UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q



x☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2019



o☐		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: ~~331-212951-01~~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~~	(Urban Edge Properties)		47-6311266
Delaware ~~(Urban~~	(Urban Edge Properties LP)		36-4791544
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

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 of registered securities	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~~ Yesx NO oUrban Edge Properties LP ~~YES~~ Yesx NO o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~(232.405~~(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Urban Edge Properties ~~YES~~ Yesx NO oUrban Edge Properties LP ~~YES~~ Yesx NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

Urban Edge Properties:



Large Accelerated Filer	x	Accelerated Filer o	~~Accelerated Filer~~ o	Non-Accelerated Filer o	Smaller Reporting Companyo	☐	Emerging Growth Companyo	☐

Urban Edge Properties LP:



Large Accelerated Filer o	Accelerated Filer o	Non-Accelerated Filerx	x	Smaller Reporting Companyo	☐	Emerging Growth Companyo	☐

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 pursuant to Section ~~139a)~~13(a) of the Exchange Act.

Urban Edge PropertiesoUrban Edge Properties LPo

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 o☐ NO xUrban Edge Properties LP YES o☐ NO x

As of October ~~27, 2017,~~25, 2019, Urban Edge Properties had ~~113,817,429~~121,223,353 common shares outstanding.

URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2019

TABLE OF CONTENTS



	PART I

Item 1.	Financial Statements
	Consolidated Financial Statements of Urban Edge Properties:
	Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 (unaudited)	1
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	2
	Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	3
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	5
	Consolidated Financial Statements of Urban Edge Properties LP:
	Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 (unaudited)	7
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	8
	Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	9
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	11
	Urban Edge Properties and Urban Edge Properties LP
	Notes to Consolidated Financial Statements (unaudited)	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	44

	PART II

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	46
Item 6.	Exhibits	46
	Signatures	47

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, ~~2017~~2019 of Urban Edge Properties and Urban Edge Properties LP. Unless stated otherwise or the context otherwise requires, references to “UE” and “Urban Edge” 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, ~~2017,~~2019, UE owned an approximate ~~89.9%~~95.4% ownership interest in UELP. The remaining approximate ~~10.1%~~4.6% interest is owned by limited partners. The other limited partners of UELP are ~~Vornado Realty L.P.,~~ 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.

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. 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 ~~facility,~~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 ~~15,~~14, Equity and Noncontrolling ~~Interests~~Interest and Note 16, ~~thereto,~~ 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.

~~URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP~~

~~QUARTERLY REPORT ON FORM 10-Q~~

~~QUARTER ENDED SEPTEMBER 30, 2017~~

~~TABLE OF CONTENTS~~



	~~PART I~~

~~Item 1.~~	~~Financial Statements~~
	~~Consolidated Financial Statements of Urban Edge Properties:~~
	~~Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016~~	1
	~~Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	2
	~~Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2017 (unaudited)~~	3
	~~Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	4
	~~Consolidated Financial Statements of Urban Edge Properties LP:~~
	~~Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016~~	6
	~~Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	7
	~~Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2017 (unaudited)~~	8
	~~Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (unaudited)~~	9
	~~Urban Edge Properties and Urban Edge Properties LP~~
	~~Notes to Consolidated Financial Statements (unaudited)~~	11
~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	25
~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~	39
~~Item 4.~~	~~Controls and Procedures~~	40

	~~PART II~~

~~Item 1.~~	~~Legal Proceedings~~	40
~~Item 1A.~~	~~Risk Factors~~	40
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	41
~~Item 3.~~	~~Defaults Upon Senior Securities~~	41
~~Item 4.~~	~~Mine Safety Disclosures~~	41
~~Item 5.~~	~~Other Information~~	41
~~Item 6.~~	~~Exhibits~~	41
	~~Signatures~~	42

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,			September 30,			December 31,
	2017			2016			2019			2018
ASSETS	(Unaudited)
Real estate, at cost:
Land	$	522,085		$	384,217		$	500,411		$	525,819
Buildings and improvements	2,013,767			1,650,054			2,169,835			2,156,113
Construction in progress	117,830			99,236			43,671			80,385
Furniture, fixtures and equipment	7,129			4,993			7,315			6,675
Total	2,660,811			2,138,500			2,721,232			2,768,992
Accumulated depreciation and amortization	(586,187		)	(541,077		)	(662,713		)	(645,872		)
Real estate, net	2,074,624			1,597,423			2,058,519			2,123,120
Right-of-use assets							83,523			—
Cash and cash equivalents	380,395			131,654			441,561			440,430
Restricted cash	8,363			8,532			94,785			17,092
Tenant and other receivables, net of allowance for doubtful accounts of $3,469 and $2,332, respectively	24,063			9,340
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $260 and $261, respectively	85,853			87,695
Identified intangible assets, net of accumulated amortization of $29,771 and $22,361, respectively	91,305			30,875
Deferred leasing costs, net of accumulated amortization of $15,556 and $13,909, respectively	20,500			19,241
Deferred financing costs, net of accumulated amortization of $1,484 and $726, respectively	4,492			1,936
Tenant and other receivables, net of allowance for doubtful accounts of $6,486 as of December 31, 2018							27,240			28,563
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 as of December 31, 2018							75,418			84,903
Identified intangible assets, net of accumulated amortization of $30,214 and $39,526, respectively							49,527			68,422
Deferred leasing costs, net of accumulated amortization of $16,326 and $16,826, respectively							20,263			21,277
Deferred financing costs, net of accumulated amortization of $3,543 and $2,764, respectively							4,093			2,219
Prepaid expenses and other assets	16,917			17,442			18,949			12,968
Total assets	$	2,706,512		$	1,904,138		$	2,873,878		$	2,798,994

LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net	$	1,408,066		$	1,197,513		$	1,547,486		$	1,550,242
Identified intangible liabilities, net of accumulated amortization of $63,468 and $72,528, respectively	184,061			146,991
Accounts payable and accrued expenses	65,769			48,842
Other liabilities	16,542			14,675
Lease liabilities							81,428			—
Accounts payable, accrued expenses and other liabilities							80,161			98,517
Identified intangible liabilities, net of accumulated amortization of $68,483 and $65,058, respectively							129,090			144,258
Total liabilities	1,674,438			1,408,021			1,838,165			1,793,017
Commitments and contingencies
Shareholders’ equity:
Common shares: $0.01 par value; 500,000,000 shares authorized and 113,817,429 and 99,754,900 shares issued and outstanding, respectively	1,138			997
Common shares: $0.01 par value; 500,000,000 shares authorized and 121,223,353 and 114,345,565 shares issued and outstanding, respectively							1,212			1,143
Additional paid-in capital	945,047			488,375			1,016,054			956,420
Accumulated deficit	(18,322		)	(29,066		)	(29,217		)	(52,857		)
Noncontrolling interests:
Redeemable noncontrolling interests	103,818			35,451
Noncontrolling interest in consolidated subsidiaries	393			360
Operating partnership							47,239			100,822
Consolidated subsidiaries							425			449
Total equity	1,032,074			496,117			1,035,713			1,005,977
Total liabilities and equity	$	2,706,512		$	1,904,138		$	2,873,878		$	2,798,994

See notes to consolidated financial statements (unaudited).

URBAN EDGE PROPERTIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
REVENUE
Property rentals	$	69,625		$	59,138		$	196,831		$	176,750
Tenant expense reimbursements	23,938			19,888			71,590			62,274
Rental revenue													$	90,769		$	111,733		$	289,565		$	310,895
Management and development fees	369			375			1,199			1,356			280			375			940			1,064
Income from acquired leasehold interest	—			—			39,215			—
Other income	169			572			831			2,118			194			106			1,217			1,278
Total revenue	94,101			79,973			309,666			242,498			91,243			112,214			291,722			313,237
EXPENSES
Depreciation and amortization	20,976			14,435			60,505			41,908			21,496			21,833			65,893			73,544
Real estate taxes	15,872			12,729			43,975			38,701			14,490			16,374			45,188			47,736
Property operating	11,402			9,897			35,858			32,596			14,075			22,328			45,552			61,996
General and administrative	6,930			6,618			22,720			20,873			8,353			9,702			28,943			25,579
Casualty and impairment loss	2,170			—			5,637			—
Ground rent	2,891			2,508			7,997			7,529
Transaction costs	95			223			278			307
Provision for doubtful accounts	575			149			1,674			994
Casualty and impairment loss (gain), net⁽¹⁾													—			58			9,070			(1,248		)
Lease expense													3,486			2,722			11,037			8,210
Total expenses	60,911			46,559			178,644			142,908			61,900			73,017			205,683			215,817
Operating income	33,190			33,414			131,022			99,590
Gain on sale of real estate	202			—			202			15,618			39,716			2,185			68,219			52,625
Gain on sale of lease													1,849			—			1,849			—
Interest income	719			176			1,182			520			2,706			2,388			7,670			5,943
Interest and debt expense	(14,637		)	(12,766		)	(41,379		)	(39,015		)	(16,861		)	(16,756		)	(49,869		)	(48,059		)
Loss on extinguishment of debt	—			—			(1,274		)	—
Gain on extinguishment of debt													—			—			—			2,524
Income before income taxes	19,474			20,824			89,753			76,713			56,753			27,014			113,908			110,453
Income tax expense	(318		)	(319		)	(942		)	(349		)	(53		)	(115		)	(1,249		)	(741		)
Net income	19,156			20,505			88,811			76,364			56,700			26,899			112,659			109,712
Less (net income) loss attributable to noncontrolling interests in:
Less net (income) loss attributable to noncontrolling interests in:
Operating partnership	(1,967		)	(1,239		)	(7,431		)	(4,594		)	(2,662		)	(2,688		)	(6,535		)	(11,041		)
Consolidated subsidiaries	(11		)	(1		)	(33		)	1			2			(11		)	24			(34		)
Net income attributable to common shareholders	$	17,178		$	19,265		$	81,347		$	71,771		$	54,040		$	24,200		$	106,148		$	98,637

Earnings per common share - Basic:	$	0.15		$	0.19		$	0.77		$	0.72		$	0.45		$	0.21		$	0.89		$	0.87
Earnings per common share - Diluted:	$	0.15		$	0.19		$	0.77		$	0.72		$	0.45		$	0.21		$	0.89		$	0.86
Weighted average shares outstanding - Basic	110,990			99,304			104,938			99,281			121,087			113,890			119,259			113,769
Weighted average shares outstanding - Diluted	111,260			99,870			115,323			99,711			121,183			114,156			126,489			114,236

⁽¹⁾ Refer to Note 2 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q.

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 Earnings (Deficit)			Operating Partnership			Consolidated Subsidiaries		Total Equity
Balance, June 30, 2018	114,004,276		$	1,140	$	950,958		$	(33,307	)	$	102,714		$	427	$	1,021,932
Net income attributable to common shareholders	—		—		—			24,200			—			—		24,200
Net income attributable to noncontrolling interests	—		—		—			—			2,688			11		2,699
Limited partnership interests:
Units redeemed for common shares	179,110		1		1,471			—			—			—		1,472
Reallocation of noncontrolling interests	—		—		(1,641		)	—			169			—		(1,472		)
Common shares issued	(7,779	)	—		29			(38		)	—			—		(9		)
Dividends on common shares ($0.22 per share)	—		—		—			(25,085		)	—			—		(25,085		)
Distributions to redeemable NCI ($0.22 per unit)	—		—		—			—			(2,735		)	—		(2,735		)
Share-based compensation expense	—		—		1,142			9			1,101			—		2,252
Balance, September 30, 2018	114,175,607		$	1,141	$	951,959		$	(34,221	)	$	103,937		$	438	$	1,023,254

Common Shares Noncontrolling Interests (“NCI”)
Shares Amount

Additional
Paid-In Capital

Accumulated Earnings
(Deficit)
Redeemable NCI NCI in Consolidated Subsidiaries Total Equity
Balance, December 31, 2016 99,754,900
$ 997
$ 488,375
$ (29,066 ) $ 35,451
$ 360
$ 496,117
Net income attributable to common shareholders
—
—
—
81,347
—
—
81,347
Net income attributable to noncontrolling interests
—
—
—
—
7,431
33
7,464
Limited partnership units issued —
—
105,279
—
65,805
—
171,084
Common shares issued
14,073,037
141
348,326
(253 ) —
—
348,214
Share-based awards withheld for taxes
(10,508 ) —
(287 ) —
—
—
(287 )
Dividends on common shares ($0.66 per share) —
—
—
(70,408 ) —
—
(70,408 )
Share-based compensation expense
—
—
3,354
58
1,836
—
5,248
Distributions to redeemable NCI ($0.66 per unit) —
—
—
—
(6,705 ) —
(6,705 )
Balance, September 30, 2017 113,817,429
$ 1,138
$ 945,047
$ (18,322 ) $ 103,818
$ 393
$ 1,032,074



	Common Shares									Noncontrolling Interests (“NCI”)
	Shares	Amount		Additional Paid-In Capital			Accumulated Earnings (Deficit)			Operating Partnership			Consolidated Subsidiaries			Total Equity
Balance, June 30, 2019	121,171,003	$	1,212	$	1,015,470		$	(56,580	)	$	49,157		$	427		$	1,009,686
Net income attributable to common shareholders	—	—		—			54,040			—			—			54,040
Net income (loss) attributable to noncontrolling interests	—	—		—			—			2,662			(2		)	2,660
Limited partnership interests:
Units redeemed for common shares	50,000	—		435			—			(2,726		)	—			(2,291		)
Units redeemed for cash	—	—		(3,422		)	—			(2,556		)	—			(5,978		)
Reallocation of noncontrolling interests	—	—		2,291			—			—			—			2,291
Common shares issued	2,350	—		(30		)	(31		)	—			—			(61		)
Dividends to common shareholders ($0.22 per share)	—	—		—			(26,646		)	—			—			(26,646		)
Distributions to redeemable NCI ($0.22 per unit)	—	—		—			—			(1,298		)	—			(1,298		)
Share-based compensation expense	—	—		1,310			—			2,000			—			3,310
Balance, September 30, 2019	121,223,353	$	1,212	$	1,016,054		$	(29,217	)	$	47,239		$	425		$	1,035,713

See notes to consolidated financial statements (unaudited).



	Common Shares											Noncontrolling Interests (“NCI”)
	Shares		Amount			Additional Paid-In Capital			Accumulated Earnings (Deficit)			Operating Partnership			Consolidated Subsidiaries		Total Equity
Balance, December 31, 2017	113,827,529		$	1,138		$	946,402		$	(57,621	)	$	100,218		$	404	$	990,541
Net income attributable to common shareholders	—		—			—			98,637			—			—		98,637
Net income attributable to noncontrolling interests	—		—			—			—			11,041			34		11,075
Limited partnership interests:
Units redeemed for common shares	249,110		2			2,041			—			—			—		2,043
Reallocation of noncontrolling interests	—		—			(21		)	—			(2,022		)	—		(2,043		)
Common shares issued	116,158		2			452			(139		)	—			—		315
Dividends to common shareholders ($0.66 per share)	—		—			—			(75,122		)	—			—		(75,122		)
Distributions to redeemable NCI ($0.66 per unit)	—		—			—			—			(8,301		)	—		(8,301		)
Share-based compensation expense	—		—			3,469			24			3,001			—		6,494
Share-based awards retained for taxes	(17,190	)	(1		)	(384		)	—			—			—		(385		)
Balance, September 30, 2018	114,175,607		$	1,141		$	951,959		$	(34,221	)	$	103,937		$	438	$	1,023,254



	Common Shares										Noncontrolling Interests (“NCI”)
	Shares		Amount		Additional Paid-In Capital			Accumulated Earnings (Deficit)			Operating Partnership			Consolidated Subsidiaries			Total Equity
Balance, December 31, 2018	114,345,565		$	1,143	$	956,420		$	(52,857	)	$	100,822		$	449		$	1,005,977
Net income attributable to common shareholders	—		—		—			106,148			—			—			106,148
Net income (loss) attributable to noncontrolling interests	—		—		—			—			6,535			(24		)	6,511
Impact of ASC 842 adoption	—		—		—			(2,918		)	—			—			(2,918		)
Limited partnership interests:
Units redeemed for common shares	6,861,692		68		54,680			—			(2,726		)	—			52,022
Units redeemed for cash	—		—		(3,422		)	—			(2,556		)	—			(5,978		)
Reallocation of noncontrolling interests	—		—		4,077			—			(56,099		)	—			(52,022		)
Common shares issued	47,372		1		353			(101		)	—			—			253
Dividends to common shareholders ($0.66 per share)	—		—		—			(79,489		)	—			—			(79,489		)
Distributions to redeemable NCI ($0.66 per unit)	—		—		—			—			(4,427		)	—			(4,427		)
Share-based compensation expense	—		—		4,579			—			5,690			—			10,269
Share-based awards retained for taxes	(31,276	)	—		(633		)	—			—			—			(633		)
Balance, September 30, 2019	121,223,353		$	1,212	$	1,016,054		$	(29,217	)	$	47,239		$	425		$	1,035,713

See notes to consolidated financial statements (unaudited).

URBAN EDGE PROPERTIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	88,811		$	76,364		$	112,659		$	109,712
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,576			42,682			65,645			74,025
Income from acquired leasehold interest	(39,215		)	—
Casualty and impairment loss	5,637			—
Loss on extinguishment of debt	1,274			—
Casualty and impairment loss, net							9,070			—
Gain on sale of real estate							(68,219		)	(52,625		)
Gain on sale of lease							(1,849		)	—
Gain on extinguishment of debt							—			(2,524		)
Amortization of deferred financing costs	2,175			2,106			2,170			2,159
Amortization of below market leases, net	(6,842		)	(5,907		)	(13,933		)	(29,767		)
Amortization of right-of-use assets							6,329			—
Straight-lining of rent	520			(97		)	120			(381		)
Share-based compensation expense	5,248			4,080			10,269			6,494
Gain on sale of real estate	(202		)	(15,618		)
Provision for doubtful accounts	1,674			994			—			2,588
Change in operating assets and liabilities:
Tenant and other receivables	(9,605		)	(821		)	2,444			(12,812		)
Deferred leasing costs	(3,556		)	(2,624		)	(3,239		)	(3,441		)
Prepaid and other assets	(6,073		)	(1,954		)	(2,377		)	(1,359		)
Accounts payable and accrued expenses	12,372			(1,368		)
Other liabilities	1,704			1,346
Accounts payable, accrued expenses and other liabilities							(3,496		)	(3,947		)
Net cash provided by operating activities	114,498			99,183			115,593			88,122
CASH FLOWS FROM INVESTING ACTIVITIES
Real estate development and capital improvements	(55,941		)	(45,668		)	(71,005		)	(90,703		)
Acquisition of real estate	(211,393		)	(2,000		)	—			(4,931		)
Proceeds from sale of real estate	5,005			19,938
Net cash used in investing activities	(262,329		)	(27,730		)
Proceeds from sale of operating properties							111,440			57,593
Proceeds from sale of operating lease							6,943			—
Insurance proceeds							12,677			1,300
Net cash provided by (used in) investing activities							60,055			(36,741		)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt repayments	(88,559		)	(34,008		)	(3,907		)	(3,153		)
Dividends paid to shareholders	(70,408		)	(59,390		)
Debt issuance costs							(2,643		)	—
Dividends to common shareholders							(79,489		)	(75,122		)
Distributions to redeemable noncontrolling interests	(6,705		)	(3,711		)	(4,427		)	(8,301		)
Debt issuance costs	(11,352		)	—
Taxes withheld for vested restricted shares	(287		)	(38		)	(633		)	(385		)
Proceeds from issuance of common shares	348,214			5,020
Proceeds from borrowings	225,500			—
Net cash provided by (used in) financing activities	396,403			(92,127		)
Proceeds related to the issuance of common shares							253			315
Payment for redemption of units							(5,978		)	—
Net cash used in financing activities							(96,824		)	(86,646		)
Net increase (decrease) in cash and cash equivalents and restricted cash	248,572			(20,674		)	78,824			(35,265		)
Cash and cash equivalents and restricted cash at beginning of period	140,186			178,025			457,522			500,841
Cash and cash equivalents and restricted cash at end of period	$	388,758		$	157,351		$	536,346		$	465,576

See notes to consolidated financial statements (unaudited).


