards retained for taxes | (11,117) | | | — | | | (195) | | | — | | | — | | | — | | | — | | | (195) | |
Balance, September 30, 2024 | 124,871,347 | | $ | 1,247 | | | $ | 1,135,191 | | | $ | (34) | | | $ | 117,880 | | | $ | 69,255 | | | $ | 15,371 | | | $ | 1,338,910 | |
See notes to consolidated financial statements (unaudited).
URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2024 | | 2023 |
CASH FLOWS FROM OPERATING ACTIVITIES | | | |
Net income | $ | 43,936 | | | $ | 27,957 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 116,092 | | | 79,985 | |
Gain on sale of real estate | (15,349) | | | (356) | |
Real estate impairment loss | — | | | 34,055 | |
Gain on extinguishment of debt, net | (21,427) | | | (42,540) | |
| | | |
Amortization of below market leases, net | (4,926) | | | (5,184) | |
Noncash lease expense | 5,407 | | | 5,390 | |
Straight-lining of rent | (2,389) | | | (2,786) | |
Share-based compensation expense | 7,579 | | | 6,023 | |
| | | |
Change in operating assets and liabilities: | | | |
Tenant and other receivables | (4,862) | | | 1,700 | |
Deferred leasing costs | (5,369) | | | (5,004) | |
Prepaid expenses and other assets | (4,906) | | | 2,458 | |
Lease liabilities | (5,267) | | | (5,186) | |
Accounts payable, accrued expenses and other liabilities | (7,781) | | | 6,340 | |
Net cash provided by operating activities | 100,738 | | | 102,852 | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | |
Real estate development and capital improvements | (65,978) | | | (84,760) | |
Proceeds from sale of real estate | 35,183 | | | 356 | |
Acquisitions of real estate | (115,549) | | | (2,071) | |
Net cash used in investing activities | (146,344) | | | (86,475) | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | |
Debt repayments | (322,041) | | | (428,948) | |
Dividends to common shareholders | (61,606) | | | (56,387) | |
| | | |
Distributions to redeemable noncontrolling interests | (3,389) | | | (2,436) | |
Taxes withheld for vested restricted shares | (195) | | | (119) | |
Contributions from noncontrolling interests | 901 | | | 1,221 | |
Borrowings under unsecured credit facility | 60,000 | | | — | |
| | | |
Proceeds from mortgage loan borrowings | 161,000 | | | 426,000 | |
| | | |
| | | |
Debt issuance costs | (3,449) | | | (6,753) | |
Proceeds related to the issuance of common shares, net | 129,781 | | | 195 | |
Net cash used in financing activities | (38,998) | | | (67,227) | |
Net decrease in cash and cash equivalents and restricted cash | (84,604) | | | (50,850) | |
Cash and cash equivalents and restricted cash at beginning of period | 174,248 | | | 128,774 | |
Cash and cash equivalents and restricted cash at end of period | $ | 89,644 | | | $ | 77,924 | |
See notes to consolidated financial statements (unaudited).
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2024 | | 2023 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | |
Cash payments for interest, net of amounts capitalized of $7,701 and $8,379, respectively | $ | 62,668 | | | $ | 50,266 | |
Cash payments for income taxes | 9,539 | | | 41 | |
NON-CASH INVESTING AND FINANCING ACTIVITIES | | | |
Accrued capital expenditures included in accounts payable and accrued expenses | 16,715 | | | 18,306 | |
Write-off of fully depreciated and impaired assets | 12,440 | | | 38,311 | |
Mortgage debt forgiven | — | | | 44,105 | |
Transfer of assets held for sale included in prepaid expenses and other assets | 46,511 | | | — | |
Transfer of liabilities held for sale included in accounts payable, accrued expenses and other liabilities | (44,403) | | | — | |
Decrease in assets and liabilities in connection with foreclosure: | | | |
Real estate, net | 47,518 | | | — | |
Mortgage debt, net | 68,613 | | | — | |
| | | |
| | | |
| | | |
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
Cash and cash equivalents at beginning of period | $ | 101,123 | | | $ | 85,518 | |
Restricted cash at beginning of period | 73,125 | | | 43,256 | |
Cash and cash equivalents and restricted cash at beginning of period | $ | 174,248 | | | $ | 128,774 | |
| | | |
Cash and cash equivalents at end of period | $ | 67,915 | | | $ | 50,793 | |
Restricted cash at end of period | 21,729 | | | 27,131 | |
Cash and cash equivalents and restricted cash at end of period | $ | 89,644 | | | $ | 77,924 | |
See notes to consolidated financial statements (unaudited).
