Urban Edge Properties(UE) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited consolidated financial statements for Urban Edge Properties and its LP, including balance sheets, income statements, equity changes, cash flows, and detailed notes on accounting policies, acquisitions, debt, and leases Consolidated Financial Statements of Urban Edge Properties Urban Edge Properties reported total assets of $2.90 billion as of June 30, 2023, with a net income of $10.6 million for Q2 2023 and a net loss of $9.6 million for H1 2023, primarily due to impairment Urban Edge Properties - Key Financial Highlights (Q2 & H1 2023 vs 2022) | Metric (in thousands) | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $99,065 | $97,854 | $198,506 | $198,055 | | Net Income (Loss) | $10,563 | $12,009 | $(9,583) | $21,543 | | Net Income (Loss) Attributable to Common Shareholders | $10,262 | $11,626 | $(8,856) | $21,112 | | EPS - Diluted | $0.09 | $0.10 | $(0.08) | $0.18 | Urban Edge Properties - Consolidated Balance Sheet Summary | Metric (in thousands) | June 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $2,903,129 | $2,977,432 | | Real estate, net | $2,504,837 | $2,535,399 | | Cash and cash equivalents | $48,930 | $85,518 | | Total Liabilities | $1,916,631 | $1,947,326 | | Mortgages payable, net | $1,683,328 | $1,691,690 | | Total Equity | $986,498 | $1,030,106 | Urban Edge Properties - Consolidated Cash Flow Summary (Six Months Ended June 30) | Metric (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $68,449 | $60,976 | | Net cash used in investing activities | $(56,454) | $(83,967) | | Net cash used in financing activities | $(47,343) | $(25,524) | | Net decrease in cash | $(35,348) | $(48,515) | Consolidated Financial Statements of Urban Edge Properties LP Urban Edge Properties LP's financials mirror the parent company, reporting $2.90 billion in total assets, a $10.6 million net income for Q2 2023, and a $9.6 million net loss for H1 2023, with distinct equity components Urban Edge Properties LP - Key Financial Highlights (Q2 & H1 2023 vs 2022) | Metric (in thousands) | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $99,065 | $97,854 | $198,506 | $198,055 | | Net Income (Loss) | $10,563 | $12,009 | $(9,583) | $21,543 | | Net Income (Loss) Attributable to Unitholders | $10,706 | $12,132 | $(9,200) | $22,005 | Urban Edge Properties LP - Consolidated Balance Sheet Summary | Metric (in thousands) | June 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $2,903,129 | $2,977,432 | | Total Liabilities | $1,916,631 | $1,947,326 | | Total Equity | $986,498 | $1,030,106 | | - General partner capital | $1,014,000 | $1,012,466 | | - Limited partners capital | $44,605 | $41,810 | Notes to Consolidated Financial Statements Notes detail accounting policies, portfolio size of 17.2 million sq ft, H1 2023 acquisitions, debt refinancing, a $34.1 million impairment charge, and tenant bankruptcies like Bed Bath & Beyond - As of June 30, 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 feet[46] - In H1 2023, the company acquired the underlying land for its Sunrise Mall property for $2.1 million, terminating a ground lease[58] - A non-cash impairment charge of $34.1 million was recognized on the Kingswood Center property in Q1 2023 due to tenants vacating and uncertainty in the office market[94] - The company has 22 active development, redevelopment, or anchor repositioning projects with total estimated costs of $196.5 million, of which $128.2 million remains to be funded[97] - Bed Bath & Beyond, which filed for Chapter 11 bankruptcy, has six leases with the company. Three leases were rejected, and the status of the remaining three, generating $3.1 million in annual rent, is uncertain[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2023 net income decrease to $10.6 million, H1 2023 net loss of $9.6 million due to impairment, positive same-property NOI growth, and a strong liquidity position with $93.4 million cash and $775.7 million credit facility availability Key Financial Metrics Overview (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $10,563 | $12,009 | $(9,583) | $21,543 | | FFO | $35,918 | $36,236 | $74,520 | $70,407 | | NOI | $61,537 | $59,648 | $122,683 | $116,710 | | Same-property NOI | $56,126 | $54,878 | $110,893 | $106,829 | - Same-property NOI increased by 2.3% for the three months and 3.8% for the six months ended June 30, 2023, compared to the same periods in 2022[152] - As of June 30, 2023, the company had $93.4 million in cash and cash equivalents and approximately $775.7 million available under its undrawn $800 million Revolving Credit Agreement[164] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk, with 92% fixed-rate debt; a 1% rate increase would impact variable debt by $1.3 million, mitigated by derivatives and the LIBOR to SOFR transition Interest Rate Sensitivity Analysis (as of June 30, 2023) | Debt Type | Balance (in thousands) | Weighted Avg. Interest Rate | Effect of 1% Change in Base Rates (in thousands) | | :--- | :--- | :--- | :--- | | Variable rate mortgages | $129,418 | 6.32% | $1,294 | | Fixed rate mortgages | $1,565,819 | 4.67% | N/A | - All LIBOR-indexed debt was transitioned to the Secured Overnight Financing Rate (SOFR) effective July 2023, and the company does not expect this to have a material impact[185] - The company utilizes interest rate derivative agreements, including two designated as cash flow hedges, to mitigate the impact of interest rate fluctuations[184] Item 4. Controls and Procedures Management, including CEO and CFO, concluded that disclosure controls and procedures for both Urban Edge Properties and its LP were effective as of June 30, 2023, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the disclosure controls and procedures for both Urban Edge Properties and Urban Edge Properties LP were effective as of June 30, 2023[190][193] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[191][194] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course legal actions, with management not expecting a material adverse effect on financial position, results, or cash flows - The company is party to various legal actions arising from the ordinary course of business, but does not expect them to have a material adverse effect on its financial condition[195] Item 1A. Risk Factors No material changes were reported to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes were reported to the risk factors disclosed in the company's 2022 Annual Report on Form 10-K[196] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2023, Urban Edge Properties issued 50,000 unregistered common shares in exchange for 50,000 OP Units, exempt under Section 4(a)(2) of the Securities Act - In Q2 2023, the company issued 50,000 unregistered common shares in exchange for 50,000 OP Units[197] Item 5. Other Information No trustees or officers adopted, terminated, or modified any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2023 - No trustees or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during Q2 2023[200] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files