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2019		2018
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payment for interest, includes amounts capitalized of $2,912 and $2,755, respectively	$	40,567	$	38,503
Cash payments for interest, net of amounts capitalized of $1,277 and $2,769, respectively					$	48,776	$	49,549
Cash payments for income taxes	1,237		1,258		1,589		757
Cash payments for lease liabilities					8,205		—
NON-CASH INVESTING AND FINANCING ACTIVITIES
Acquisition of real estate through issuance of OP units	171,084		—
Acquisition of real estate through assumption of debt	69,659		—
Accrued capital expenditures included in accounts payable and accrued expenses	15,226		12,340		13,444		24,100
Write-off of fully depreciated assets	910		958
Write-off of fully depreciated and impaired assets					43,625		10,407
Operating lease liabilities arising from obtaining right-of-use assets					98,980		—
Mortgage debt forgiven in foreclosure					—		11,537
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH					RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	131,654	$	168,983	$	440,430	$	490,279
Restricted cash at beginning of period	8,532		9,042		17,092		10,562
Cash and cash equivalents and restricted cash at beginning of period	$	140,186	$	178,025	$	457,522	$	500,841

Cash and cash equivalents at end of period	$	380,395	$	149,698	$	441,561	$	449,307
Restricted cash at end of period	8,363		7,653		94,785		16,269
Cash and cash equivalents and restricted cash at end of period	$	388,758	$	157,351	$	536,346	$	465,576

See notes to consolidated financial statements (unaudited).

URBAN EDGE PROPERTIES LP

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except unit and per unit amounts)


	September 30,			December 31,			September 30,			December 31,
	2017			2016			2019			2018
ASSETS	(Unaudited)
Real estate, at cost:
Land	$	522,085		$	384,217		$	500,411		$	525,819
Buildings and improvements	2,013,767			1,650,054			2,169,835			2,156,113
Construction in progress	117,830			99,236			43,671			80,385
Furniture, fixtures and equipment	7,129			4,993			7,315			6,675
Total	2,660,811			2,138,500			2,721,232			2,768,992
Accumulated depreciation and amortization	(586,187		)	(541,077		)	(662,713		)	(645,872		)
Real estate, net	2,074,624			1,597,423			2,058,519			2,123,120
Right-of-use assets							83,523			—
Cash and cash equivalents	380,395			131,654			441,561			440,430
Restricted cash	8,363			8,532			94,785			17,092
Tenant and other receivables, net of allowance for doubtful accounts of $3,469 and $2,332, respectively	24,063			9,340
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $260 and $261, respectively	85,853			87,695
Identified intangible assets, net of accumulated amortization of $29,771 and $22,361, respectively	91,305			30,875
Deferred leasing costs, net of accumulated amortization of $15,556 and $13,909, respectively	20,500			19,241
Deferred financing costs, net of accumulated amortization of $1,484 and $726, respectively	4,492			1,936
Tenant and other receivables, net of allowance for doubtful accounts of $6,486 as of December 31, 2018							27,240			28,563
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 as of December 31, 2018							75,418			84,903
Identified intangible assets, net of accumulated amortization of $30,214 and $39,526, respectively							49,527			68,422
Deferred leasing costs, net of accumulated amortization of $16,326 and $16,826, respectively							20,263			21,277
Deferred financing costs, net of accumulated amortization of $3,543 and $2,764, respectively							4,093			2,219
Prepaid expenses and other assets	16,917			17,442			18,949			12,968
Total assets	$	2,706,512		$	1,904,138		$	2,873,878		$	2,798,994

LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net	$	1,408,066		$	1,197,513		$	1,547,486		$	1,550,242
Identified intangible liabilities, net of accumulated amortization of $63,468 and $72,528, respectively	184,061			146,991
Accounts payable and accrued expenses	65,769			48,842
Other liabilities	16,542			14,675
Lease liabilities							81,428			—
Accounts payable, accrued expenses and other liabilities							80,161			98,517
Identified intangible liabilities, net of accumulated amortization of $68,483 and $65,058, respectively							129,090			144,258
Total liabilities	1,674,438			1,408,021			1,838,165			1,793,017
Commitments and contingencies
Equity:
Partners’ capital:
General partner:113,817,429 and 99,754,900 units outstanding, respectively	946,185			489,372
Limited partners:12,729,634 and 6,378,704 units outstanding, respectively	104,722			37,081
General partner: 121,223,353 and 114,345,565 units outstanding, respectively							1,017,266			957,563
Limited partners: 5,793,230 and 12,736,633 units outstanding, respectively							49,756			105,447
Accumulated deficit	(19,226		)	(30,696		)	(31,734		)	(57,482		)
Total partners’ capital	1,031,681			495,757			1,035,288			1,005,528
Noncontrolling interest in consolidated subsidiaries	393			360			425			449
Total equity	1,032,074			496,117			1,035,713			1,005,977
Total liabilities and equity	$	2,706,512		$	1,904,138		$	2,873,878		$	2,798,994

See notes to consolidated financial statements (unaudited).

URBAN EDGE PROPERTIES LP

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except unit and per unit amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
REVENUE
Property rentals	$	69,625		$	59,138		$	196,831		$	176,750
Tenant expense reimbursements	23,938			19,888			71,590			62,274
Rental revenue													$	90,769		$	111,733		$	289,565		$	310,895
Management and development fees	369			375			1,199			1,356			280			375			940			1,064
Income from acquired leasehold interest	—			—			39,215			—
Other income	169			572			831			2,118			194			106			1,217			1,278
Total revenue	94,101			79,973			309,666			242,498			91,243			112,214			291,722			313,237
EXPENSES
Depreciation and amortization	20,976			14,435			60,505			41,908			21,496			21,833			65,893			73,544
Real estate taxes	15,872			12,729			43,975			38,701			14,490			16,374			45,188			47,736
Property operating	11,402			9,897			35,858			32,596			14,075			22,328			45,552			61,996
General and administrative	6,930			6,618			22,720			20,873			8,353			9,702			28,943			25,579
Casualty and impairment loss	2,170			—			5,637			—
Ground rent	2,891			2,508			7,997			7,529
Transaction costs	95			223			278			307
Provision for doubtful accounts	575			149			1,674			994
Casualty and impairment loss (gain), net⁽¹⁾													—			58			9,070			(1,248		)
Lease expense													3,486			2,722			11,037			8,210
Total expenses	60,911			46,559			178,644			142,908			61,900			73,017			205,683			215,817
Operating income	33,190			33,414			131,022			99,590
Gain on sale of real estate	202			—			202			15,618			39,716			2,185			68,219			52,625
Gain on sale of lease													1,849			—			1,849			—
Interest income	719			176			1,182			520			2,706			2,388			7,670			5,943
Interest and debt expense	(14,637		)	(12,766		)	(41,379		)	(39,015		)	(16,861		)	(16,756		)	(49,869		)	(48,059		)
Loss on extinguishment of debt	—			—			(1,274		)	—
Gain on extinguishment of debt													—			—			—			2,524
Income before income taxes	19,474			20,824			89,753			76,713			56,753			27,014			113,908			110,453
Income tax expense	(318		)	(319		)	(942		)	(349		)	(53		)	(115		)	(1,249		)	(741		)
Net income	19,156			20,505			88,811			76,364			56,700			26,899			112,659			109,712
Less: (net income) loss attributable to NCI in consolidated subsidiaries	(11		)	(1		)	(33		)	1
Less: net (income) loss attributable to NCI in consolidated subsidiaries													2			(11		)	24			(34		)
Net income attributable to unitholders	$	19,145		$	20,504		$	88,778		$	76,365		$	56,702		$	26,888		$	112,683		$	109,678

Earnings per unit - Basic:	$	0.15		$	0.19		$	0.77		$	0.72		$	0.45		$	0.21		$	0.89		$	0.87
Earnings per unit - Diluted:	$	0.15		$	0.19		$	0.77		$	0.72		$	0.45		$	0.21		$	0.89		$	0.86
Weighted average units outstanding - Basic	123,433			105,404			114,979			105,370			126,277			126,208			126,387			126,170
Weighted average units outstanding - Diluted	123,703			105,970			115,323			105,800			126,373			126,693			126,490			126,636

⁽¹⁾ Refer to Note 2 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q.

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)

General Partner
Limited Partners⁽¹⁾

Accumulated Earnings
(Deficit)
NCI in Consolidated Subsidiaries Total Equity
Balance, December 31, 2016 $ 489,372
$ 37,081
$ (30,696 ) $ 360
$ 496,117
Net income attributable to unitholders —
—
88,778
—
88,778
Net income attributable to noncontrolling interests —
—
—
33
33
Common units issued as a result of common
shares issued by Urban Edge
348,467
—
(253 ) —
348,214
Limited partnership units issued 105,279
65,805
—
—
171,084
Distributions to Partners ($0.66 per unit) —
—
(77,113 ) —
(77,113 )
Share-based compensation expense 3,354
1,836
58
—
5,248
Share-based awards withheld for taxes (287 ) —
—
—
(287 )
Balance, September 30, 2017 $ 946,185
$ 104,722
$ (19,226 ) $ 393
$ 1,032,074



	Total Shares		General Partner			Total Units		Limited Partners⁽¹⁾		Accumulated Earnings (Deficit)			NCI in Consolidated Subsidiaries		Total Equity
Balance, June 30, 2018	114,004,276		952,098			12,738,907		105,204		(35,797		)	427		1,021,932
Net income attributable to unitholders	—		—			—		—		26,888			—		26,888
Net income attributable to noncontrolling interests	—		—			—		—		—			11		11
Common units issued as a result of common shares issued by Urban Edge	(7,779	)	29			—		—		(38		)	—		(9		)
Equity redemption of OP units	179,110		1,472			(179,110	)	—		—			—		1,472
Limited partnership units issued, net	—		—			348,729		—		—			—		—
Reallocation of noncontrolling interests	—		(1,641		)	—		169		—			—		(1,472		)
Distributions to Partners ($0.22 per unit)	—		—			—		—		(27,820		)	—		(27,820		)
Share-based compensation expense	—		1,142			—		1,101		9			—		2,252
Balance, September 30, 2018	114,175,607		$	953,100		12,908,526		$	106,474	$	(36,758	)	$	438	$	1,023,254

⁽¹⁾ Limited partners have a ~~10.1%~~10.2% common limited partnership interest in the Operating Partnership as of September 30, ~~2017~~2018 in the form of units of interest in the Operating Partnership (“OP Units”) and Long-Term Incentive Plan (“LTIP”) units.



	Total Shares	General Partner			Total Units		Limited Partners⁽²⁾			Accumulated Earnings (Deficit)			NCI in Consolidated Subsidiaries			Total Equity
Balance, June 30, 2019	121,171,003	$	1,016,682		6,201,228		$	53,038		$	(60,461	)	$	427		$	1,009,686
Net income attributable to unitholders	—	—			—		—			56,702			—			56,702
Net loss attributable to noncontrolling interests	—	—			—		—			—			(2		)	(2		)
Common units issued as a result of common shares issued by Urban Edge	2,350	(30		)	—		—			(31		)	—			(61		)
Equity redemption of OP units	50,000	435			(50,000	)	(2,726		)	—			—			(2,291		)
Cash redemption of OP units	—	(3,422		)	(357,998	)	(2,556		)	—			—			(5,978		)
Reallocation of noncontrolling interests	—	2,291			—		—			—			—			2,291
Distributions to Partners ($0.22 per unit)	—	—			—		—			(27,944		)	—			(27,944		)
Share-based compensation expense	—	1,310			—		2,000			—			—			3,310
Balance, September 30, 2019	121,223,353	$	1,017,266		5,793,230		$	49,756		$	(31,734	)	$	425		$	1,035,713

⁽²⁾ Limited partners have a 4.6% common limited partnership interest in the Operating Partnership as of September 30, 2019 in the form of units of interest in the OP Units and LTIP units.

See notes to consolidated financial statements (unaudited).



	Total Shares		General Partner			Total Units		Limited Partners⁽¹⁾			Accumulated Earnings (Deficit)			NCI in Consolidated Subsidiaries		Total Equity
Balance, December 31, 2017	113,827,529		$	947,540		12,812,954		$	105,495		$	(62,898	)	$	404	$	990,541
Net income attributable to unitholders	—		—			—		—			109,678			—		109,678
Net income attributable to noncontrolling interests	—		—			—		—			—			34		34
Common units issued as a result of common shares issued by Urban Edge	116,158		454			—		—			(139		)	—		315
Equity redemption of OP units	249,110		2,043			(249,110	)	—			—			—		2,043
Limited partnership units issued, net	—		—			344,682		—			—			—		—
Reallocation of noncontrolling interests	—		(21		)	—		(2,022		)	—			—		(2,043		)
Distributions to Partners ($0.66 per unit)	—		—			—		—			(83,423		)	—		(83,423		)
Share-based compensation expense	—		3,469			—		3,001			24			—		6,494
Share-based awards retained for taxes	(17,190	)	(385		)	—		—			—			—		(385		)
Balance, September 30, 2018	114,175,607		$	953,100		12,908,526		$	106,474		$	(36,758	)	$	438	$	1,023,254

⁽¹⁾ Limited partners have a 10.2% common limited partnership interest in the Operating Partnership as of September 30, 2018 in the form of units of interest in the OP Units and LTIP units.



	Total Shares		General Partner			Total Units		Limited Partners⁽²⁾			Accumulated Earnings (Deficit)			NCI in Consolidated Subsidiaries			Total Equity
Balance, December 31, 2018	114,345,565		$	957,563		12,736,633		$	105,447		$	(57,482	)	$	449		$	1,005,977
Net income attributable to unitholders	—		—			—		—			112,683			—			112,683
Net loss attributable to noncontrolling interests	—		—			—		—			—			(24		)	(24		)
Impact of ASC 842 adoption	—		—			—		—			(2,918		)	—			(2,918		)
Common units issued as a result of common shares issued by Urban Edge	47,372		354			—		—			(101		)	—			253
Equity redemption of OP units	6,861,692		54,748			(6,861,692	)	(2,726		)	—			—			52,022
Cash redemption of OP units	—		(3,422		)	(357,998	)	(2,556		)	—			—			(5,978		)
Limited partnership units issued, net	—		—			276,287		—			—			—			—
Reallocation of noncontrolling interests	—		4,077			—		(56,099		)	—			—			(52,022		)
Distributions to Partners ($0.66 per unit)	—		—			—		—			(83,916		)	—			(83,916		)
Share-based compensation expense	—		4,579			—		5,690			—			—			10,269
Share-based awards retained for taxes	(31,276	)	(633		)	—		—			—			—			(633		)
Balance, September 30, 2019	121,223,353		$	1,017,266		5,793,230		$	49,756		$	(31,734	)	$	425		$	1,035,713

⁽²⁾ Limited partners have a 4.6% common limited partnership interest in the Operating Partnership as of September 30, 2019 in the form of units of interest in the OP Units and LTIP units.

See notes to consolidated financial statements (unaudited).

URBAN EDGE PROPERTIES LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	88,811		$	76,364		$	112,659		$	109,712
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	60,576			42,682			65,645			74,025
Income from acquired leasehold interest	(39,215		)	—
Casualty and impairment loss	5,637			—
Loss on extinguishment of debt	1,274			—
Casualty and impairment loss, net							9,070			—
Gain on sale of real estate							(68,219		)	(52,625		)
Gain on sale of lease							(1,849		)	—
Gain on extinguishment of debt							—			(2,524		)
Amortization of deferred financing costs	2,175			2,106			2,170			2,159
Amortization of below market leases, net	(6,842		)	(5,907		)	(13,933		)	(29,767		)
Amortization of right-of-use assets							6,329			—
Straight-lining of rent	520			(97		)	120			(381		)
Share-based compensation expense	5,248			4,080			10,269			6,494
Gain on sale of real estate	(202		)	(15,618		)
Provision for doubtful accounts	1,674			994			—			2,588
Change in operating assets and liabilities:
Tenant and other receivables	(9,605		)	(821		)	2,444			(12,812		)
Deferred leasing costs	(3,556		)	(2,624		)	(3,239		)	(3,441		)
Prepaid and other assets	(6,073		)	(1,954		)	(2,377		)	(1,359		)
Accounts payable and accrued expenses	12,372			(1,368		)
Other liabilities	1,704			1,346
Accounts payable, accrued expenses and other liabilities							(3,496		)	(3,947		)
Net cash provided by operating activities	114,498			99,183			115,593			88,122
CASH FLOWS FROM INVESTING ACTIVITIES
Real estate development and capital improvements	(55,941		)	(45,668		)	(71,005		)	(90,703		)
Acquisition of real estate	(211,393		)	(2,000		)	—			(4,931		)
Proceeds from sale of real estate	5,005			19,938
Net cash used in investing activities	(262,329		)	(27,730		)
Proceeds from sale of operating properties							111,440			57,593
Proceeds from sale of operating lease							6,943			—
Insurance proceeds							12,677			1,300
Net cash provided by (used in) investing activities							60,055			(36,741		)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt repayments	(88,559		)	(34,008		)	(3,907		)	(3,153		)
Debt issuance costs							(2,643		)	—
Distributions to partners	(77,113		)	(63,101		)	(83,916		)	(83,423		)
Debt issuance costs	(11,352		)	—
Taxes withheld for vested restricted units	(287		)	(38		)	(633		)	(385		)
Proceeds from issuance of units	348,214			5,020
Proceeds from borrowings	225,500			—
Net cash provided by (used in) financing activities	396,403			(92,127		)
Proceeds related to the issuance of common shares							253			315
Payment for redemption of units							(5,978		)	—
Net cash used in financing activities							(96,824		)	(86,646		)
Net increase (decrease) in cash and cash equivalents and restricted cash	248,572			(20,674		)	78,824			(35,265		)
Cash and cash equivalents and restricted cash at beginning of period	140,186			178,025			457,522			500,841
Cash and cash equivalents and restricted cash at end of period	$	388,758		$	157,351		$	536,346		$	465,576

See notes to consolidated financial statements (unaudited).


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2019		2018
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payment for interest, includes amounts capitalized of $2,912 and $2,755, respectively	$	40,567	$	38,503
Cash payments for interest, net of amounts capitalized of $1,277 and $2,769, respectively					$	48,776	$	49,549
Cash payments for income taxes	1,237		1,258		1,589		757
Cash payments for lease liabilities					8,205		—
NON-CASH INVESTING AND FINANCING ACTIVITIES
Acquisition of real estate through issuance of OP units	171,084		—
Acquisition of real estate through assumption of debt	69,659		—
Accrued capital expenditures included in accounts payable and accrued expenses	15,226		12,340		13,444		24,100
Write-off of fully depreciated assets	910		958
Write-off of fully depreciated and impaired assets					43,625		10,407
Operating lease liabilities arising from obtaining right-of-use assets					98,980		—
Mortgage debt forgiven in foreclosure					—		11,537
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH					RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	131,654	$	168,983	$	440,430	$	490,279
Restricted cash at beginning of period	8,532		9,042		17,092		10,562
Cash and cash equivalents and restricted cash at beginning of period	$	140,186	$	178,025	$	457,522	$	500,841

Cash and cash equivalents at end of period	$	380,395	$	149,698	$	441,561	$	449,307
Restricted cash at end of period	8,363		7,653		94,785		16,269
Cash and cash equivalents and restricted cash at end of period	$	388,758	$	157,351	$	536,346	$	465,576

See notes to consolidated financial statements (unaudited).

URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	ORGANIZATION

Urban Edge Properties (“UE”, “Urban Edge” or the “Company”) (NYSE: UE) is a Maryland real estate investment trust ~~that owns, manages, acquires, develops, redevelops~~focused on managing, developing, redeveloping, and ~~operates~~acquiring retail real estate in ~~high barrier-to-entry markets.~~urban communities, primarily in the New York metropolitan area. Urban Edge Properties LP (“UELP” or the “Operating Partnership”) is a Delaware limited partnership formed to serve as ~~the Company’s~~UE’s majority-owned partnership subsidiary and to own, through affiliates, all of the Company’s real estate properties and other assets. Unless the context otherwise requires, references to “we”, “us” and “our” refer to Urban Edge Properties and UELP and their consolidated entities/subsidiaries.