URBAN EDGE PROPERTIES LP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except unit amounts)
| | | | | | | | | | | |
| September 30, | | December 31, |
| 2024 | | 2023 |
ASSETS | | | |
Real estate, at cost: | | | |
Land | $ | 646,276 | | | $ | 635,905 | |
Buildings and improvements | 2,703,798 | | | 2,678,076 | |
Construction in progress | 246,815 | | | 262,275 | |
Furniture, fixtures and equipment | 10,934 | | | 9,923 | |
Total | 3,607,823 | | | 3,586,179 | |
Accumulated depreciation and amortization | (868,892) | | | (819,243) | |
Real estate, net | 2,738,931 | | | 2,766,936 | |
Operating lease right-of-use assets | 56,928 | | | 56,988 | |
Cash and cash equivalents | 67,915 | | | 101,123 | |
Restricted cash | 21,729 | | | 73,125 | |
Tenant and other receivables | 19,567 | | | 14,712 | |
Receivable arising from the straight-lining of rents | 61,045 | | | 60,775 | |
Identified intangible assets, net of accumulated amortization of $61,892 and $51,399, respectively | 105,889 | | | 113,897 | |
Deferred leasing costs, net of accumulated amortization of $21,866 and $21,428, respectively | 27,910 | | | 27,698 | |
Prepaid expenses and other assets | 111,804 | | | 64,555 | |
Total assets | $ | 3,211,718 | | | $ | 3,279,809 | |
| | | |
LIABILITIES AND EQUITY | | | |
Liabilities: | | | |
Mortgages payable, net | $ | 1,515,379 | | | $ | 1,578,110 | |
Unsecured credit facility | — | | | 153,000 | |
Operating lease liabilities | 53,943 | | | 53,863 | |
Accounts payable, accrued expenses and other liabilities | 130,985 | | | 102,997 | |
Identified intangible liabilities, net of accumulated amortization of $50,955 and $46,610, respectively | 172,501 | | | 170,411 | |
Total liabilities | 1,872,808 | | | 2,058,381 | |
Commitments and contingencies (Note 10) | | | |
Equity: | | | |
Partners’ capital: | | | |
General partner: 124,871,347 and 117,652,656 units outstanding, respectively | 1,136,438 | | | 1,013,117 | |
Limited partners: 6,894,784 and 5,659,781 units outstanding, respectively | 64,222 | | | 49,311 | |
Accumulated other comprehensive (loss) income | (34) | | | 460 | |
Accumulated earnings | 122,913 | | | 143,157 | |
Total partners’ capital | 1,323,539 | | | 1,206,045 | |
Noncontrolling interest in consolidated subsidiaries | 15,371 | | | 15,383 | |
Total equity | 1,338,910 | | | 1,221,428 | |
Total liabilities and equity | $ | 3,211,718 | | | $ | 3,279,809 | |
See notes to consolidated financial statements (unaudited).
URBAN EDGE PROPERTIES LP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per unit amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
REVENUE | | | | | | | |
Rental revenue | $ | 112,262 | | | $ | 101,732 | | | $ | 328,167 | | | $ | 299,859 | |
Other income | 165 | | | 102 | | | 432 | | | 481 | |
Total revenue | 112,427 | | | 101,834 | | | 328,599 | | | 300,340 | |
EXPENSES | | | | | | | |
Depreciation and amortization | 34,653 | | | 26,922 | | | 112,906 | | | 77,519 | |
Real estate taxes | 17,667 | | | 16,182 | | | 52,142 | | | 47,980 | |
Property operating | 18,422 | | | 16,618 | | | 57,188 | | | 49,752 | |
General and administrative | 9,415 | | | 8,938 | | | 27,829 | | | 27,903 | |
Real estate impairment loss | — | | | — | | | — | | | 34,055 | |
Lease expense | 3,433 | | | 3,159 | | | 9,676 | | | 9,470 | |
Total expenses | 83,590 | | | 71,819 | | | 259,741 | | | 246,679 | |
Gain on sale of real estate | — | | | — | | | 15,349 | | | 356 | |
Interest income | 679 | | | 565 | | | 2,028 | | | 1,640 | |
Interest and debt expense | (19,531) | | | (19,006) | | | (62,004) | | | (52,430) | |
Gain on extinguishment of debt, net | — | | | 43,029 | | | 21,427 | | | 42,540 | |
Income before income taxes | 9,985 | | | 54,603 | | | 45,658 | | | 45,767 | |
Income tax expense | (518) | | | (17,063) | | | (1,722) | | | (17,810) | |
Net income | 9,467 | | | 37,540 | | | 43,936 | | | 27,957 | |
Less net loss attributable to NCI in consolidated subsidiaries | 163 | | | 133 | | | 913 | | | 516 | |
Net income attributable to unitholders | $ | 9,630 | | | $ | 37,673 | | | $ | 44,849 | | | $ | 28,473 | |
| | | | | | | |
Earnings per unit - Basic: | $ | 0.07 | | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.23 | |
Earnings per unit - Diluted: | $ | 0.07 | | | $ | 0.31 | | | $ | 0.35 | | | $ | 0.23 | |
Weighted average units outstanding - Basic | 128,074 | | | 121,964 | | | 124,776 | | | 121,879 | |
Weighted average units outstanding - Diluted | 128,186 | | | 122,205 | | | 124,889 | | | 122,014 | |
| | | | | | | |
Net income | $ | 9,467 | | | $ | 37,540 | | | $ | 43,936 | | | $ | 27,957 | |
Effective portion of change in fair value of derivatives | (763) | | | 1,058 | | | (523) | | | 737 | |
Comprehensive income | 8,704 | | | 38,598 | | | 43,413 | | | 28,694 | |
Less net loss attributable to NCI in consolidated subsidiaries | 163 | | | 133 | | | 913 | | | 516 | |
Comprehensive income attributable to unitholders | $ | 8,867 | | | $ | 38,731 | | | $ | 44,326 | | | $ | 29,210 | |
See notes to consolidated financial statements (unaudited).
