Urban Edge Properties(US:UE)2023-05-09 11:00PART I - FINANCIAL INFORMATION Financial Statements The company reported a Q1 2023 net loss of $20.1 million, driven by a significant real estate impairment Urban Edge Properties - Consolidated Statement of Income (Q1 2023 vs Q1 2022) | Metric | Q1 2023 (in thousands) | Q1 2022 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $99,441 | $100,201 | | Total Expenses | $104,455 | $75,963 | | Real estate impairment loss | $34,055 | $0 | | Net Income (Loss) | ($20,146) | $9,534 | | Net Income (Loss) Attributable to Common Shareholders | ($19,118) | $9,486 | | Earnings (Loss) Per Share - Diluted | ($0.16) | $0.08 | Urban Edge Properties - Consolidated Balance Sheet Summary | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | Real estate, net | $2,500,986 | $2,535,399 | | Cash and cash equivalents | $62,142 | $85,518 | | Total Assets | $2,923,644 | $2,977,432 | | Mortgages payable, net | $1,686,897 | $1,691,690 | | Total Liabilities | $1,931,155 | $1,947,326 | | Total Equity | $992,489 | $1,030,106 | Urban Edge Properties - Consolidated Cash Flow Summary (Q1 2023 vs Q1 2022) | Cash Flow Activity | Q1 2023 (in thousands) | Q1 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $29,422 | $24,521 | | Net cash used in investing activities | ($22,797) | ($23,018) | | Net cash used in financing activities | ($24,213) | ($23,312) | | Net decrease in cash | ($17,588) | ($21,809) | Notes to Consolidated Financial Statements Key disclosures include a $34.1 million impairment charge, mortgage details, and redevelopment commitments - As of March 31, 2023, the company's portfolio consisted of 70 shopping centers, two outlet centers, two malls, and two industrial parks totaling approximately 17.2 million square feet42 - A real estate impairment charge of $34.1 million was recognized on the Kingswood Center property in Brooklyn, NY, due to tenants vacating and uncertainty in the office market8586 - On April 6, 2023, subsequent to the quarter's end, the company refinanced the $300 million loan for Bergen Town Center with a new 7-year, $290 million loan at a fixed rate of 6.3%5966 - The company has 24 active development, redevelopment, or anchor repositioning projects with total estimated costs of $217.7 million, of which $150 million remains to be funded as of March 31, 202389 - Bed Bath & Beyond, which filed for Chapter 11 bankruptcy on April 23, 2023, has six leases with the company, with three active leases generating $3.1 million in annual rental revenue98 Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss was driven by an impairment charge, while non-GAAP metrics like FFO showed growth Results of Operations A $34.1 million impairment loss drove the net loss despite lower operating and administrative expenses Comparison of Operating Results (Q1 2023 vs Q1 2022) | Line Item (in thousands) | Q1 2023 | Q1 2022 | $ Change | | :--- | :--- | :--- | :--- | | Total revenue | $99,441 | $100,201 | ($760) | | Property operating expenses | $17,426 | $21,205 | ($3,779) | | General and administrative expenses | $9,058 | $11,121 | ($2,063) | | Real estate impairment loss | $34,055 | $0 | $34,055 | | Interest and debt expense | $15,293 | $14,004 | $1,289 | - The decrease in property operating expenses was primarily driven by $4.1 million in lower common area maintenance costs, including reduced snow removal, cleaning, and security expenses compared to Q1 2022135 Non-GAAP Financial Measures Same-Property Net Operating Income increased by 5.1% and Funds From Operations (FFO) grew to $38.6 million - Same-property NOI increased by $2.8 million, or 5.1%, for the three months ended March 31, 2023, compared to the same period in 2022140 FFO Reconciliation (Q1 2023 vs Q1 2022) | Metric (in thousands) | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net income (loss) attributable to common shareholders | ($19,118) | $9,486 | | Adjustments: | | | | Rental property depreciation and amortization | $24,809 | $24,298 | | Real estate impairment loss | $34,055 | $0 | | FFO applicable to diluted common shareholders | $38,602 | $34,171 | Liquidity and Capital Resources The company maintains strong liquidity with $111.2 million in cash and an $800 million credit facility - As of March 31, 2023, the company had cash and cash equivalents of $111.2 million and an $800 million Revolving Credit Agreement with no amounts drawn148150159 - The company has 24 active development, redevelopment, or anchor repositioning projects with $150.0 million in remaining funding commitments as of March 31, 2023156 - The company has an At-The-Market (ATM) Program to sell up to $250 million in common shares, but no shares were issued under this program as of March 31, 2023160 Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate exposure, which is managed through derivative instruments - The company's main market risk is interest rate risk; a hypothetical 1% increase in base rates on its $158.8 million of variable-rate debt would increase annual interest expense by approximately $1.6 million168169 - The company utilizes two interest rate derivative agreements, designated as cash flow hedges, to mitigate the impact of interest rate fluctuations169 - The company is preparing for the discontinuation of LIBOR after June 30, 2023, and expects its LIBOR-based borrowings to convert to a replacement rate like SOFR, without anticipating a material impact170 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023 - Management, including the CEO and CFO, concluded that the disclosure controls and procedures for both Urban Edge Properties and Urban Edge Properties LP are effective as of the end of the period covered by the report175178 - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2023176179 PART II - OTHER INFORMATION Legal Proceedings Ongoing legal actions are not expected to have a material adverse effect on the company's financials - The company states that ongoing legal actions from the ordinary course of business are not expected to have a material adverse effect on its financial results180 Risk Factors No material changes were reported to the risk factors disclosed in the 2022 Annual Report - The company reports no material changes to the risk factors previously disclosed in its 2022 Annual Report on Form 10-K181 Unregistered Sales of Equity Securities and Use of Proceeds The company has $145.9 million remaining in its share repurchase program, with no shares repurchased - In February 2023, 7,637 common shares were surrendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted shares182 - Approximately $145.9 million remains available for share repurchases under the company's $200 million program; no shares were repurchased during the quarter182 Other Part II Information This section confirms no defaults on senior securities and lists exhibits filed with the report - The company reported no defaults upon senior securities during the period184