The Operating Partnership’s capital includes general and common limited partnership interests in the operating partnership (“OP Units”). As of September 30, ~~2017,~~2019, Urban Edge owned approximately ~~89.9%~~95.4% of the outstanding common OP Units with the remaining limited OP Units held by ~~Vornado Realty L.P.,~~ members of management, ~~our~~Urban Edge’s Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership. The ~~third party~~third-party unitholders have limited rights over the Operating Partnership such that they do not have characteristics of a controlling financial interest. As such, the Operating Partnership is considered a variable interest entity (“VIE”), and the Company is the primary beneficiary which consolidates it. The Company’s only investment is the Operating Partnership. The VIE’s assets can be used for purposes other than the settlement of the VIE’s obligations and the Company’s partnership interest is considered a majority voting interest.

As of September 30, ~~2017,~~2019, our portfolio consisted of 8573 shopping centers, ~~four~~4 malls and a warehouse park, totaling ~~16.7~~approximately 15.0 million square ~~feet.~~feet (“sf”).


2.	BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions of Form 10-Q. Certain information and footnote disclosures included in our annual financial statements have been condensed or omitted. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of the Company and the Operating Partnership and the results of operations and cash flows for the interim periods presented. Operating results for the three and nine months ended September 30, ~~2017~~2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2017.~~2019. Accordingly, these consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, as filed with the Securities Exchange Commission (“SEC”).

The consolidated balance sheets as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018 reflect the consolidation of wholly-owned subsidiaries and those entities in which we have a controlling financial interest. The consolidated statements of income for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 include the consolidated accounts of the Company and the Operating Partnership. All intercompany transactions have been eliminated in consolidation.

In accordance with ASC 205 Presentation of Financial Statements, the Company reclassified Property rentals and Tenant reimbursement income to Rental revenue on its consolidated statements of income for the three and nine months ended September 30, 2019 and 2018, respectively, as reflected beginning on Form 10-K for the year ended December 31, 2018. Additionally, the Company includes credit losses related to operating lease receivables as a reduction to rental revenue in "Rental revenue" in the consolidated statements of income for the three and nine months ended September 30, 2019 due to the adoption of (“ASU 2016-02”) ASC 842 Leases. Provision for doubtful accounts are included in "Property operating expenses" for the three and nine months ended September 30, 2018.

The Company includes real estate impairment charges, and casualty losses (gains) resulting from natural disasters in Casualty and impairment loss (gain), net on its consolidated statements of income for the three and nine months ended September 30, 2019 and 2018, respectively, as reflected in this Quarterly Report on Form 10-Q. Refer to Note 9 and Note 10 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information regarding real estate impairment charges and casualty losses (gains), respectively.

Our primary business is the ownership, management, redevelopment, development and operation of retail shopping centers and malls. We do not distinguish our primary business or group our operations on a geographical basis for purposes of measuring

performance. ~~We review~~The Company’s chief operating decision maker reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. None of our tenants accounted for more than 10% of our revenue or property operating income. We aggregate all of our properties into ~~one~~1 reportable segment due to their similarities with regard to the nature and economics of the properties, tenants and operations, as well as long-term average financial performance.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Use of Estimates~~ Recently Issued Accounting Literature —~~The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect~~ Effective for the ~~reported amount of assets and liabilities~~fiscal period beginning January 1, 2019, we adopted (“ASU 2016-02”) ASC 842 Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of ~~contingent~~leases for both parties to a contract (i.e. lessees and lessors). In connection with the adoption of ASU 2016-02, we also adopted (i) ASU 2019-01 Leases (ASC 842): Codification Improvements, (ii)ASU 2018-20 Leases (ASC 842): Narrow-Scope Improvements for Lessors,(iii) ASU 2018-11 Leases (ASC 842): Targeted Improvements,(iv) ASU 2018-10 Codification Improvements to ASC 842, Leases and (v)ASU 2018-01 Leases (ASC 842): Land Easement Practical Expedient for Transition to Topic 842.

We initially applied the standard at the beginning of the period of adoption through the transition method issued by ASU 2018-11 and have presented comparative periods under ASC 840 Leases. Due to the effects of applying ASC 842, the Company recognized a $2.9 million cumulative-effect adjustment to its accumulated deficit to adjust reserves on receivables from straight-line rents. The new standard requires lessees to apply a two-model approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use ("ROU") asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The Company has elected the short-term lease recognition exemption, and therefore, leases with a term of 12 months or less are not recognized on the balance sheet. The new standard requires lessors to account for leases using an approach that is substantially equivalent to guidance for sales-type leases, direct financing leases and operating leases under ASC 840. For purposes of transition, we did not elect the hindsight practical expedient but did elect the land easement practical expedient to not reassess whether existing land easements contain leases and the practical expedient package, which has been applied consistently to all of our leases. As a result of electing the practical expedient package, we did not (i) reassess whether any expired or existing contracts are or contain leases, (ii) reassess the lease classification for any expired or existing leases or (iii) reassess initial direct costs for any existing leases.

From a lessee perspective, the initial adoption on January 1, 2019 resulted in the recognition of operating lease ROU assets and lease liabilities atfor 24 operating leases with an aggregate balance of $98.5 million and $93.6 million, respectively. On January 1, 2019, we also reclassified $11.9 million of acquired below-market lease intangibles and $7.1 million of accrued rent and adjusted the ~~date~~carrying values of our ROU assets by the corresponding amounts. If a finance lease is commenced in the future, a finance lease ROU asset and finance lease liability will be recognized on the balance sheet. The Company will recognize amortization of the ~~financial statements~~finance lease ROU asset and interest expense on the ~~reported~~lease liability. As of September 30, 2019, our operating lease ROU assets and lease liabilities were $83.5 million and $81.4 million, respectively, as presented on our consolidated balance sheet. The standard's adoption has also impacted the presentation of our consolidated income statement due to accounting for the lease and non-lease components as a single lease component for all classes of underlying assets, presented as lease expense on the consolidated statement of income. Prior to the adoption of ASC 842, related lease and non-lease expense amounts were recognized within lease expense, real estate taxes, property operating expenses and general administrative expenses on the consolidated statement of income.

From a lessor perspective, the adoption resulted in additional general and administrative expenses, attributable to internal leasing department costs not meeting the definition of initial direct costs under ASC 842. Capitalized internal leasing costs were $0.5 million for the nine months ended September 30, 2018. The standard's adoption has also impacted the presentation of our consolidated income statement due to accounting for lease and non-lease components as a single lease component, presented as rental revenue on the consolidated statement of income, however there has been no change in the timing of revenue recognition since adoption. Additionally, under the amendments issued in ASU 2018-20, the Company has accounted for common area maintenance expenses paid directly by tenants to third-parties as variable rental revenue and has reported the corresponding expense within property operating expenses. Real estate taxes and insurance expenses ~~during~~paid directly by tenants have not been recognized as rental revenue, real estate taxes and property operating expenses on the ~~reporting period. Actual results could differ from those estimates.~~consolidated statements of income.

The adoption of this standard has also resulted in additional quantitative and qualitative footnote disclosures (refer to Note 8 Leases).

ASU 2016-13, Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses will become effective for the fiscal period beginning January 1, 2020. ASU 2016-13 introduces a new model for estimating credit losses for certain types of

~~Recently Issued Accounting Literature~~

financial instruments and also modifies the impairment model with new methodology for estimating credits losses. In ~~May 2017,~~November 2018, the FASB issued ~~an update (“~~ASU ~~2017-09”)~~ ~~Scope of Modification Accounting~~2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which ~~clarifies when~~included amendments to ~~account for a change~~clarify receivables arising from operating leases are within the scope ASC 842. Due to the ~~terms or conditions~~adoption of ~~a share-based payment award~~ASC 842, the Company includes credit losses related to operating lease receivables as a ~~modification. Under~~reduction to rental revenue in "Rental revenue" in the ~~new guidance, modification accounting will~~consolidated statements of income. The Company does not ~~apply if~~expect the ~~fair value, vesting conditions, and classification~~adoption of ~~the awards are the same immediately before and after the modification.~~ ASU ~~2017-09 is effective for annual periods beginning after December 15, 2017, with early adoption permitted. We expect~~2016-13 to ~~adopt the standard beginning January 1, 2018. Once adopted, if we encounter~~have a ~~change to the terms or conditions of any of~~material impact on our share-based payment awards we will evaluate the need to apply modification accounting based on the new guidance. The general treatment for modifications of share-based payment awards is to record the incremental value arising from the change as additional compensation cost.consolidated financial statements.

In ~~February 2017,~~August 2018, the FASB issued ~~an updated (“~~ASU ~~2017-05”)~~ ~~Other Income - Gains and Losses from~~2018-13 Disclosure Framework-Changes to the ~~Derecognition of Nonfinancial Assets,~~ Disclosure Requirements for Fair Value Measurementto ~~clarify~~ASC 820, Fair Value Measurement. ASU 2018-13 modifies the ~~scope and accounting~~disclosure requirements for ~~derecognition of nonfinancial assets.~~fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2017-05 eliminated the guidance specific to real estate sales and partial sales. ASU 2017-05 defines “in-substance nonfinancial assets” and includes guidance on partial sales of nonfinancial assets. ASU 2017-052018-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, ~~2017, with~~2019. We elected to early ~~adoption permitted. At this point in time, we do not believe the~~adopt ASU 2018-13 effective January 1, 2019. The adoption of ~~ASU 2017-05 will~~this update did not have a material impact on our consolidated financial statements and ~~related~~ disclosures.

~~In January 2017, the FASB issued an update (“ASU 2017-01”)~~ ~~Clarifying the Definition of a Business~~, which changes the definition of a business to exclude acquisitions where substantially all of the fair value of the assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets. While there are various differences between accounting for an asset acquisition and a business combination, the largest impact is that transaction costs are capitalized for asset acquisitions rather than expensed when they are considered business combinations. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, with early adoption permitted. We elected to early adopt ASU 2017-01 effective January 1, 2017. The adoption of this standard has resulted in asset acquisition classification for the real estate acquisitions closed in the nine months ended September 30, 2017, and accordingly, acquisition costs for these acquisitions have been capitalized (refer to Note 4 Acquisitions and Dispositions).

~~In February 2016, the FASB issued an update (“ASU 2016-02”)~~ ~~Leases,~~ which revises the accounting related to lease accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases with terms greater than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The provisions of ASU 2016-02 are effective for fiscal years beginning after December 15, 2018 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We expect to adopt the standard beginning January 1, 2019. This standard will impact our consolidated financial statements by the recording of right-of-use assets and lease liabilities on our consolidated balance sheets for operating and finance leases where we are the lessee. We are currently in the process of evaluating the inputs required to calculate the amount that will be recorded on our consolidated balance sheets for these leases. In addition, leases where we are the lessor that meet the criteria of a finance lease will be amortized using the effective interest method with corresponding charges to interest expense and amortization expense. Leases where we are the lessor that meet the criteria of an operating lease will continue to be amortized on a straight-line basis. Further, internal leasing department costs previously capitalized will be expensed within general and administrative expenses. Historical capitalization of internal leasing costs was $0.5 million and $0.8 million during the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively. We expect this standard will have an impact on the classification of reimbursements of real estate taxes, insurance expenses and certain non-lease components of revenue (reimbursements of common area maintenance expenses) for new leases executed on or after January 1, 2019. There will be no material impact on total revenues.

~~In May 2014, the FASB issued an update (“ASU 2014-09”)~~ ~~Revenue from Contracts with Customers~~ to ASC Topic 606, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. During the year ended December 31, 2016, the FASB issued the following updates to ASC Topic 606 to clarify and/or amend the guidance in ASU 2014-09: (i) ASU 2016-08 ~~Principal versus Agent Considerations (Reporting Revenue Gross versus Net),~~ ~~which clarifies the implementation guidance on principal versus agent considerations, (ii) ASU 2016-10~~ ~~Identifying Performance Obligations and Licensing,~~ ~~which clarifies guidance related to identifying performance obligations and licensing implementation guidance and (iii) ASU 2016-12~~ ~~Narrow-Scope Improvements and Practical Expedients,~~ ~~which amends certain aspects of ASU 2014-09. In August 2015, the FASB issued an update (“ASU 2015-09”)~~ ~~Revenue from Contracts with Customers~~ to ASC Topic 606, which defers the effective date of ASU 2014-09 for all entities by one year. ASU 2015-09 is effective beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We have commenced the process of adopting ASU 2014-09 for reporting periods beginning after December 15, 2017 using the modified retrospective approach, including evaluating all sources of revenue we expect will be impacted by the adoption of ASU 2014-09. Specifically,

we have evaluated the impact ASU 2014-09 will have on the Company’s management and development fee income as well as tenant reimbursement income relating to certain non-lease components of revenue. Currently, the Company does not believe the adoption will impact the timing of the recognition of these revenue sources. For tenant reimbursement income, we expect there may be an impact to the classification of certain lease and non-lease components of revenue from leases upon the adoption of (“ASU 2016-02”) ~~Leases~~ ~~with no material impact to total revenue. We are in the process of completing our evaluation of the overall impact, including the required disclosures for adoption January 1, 2018.~~

Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they are not relevant to the Company or the Operating Partnership, or they are not expected to have a material impact on our consolidated financial statements.


4.	ACQUISITIONS AND DISPOSITIONS

Acquisitions

During the nine months ended September 30, ~~2017,~~2019, 0 acquisitions were completed by the Company.

As of September 30, 2019, we ~~closed on the following acquisitions:~~

Date Purchased Property Name City State Square Feet
Purchase Price⁽¹⁾
(in thousands)
January 4, 2017 Yonkers Gateway Center Yonkers NY —
⁽²⁾
$ 51,902
January 17, 2017 Shops at Bruckner Bronx NY 114,000
32,269
February 2, 2017 Hudson Mall Jersey City NJ 383,000
44,273
May 24, 2017 Yonkers Gateway Center Yonkers NY 437,000
⁽²⁾
101,825
May 24, 2017 The Plaza at Cherry Hill Cherry Hill NJ 413,000
53,535
May 24, 2017 Manchester Plaza Manchester MO 131,000
20,162
May 24, 2017 Millburn Gateway Center Millburn NJ 102,000
45,583
May 24, 2017 21 E Broad St / One Lincoln Plaza Westfield NJ 22,000
10,158
May 25, 2017 The Plaza at Woodbridge Woodbridge NJ 411,000
103,962
Total $ 463,669


⁽¹⁾	~~Includes $11.3 million of transaction costs incurred since January 1, 2017.~~


⁽²⁾	On January 4, 2017, we acquired fee and leasehold interests, including the lessor position under an operating lease for the whole property. On May 24, 2017, we purchased the remaining fee and leasehold interests not previously acquired, including the lessee position under the operating lease for the whole property.

~~On January 4, 2017, we acquired fee and leasehold interests~~were under contract to purchase an office building in ~~Yonkers Gateway Center for $51.9 million. Consideration for this purchase consisted of the issuance of $48.8 million in OP units and $2.9 million of cash.~~Maywood, NJ, adjacent to our existing property, Bergen Town Center. The ~~total number of OP units issued was 1.8 million at a value of $27.09 per unit. Transaction costs associated with this acquisition were $0.2 million.~~

On January 17, 2017, we acquired the leasehold interest in the Shops at Bruckner for $32.3 million, consisting of the assumption of the existing debt of $12.6 million and $19.4 million of cash. The propertybuilding is ~~a 114,000 sf retail center in the Bronx, NY directly across from our 376,000 sf Bruckner Commons shopping center. We own the land under the Shops at Bruckner and had been leasing it~~subject to ~~the seller under~~ a ground lease, ~~that ran through~~in which the Company will acquire the lessee position for a purchase price of $7.1 million. The transaction is scheduled to close by the end of 2019.

As of September ~~2044. Concurrent with~~30, 2019, we were also under contract to purchase a retail outparcel in Paramus, NJ, adjacent to our existing property, Bergen Town Center, for a gross purchase price of $6.6 million. The transaction is scheduled to close by the ~~acquisition,~~end of 2019.

We are also under contract to purchase 1 property located in the Boston metropolitan area for a gross purchase price of $24.5 million.

The completion of these transactions are contingent on satisfying closing conditions. The Company’s pending acquisitions will serve as 1031 exchanges for the Company’s dispositions and the required equity will be funded using proceeds from dispositions.

Dispositions

During the three months ended September 30, 2019, we ~~wrote-off the unamortized intangible liability balance related to the below-market ground lease as well as the existing straight-line receivable balance. As~~disposed of 6 properties and received proceeds of $77.6 million, net of selling costs, resulting in a ~~result, we recognized $39.2~~$39.7 million net gain on sale of ~~income from acquired leasehold interest in~~real estate. During the nine months ended September 30, ~~2017. Transaction costs associated with this acquisition were $0.3 million.~~

~~On February 2, 2017,~~2019, we ~~acquired Hudson Mall, a 383,000 sf retail center in Jersey City, NJ adjacent to our existing Hudson Commons shopping center. Consideration for this purchase consisted~~disposed of ~~the assumption~~8 properties and received proceeds of ~~the existing debt of $23.8 million and $19.9 million of cash. Transaction costs associated with this acquisition were $0.6 million.~~

On May 24 and 25, 2017, we acquired a portfolio of seven retail assets (the "Portfolio”) comprising 1.5 million sf of gross leasable area, predominantly in the New York City metropolitan area, for $325 million. The Portfolio was privately owned for more than three decades and was 83% leased as of the date of acquisition. Consideration for this purchase consisted of the issuance of $122 million in OP units, the assumption of $33 million of existing mortgage debt, the issuance of $126 million of non-recourse, secured mortgage debt and $44 million of cash. The total number of OP units issued was 4.5 million at a value of $27.02 per unit. Transaction costs associated with this acquisition were $10.2 million.

All acquisitions closed during the nine months ended September 30, 2017 were accounted for as asset acquisitions in accordance with ASU 2017-01, adopted January 1, 2017. Accordingly, transaction costs incurred since January 1, 2017 related to these transactions were capitalized as part of the asset’s purchase price. The purchase prices for all acquisitions were allocated to the acquired assets and liabilities based on their relative fair values at date of acquisition.

~~The aggregate purchase price of the above property acquisitions have been allocated as follows:~~

Property Name Land Buildings and improvements Identified intangible assets Identified intangible liabilities Debt premium Total purchase price
(in thousands)
Yonkers Gateway Center $ 40,699
$ —
$ 25,858
$ (14,655 ) $ —
$ 51,902
Shops at Bruckner —
32,979
12,029
(12,709 ) (30 ) 32,269
Hudson Mall 15,824
37,593
9,930
(17,344 ) (1,730 ) 44,273
Yonkers Gateway Center 22,642
110,635
38,162
(68,694 ) (920 ) 101,825
The Plaza at Cherry Hill 14,602
33,666
7,800
(2,533 ) —
53,535
Manchester Plaza 4,409
13,756
3,256
(1,259 ) —
20,162
Millburn Gateway Center 15,783
25,387
5,360
(947 ) —
45,583
21 E Broad St / One Lincoln Plaza 5,728
4,305
679
(554 ) —
10,158
The Plaza at Woodbridge 21,547
75,017
11,596
(4,198 ) —
103,962
Total $ 141,234
$ 333,338
$ 114,670
$ (122,893 ) $ (2,680 ) $ 463,669

~~Dispositions~~

~~On June 30, 2017, we completed the sale of our property previously classified as held for sale in Eatontown, NJ, for $4.8~~$111.4 million, net of selling ~~costs. Prior to the sale, the book value of this property exceeded its estimated fair value less~~ costs, to sell, and as such, an impairment charge of $3.5 million was recognized during the nine months ended September 30, 2017. Our determination of fair value was based on the executed contract of sale with the third-party buyer.

~~On September 8, 2017, we completed the sale of excess land in Kearny, NJ for $0.3 million,~~ resulting in a $68.2 million net gain ~~of $0.2 million.~~

~~On June 9, 2016, we completed the~~on sale of ~~a shopping center located in Waterbury, CT for $21.6 million, resulting in a gain of $15.6 million.~~real estate.