URBAN EDGE PROPERTIES LP
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
(In thousands, except unit and per unit amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Shares | | General Partner | | Total Units | | Limited Partners(1) | | | | Accumulated Other Comprehensive Income | | Accumulated (Deficit) Earnings | | NCI in Consolidated Subsidiaries | | Total Equity |
Balance, June 30, 2023 | 117,639,602 | | | $ | 1,014,000 | | | 5,053,057 | | | $ | 44,605 | | | | | $ | 321 | | | $ | (87,172) | | | $ | 14,744 | | | $ | 986,498 | |
Net income attributable to unitholders | — | | | — | | | — | | | — | | | | | — | | | 37,673 | | | — | | | 37,673 | |
Net loss attributable to NCI | — | | | — | | | — | | | — | | | | | — | | | — | | | (133) | | | (133) | |
Other comprehensive income | — | | | — | | | — | | | — | | | | | 1,013 | | | 45 | | | — | | | 1,058 | |
Common units issued as a result of common shares issued by Urban Edge | (425) | | | 22 | | | 165,585 | | | — | | | | | — | | | (22) | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Reallocation of NCI | — | | | 265 | | | — | | | (265) | | | | | — | | | — | | | — | | | — | |
Distributions to Partners ($0.16 per unit) | — | | | — | | | — | | | — | | | | | — | | | (19,613) | | | — | | | (19,613) | |
| | | | | | | | | | | | | | | | | |
Share-based compensation expense | — | | | 194 | | | — | | | 1,620 | | | | | — | | | — | | | — | | | 1,814 | |
| | | | | | | | | | | | | | | | | |
Balance, September 30, 2023 | 117,639,177 | | | $ | 1,014,481 | | | 5,218,642 | | | $ | 45,960 | | | | | $ | 1,334 | | | $ | (69,089) | | | $ | 14,611 | | | $ | 1,007,297 | |
(1) Limited partners have a 4.2% common limited partnership interest in the Operating Partnership as of September 30, 2023 in the form of Operating Partnership Units (“OP Units”) and Long-Term Incentive Plan Units (“LTIP Units”).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Shares | | General Partner | | Total Units | | Limited Partners(2) | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Earnings (Deficit) | | NCI in Consolidated Subsidiaries | | Total Equity |
Balance, June 30, 2024 | 120,444,011 | | | $ | 1,053,402 | | | 6,722,628 | | | $ | 60,516 | | | $ | 689 | | | $ | 135,609 | | | $ | 15,534 | | | $ | 1,265,750 | |
Net income attributable to unitholders | — | | | — | | | — | | | — | | | — | | | 9,630 | | | — | | | 9,630 | |
Net loss attributable to NCI | — | | | — | | | — | | | — | | | — | | | — | | | (163) | | | (163) | |
Other comprehensive loss | — | | | — | | | — | | | — | | | (723) | | | (40) | | | — | | | (763) | |
Common units issued as a result of common shares issued by Urban Edge, net | 4,406,336 | | | 83,637 | | | 193,156 | | | — | | | — | | | (23) | | | — | | | 83,614 | |
Equity redemption of OP Units | 21,000 | | | 208 | | | (21,000) | | | 209 | | | — | | | — | | | — | | | 417 | |
| | | | | | | | | | | | | | | |
Reallocation of noncontrolling interests | — | | | (1,056) | | | — | | | 639 | | | — | | | — | | | — | | | (417) | |
Distributions to Partners ($0.17 per unit) | — | | | — | | | — | | | — | | | — | | | (22,263) | | | — | | | (22,263) | |
| | | | | | | | | | | | | | | |
Share-based compensation expense | — | | | 247 | | | — | | | 2,469 | | | — | | | — | | | — | | | 2,716 | |
Issuance of LTIP Units | — | | | — | | | — | | | 389 | | | — | | | — | | | — | | | 389 | |
| | | | | | | | | | |