5.	~~RELATED PARTY TRANSACTIONS~~

In connection with the separation, the Company and Vornado Realty Trust (“Vornado”) entered into a transition services agreement under which Vornado provided transition services to the Company including human resources, information technology, risk management, tax services and office space and support. The fees charged to us by Vornado for those transition services approximated the actual cost incurred by Vornado in providing such services. On June 28, 2016, the Company executed an amendment to the transition services agreement, extending Vornado’s provision of information technology, risk management services and the portion of the human resources service related to health and benefits through July 31, 2018, unless terminated earlier. Fees for these services remain the same except that they may be adjusted for inflation. As of September 30, 2017 and December 31, 2016, there were no amounts due to Vornado related to such services.

During the three and nine months ended September 30, ~~2017, there were $0.3~~2019, the Company also sold its lessee position in 1 of its ground leases and received proceeds of $6.9 million, net of selling costs, and ~~$1.2~~derecognized the lease’s ROU asset and corresponding lease liability. We recognized a gain on sale of lease of $1.8 million ~~respectively,~~on our consolidated statements of costs paid to Vornado included in general and administrative expenses, which consisted of $0.2 million and $0.7 million, respectively, of rent expense for two of our office locations and $0.1 million and $0.5 million, respectively, of transition services fees. For income during the three and nine months ended September 30, 2016, there were $0.4 million and $1.3 million, respectively, of costs paid to Vornado included in general and administrative expenses, which consisted of $0.2 million and $0.7 million, respectively, of rent expense for two of our office locations and $0.2 million and $0.6 million of transition services fees, respectively.

~~Management and Development Fees~~

In connection with the separation, the Company and Vornado entered into property management agreements under which the Company provides management, development, leasing and other services to certain properties owned by Vornado and its affiliates, including Interstate Properties (“Interstate”) and Alexander’s, Inc. (NYSE:ALX). Interstate is2019 as a general partnership that owns retail properties in which Steven Roth, Chairman of Vornado’s Board and Chief Executive Officer of Vornado, and a member of our Board of Trustees, is the managing general partner. Interstate and its partners beneficially owned an aggregate of approximately 7.1%result of the ~~common shares of beneficial interest of Vornado as of December 31, 2016.~~ sale.

Real Estate Held for Sale

As of September 30, ~~2017, Vornado owned 32.4%~~2019, our property in Lawnside, NJ was classified as held for sale based on an executed contract of ~~Alexander’s, Inc. During~~sale with a third-party buyer. The Company classifies properties as held for sale when executed contract contingencies have been satisfied, which signify that the ~~three and nine months ended September 30, 2017, we recognized management and development fee income~~sale is legally binding. The aggregate asset amount of ~~$0.4~~this property was $3.5 million, and $1.2 million, respectively, and $0.4 million and $1.4 million for the same periods in 2016. As of September 30, 2017 and December 31, 2016, respectively, there were $0.3 million of fees due from Vornadowas included in ~~tenant~~prepaid expenses and other ~~receivables~~assets in our consolidated balance ~~sheets.~~

sheets as of September 30, 2019.

5. IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES

Our identified intangible assets (acquired in-place and ~~above and below-market~~above-market leases) and liabilities (acquired below-market leases), net of accumulated amortization were ~~$91.3~~$49.5 million and ~~$184.1~~$129.1 million, respectively, as of September 30, ~~2017, respectively,~~2019 and ~~$30.9~~$68.4 million and ~~$147.0~~$144.3 million, respectively, as of December 31, ~~2016, respectively.~~2018.

Amortization of acquired below-market leases, net of acquired above-market leases resulted in additional rental income of ~~$2.7~~$2.1 million and ~~$6.8~~$13.9 million ~~and~~ for the three and nine months ended September 30, ~~2017,~~2019, respectively, and ~~$2.2~~$19.3 million and ~~$6.0~~$29.8 million for the same periods in ~~2016.~~2018.

Amortization of acquired in-place leases and customer relationships resulted in additional depreciation and amortization expense of ~~$2.9~~$1.7 million and ~~$6.0~~$5.7 million for the three and nine months ended September 30, ~~2017,~~2019, respectively, and ~~$0.8~~$2.7 million and ~~$1.6~~$11.2 million for the same periods in ~~2016.~~2018.

Certain shopping centers are subject to ground leases or ground and building leases. Amortization of these acquired below-market leases resulted in additional rent expense of $0.2 million and $0.7 million for the three and nine months ended September 30, 2017 and 2016, respectively.

The following table sets forth the estimated annual amortization income and expense related to intangible assets and liabilities for the remainder of 2019 and the five succeeding ~~years commencing January 1, 2018:~~years:


(Amounts in thousands)	Below-Market		Above-Market				Below-Market		Below-Market		Above-Market
Year	Operating Lease Income		Operating Lease Expense		In-Place Leases		Ground Leases		Operating Lease Amortization		Operating Lease Amortization			In-Place Leases
2018	$	12,074	$	1,574	$	11,285	$	972
2019	11,620		1,294		8,592		972
2019⁽¹⁾									$	2,402	$	(282	)	$	(1,701	)
2020	11,453		1,016		7,325		972		9,547		(996		)	(6,124		)
2021	11,251		803		6,013		622		9,409		(797		)	(4,934		)
2022	10,802		426		4,224		590		9,332		(433		)	(4,032		)
2023									9,285		(327		)	(3,702		)
2024									9,038		(266		)	(3,264		)

⁽¹⁾Remainder of 2019.

6. MORTGAGES PAYABLE

The following is a summary of mortgages payable as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018.

Interest Rate at September 30, December 31,
(Amounts in thousands) Maturity September 30, 2017 2017 2016
Cross-collateralized mortgage loan:

Fixed Rate 9/10/2020 4.39% $ 507,993
$ 519,125
Variable Rate⁽¹⁾
9/10/2020 2.59% 38,756
38,756
Total cross collateralized 546,749
557,881
First mortgages secured by:
Englewood⁽³⁾
10/1/2018 6.22% 11,537
11,537
Montehiedra Town Center, Senior Loan⁽²⁾
7/6/2021 5.33% 86,383
87,308
Montehiedra Town Center, Junior Loan⁽²⁾
7/6/2021 3.00% 30,000
30,000
Plaza at Cherry Hill⁽⁸⁾
5/24/2022 2.84% 28,930
—
Westfield - One Lincoln⁽⁸⁾
5/24/2022 2.84% 4,730
—
Plaza at Woodbridge⁽⁸⁾
5/25/2022 2.84% 55,340
—
Bergen Town Center 4/8/2023 3.56% 300,000
300,000
Shops at Bruckner⁽⁶⁾
5/1/2023 3.90% 12,304
—
Hudson Mall⁽⁷⁾
12/1/2023 5.07% 25,170
—
Yonkers Gateway Center⁽⁹⁾
4/6/2024 4.16% 33,601
—
Las Catalinas 8/6/2024 4.43% 130,000
130,000
North Bergen (Tonnelle Avenue)⁽⁵⁾
4/1/2027 4.18% 100,000
73,951
Manchester Plaza 6/1/2027 4.32% 12,500
—
Millburn Gateway Center 6/1/2027 3.97% 24,000
—
Mount Kisco (Target)⁽⁴⁾
11/15/2034 6.40% 14,562
14,883
Total mortgages payable 1,415,806

1,205,560
Unamortized debt issuance costs (7,740 ) (8,047 )
Total mortgages payable, net of unamortized debt issuance costs

$ 1,408,066
$ 1,197,513



		Interest Rate at	September 30,			December 31,
(Amounts in thousands)	Maturity	September 30, 2019	2019			2018
First mortgages secured by:
Variable rate
Cherry Hill (Plaza at Cherry Hill)⁽¹⁾	5/24/2022	3.70%	$	28,930		$	28,930
Westfield (One Lincoln Plaza)⁽¹⁾	5/24/2022	3.70%	4,730			4,730
Woodbridge (Plaza at Woodbridge)⁽¹⁾	5/25/2022	3.70%	55,340			55,340
Jersey City (Hudson Commons)⁽²⁾	11/15/2024	4.00%	29,000			29,000
Watchung⁽²⁾	11/15/2024	4.00%	27,000			27,000
Bronx (1750-1780 Gun Hill Road)⁽²⁾	12/1/2024	4.00%	24,500			24,500
Total variable rate debt			169,500			169,500
Fixed rate
Montehiedra (senior loan)	7/6/2021	5.33%	83,484			84,860
Montehiedra (junior loan)	7/6/2021	3.00%	30,000			30,000
Bergen Town Center - West, Paramus	4/8/2023	3.56%	300,000			300,000
Bronx (Shops at Bruckner)	5/1/2023	3.90%	11,132			11,582
Jersey City (Hudson Mall)⁽⁴⁾	12/1/2023	5.07%	23,803			24,326
Yonkers Gateway Center⁽⁵⁾	4/6/2024	4.16%	30,524			31,704
Las Catalinas	8/6/2024	4.43%	129,843			130,000
Brick	12/10/2024	3.87%	50,000			50,000
North Plainfield	12/10/2025	3.99%	25,100			25,100
Middletown	12/1/2026	3.78%	31,400			31,400
Rockaway	12/1/2026	3.78%	27,800			27,800
East Hanover (200 - 240 Route 10 West)	12/10/2026	4.03%	63,000			63,000
North Bergen (Tonnelle Ave)	4/1/2027	4.18%	100,000			100,000
Manchester	6/1/2027	4.32%	12,500			12,500
Millburn	6/1/2027	3.97%	23,901			24,000
Totowa	12/1/2027	4.33%	50,800			50,800
Woodbridge (Woodbridge Commons)	12/1/2027	4.36%	22,100			22,100
East Brunswick	12/6/2027	4.38%	63,000			63,000
East Rutherford	1/6/2028	4.49%	23,000			23,000
Hackensack	3/1/2028	4.36%	66,400			66,400
Marlton	12/1/2028	3.86%	37,400			37,400
East Hanover Warehouses	12/1/2028	4.09%	40,700			40,700
Union (2445 Springfield Ave)	12/10/2028	4.01%	45,600			45,600
Freeport (Freeport Commons)	12/10/2029	4.07%	43,100			43,100
Garfield	12/1/2030	4.14%	40,300			40,300
Mt Kisco⁽³⁾	11/15/2034	6.40%	13,616			13,987
Total fixed rate debt			1,388,503			1,392,659
	Total mortgages payable		1,558,003			1,562,159
	Unamortized debt issuance costs		(10,517		)	(11,917		)
Total mortgages payable, net of unamortized debt issuance costs			$	1,547,486		$	1,550,242


⁽¹⁾	~~Subject to a LIBOR floor of 1.00%, bears interest at LIBOR plus 136 bps.~~


⁽²⁾	~~As part of the planned redevelopment of Montehiedra Town Center, we committed to fund $20.0 million for leasing and capital expenditures which has been fully funded as of September 30, 2017.~~

⁽³⁾

On March 30, 2015, we notified the lender that due to tenants vacating, the property’s operating cash flow would be insufficient to pay its debt service. As of September 30, 2017, we were in default and the property was transferred to receivership. Urban Edge no longer manages the property but will remain its title owner until the receiver disposes of the property. We have determined this property is held in a VIE for which we are the primary beneficiary. Accordingly, as of September 30, 2017, we consolidated Englewood and its operations. The consolidated balance sheet included total assets and liabilities of $12.4 million~~and $14.6 million, respectively.~~


⁽⁴⁾	The mortgage payable balance on the loan secured by Mount Kisco (Target) includes $1.0 million and $1.1 million of unamortized debt discount as of September 30, 2017 and December 31, 2016, respectively. The effective interest rate including amortization of the debt discount is 7.26% as of September 30, 2017.

⁽⁵⁾

On March 29, 2017, we refinanced the $74 million, 4.59% mortgage loan secured by our Tonnelle Commons property in North Bergen, NJ, increasing the principal balance to $100 million with a 10-year fixed rate mortgage, at 4.18%. As a result, we recognized a loss on extinguishment of debt of $1.3 million during the nine months ended September 30, 2017 comprised of a $1.2 million prepayment penalty and write-off of $0.1 million of unamortized deferred financing fees on the original loan.


⁽⁶⁾	~~On January 17, 2017, we assumed the existing mortgage secured by the Shops at Bruckner in connection with our acquisition of the property’s leasehold interest.~~


⁽⁷⁾	On February 2, 2017, we assumed the existing mortgage secured by Hudson Mall in connection with our acquisition of the property. The mortgage payable balance on the loan secured by Hudson Mall includes $1.6 million of unamortized debt premium as of September 30, 2017. The effective interest rate including amortization of the debt premium is 3.37%~~as of September 30, 2017.~~


⁽⁸⁾	Bears interest at one month LIBOR plus 160 bps.


⁽⁹⁾⁽²⁾	Bears interest at one month LIBOR plus 190 bps.


~~Reflects~~⁽³⁾	The mortgage payable balance on the ~~$33~~loan secured by Mt Kisco includes $0.9 million ~~existing~~and $1.0 million of unamortized debt discount as of September 30, 2019 and December 31, 2018, respectively. The effective interest rate including amortization of the debt discount is 7.33% as of September 30, 2019.


⁽⁴⁾	The mortgage ~~assumed in connection with~~payable balance on the ~~acquisition~~loan secured by Hudson Mall includes $1.1 million and $1.2 million of ~~Yonkers Gateway Center on May 24, 2017.~~ unamortized debt premium as of September 30, 2019 and December 31, 2018, respectively. The effective interest rate including amortization of the debt premium is 3.87% as of September 30, 2019.


⁽⁵⁾	The mortgage payable balance on the loan secured by Yonkers Gateway Center includes ~~$0.9~~$0.6 million and $0.7 million of unamortized debt premium as of September 30, ~~2017.~~2019 and December 31, 2018, respectively. The effective interest rate including amortization of the debt premium is ~~1.77%~~3.77% as of September 30, ~~2017.~~2019.

The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately ~~$1.3~~$1.2 billion as of September 30, ~~2017.~~2019. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and in certain circumstances require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. As of September 30, ~~2017,~~2019, we were in compliance with all debt covenants.

During 2017, our property in Englewood, NJ was transferred to a receiver. On January 31, 2018, our property in Englewood, NJ was sold at a foreclosure sale and on February 23, 2018, the court order was received approving the sale and discharging the receiver of all assets and liabilities related to the property. We recognized a gain on extinguishment of debt of $2.5 million as a result of the forgiveness of outstanding mortgage debt of $11.5 million, which is included in gain on extinguishment of debt in the consolidated statement of income for the nine months ended September 30, 2018.

As of September 30, ~~2017,~~2019, the principal repayments for the next five years and thereafter are as follows:


(Amounts in thousands)
Year Ending December 31,
2017⁽¹⁾	$	5,126
2018	29,762
2019	20,398
2019⁽¹⁾			$	1,472
2020	517,328		7,515
2021	122,727		122,645
2022	96,749		99,976
2023			344,368
2024			274,316
Thereafter	623,716		707,711

⁽¹⁾Remainder of ~~2017.~~2019.

On January 15, 2015, we entered into a $500 million Revolving Credit Agreement (the “Agreement”) with certain financial institutions. On March 7, 2017, we amended and extended the Agreement. The amendment increased the credit facility size by $100 million to $600 million and extended the maturity date to March 7, 2021 with ~~two~~2 six-month extension options. ~~Borrowings~~On July 29, 2019, we entered into a second amendment to the Agreement to extend the maturity date to January 29, 2024 with 2 six-month extension options. Company borrowings under the Agreement are subject to interest at LIBOR plus ~~1.15%~~1.05% to 1.50% and ~~we are required to pay~~ an annual facility fee of 15 to 30 basis ~~points which is expensed within interest and debt expense as incurred.~~points. Both the spread over LIBOR and the facility fee are based on our current leverage ratio and are subject to increase if our leverage ratio increases above predefined thresholds. The Agreement contains customary financial covenants including a maximum leverage ratio of 60% and a minimum fixed charge coverage ratio of 1.5x. NoNaN amounts have been drawn to date under the Agreement. Financing fees associated with the Agreement of ~~$3.5~~$4.1 million and ~~$1.9~~$2.2 million as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, are included in deferred financing fees, net in the consolidated balance sheets.


8.7.	INCOME TAXES

The Company ~~has~~ elected to ~~qualify~~be taxed as a REIT under sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the filing of ~~our~~its 2015 tax return for its tax year ended December 31, 2015. With exception to the ~~2015 fiscal year. Under those sections, a~~Company’s taxable REIT ~~that distributes at least 90% of its REIT taxable income as a dividend~~subsidiary (“TRS”), to ~~its shareholders each year and which~~the extent the Company meets certain ~~other conditions~~requirements under the Code, the Company will not be taxed on ~~that portion of~~ its ~~taxable income which is distributed to its shareholders. As a REIT, we generally will not be subject to~~ federal ~~income taxes, provided that we distribute 100% of~~ taxable income. ~~It is our intention to adhere to the organizational and operational requirements to maintain our REIT status.~~ If we fail to qualify as a REIT for any taxable year, we will be subject to federal income taxes at regular corporate rates (including any alternative minimum ~~tax)~~tax, which, for corporations, was repealed under the Tax Cuts and Jobs Act (“TCJA”) for tax years beginning after December 31, 2017) and may not be able to qualify as a REIT for the four subsequent taxable years.

~~The REIT~~ In addition to its TRS, the Company is subject to certain foreign and ~~the other minority members~~state and local income taxes, including a 29% non-resident withholding tax on its 2 Puerto Rico malls, which are ~~partners~~included in income tax expense in the ~~Operating Partnership. As such, the partners are required to report their share~~consolidated statements of ~~taxable income on their tax returns. We are~~income. The Company is also subject to certain other taxes, including state and local ~~taxes and~~ franchise taxes which are included in general and administrative expenses in the consolidated statements of income.

On December 22, 2017, the TCJA was signed into law. The TCJA amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. Effective January 1, 2018, for businesses, the TCJA reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. Since UE has elected to qualify as a REIT under sections 856-860 of the Internal Revenue Code with intent to distribute 100% of its taxable income and did not have any activities in a Taxable REIT Subsidiary (“TRS”) prior to January 1, 2018, there was no impact from the provisions of the TCJA to the Company’s financial statements.

On December 31, 2017, the Company elected, for tax purposes, to treat the wholly-owned limited partnership that held its Allentown property as a TRS. A TRS is a corporation, other than a REIT, in which we directly or indirectly hold stock, which has made a joint election with us to be treated as a TRS under Section 856(l) of the Code. A TRS is required to pay regular U.S. federal income tax, and state and local income tax where applicable, as a non-REIT “C” corporation. The Allentown legal entity restructuring resulted in a capital gain recognized for tax purposes in 2017 and a step up in tax basis to the Allentown property resulting in no capital gains recognized for tax purposes in 2018 upon the property’s sale on April 26, 2018. The Company’s consolidated financial statements for the three and nine months ended September 30, 2018 reflect the TRS’ federal and state corporate income taxes associated with the operating activities at the TRS. The tax expense recorded in association with the operating activities of the TRS was $0.2 million for the nine months ended September 30, 2018. As of December 31, 2018, the Allentown TRS has been dissolved and as such, the Company’s consolidated financial statements for the three and nine months ended September 30, 2019 do not reflect any corporate income taxes associated with such TRS.

During the nine months ended September 30, 2019, certain non-real estate operating activities, non-qualifying for REIT purposes, commenced through the Company’s operating TRS and are subject to federal, state and local income taxes. These income taxes are included in the income tax expense in the consolidated statements of income.

Our ~~two~~2 Puerto Rico malls are subject to a 29% non-resident withholding tax which is included in income tax expense in the consolidated statements of income. The Puerto Rico tax expense recorded was ~~$0.3~~$0.1 million for the ~~quarters~~three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$0.9~~$1.2 million and ~~$0.3~~$0.5 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. Both properties are held in a special partnership for Puerto Rico tax reporting (the general partner being a qualified REIT subsidiary or “QRS”).

The REIT and the other minority members are partners in the Operating Partnership. As such, the partners are required to report their share of taxable income on their tax returns.


8.	LEASES

Leases — We have approximately 1,100 operating leases at our retail shopping centers and malls, which generate rental income from tenants and operating cash flows for the Company. Our tenant leases are dependent on the Company, as lessor, agreeing to provide our tenants with the right to control the use of our real estate assets, as lessees. Our real estate assets are comprised of retail shopping centers and malls. Tenants agree to use and control their agreed upon space for their business purposes. Thus, our tenants obtain substantially all of the economic benefits from the use of our shopping center space and have the right to direct how and for what purpose the real estate space is used throughout the period of use. Given these contractual terms, the Company has determined that all tenant contracts of this nature contain a lease. The Company assesses lease classification for each new and modified lease. All new and modified leases commenced in the nine months ended September 30, 2019 have been assessed and classified as operating leases.

Contractual rent increases of renewal options are often fixed at the time of the initial lease agreement which may result in tenants being able to exercise their renewal options at amounts that are less than the fair value of the rent at the date of renewal. In addition

to fixed base rents, certain rental income derived from our tenant leases is variable and may be dependent on percentage rent or the Consumer Price Index ("CPI"). Variable lease payments from percentage rents are earned by the Company in the event the tenant's gross sales exceed certain amounts. Terms of percentage rent are agreed upon in the tenant's lease and will vary based on the tenant's sales. Variable lease payments dependent on the CPI, will change in accordance with the corresponding increase or decrease in CPI if negotiated and agreed upon in the tenant's lease. Variable lease payments dependent on percentage rent and the CPI were $0.9 million for the nine months ended September 30, 2019. Variable lease payments also arise from tenant expense reimbursements, which provide for the recovery of all or a portion of the operating expenses, common area maintenance expenses, real estate taxes, insurance and capital improvements of the respective property and amounted to $78.2 million in the nine months ended September 30, 2019. The Company accounts for variable lease payments as "Rental revenue" on the consolidated statement of income in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.

The Company also has 19 properties in its portfolio either completely or partially on land or a building that are owned by third parties. These properties are leased or subleased to us pursuant to ground or building leases, with remaining terms ranging from less than two years to over 80 years and provide us the right to operate each such property. We also lease or sublease real estate for our 3 corporate offices with remaining terms ranging from one to two years. ROU assets are recorded for these leases, which represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from these leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The initial measurement of a ROU asset may differ from the initial measurement of the lease liability due to initial direct costs, prepaid lease payments and lease incentives. As of September 30, 2019, no other contracts have been identified as leases. Our leases often offer renewal options, which we assess against relevant economic factors to determine whether the Company is reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods, for which the Company has determined are reasonably certain of being exercised, are included in the measurement of the corresponding lease liability and ROU asset. During the nine months ended September 30, 2019, the Company reassessed the lease term of one of its ground leases due to a change in circumstances in our election to renew the ground lease. As a result of this reassessment, the Company remeasured the lease liability by using revised inputs as of the reassessment date and recorded an additional ROU asset and lease liability of$5.0 million, respectively. During the three and nine months ended September 30, 2019, the Company sold its lessee position in 1 of its operating ground leases for $6.9 million, net of selling costs, and derecognized the lease’s ROU asset and corresponding lease liability. We recognized a gain on sale of lease of $1.8 million on our consolidated statements of income during the three and nine months ended September 30, 2019 as a result of the sale. Additionally, on July 31, 2019, the Company’s lessee position in 1 of its ground leases expired in accordance with the terms of the lease.

The discount rate applied to measure each ROU asset and lease liability is based on the incremental borrowing rate of the lease due to the rate implicit in the lease not being readily determinable. The Company initially considers the general economic environment and factors in various financing and asset specific secured borrowings so that the overall incremental borrowing rate is appropriate to the intended use of the lease. Certain expenses derived from these leases are variable and are not included in the measurement of the corresponding lease liability and ROU asset, but are recognized in the period in which the obligation for those payments is incurred. These variable lease payments consist of payments for real estate taxes and common area maintenance, which is dependent on projects and activities at each individual property under ground or building lease.

Accounts Receivable and Changes in Collectibility Assessment — Accounts receivable includes unpaid amounts billed to tenants, disputed enforceable charges and accrued revenues for future billings to tenants for property expenses. We periodically evaluate the collectibility of amounts due from tenants and disputed enforceable charges, resulting from the inability of tenants to make required payments under their lease agreements. We recognize changes in the collectibility assessment of these operating leases as adjustments to rental revenue. Management exercises judgment in assessing collectibility and considers payment history and current credit status. Accounts receivable are written-off directly when they are deemed to be uncollectible.

Leases as lessor

We have approximately 1,100 operating leases at our retail shopping centers and malls, which generate rental income from tenants and operating cash flows for the Company. Our tenant base comprises a diverse group of merchants including department stores, supermarkets, discounters, entertainment offerings, health clubs, DIY stores, in-line specialty shops, restaurants and other food and beverage vendors and service providers. Tenant leases for under 10,000 sf generally have lease terms of five years or less. Tenant leases for 10,000 sf or more are considered anchor leases and generally have lease terms of 10 to 25 years, with one or more renewal options available upon expiration of the initial lease term. Contractual rent increases for the renewal options are often fixed at the time of the initial lease agreement which may result in tenants being able to exercise their renewal options at amounts that are less than the fair value of the rent at the date of renewal.

The components of rental revenue for the three and nine months ended September 30, 2019 were as follows:



(Amounts in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Rental Revenue
Fixed lease revenue	$	66,478	$	209,858
Variable lease revenue	24,291		79,707
Total rental revenue	$	90,769	$	289,565

Maturity analysis of lease payments as lessor

The Company’s operating leases are disclosed in the aggregate due to their consistent nature as real estate leases. As of September 30, 2019, the undiscounted cash flows to be received from lease payments of our operating leases on an annual basis for the next five years and thereafter are as follows:



(Amounts in thousands)
Year Ending December 31,
2019⁽¹⁾	$	65,142
2020	253,409
2021	234,944
2022	217,097
2023	193,934
2024	160,771
Thereafter	861,213
Total undiscounted cash flows	$	1,986,510

⁽¹⁾Remainder of 2019.

As of December 31, 2018, future base rental revenue under non-cancelable operating leases, under ASC 840 as lessor, was as follows:



(Amounts in thousands)
Year Ending December 31,
2019	$	256,598
2020	235,652
2021	216,247
2022	198,449
2023	176,282
Thereafter	986,865

These future minimum amounts do not include additional rents based on a percentage of tenants’ sales and tenant expense reimbursements. For the year ended December 31, 2018, rental revenue from percentage rent was $2.0 million. For the year ended December 31, 2018, rental revenue from tenant expense reimbursements was $108.7 million.

Property, plant and equipment under operating leases as lessor

As of September 30, 2019, substantially all of the Company’s real estate assets are subject to operating leases.

Leases as lessee

As of September 30, 2019, the Company had 19 properties in its portfolio either completely or partially on land or a building that was owned by third parties. These properties are leased or subleased to us pursuant to ground or building leases, with remaining terms ranging from less than two years to over 80 years and provide us the right to operate the property. We also lease or sublease real estate for our 3 corporate offices with remaining terms ranging from one to two years.

The components of lease expense for the three and nine months ended September 30, 2019 were as follows:



(Amounts in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease expense
Operating lease cost⁽¹⁾	$	2,890	$	8,998
Variable lease cost	596		2,039
Total lease expense	$	3,486	$	11,037

⁽¹⁾ During the three and nine months ended September 30, 2019, the Company recognized sublease income of $4.9 million and $15.1 million, respectively, included in rental revenue on the consolidated statement of income in relation to certain ground and building lease arrangements. Operating lease cost includes amortization of below-market ground lease intangibles and straight-line lease expense.

Supplemental balance sheet information related to leases was as follows:



	September 30, 2019
Supplemental noncash information
Weighted-average remaining lease term - operating leases	16.1 years
Weighted-average discount rates - operating leases	3.97	%

Maturity analysis of lease payments as lessee

The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented in the table below. The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability on the consolidated balance sheet by considering the present value discount.



(Amounts in thousands)
Year Ending December 31,
2019⁽¹⁾	$	2,446
2020	9,228
2021	8,639
2022	8,658
2023	8,456
2024	8,463
Thereafter	68,956
Total undiscounted cash flows	114,846
Present value discount	(33,418		)
Discounted cash flows	$	81,428

⁽¹⁾Remainder of 2019.

As of December 31, 2018, future lease payments under operating lease agreements, including extension options if reasonably assured of being exercised, under ASC 840 as lessee, were as follows:



(Amounts in thousands)
Year Ending December 31,
2019	$	10,640
2020	9,614
2021	8,957
2022	8,982
2023	8,850
Thereafter	85,535

9. FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 - observable prices based on inputs not quoted in active markets, but corroborated by market data; and Level 3 - unobservable inputs used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value.

Financial Assets and Liabilities Measured at Fair Value on a Recurring or Non-Recurring Basis

There were no financial assets or liabilities measured at fair value on a recurring ~~basis as of September 30, 2017 and December 31, 2016.~~

~~Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis~~

~~There were no financial assets~~ or ~~liabilities measured at fair value on a~~ non-recurring basis as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018.

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on the consolidated balance sheets include cash and cash equivalents and mortgages payable. Cash and cash equivalents are carried at cost, which approximates fair value. The fair value of mortgages payable is calculated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit ratings, which are provided by a third-party specialist. The fair value of cash and cash equivalents is classified as Level 1 and the fair value of mortgages payable is classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of September 30, ~~2017~~2019 and December 31, ~~2016.~~2018.



	As of September 30, 2019				As of December 31, 2018
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	441,561	$	441,561	$	440,430	$	440,430
Liabilities:
Mortgages payable⁽¹⁾	$	1,558,003	$	1,599,896	$	1,562,159	$	1,543,963

As of September 30, 2017 As of December 31, 2016
(Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value
Assets:

Cash and cash equivalents $ 380,395
$ 380,395
$ 131,654
$ 131,654
Liabilities:

Mortgages payable⁽¹⁾
$ 1,415,806
$ 1,432,817
$ 1,205,560
$ 1,216,989

⁽¹⁾Carrying amounts exclude unamortized debt issuance costs of ~~$7.7~~$10.5 million and ~~$8.0~~$11.9 million as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively.

~~The following market spreads were used by~~Nonfinancial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We assess the carrying value of our properties for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

During the three months ended June 30, 2019, the Company recognized impairment charges of $18.7 million on 2 retail properties that the Company intends to ~~estimate~~market and sell within the next two years. The impairment loss was calculated as the difference between the assets’ individual carrying values and the estimated aggregated fair values of $28.5 million, less estimated selling costs. We also recognized a $4.0 million impairment charge on an additional property during the three months ended March 31, 2019 as a result of the loss of a significant tenant at the property. The valuation of these properties were based on comparable sale transactions in the properties’ surrounding areas. The Company believes the inputs utilized to measure the fair values were reasonable in the context of applicable market conditions, however due to the significance of the unobservable inputs in the overall fair value measures, including market conditions and expectations for growth, the Company determined that such fair value measurements are classified as Level 3. Aggregate impairment charges of ~~mortgages payable:~~$22.7 million are included as an expense within casualty and impairment loss (gain), net on our consolidated statements of income for the nine months ended September 30, 2019.

September 30, 2017 December 31, 2016
Low High Low High
Mortgages payable 1.8% 2.2% 2.0% 2.3%

10. COMMITMENTS AND CONTINGENCIES

There are various legal actions against us in the ordinary course of business. ~~In our opinion, after~~After consultation with legal counsel, the outcome of such matters will not have a material adverse effect on our financial condition, results of operations or cash flows.

~~Loan Commitments:~~ In January 2015, we completed the modification of the $120.0 million, 6.04% mortgage loan secured by Montehiedra Town Center. As part of the planned redevelopment of the property, we committed to fund $20.0 million for leasing and building capital expenditures which has been fully funded as of September 30, 2017.Redevelopment

~~Redevelopment:~~ As of September 30, ~~2017,~~2019, we had approximately ~~$199.4~~$42.5 million of active development, redevelopment and anchor repositioning projects underway, of which ~~$109.4~~$8.3 million remains to be funded. Based on current plans and estimates, we anticipate the remaining amounts will be expended over the next two years.

Insurance

~~We maintain~~The Company maintains (i) general liability insurance with limits of $200 million for properties in the U.S. and Puerto Rico and (ii) all-risk property ~~and rental value~~ insurance ~~coverage~~ with limits of $500 million per occurrence and in the aggregate for properties in the U.S. and $139 million for properties in Puerto Rico, ~~with~~subject to the terms, conditions, exclusions, deductibles and sub-limits when applicable for certain perils such as floods and earthquakes ~~on each of our properties. Our~~and (iii) numerous other insurance policies including trustees’ and officers’ insurance, workers’ compensation and automobile-related liabilities insurance. The Company’s insurance includes coverage for acts of terrorism ~~acts~~ but excludes coverage for nuclear, biological, chemical or radiological terrorism events as defined by the Terrorism Risk Insurance Program Reauthorization Act, which expires in December 2020. In addition, ~~we maintain~~the Company maintains coverage for certain cybersecurity losses with limits of $5 million per occurrence and in the aggregate providing first and ~~third party~~third-party coverage including network interruption, event management, cyber extortion and claims for media content, security and privacy liability. Insurance premiums are typically charged directly to each of the retail properties and ~~warehouses. We will be~~warehouses but not all of the cost of such premiums are recovered. The Company is responsible for deductibles, ~~and~~ losses in excess of insurance coverage, and the portion of premiums not reimbursable by tenants at our properties, which could be material.

We continue to monitor the state of the insurance market and the scope and costs of ~~coverage for acts of terrorism. However, we~~available coverage. We cannot anticipate what coverage will be available on commercially reasonable terms in the ~~future.~~future and expect premiums across most coverage lines to increase in light of recent events. The incurrence of uninsured losses, costs or uncovered premiums could materially and adversely affect our business, results of operations and financial condition.

~~Our mortgage~~Certain of our loans ~~are non-recourse~~ and other agreements contain customary covenants requiring ~~adequate~~the maintenance of insurance coverage. Although we believe that we currently have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders or other counterparties insist on greater coverage than we are able to obtain, itsuch requirement could materially and adversely affect our ability to finance our properties and expand our portfolio.

Tornado-Related Charges

On June 13, 2018, a tornado hit our shopping center in Wilkes-Barre, PA, damaging approximately 13% of the property’s gross leasable area. During the nine months ended September 30, 2019, the Company settled the related insurance claim with its carrier for $5.5 million. Of this amount, the Company recognized $4.8 million as a casualty gain in the nine months ended September 30, 2019. As part of the settlement, the Company recognized $0.3 million as business interruption proceeds within rental revenue for the nine months ended September 30, 2019.

Hurricane-Related Charges

On September 20, 2017, Hurricane Maria made landfall, ondamaging our 2 properties in Puerto ~~Rico and damaged our two properties. The~~Rico. During the nine months ended September 30, 2018, the Company ~~estimates it will spend approximately $6.5~~received $1.5 million ~~repairing its properties and expects~~in casualty insurance proceeds, ~~to cover these~~which were partially offset by $0.3 million of hurricane related costs, resulting in ~~addition to business interruption losses, subject to applicable deductibles estimated to be approximately $2.5 million. Based~~net casualty gains of $1.2 million included in casualty and impairment loss (gain), net on ~~management’s estimates, which are subject to change,~~the accompanying consolidated statements of income.

During the three and nine months ended September 30, 2018, the Company recognized a ~~$2.2~~$0.1 million ~~charge reflecting~~net casualty gain and $0.4 million of business interruption losses, respectively. For the ~~net book value~~nine months ended September 30, 2018, losses of ~~assets damaged during~~$0.8 million pertained to rent abatements due to tenants that had not reopened since the ~~third quarter.~~hurricane, recorded as a reduction of rental revenue, offset by a $0.4 million reversal within property operating expenses to provision for doubtful accounts for payments received from tenants on rents previously reserved.

~~All anchor tenants are open~~

In June 2019, the Company reached a settlement agreement with its carrier regarding its final insurance recovery related to Hurricane Maria for business with the exception of Marshalls at Montehiedra, which requires substantial restoration work. The Company has made significant progress remediating the damage to its assets, but full operations, particularly with respect to the interior of each mall, will not resume until power is restored on a continuous basis, the timing$14.3 million, of which ~~is uncertain and outside the Company’s control.~~

~~The Company has comprehensive, all-risk property and rental value insurance coverage on these properties, including business interruption, with a limit~~$3.3 million was previously received, subject to deductibles of ~~$139~~$2.3 million. We recognized an $8.7 million ~~per occurrence and~~casualty gain in the aggregate and with sub-limits for certain perils such as floods, earthquakes, civil authority and service interruption. Our deductible for windstorm is 2% of total insured value and business interruption coverage has a deductible equal to three days of cessation of operations. No determination has been made as to the total amount or timing of insurance payments that may be receivednine months ended September 30, 2019 as a result of the ~~hurricane.~~remaining insurance proceeds from the settlement agreement for our two malls in Puerto Rico.

The Company has received a $1.0 million cash advance from its insurance provider for the business interruption caused to these properties. Approximately $0.5 million of the advance is included in property rentals on our consolidated statement of income which offsets rent abatements due to tenants in September. The remaining $0.5 million is recorded as deferred revenue and is included in accounts payable and accrued expenses on our consolidated balance sheet as of September 30, 2017 and will be recognized as earned in subsequent periods.

As of September 30, 2017, the Company has individual, non-recourse mortgages on each of the properties as follows: a $116.4 million mortgage, comprised of a senior and junior loan, maturing in July 2021 secured by the Montehiedra Town Center and a $130.0 million mortgage maturing in August 2024 secured by the Las Catalinas Mall.

Environmental Matters

balance sheets as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, for ~~potential~~ remediation costs for environmental contamination at ~~two~~certain properties. While this accrual reflects our best estimates of the potential costs of remediation at these properties, ~~$0.1 million has currently been expended during the nine months ended September 30, 2017 and~~ there can be no assurance that the actual costs will not exceed ~~this amount. With respect to our~~these amounts. During the nine months ended September 30, 2018, the Company recognized $0.6 million of environmental remediation costs within property operating expenses on the consolidated statements of income. Although we are not aware of any other ~~properties, the environmental assessments did not reveal any~~ material environmental ~~contamination. However,~~contamination, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.

Bankruptcies

Although our rental revenue is supported by long-term leases, leases may be rejected in a bankruptcy proceeding and the related tenant stores may permanently vacate prior to lease expiration. In the event a tenant with a significant number of leases or square footage in our shopping centers files for bankruptcy and rejects its leases with us, we could experience a reduction in our revenues. We monitor the operating performance and rent collections of all tenants in our shopping centers, especially those tenants in arrears or operating retail formats that are experiencing significant changes in competition, business practice, or store closings in other locations.

Sears Holdings Corporation (“Sears”), the parent company of Kmart, filed for Chapter 11 bankruptcy protection on October 15, 2018. The Company had 4 Kmart leases comprising approximately 547,000 sf, which generated $8.5 million in annual rental revenue. In January 2019, Sears announced the acquisition of its assets by ESL Investments (“ESL”) for approximately $5.2 billion. Property rents were paid on all 4 Kmart locations through April 2019. In April 2019, our Kmart leases at Las Catalinas and Huntington, NY were rejected and we recognized a $7.4 million write-off of the below-market intangible liability connected with the lease in Huntington, NY (classified within rental revenues). ESL assumed the Company’s remaining 2 Kmart leases at Montehiedra and at Bruckner Commons. The Company is monitoring the proceedings and considering its alternatives.

During the three and nine months ended September 30, 2019, the Company received $0.1 million and $1.2 million of bankruptcy settlement income in connection with the bankruptcy proceedings of Toys "R" Us Inc. (“Toys “R” Us”). The settlement proceeds were used to offset outstanding credit losses and the remaining proceeds were recorded to other income. Prior to liquidation in 2018, the Company had leases with Toys “R” Us at 9 locations with annual gross rents of $7.6 million. No determination has been made as to the amount or timing of additional bankruptcy settlement proceeds, if any, that may be received.

11. PREPAID EXPENSES AND OTHER ASSETS

The following is a summary of the composition of the prepaid expenses and other assets in the consolidated balance sheets:


	Balance at				Balance at
(Amounts in thousands)	September 30, 2017		December 31, 2016		September 30, 2019		December 31, 2018
Assets held for sale					$	3,453	$	—
Other assets	$	3,600	$	2,161	4,289		2,765
Deposits for acquisitions	—		6,600
Prepaid expenses:
Real estate taxes	7,425		5,198		6,513		6,911
Insurance	4,400		2,545		3,165		2,509
Rent, licenses/fees	1,492		938
Licenses/fees					1,529		783
Total Prepaid expenses and other assets	$	16,917	$	17,442	$	18,949	$	12,968

12. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

The following is a summary of the composition of accounts payable, accrued expenses other liabilities in the consolidated balance sheets:

Balance at
(Amounts in thousands) September 30, 2017 December 31, 2016
Deferred ground rent expense $ 6,445
$ 6,284
Deferred tax liability, net 3,867
3,802
Deferred tenant revenue 4,532
3,280
Environmental remediation costs 1,232
1,309
Other liabilities 466
—
Total Other liabilities $ 16,542
$ 14,675



	Balance at
(Amounts in thousands)	September 30, 2019		December 31, 2018
Deferred tenant revenue	$	27,305	$	28,697
Accrued capital expenditures and leasing costs	17,669		29,754
Accrued interest payable	9,398		8,950
Security deposits	5,827		5,396
Deferred tax liability, net	5,279		5,532
Accrued payroll expenses	4,941		5,747
Other liabilities and accrued expenses	9,742		7,371
Accrued rent⁽¹⁾	—		7,070
Total accounts payable, accrued expenses and other liabilities	$	80,161	$	98,517

⁽¹⁾In connection with the adoption of ASC 842 on January 1, 2019, we reclassified $7.1 million of accrued rent and adjusted the carrying values of our ROU assets by the corresponding amount.

13. INTEREST AND DEBT EXPENSE

The following table sets forth the details of interest and debt ~~expense:~~expense in the consolidated statements of income:



	Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in thousands)	2019		2018		2019		2018
Interest expense	$	16,131	$	16,036	$	47,699	$	45,900
Amortization of deferred financing costs	730		720		2,170		2,159
Total Interest and debt expense	$	16,861	$	16,756	$	49,869	$	48,059

Three Months Ended September 30, Nine Months Ended September 30,
(Amounts in thousands) 2017 2016 2017 2016
Interest expense $ 13,913
$ 12,043
$ 39,204
$ 36,909
Amortization of deferred financing costs 724
723
2,175
2,106
Total Interest and debt expense $ 14,637
$ 12,766
$ 41,379
$ 39,015

14. EQUITY AND NONCONTROLLING INTEREST

At-The-Market Program

In 2016, the Company established an at-the-market (“ATM”) equity program, pursuant to which the Company may offer and sell from time to time its common shares, par value $0.01 per share, with an aggregate gross sales price of up to $250.0 million through a consortium of broker dealers acting as sales agents. ~~As of~~During the three and nine months ended September 30, ~~2017, $241.3 million of~~2019 and 2018, respectively, 0 common shares ~~remained available for issuance under this ATM equity program and there~~ were ~~no common shares~~ issued under the ATM equity program. The Company’s ATM program during the nine months ended September 30, 2017. From September 2016 to December 31, 2016, the Company issued 307,342 common shares at a weighted average price of $28.45 under its ATM equity program, generating cash proceeds of $8.7 million.expired in August 2019. We paid $0.1 million of commissions to distribution agents and $0.4 million in additional offering expenses related to the issuance of these common shares. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common shares and our capital needs. We have nohad 0 obligation to sell the remaining shares available under the ~~active~~ ATM equity program.

~~Underwritten Public Offering~~

On May 10, 2017, the Company issued 7.7 million common shares of beneficial interest in an underwritten public offering pursuant to the Company’s effective shelf registration statement previously filed on Form S-3 (File No. 333-212951) with the SEC on August 5, 2016. This offering generated cash proceeds of $193.5 million, net of $1.3 million of issuance costs.

~~Stock Purchase Agreement~~

On August 4, 2017, the Company issued 6.25 million common shares of beneficial interest to a large institutional investor at a net price of $24.80 per share, pursuant to the Company’s effective shelf registration statement previously filed on Form S-3 (File No. 333-212951) with the SEC on August 5, 2016. The issuance was a direct sale with no underwriter or placement agent such that net cash proceeds to the Company were $155 million.

~~Units of the Operating Partnership~~

~~An equivalent number of common units were issued by the Operating Partnership to the Company in connection with the Company’s issuance of common shares of beneficial interest, as discussed above.~~

The Operating Partnership issued 1.8 million OP units in connection with the acquisition of Yonkers Gateway Center on January 4, 2017, at a value of $27.09 per unit. On May 24 and 25, 2017, the Operating Partnership issued 2.6 million OP units and 1.9 million OP units, respectively, in connection with the Portfolio acquisition at a value of $27.02 per unit (refer to Note 4 Acquisitions and Dispositions).

Dividends and Distributions

During the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, the Company declared dividends on our common shares and OP unit distributions of $0.22 ~~and $0.20~~ per share/~~unit, respectively.~~unit. During the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018, respectively, the Company declared dividends on our common ~~stock dividends~~shares and OP unit distributions of $0.66 ~~and $0.60~~ per share/unit ~~respectively.~~in the aggregate.

~~Redeemable~~ Noncontrolling Interests in Operating Partnership

Redeemable noncontrolling interests reflected on the consolidated balance sheets of the Company are comprised of OP units and limited partnership interests in the Operating Partnership in the form of LTIP unit awards. In connection with the separation, the Company issued 5.7 million OP units, representing a 5.4% interest in the Operating Partnership to VRLP in exchange for interests in VRLP properties contributed by VRLP. LTIP unit awards were granted to certain executives pursuant to our 2015 Omnibus Share Plan (the “Omnibus Share Plan”) and our 2018 Inducement Equity Plan (the “Inducement Plan”). OP units were issued to contributors in exchange for their property interests in connection with the Company’s ~~acquisition of Yonkers Gateway Center and the Portfolio acquisition.~~ property acquisitions in 2017.

The total of the OP units and LTIP units represent a ~~10.3%~~4.7% and ~~9.0%~~6.2% weighted-average interest in the Operating Partnership for the three and nine months ended September 30, ~~2017,~~2019, respectively. Holders of outstanding vested LTIP units may, from and after two years from the date of issuance, redeem their LTIP units for cash, or for the Company’s common shares on a ~~one-for-one~~1-for-one basis, solely at our election. Holders of outstanding OP units may ~~at a determinable date,~~ redeem their units for cash or the Company’s common shares on a ~~one-for-one~~1-for-one basis, solely at our election. On August 5, 2019, the Company received requests from certain holders of OP units to

redeem 357,998 units. The Company elected to satisfy the redemption requests by repurchasing the units at a price of $16.70 per unit, for total cash consideration of $6.0 million.

In connection with the separation from Vornado Realty L.P. (“VRLP”), the Company issued 5.7 million OP units, which represented a 5.4% interest in the Operating Partnership, to VRLP in exchange for interests in VRLP properties contributed by VRLP. On February 28, 2019, the Company issued 5.7 million common shares to VRLP, in exchange for an equal number of OP units after receiving a notice of redemption from VRLP. The issuance is exempt from registration in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended, on the basis that no public offering was made.

Noncontrolling Interest in Consolidated Subsidiaries

The noncontrolling interest relates to the 5% interest held by others in our property in Walnut Creek, CA (Mount Diablo). The net income attributable to noncontrolling interest is presented separately in our consolidated statements of income.

15. SHARE-BASED COMPENSATION

~~2017 Outperformance Plan~~

On February 24, 2017, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2017 Outperformance Plan (“2017 OPP”), a multi-year performance-based equity compensation program. Under the 2017 OPP, participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units if, and only if, we outperform a predetermined total shareholder return (“TSR”) and/or outperform the market with respect to a relative TSR in any year during the requisite performance periods as described below. The aggregate notional amount of the 2017 OPP grant is $12.0 million.

Awards under the 2017 OPP may be earned if we (i) achieve a TSR level greater than 7% per annum, or 21% over the three-year performance measurement period, and/or (ii) achieve a TSR equal to or above, that of the 50^th percentile of a retail REIT peer group comprised of 14 of our peer companies, over a three-year performance measurement period. Distributions on awards accrue during the measurement period, except that 10% of such distributions are paid in cash. If the designated performance objectives are achieved, LTIP units are also subject to time-based vesting requirements. Awards earned under the 2017 OPP vest 50% in year three, 25% in year four and 25% in year five.

The fair value of the 2017 OPP on the date of grant was $4.1 million using a Monte Carlo simulation to estimate the fair value based on the probability of satisfying the market conditions and the projected share price at the time of payment, discounted to the valuation date over a three-year performance period. Assumptions include historic volatility (19.7%), risk-free interest rates (1.5%), and historic daily return as compared to our Peer Group. Such amount is being amortized into expense over a five-year period from the date of grant, using a graded vesting attribution model.

Share-Based Compensation Expense

Share-based compensation expense, which is included in general and administrative expenses in our consolidated statements of income, is summarized as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in thousands)	2019		2018		2019		2018
Share-based compensation expense components:
Restricted share expense	$	297	$	525	$	1,384	$	1,726
Stock option expense	992		546		3,062		1,650
LTIP expense	1,171		285		3,374		659
Outperformance Plan (“OPP”) expense	828		825		2,315		2,365
Deferred share unit (“DSU”) expense	22		71		134		94
Total Share-based compensation expense	$	3,310	$	2,252	$	10,269	$	6,494

Three Months Ended September 30, Nine Months Ended September 30,
(Amounts in thousands) 2017 2016 2017 2016
Share-based compensation expense components:
Restricted share expense $ 527
$ 352
$ 1,435
$ 968
Stock option expense 650
604
1,919
1,833
LTIP expense 147
95
410
378
Outperformance Plan (“OPP”) expense 565
308
1,484
901
Total Share-based compensation expense $ 1,889
$ 1,359
$ 5,248
$ 4,080

Equity award activity during the nine months ended September 30, 2019 included: (i) 276,482 LTIP units granted, (ii) 180,213 stock options granted, (iii) 34,638 restricted shares granted, (iv) 693,441 stock options vested, (v) 96,378 restricted shares vested and (vi) 80,681 LTIP units vested.

2019 Long-Term Incentive Plan

On April 4, 2019, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2019 Long-Term Incentive Plan (“2019 LTI Plan”). The Plan is a multi-year, equity compensation program under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units that vest based on the passage of time (one-third of the program) and performance goals tied to our relative and absolute total shareholder return (“TSR”) during the three-year performance period following their grant (two-thirds of the program).

For the performance-based awards under the 2019 LTI Plan, participants, have the opportunity to earn awards in the form of LTIP Units if, and only if, Urban Edge’s absolute and relative TSR meets certain criteria over the three-year performance measurement period (the “Performance Period”) beginning on February 27, 2019 and ending on February 26, 2022. The Company issued 489,319 LTIP Units under the 2019 LTI Plan.

Under the Absolute TSR component, 40% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 18%, 100% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 27%, and 165% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to or greater than 36%. The Relative TSR component is based on the Company’s performance compared to a peer group comprised of 14 companies. Under the Relative TSR Component, 40% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to the 35^th percentile of the peer group, 100% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to the 55^th percentile of the peer group, and 165% of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to or above the 75^thpercentile of the peer group, with earning determined using linear interpolation if between such relative and absolute TSR thresholds. The fair value of the performance-based award portion of the 2019 LTI Plan on the date of grant was $4.3 million using a Monte Carlo simulation to estimate the fair value through a risk-neutral premise.

The time-based awards under the 2019 LTI Plan, also granted in the form of LTIP Units, vest ratably over three years except in the case of our Chairman and Chief Executive Officer, where the vesting is ratably over four years. As of September 30, 2019, the Company granted time-based awards under the 2019 LTI Plan that represent 112,910 LTIP units with a grant date fair value of $2.0 million.

Units Granted to Trustees

On May 9, 2019, certain trustees elected to receive a portion of their compensation in deferred share units and an aggregate of 5,608 shares were granted to those trustees based on the weighted average grant date fair value of $15.60. In addition, certain trustees elected to receive a portion of their compensation in LTIP units and an aggregate of 28,040 LTIP units, were granted to those trustees based on the weighted average grant date fair value of $14.98.

16. EARNINGS PER SHARE AND UNIT

Urban Edge Earnings per Share

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of Urban Edge common shares and participating securities is calculated according to dividends declared and participating rights in undistributed earnings. Restricted shares issued pursuant to our share-based compensation program are considered participating securities, and as such have non-forfeitable rights to receive dividends.

The following table sets forth the computation of our basic and diluted earnings per share:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(Amounts in thousands, except per share amounts)	2017			2016			2017			2016			2019			2018			2019			2018
Numerator:
Net income attributable to common shareholders	$	17,178		$	19,265		$	81,347		$	71,771		$	54,040		$	24,200		$	106,148		$	98,637
Less: Earnings allocated to unvested participating securities	(39		)	(26		)	(133		)	(88		)	(43		)	(44		)	(89		)	(177		)
Net income available for common shareholders - basic	$	17,139		$	19,239		$	81,214		$	71,683		$	53,997		$	24,156		$	106,059		$	98,460
Impact of assumed conversions:
OP and LTIP units	—			—			7,175			—			—			—			5,883			200
Net income available for common shareholders - dilutive	$	17,139		$	19,239		$	88,389		$	71,683		$	53,997		$	24,156		$	111,942		$	98,660

Denominator:
Weighted average common shares outstanding - basic	110,990			99,304			104,938			99,281			121,087			113,890			119,259			113,769
Effect of dilutive securities⁽¹⁾:
Stock options using the treasury stock method	94			436			180			259			—			78			—			36
Restricted share awards	176			130			164			109			96			188			102			194
Assumed conversion of OP and LTIP units	—			—			10,041			62			—			—			7,128			237
Weighted average common shares outstanding - diluted	111,260			99,870			115,323			99,711			121,183			114,156			126,489			114,236

Earnings per share available to common shareholders:
Earnings per common share - Basic	$	0.15		$	0.19		$	0.77		$	0.72		$	0.45		$	0.21		$	0.89		$	0.87
Earnings per common share - Diluted	$	0.15		$	0.19		$	0.77		$	0.72		$	0.45		$	0.21		$	0.89		$	0.86

^{(1) (}¹⁾For the three ~~and nine~~ months ended September 30, ~~2016~~2019 and ~~the three months endedSeptember 30, 2017~~2018, the effect of the redemption of OP and LTIP units for Urban Edge common shares would have an anti-dilutive effect on the calculation of diluted EPS. Accordingly, the impact of such redemption has not been included in the determination of diluted EPS for these periods.

Operating Partnership Earnings per Unit

The following table sets forth the computation of basic and diluted earnings per unit:



	Three Months Ended September 30,						Nine Months Ended September 30,
(Amounts in thousands, except per unit amounts)	2019			2018			2019			2018
Numerator:
Net income attributable to unitholders	$	56,702		$	26,888		$	112,683		$	109,678
Less: net income attributable to participating securities	(43		)	(46		)	(89		)	(190		)
Net income available for unitholders	$	56,659		$	26,842		$	112,594		$	109,488

Denominator:
Weighted average units outstanding - basic	126,277			126,208			126,387			126,170
Effect of dilutive securities issued by Urban Edge	96			267			102			229
Unvested LTIP units	—			218			1			237
Weighted average units outstanding - diluted	126,373			126,693			126,490			126,636

Earnings per unit available to unitholders:
Earnings per unit - Basic	$	0.45		$	0.21		$	0.89		$	0.87
Earnings per unit - Diluted	$	0.45		$	0.21		$	0.89		$	0.86

Three Months Ended September 30, Nine Months Ended September 30,
(Amounts in thousands, except per unit amounts) 2017 2016 2017 2016
Numerator:
Net income attributable to unitholders $ 19,145
$ 20,504
$ 88,778
$ 76,365
Less: net income attributable to participating securities (39 ) (43 ) (142 ) (174 )
Net income available for unitholders $ 19,106

$ 20,461

$ 88,636

$ 76,191

Denominator:
Weighted average units outstanding - basic 123,433
105,404
114,979
105,370
Effect of dilutive securities issued by Urban Edge 270
566
344
368
Unvested LTIP units —
—
—
62
Weighted average units outstanding - diluted 123,703
105,970
115,323
105,800

Earnings per unit available to unitholders:
Earnings per unit - Basic $ 0.15
$ 0.19
$ 0.77
$ 0.72
Earnings per unit - Diluted $ 0.15
$ 0.19
$ 0.77
$ 0.72

~~17. SUBSEQUENT EVENTS~~

Pursuant to the Subsequent Events Topic of the FASB ASC, we have evaluated subsequent events and transactions that occurred after our September 30, 2017 consolidated balance sheet date for potential recognition or disclosure in our consolidated financial statements. Based on this evaluation, the Company has determined there are no subsequent events required to be disclosed.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our future results, financial condition 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 Quarterly Report on Form 10-Q. 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~~These factors include, among others, the ~~estimated remediation~~impact of e-commerce; the loss of or bankruptcy of major tenants; general economic conditions and ~~repair~~changes in the real estate market in particular; adverse economic conditions in the areas in which our properties are located; natural disasters; potentially higher costs related to ~~Hurricane Maria~~our development, redevelopment and anchor repositioning projects, and our ability to lease these projects at projected rates; competition for acquisitions; the ~~timing~~loss of ~~re-opening~~key personnel; the availability of financing and ~~resumption of full operations at the affected properties.~~changes in, and compliance with, tax law and REIT qualifications. For further discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018 and the other documents filed by the Company with the SEC, including the information contained in this Quarterly Report on Form 10-Q.

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 Quarterly Report on Form 10-Q. 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 Quarterly Report on Form 10-Q.

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Part I of this Quarterly Report on Form 10-Q.

Overview

Urban Edge Properties (“UE”, “Urban Edge” or the “Company”) (NYSE: UE) is a Maryland real estate investment trust that ~~owns,~~ manages, ~~acquires,~~ develops, redevelops, and ~~operates~~acquires retail real estate, primarily in ~~high barrier-to-entry markets.~~the New York metropolitan area. Urban Edge Properties LP (“UELP” or the “Operating Partnership”) is a Delaware limited partnership formed to serve as ~~the Company’s~~UE’s majority-owned partnership subsidiary and to own, through affiliates, all of the Company’s real estate properties and other assets. Unless the context otherwise requires, references to “we”, “us” and “our” refer to Urban Edge Properties and UELP and their consolidated entities/subsidiaries.

The Operating Partnership’s capital includes general and common limited partnership interests in the operating partnership (“OP Units”). As of September 30, ~~2017,~~2019, Urban Edge owned approximately ~~89.9%~~95.4% of the outstanding common OP Units with the remaining limited OP Units held by ~~Vornado Realty L.P.,~~ members of management, ~~our~~Urban Edge’s Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership. The third party unitholders have limited rights over the Operating Partnership such that they do not have characteristics of a controlling financial interest. As such, the Operating Partnership is considered a variable interest entity (“VIE”), and the Company is the primary beneficiary which consolidates it. The Company’s only investment is the Operating Partnership. The VIE’s assets can be used for purposes other than the settlement of the VIE’s obligations and the Company’s partnership interest is considered a majority voting interest.

As of September 30, ~~2017,~~2019, our portfolio consisted of 8573 shopping centers, four malls and a warehouse park, totaling ~~16.7~~approximately 15.0 million square feet.

Critical Accounting Policies and Estimates

The Company’s ~~2016~~ Annual Report on Form 10-K for the fiscal year ended December 31, 2018 contains a description of our critical accounting policies, including accounting for real estate ~~allowance for doubtful accounts~~ and revenue recognition. For the nine months ended September 30, ~~2017,~~2019, there were no material changes to these policies, other than the adoption of ASU 2016-02 and updates to the ~~Accounting Standards Update (“ASU”) 2017-01~~Company’s policies on leases, accounts receivable and changes in collectibility assessment described in Note 3 and Note 8 to the unaudited consolidated financial statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

Refer to Note 3 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements that may affect us.

Results of Operations

We derive substantially all of our revenue from rents received from tenants under existing leases on each of our properties. This revenue includes fixed base rents, recoveries of expenses that we have incurred and that we pass through to the individual tenants and percentage rents that are based on specified percentages of tenants’ revenue, in each case as provided in the respective leases.

Our primary cash ~~expenses~~expenditures consist of our property operating and capital ~~expenses,~~costs, general and administrative expenses, and interest and debt expense. Property operating expenses include: real estate taxes, repairs and maintenance, management expenses, insurance and utilities; general and administrative expenses include payroll, professional fees, information technology, office expenses and other administrative expenses; and interest and debt expense is primarily consist of interest on our mortgage ~~debt and amortization of deferred financing costs on our revolving credit facility.~~debt. In addition, we incur substantial non-cash charges for depreciation and amortization on our properties. We also capitalize certain expenses, such as taxes, interest and salaries related to properties under development or redevelopment until the property is ready for its intended use.

Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions, dispositions, developments, redevelopments and ~~redevelopments.~~changes in accounting policies. The results of operations of any acquired properties are included in our financial statements as of the date of acquisition.

The following provides an overview of our key financial metrics based on our consolidated results of operations (refer to cash Net Operating Income (“NOI”), same-property cash NOI and Funds From Operations applicable to diluted common shareholders (“FFO”) described later in this section):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in thousands)	2017		2016		2017		2016		2019		2018		2019		2018
Net income	$	19,156	$	20,505	$	88,811	$	76,364	$	56,700	$	26,899	$	112,659	$	109,712
FFO applicable to diluted common shareholders⁽¹⁾	40,000		34,773		152,131		102,166		38,248		46,342		132,350		130,022
Cash NOI⁽²⁾	60,807		52,867		175,355		157,590		57,373		50,855		176,851		165,517
Same-property cash NOI⁽²⁾	47,812		46,017		142,978		136,527		52,144		53,585		150,886		153,739

⁽¹⁾Refer to page 3338 for a reconciliation to the nearest generally accepted accounting principles (“GAAP”) measure.

⁽²⁾Refer to page 3237 for a reconciliation to the nearest GAAP measure.

~~Significant~~ Development/Redevelopment Activity

The Company ~~had 16~~has eight active development, redevelopment or anchor repositioning projects with total estimated costs of ~~$199.4~~$42.5 million, of which ~~$90.0~~$34.2 million (or ~~45%~~80%) has been incurred as of September 30, ~~2017. As~~2019.

The Company completed five redevelopment projects with total estimated costs of ~~September 30, 2017,~~$80.4 million during the ~~Company had completed projects at six properties for a total investment~~third quarter:

Bergen Town Center in Paramus, NJ - expanded center with the addition of ~~$36.5 million.~~Burlington and added new restaurants including Ruth's Chris, Cava Grill, Sticky's Finger Joint and Chopt

West Branch Commons in Union, NJ - Burlington replaced former Toys “R” Us

Amherst Commons in Amherst, NY - Burlington replaced former Toys “R” Us

Briarcliff Commons in Morris Plains, NJ - Renovated façade and added Chick-fil-A and First Watch

Acquisition/Disposition Activity

~~On January 4, 2017,~~During the three months ended September 30, 2019, we ~~acquired fee~~disposed of six properties and ~~leasehold interests~~received proceeds of $77.6 million, net of selling costs, resulting in ~~Yonkers Gateway Center for $51.9 million. Consideration for this purchase consisted~~a $39.7 million gain on sale of the issuance of $48.8 million in OP units and $2.9 million of cash. The total number of OP units issued was 1.8 million at a value of $27.09 per unit. Transaction costs associated with this acquisition were $0.2 million.

On January 17, 2017, we acquired the leasehold interest in the Shops at Bruckner for $32.3 million, consisting of the assumption of the existing debt of $12.6 million and $19.4 million of cash. The property is a 114,000 sf retail center in the Bronx, NY directly across from our 376,000 sf Bruckner Commons shopping center. We own the land under the Shops at Bruckner and had been leasing it to the seller under a ground lease that ran through September 2044. Concurrent with the acquisition, we wrote-off the unamortized intangible liability balance related to the below-market ground lease as well as the existing straight-line receivable balance. As a result, we recognized $39.2 million of income from acquired leasehold interest inreal estate. During the nine months ended September 30, ~~2017. Transaction costs associated with this acquisition were $0.3 million.~~

~~On February 2, 2017,~~2019, we ~~acquired Hudson Mall, a 383,000 sf retail center in Jersey City, NJ adjacent to our existing Hudson Commons shopping center. Consideration for this purchase consisted~~disposed of ~~the assumption~~eight properties and received proceeds of ~~the existing debt of $23.8 million and $19.9 million of cash. Transaction costs associated with this acquisition were $0.6 million.~~

~~On September 8, 2017, we completed the sale of excess land in Kearny, NJ for $0.3 million,~~ resulting in a $68.2 million gain ~~of $0.2 million.~~

~~On June 9, 2016, we completed the~~on sale of ~~a shopping center located in Waterbury, CT for $21.6 million, resulting in a gain of $15.6 million.~~ real estate. During the three and nine months ended September 30, ~~2016, there were no acquisitions.~~2019, the Company also sold its lessee position in one of its ground leases and received proceeds of $6.9 million, net of selling costs, resulting in a $1.8 million gain on sale of lease.

~~Significant Debt and Equity Activity~~

~~Debt Activity~~

During May of 2017, $126 million of non-recourse, secured debt was obtained in connection with the funding of the Portfolio acquisition. The mortgages are scheduled to mature beginning in 2022 through 2027. In addition, we assumed a $33 million existing mortgage in connection with the acquisition of Yonkers Gateway Center on May 24, 2017. The mortgage payable balance on the loan secured by Yonkers Gateway Center includes $0.9 million of unamortized debt premium asAs of September 30, ~~2017.~~2019, we were under contract to purchase an office building in Maywood, NJ, adjacent to our existing property, Bergen Town Center. The building is subject to a ground lease, in which the Company will acquire the lessee position for a purchase price of $7.1 million. The transaction is scheduled to close by the end of 2019.

As of September 30, 2019, we were also under contract to purchase a retail outparcel in Paramus, NJ, adjacent to our existing property, Bergen Town Center, for a gross purchase price of $6.6 million. The transaction is scheduled to close by the end of 2019.

~~On March 29, 2017, we refinanced~~

We are also under contract to purchase one property located in the ~~$74 million, 4.59% mortgage loan secured by our Tonnelle Commons property in North Bergen, NJ, increasing~~Boston metropolitan area for a gross purchase price of $24.5 million.

The completion of these transactions are contingent on satisfying closing conditions. The Company’s pending acquisitions will serve as 1031 exchanges for the ~~principal balance to $100 million with a 10-year fixed rate mortgage, at 4.18%. As a result, we recognized a loss on extinguishment of debt of $1.3 million~~Company’s dispositions and the required equity will be funded using proceeds from dispositions.

Equity Activity

Equity award activity during the nine months ended September 30, ~~2017 comprised~~2019 included: (i) 276,482 LTIP units granted, (ii) 180,213 stock options granted, (iii) 34,638 restricted shares granted, (iv) 693,441 stock options vested, (v) 96,378 restricted shares vested and (vi) 80,681 LTIP units vested. Refer to Note 15 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for more information regarding the Company’s equity award activity.

In August, the Company received requests from certain OP unitholders to redeem 357,998 units. The Company elected to satisfy the redemption requests by repurchasing the units at a ~~$1.2 million prepayment penalty and write-off~~price of ~~$0.1 million~~$16.70 per unit, for total cash consideration of ~~unamortized deferred financing fees on the original loan.~~$6.0 million.

During June 2016, in connection with the sale of a shopping center located in Waterbury, CT, we prepaid $21.2 million of our cross collateralized mortgage loan to release the property from the mortgage and maintain compliance with covenant requirements.

On March 30, 2015, we notified the lender that due to tenants vacating the Englewood shopping center, the property’s operating cash flow would be insufficient to pay its debt service. As of September 30, 2017, we were in default and the property was transferred to receivership. Urban Edge no longer manages the property but will remain its title owner until the receiver disposes of the property.

~~Equity Activity~~

On January 7, 2015, our board and initial shareholder approved the Urban Edge Properties 2015 Omnibus Share Plan, under which awards may be granted up to a maximum of 15,000,000 of our common shares or share equivalents. Pursuant to the Omnibus Share Plan, stock options, LTIP units, Operating Partnership units and restricted shares are available for grant. We have a Dividend Reinvestment Plan (the “DRIP”), whereby shareholders may use their dividends to purchase shares.

~~On February 24, 2017,~~April 4, 2019, the Compensation Committee of the Board of Trustees of the Company approved the Company’s ~~2017 Outperformance~~2019 Long-Term Incentive Plan (“~~2017 OPP”~~2019 LTI Plan”),. The 2019 LTI Plan is a multi-year, ~~performance-based~~ equity compensation ~~program. The purpose~~program under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units that vest based on the passage of time (one-third of the ~~2017 Outperformance Plan is~~program) and performance goals tied to ~~further align~~our relative and absolute total shareholder return (“TSR”) during the ~~interests~~three-year performance period following their grant (two-thirds of the ~~Company’s shareholders with that of management by encouraging~~program). During the ~~Company’s senior officers to create shareholder value in a “pay for performance” structure. The aggregate notional amount of the~~

~~2017 OPP grant is $12.0 million. 302,000 LTIP units were granted in connection with the 2017 OPP. LTIP units will be awarded if the performance criteria are met in accordance with the OPPs.~~

~~On May 10, 2017,~~nine months ended September 30, 2019, the Company issued 7.7 million common shares of beneficial interest in an underwritten public offering pursuant to the Company’s effective shelf registration statement previously filed on Form S-3 (File No. 333-212951) with the SEC on August 5, 2016. This offering generated cash proceeds of $193.5 million, net of $1.3 million of issuance costs. We intend to use the proceeds of this offering for development and redevelopment projects and for general corporate purposes including potential acquisitions that may be identified in the future.

An equivalent number of common units were issued by the Operating Partnership to the Company in connection with the Company’s issuance of common shares of beneficial interest, as discussed above. The Operating Partnership issued 1.8 million OP units in connection with the acquisition of Yonkers Gateway Center on January 4, 2017 at a value of $27.09 per unit. On May 24 and 25, 2017, the Operating Partnership issued 2.6 million OP489,319 performance-based LTIP units and ~~1.9 million OP~~112,910 time-based LTIP units, respectively, in connection with the ~~Portfolio acquisition at a value~~2019 LTI Plan. Refer to Note 15 to the unaudited consolidated financial statements in Part I, Item I of ~~$27.02 per unit.~~this Quarterly Report on Form 10-Q for more information regarding the 2019 LTI Plan.

Other equity activity during the nine months ended September 30, 2017 included: (i) 137,259 stock options granted, (ii) 104,698 restricted shares granted, (iii) 31,734 LTIP units granted, (iv) 53,236 restricted shares vested, (v) 16,789 LTIP units vested, (vi) 11,760 2015 OPP LTIP units forfeited, (vii) 5,879 stock options forfeited, and (viii) 5,251 restricted shares forfeited.

Comparison of the Three Months Ended September 30, ~~2017~~2019 to September 30, ~~2016~~2018

Net income for the three months ended September 30, ~~2017~~2019 was ~~$19.2~~$56.7 million, compared to net income of ~~$20.5~~$26.9 million for the three months ended September 30, ~~2016.~~2018. The following table summarizes certain line items from our consolidated statements of income that we believe are important in understanding our operations and/or those items which significantly changed in the three months ended September 30, ~~2017~~2019 as compared to the same period of ~~2016:~~2018:

For the Three Months ended September 30,
(Amounts in thousands) 2017 2016 $ Change
Total revenue $ 94,101
$ 79,973
$ 14,128
Property operating expenses 11,402
9,897
1,505
Depreciation and amortization 20,976
14,435
6,541
Real estate taxes 15,872
12,729
3,143
Casualty and impairment loss 2,170
—
2,170
Interest and debt expense 14,637
12,766
1,871
Interest income 719
176
543
Provision for doubtful accounts 575
149
426



	Three Months Ended September 30,
(Amounts in thousands)	2019		2018		Change
Total revenue	$	91,243	$	112,214	$	(20,971	)
Real estate taxes	14,490		16,374		(1,884		)
Property operating expenses	14,075		22,328		(8,253		)
General and administrative	8,353		9,702		(1,349		)
Lease expense	3,486		2,722		764
Gain on sale of real estate	39,716		2,185		37,531
Gain on sale of lease	1,849		—		1,849

Total revenue ~~increased~~decreased by ~~$14.1~~$21.0 million to ~~$94.1~~$91.2 million in the third quarter of ~~2017~~2019 from ~~$80.0~~$112.2 million in the third quarter of ~~2016.~~2018. The ~~increase~~decrease is primarily attributable to:

$~~7.6~~16.5 million ~~increase~~ as a result of ~~acquisitions net~~the write-off of ~~dispositions that closed since September 2016;~~

~~$4.1 million net increase~~below-market lease intangible liabilities related to the recaptured Toys “R” Us leases in ~~tenant expense reimbursements due to an increase in recoverable expenses and revenue from recoverable capital projects;~~the third quarter of 2018;

$2.8 million ~~net increase~~as a result of property dispositions since the third quarter of 2018;

$1.9 million decrease in property rentals due to lease terminations and modifications, offset by rent commencements and contractual rent increases ~~partially offset by~~

~~$0.4 million decrease in other income due to lower tenant bankruptcy settlement income received during~~since the third quarter of ~~2017.~~2018; and

~~Property~~$0.3 million due to credit losses related to operating ~~expenses increased by $1.5 million to $11.4 million~~lease receivables recognized against rental income in the third quarter of ~~2017 from $9.9 million~~2019 in accordance with the new lease accounting standard, as compared to being included in property operating expenses in the third quarter of ~~2016. The increase is primarily attributable to an increase in common area maintenance expenses as a result of acquisitions that closed since September 2016.~~

~~Depreciation and amortization increased by $6.5 million to $21.0 million in the third quarter of 2017 from $14.4 million in the third quarter of 2016. The increase is primarily attributable to:~~

~~$6.3 million increase as a result of acquisitions net of dispositions that closed since September 2016;~~

~~$0.6 million increase from development projects and tenant improvements placed into service since September 2016,~~2018, partially offset by

$~~0.4 million in-place lease write-off due to a tenant vacating during the third quarter of 2016.~~

~~Real estate taxes increased by $3.2 million to $15.9 million in the third quarter of 2017 from $12.7 million in the third quarter of 2016. The increase is primarily attributable to:~~

~~$2.4~~0.3 million increase ~~as a result of acquisitions net of dispositions that closed since September 2016;~~

~~$0.5 million increase due to higher assessed values and tax refunds received~~ in ~~2016;~~lease termination income; and

$0.2 million increase due to ~~additional real estate taxes capitalized~~rent abatements in the third quarter of ~~2016 related~~2018 at our two malls in Puerto Rico and at our property in Wilkes-Barre, PA as a result of natural disasters.

Real estate taxes decreased by $1.9 million to ~~space taken out of service for development and redevelopment projects.~~

~~The Company recognized a casualty loss of $2.2~~$14.5 million in the third quarter of ~~2017 to write-off the estimated net book value of the fixed assets damaged by Hurricane Maria in Puerto Rico.~~

~~Interest and debt expense increased by $1.8 million to $14.6~~2019 from $16.4 million in the third quarter of ~~2017 from $12.8~~2018. The decrease is primarily attributable to:

$1.3 million due to lower assessed values and tax refunds; and

$0.6 million as a result of dispositions.

Property operating expenses decreased by $8.3 million to $14.1 million in the third quarter of ~~2016.~~2019 from $22.3 million in the third quarter of 2018. The decrease is primarily attributable to:

$9.5 million lease termination payment to acquire the Toys “R” Us lease at Bruckner Commons in the Bronx, NY in the third quarter of 2018, partially offset by

$0.7 million of common area maintenance expenses recognized on a gross basis at tenant-maintained centers in accordance with the new lease accounting standard; and

$0.5 million increase in cleanup and repair costs for vacant spaces.

General and administrative expenses decreased by $1.3 million to $8.4 million in the third quarter of 2019 from $9.7 million in the third quarter of 2018. The decrease is primarily attributable to:

$1.9 million decrease due to executive transition costs incurred in the third quarter of 2018; and

$0.4 million decrease in transaction costs, partially offset by

$1.0 million increase in share-based compensation expense due to additional equity awards granted.

Lease expense increased by $0.8 million to $3.5 million in the third quarter of 2019 from $2.7 million in the third quarter of 2018. The increase is primarily attributable to ~~interest from loans issued~~the recognition of common area maintenance and ~~assumed~~real estate taxes associated with ground or building leases within lease expense in accordance with the new lease accounting standard, effective January 1, 2019.

We recognized a gain on ~~acquisitions closed since September 2016 as well as the increased loan balance from the refinancing~~sale of ~~the mortgage loan secured by our Tonnelle Commons property in North Bergen, NJ.~~

~~Interest income increased by $0.5 million to $0.7~~real estate of $39.7 million in the third quarter of ~~2017 from $0.2~~2019 due to the sale of six operating properties. A gain on sale of real estate of $2.2 million was recognized in the third quarter of 2018 on the sale of a 5.7 acre land parcel at our property, Cherry Hill Commons, in Cherry Hill, NJ.

We recognized a gain of $1.8 million in the third quarter of ~~2016. The increase is primarily attributable to an increase in the cash balance~~2019 due to ~~multiple equity offerings since September 2016.~~

~~Provision for doubtful accounts increased by $0.4 million to $0.6 million~~the sale of our ground lease in ~~the third quarter of 2017 from $0.2 million in the third quarter of 2016. The increase is primarily attributable to an increase in reserves due to tenant bankruptcies.~~Tysons Corner, VA.

Comparison of the Nine Months Ended September 30, ~~2017~~2019 to September 30, ~~2016~~2018

Net income for the nine months ended September 30, ~~2017~~2019 was ~~$88.8~~$112.7 million, compared to net income of ~~$76.4~~$109.7 million for the nine months ended September 30, ~~2016.~~2018. The following table summarizes certain line items from our consolidated statements of income that we believe are important in understanding our operations and/or those items which significantly changed in the nine months ended September 30, ~~2017~~2019 as compared to the same period of ~~2016:~~2018:


	For the Nine Months ended September 30,							Nine Months Ended September 30,
(Amounts in thousands)	2017		2016		$ Change			2019			2018		Change
Total revenue	$	309,666	$	242,498	$	67,168		$	291,722		$	313,237	$	(21,515	)
Property operating expenses	35,858		32,596		3,262
General and administrative expenses	22,720		20,873		1,847
Depreciation and amortization	60,505		41,908		18,597			65,893			73,544		(7,651		)
Real estate taxes	43,975		38,701		5,274			45,188			47,736		(2,548		)
Casualty and impairment loss	5,637		—		5,637
Property operating expenses								45,552			61,996		(16,444		)
General and administrative								28,943			25,579		3,364
Casualty and impairment (loss) gain, net								(9,070		)	1,248		(10,318		)
Lease expense								11,037			8,210		2,827
Gain on sale of real estate	202		15,618		(15,416		)	68,219			52,625		15,594
Gain on sale of lease								1,849			—		1,849
Interest income								7,670			5,943		1,727
Interest and debt expense	41,379		39,015		2,364			49,869			48,059		1,810
Loss on extinguishment of debt	1,274		—		1,274
Gain on extinguishment of debt								—			2,524		(2,524		)
Income tax expense	942		349		593			1,249			741		508

Total revenue ~~increased~~decreased by ~~$67.2~~$21.5 million to ~~$309.7~~$291.7 million in the nine months ended September 30, ~~2017~~2019 from ~~$242.5~~$313.2 million in the nine months ended September 30, ~~2016.~~2018. The ~~increase~~decrease is primarily attributable to:

$~~39.2~~14.2 million decrease in ~~income from acquired leasehold interest due to the write-off~~write-offs of ~~the unamortized~~below-market lease intangible ~~liability~~liabilities related to ~~the below-market ground lease acquired and existing straight-line receivable balance in connection with the acquisition of the ground lease at Shops at Bruckner;~~recaptured leases;

$~~13.8~~5.8 million ~~increase~~ as a result of ~~acquisitions net of dispositions that closed since September 2016;~~property dispositions;

$2.0 million decrease in property rentals due to lease terminations and modifications, offset by rent commencements and contractual rent increases; and

$~~9.3~~1.1 million due to credit losses related to operating lease receivables recognized against rental income in 2019 in accordance with the new lease accounting standard, effective January 1, 2019, as compared to being included in property operating expenses in 2018, partially offset by;

$1.0 million increase due to rent abatements in ~~tenant expense reimbursements~~the nine months ended September 30, 2018, recognized at our two malls in Puerto Rico and at our property in Wilkes-Barre, PA as a result of natural disasters; and

$0.6 million due to an increase in ~~recoverable expenses and revenue from recoverable capital projects;~~

$6.2 million increase in property rentals due to rent commencements, contractual rent increases and an increase in percentage rental income, net of tenant vacancies primarily at properties undergoing development, partially offset by

~~$1.3 million decrease in other income due to a decrease in~~ tenant bankruptcy settlement ~~income received during 2017.~~income.

~~Property operating~~Depreciation and amortization expenses ~~increased~~decreased by ~~$3.3~~$7.7 million to ~~$35.9~~$65.9 million in the nine months ended September 30, ~~2017~~2019 from ~~$32.6~~$73.5 million in the nine months ended September 30, ~~2016.~~2018. The ~~increase~~decrease is primarily attributable ~~to an increase~~to:

$8.4 million decrease in ~~common area maintenance expenses~~depreciation and amortization as a result of ~~acquisitions that closed since September 2016.~~

~~General~~write-offs of existing tenant improvements and ~~administrative expenses increased by $1.8 million~~intangible assets related to ~~$22.7 million~~recaptured leases in the nine months ended September 30, ~~2017 from $20.9 million in the nine months ended September 30, 2016. The increase is primarily attributable to:~~

~~$1.6 million net increase in employment costs including $1.1 million increase in stock compensation expense and $0.5 million severance expense;~~2018; and

$~~0.2~~0.3 million ~~net increase in legal, other professional fees and costs related to information technology.~~

Depreciation and amortization increased by $18.6 million to $60.5 million in the nine months ended September 30, 2017 from $41.9 million in the nine months ended September 30, 2016. The increase is primarily attributable to:

~~$12.0 million increase~~decrease as a result of ~~acquisitions net of~~property dispositions, ~~that closed since September 2016;~~partially offset by

$4.4 million increase in amortization of in-place leases as a result of the write-off of the existing intangible assets at Yonkers Gateway Center upon acquisition of the remaining fee and leasehold interests;

~~$2.6~~1.0 million increase from development projects and tenant improvements placed into ~~service since September 2016, partially offset by~~

~~$0.4 million in-place lease write-off due to a tenant vacating during the third quarter of 2016.~~service.

Real estate taxes ~~increased~~decreased by ~~$5.3~~$2.5 million to ~~$44.0~~$45.2 million in the nine months ended September 30, ~~2017~~2019 from ~~$38.7~~$47.7 million in the nine months ended September 30, ~~2016.~~2018. The decrease is primarily attributable to:

$1.4 million decrease due to lower assessed values and tax refunds; and

$1.1 million decrease as a result of dispositions.

Property operating expenses decreased by $16.4 million to $45.6 million in the nine months ended September 30, 2019 from $62.0 million in the nine months ended September 30, 2018. The decrease is primarily attributable to:

$15.5 million due to lease termination payments to acquire the Toys “R” Us leases at Bruckner Commons in the Bronx, NY and Hudson Mall in Jersey City, NJ in the nine months ended September 30, 2018;

$2.5 million due to credit losses recognized in property operating expenses in the nine months ended September 30, 2018 and rental revenue in the nine months ended September 30, 2019;

$1.1 million due to lower common area maintenance expenses incurred for snow removal in 2019; and

$0.6 million of environmental remediation costs accrued in the nine months ended September 30, 2018, partially offset by

$2.2 million of common area maintenance expenses recognized on a gross basis at tenant-maintained centers in accordance with the new lease accounting standard; and

$1.1 million increase in repair costs for vacant spaces.

General and administrative expenses increased by $3.4 million to $28.9 million in the nine months ended September 30, 2019 from $25.6 million in the nine months ended September 30, 2018. The increase is primarily attributable to:

$3.4 million increase ~~as a result of acquisitions net of dispositions that closed since September 2016;~~

~~$1.6 million increase due to higher assessed values and tax refunds received~~ in ~~2016; and~~

~~$0.3 million increase~~share-based compensation expense due to additional ~~real estate taxes capitalized~~equity awards granted;

$1.1 million increase in ~~the third quarter of 2016 related to space taken out of service~~professional fees for ~~development~~consulting, recruitment and ~~redevelopment projects.~~legal services, partially offset by

~~Casualty~~$1.1 million net decrease in executive transition costs, severance and other expenses.

A casualty and impairment ~~losses~~loss, net of ~~$5.6~~$9.1 million ~~were~~was recognized in the nine months ended September 30, ~~2017~~2019 attributable to:

$22.7 million of real estate impairment charges recognized against the carrying values of three properties, partially offset by

$13.6 million from insurance settlements for Hurricane Maria at our two malls in Puerto Rico and for tornado damage at our shopping center in Wilkes-Barre, PA.

We recognized a $1.2 million casualty and impairment gain in the nine months ended September 30, 2018, comprised of $1.5 million of insurance proceeds, offset by $0.3 million of expenses incurred as a result of ~~the following events:~~

$3.5 million real estate impairment loss on our property previously classified as held for sale in Eatontown, NJ, due to the book value of this property exceeding its fair value less costs to sell. The Company’s determination of fair value was based on the executed contract of sale with the third-party buyer less selling costs; and

~~$2.2 million casualty loss in the third quarter of 2017 to write-off the estimated net book value of the fixed assets damaged by~~ Hurricane Maria in Puerto Rico.

~~Gain on sale of real estate decreased~~Lease expense increased by ~~$15.4~~$2.8 million to ~~$0.2~~$11.0 million in the nine months ended September 30, ~~2017~~2019 from ~~$15.6~~$8.2 million in the nine months ended September 30, ~~2016.~~2018. The ~~decrease~~increase is primarily attributable ~~to:~~to the recognition of common area maintenance and real estate taxes associated with ground or building leases within lease expense in accordance with the new lease accounting standard, effective January 1, 2019.

~~$15.6 million~~We recognized a gain on sale of real estate of $68.2 million in the nine months ended September 30, ~~2016~~2019 due to the sale of eight operating properties. A gain on sale of real estate of $52.6 million was recognized in the nine months ended September 30, 2018, comprised of $50.4 million as a result of the sale of our property in ~~Waterbury, CT on June 9, 2016, offset by~~

~~$0.2~~Allentown, PA and $2.2 million ~~gain on sale of real estate in the nine months ended September 30, 2017~~ as a result of the sale of ~~excess~~a 5.7 acre land parcel at our property, Cherry Hill Commons, in ~~Kearny, NJ on September 8, 2017.~~Cherry Hill, NJ.

~~Interest and debt expense increased $2.4 million to $41.4~~We recognized a gain of $1.8 million in the nine months ended September 30, ~~2017 from $39.0~~2019 due to the sale of our ground lease in Tysons Corner, VA.

Interest income increased by $1.7 million to $7.7 million in the nine months ended September 30, ~~2016. The increase is primarily attributable to:~~

~~$2.9 million increase of interest~~2019 from ~~loans issued and assumed on acquisitions closed since September 2016, partially offset by~~

~~$0.5 million interest decrease due to a lower mortgage payable balance as a result of principal payments of our cross-collateralized mortgage loan.~~

~~Loss on extinguishment of debt of $1.3~~$5.9 million in the nine months ended September 30, ~~2017 was recognized as a result of the refinancing of our mortgage loan secured by our Tonnelle Commons property~~2018. The increase is attributable to an increase in ~~North Bergen, NJ. The loss on extinguishment of~~interest rates and higher invested cash balances.

Interest and debt ~~is comprised of a $1.2 million prepayment penalty and $0.1 million of unamortized deferred financing fees on the original loan.~~

~~Income tax~~ expense increased by ~~$0.6~~$1.8 million ~~resulting in income tax expense of $0.9~~to $49.9 million in the nine months ended September 30, ~~2017~~2019 from ~~$0.3~~$48.1 million ~~of expense~~ in the nine months ended September 30, ~~2016~~2018. The increase is primarily attributable to:

$1.5 million decrease in interest capitalized due to the completion of development projects; and

$0.6 million increase resulting from higher interest rates on variable rate debt, partially offset by

$0.3 million decrease due to lower principal balances from monthly payments on fixed rate debt.

We recognized a $2.5 million gain on extinguishment of debt in the nine months ended September 30, 2018 as a result of ~~a $0.6~~the foreclosure sale and forgiveness of the $11.5 million ~~reduction~~mortgage debt secured by our property in Englewood, NJ.

Income tax expense increased by $0.5 million to $1.2 million in the nine months ended September 30, 2019 from $0.7 million in the nine months ended September 30, 2018 primarily attributable to the ~~accrued income~~ tax ~~liability recorded~~impact from the insurance settlement for our two malls in ~~the second quarter of 2016.~~Puerto Rico related to Hurricane Maria.

Non-GAAP Financial Measures

Throughout this section, we have provided certain information on a “same-property” cash basis which includes the results of operations that were owned and operated for the entirety of the reporting periods being compared totaling 7573 properties for the three ~~and nine~~ months ended September 30, ~~2017~~ 2019 and ~~2016.~~2018 and72 properties for the nine months ended September 30, 2019 and 2018. Information provided on a same-property basis excludes properties that were 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 ~~sold, under contract to be sold,~~ or ~~that are in the foreclosure process~~sold during the periods being compared. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when a property is considered to be a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan and is expected to have a significant impact on property operating income based on the retenanting that is occurring. 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.

We calculate same-property cash NOI using net income as defined by GAAP reflecting only those income and expense items that are ~~incurred at the property level,~~reflected in cash NOI, adjusted for the following items: lease termination fees, bankruptcy settlement income, ~~non-cash rental~~and income and ~~ground rent expense and income or~~ expenses that we do not believe are representative of ongoing operating results, if any.

The most directly comparable GAAP financial measure to cash NOI is net income. Cash NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. We calculate cash NOI by adjusting ~~GAAP operating~~net income to add back depreciation and amortization expense, general and administrative expenses, casualty and real estate impairment losses and non-cash ~~ground rent~~lease expense, and deduct non-cash rental income resulting from the straight-lining of rents and amortization of acquired below market leases net of above market leases.

We use cash NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. Further, we believe 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. As such, 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. Cash NOI and same-property cash NOI should not be considered substitutes for ~~operating income or~~ net income and may not be comparable to similarly titled measures employed by others.

Same-property cash NOI ~~increased~~decreased by ~~$1.8~~$1.4 million, or ~~3.9%~~(2.7)%, for the three months ended September 30, ~~2017~~2019 as compared to the three months ended September 30, ~~2016~~2018 and decreased by ~~$6.5~~$2.9 million, or ~~4.7%~~(1.9)%, for the nine months ended September 30, ~~2017~~2019 as compared to the nine months ended September 30, ~~2016.~~2018.

The following table reconciles net income to cash NOI and same-property cash NOI for the three and nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018, respectively.

Three Months Ended September 30, Nine Months Ended September 30,
(Amounts in thousands) 2017 2016 2017 2016
Net income $ 19,156
$ 20,505
$ 88,811
$ 76,364
Add: income tax expense 318
319
942
349
Income before income taxes 19,474
20,824
89,753
76,713
  Interest income (719 ) (176 ) (1,182 ) (520 )
  Gain on sale of real estate (202 ) —
(202 ) (15,618 )
  Interest and debt expense 14,637
12,766
41,379
39,015
  Loss on extinguishment of debt —
—
1,274
—
Operating income 33,190
33,414
131,022
99,590
Depreciation and amortization 20,976
14,435
60,505
41,908
Casualty and impairment loss 2,170
—
5,637
—
General and administrative expense 6,930
6,618
22,720
20,873
Transaction costs 95
223
278
307
NOI 63,361
54,690
220,162
162,678
Less: non-cash revenue and expenses (2,554 ) (1,823 ) (44,807 ) (5,088 )
Cash NOI⁽¹⁾
60,807
52,867
175,355
157,590
Adjustments:
Cash NOI related to properties being redeveloped⁽¹⁾
(6,158 ) (5,809 ) (18,580 ) (16,667 )
Cash NOI related to properties acquired, disposed, or in foreclosure⁽¹⁾
(6,357 ) (164 ) (11,987 ) (1,134 )
Management and development fee income from non-owned properties (369 ) (375 ) (1,199 ) (1,356 )
Tenant bankruptcy settlement income (115 ) (545 ) (628 ) (2,035 )
Other⁽²⁾
4
43
17
129
    Subtotal adjustments (12,995 ) (6,850 )
(32,377 )
(21,063 )
Same-property cash NOI $ 47,812
$ 46,017

$ 142,978

$ 136,527



	Three Months Ended September 30,						Nine Months Ended September 30,
(Amounts in thousands)	2019			2018			2019			2018
Net income	$	56,700		$	26,899		$	112,659		$	109,712
Management and development fee income from non-owned properties	(280		)	(375		)	(940		)	(1,064		)
Other expense (income)	251			(46		)	799			(119		)
Depreciation and amortization	21,496			21,833			65,893			73,544
General and administrative expense	8,353			9,702			28,943			25,579
Casualty and impairment loss (gain), net⁽¹⁾	—			58			9,070			(1,248		)
Gain on sale of real estate	(39,716		)	(2,185		)	(68,219		)	(52,625		)
Gain on sale of lease	(1,849		)	—			(1,849		)	—
Interest income	(2,706		)	(2,388		)	(7,670		)	(5,943		)
Interest and debt expense	16,861			16,756			49,869			48,059
Gain on extinguishment of debt	—			—			—			(2,524		)
Income tax expense	53			115			1,249			741
Non-cash revenue and expenses	(1,790		)	(19,514		)	(12,953		)	(28,595		)
Cash NOI	57,373			50,855			176,851			165,517
Adjustments:
Non-same property cash NOI⁽²⁾	(4,855		)	(6,901		)	(24,412		)	(27,194		)
Tenant bankruptcy settlement income and lease termination income	(374		)	(27		)	(1,553		)	(1,004		)
Lease termination payment	—			9,500			—			15,500
Natural disaster related operating loss	—			(6		)	—			172
Construction rental abatement	—			164			—			164
Environmental remediation costs	—			—			—			584
Same-property cash NOI	$	52,144		$	53,585		$	150,886		$	153,739
Cash NOI related to properties being redeveloped	3,415			2,992			17,041			15,162
Same-property cash NOI including properties in redevelopment	$	55,559		$	56,577		$	167,927		$	168,901

⁽¹⁾~~Cash~~The nine months ended September 30, 2019 reflect real estate impairment losses, offset by insurance proceeds for Hurricane Maria at our two malls in Puerto Rico and for tornado damage at our shopping center in Wilkes-Barre, PA. The nine months ended September 30, 2018 reflect hurricane-related insurance proceeds net of expenses.

⁽²⁾Non-same property cash NOI ~~is calculated as total property revenues less property operating expenses, excluding the net effects of non-cash rental income~~includes cash NOI related to properties being redeveloped and ~~non-cash ground rent expense.~~properties acquired or disposed.

⁽²⁾ ~~Other adjustments include revenue and expense items attributable to non-same properties and corporate activities.~~

Funds From Operations

FFO for the three months ended September 30, 2019 was $38.2 million compared to $46.3 million for the three months ended September 30, 2018 and $132.4 million for the nine months ended September 30, ~~2017 was $40.0 million and $152.1 million, respectively,~~2019 compared to ~~$34.8~~$130.0 million ~~and $102.2 million, respectively,~~ for the ~~three and~~ nine months ended September 30, ~~2016.~~2018.

We calculate FFO in accordance with the National Association of Real Estate Investment Trusts’ (‘‘~~NAREIT’~~Nareit’’) definition. ~~NAREIT~~Nareit defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of ~~depreciated~~depreciable real estate ~~assets,~~and land when connected to the main business of a REIT, impairments on depreciable real estate ~~impairment losses,~~or land related to a REIT's main business, and rental property depreciation and amortization expense. We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period to period both internally and among our peers because this non-GAAP measure excludes net gains on sales of depreciable real estate, real estate impairment losses, rental property depreciation and amortization expense which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. 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 may not be comparable to similarly titled measures employed by others.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(Amounts in thousands)	2017			2016			2017			2016			2019			2018			2019			2018
Net income	$	19,156		$	20,505		$	88,811		$	76,364		$	56,700		$	26,899		$	112,659		$	109,712
Less (net income) attributable to noncontrolling interests in:
Less net (income) loss attributable to noncontrolling interests in:
Operating partnership	(1,967		)	(1,239		)	(7,431		)	(4,594		)	(2,662		)	(2,688		)	(6,535		)	(11,041		)
Consolidated subsidiaries	(11		)	(1		)	(33		)	1			2			(11		)	24			(34		)
Net income attributable to common shareholders	17,178			19,265			81,347			71,771			54,040			24,200			106,148			98,637
Adjustments:
Rental property depreciation and amortization													21,262			21,639			65,233			72,969
Gain on sale of real estate	—			—			—			(15,618		)	(39,716		)	(2,185		)	(68,219		)	(52,625		)
Rental property depreciation and amortization	20,855			14,269			59,886			41,419
Real estate impairment loss	—			—			3,467			—			—			—			22,653			—
Limited partnership interests in operating partnership⁽¹⁾	1,967			1,239			7,431			4,594			2,662			2,688			6,535			11,041
FFO applicable to diluted common shareholders	$	40,000		$	34,773		$	152,131		$	102,166		$	38,248		$	46,342		$	132,350		$	130,022

⁽¹⁾ Represents earnings allocated to LTIP and OP ~~unit holders~~unitholders for unissued common shares which have been excluded for purposes of calculating earnings per diluted share for the periods presented. FFO applicable to diluted common shareholders calculations includes earnings allocated to LTIP and OP unit holders. For the nine months ended September 30, 2017 calculation, the weighted average share total includes the redeemable shares outstanding as their inclusion is dilutive. For the three months ended September 30, 2017 and the three and nine months ended September 30, 2016, the respective weighted average share totals are excluded because their inclusion is anti-dilutive.

Liquidity and Capital Resources

Due to the nature of our business, ~~we typically generate significant amounts of cash from operations; however,~~ the cash generated from operations is primarily paid to our shareholders and unitholders of the Operating Partnership in the form of distributions. Our status as a REIT requires that we distribute at least 90% of our REIT taxable income each year. Our Board of Trustees declared a quarterly dividend of $0.22 per common share and OP unit for each of the first three quarters of ~~2017,~~2019, or an annual rate of $0.88. We expect to pay regular cash ~~dividends,~~dividends; however, the timing, declaration, amount and payment of distributions to shareholders and unitholders of the Operating Partnership ~~falls~~fall within the discretion of our Board of Trustees. Our Board of Trustees’ decisions regarding the payment of dividends depends on many factors, such as maintaining our REIT tax status, our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other factors.

Property rental income is our primary source of cash flow and is dependent on a number of factors, including our occupancy level and rental rates, as well as our tenants’ ability to pay rent. Our properties provide us with a relatively consistent stream of cash flow that enables us to pay operating expenses, debt service and recurring capital expenditures. Other sources of liquidity to fund cash requirements include proceeds from financings, equity offerings and asset sales.

Our short-term liquidity requirements consist of normal recurring operating expenses, lease obligations, regular debt service requirements, ~~(including debt service relating to additional or replacement debt, as well as scheduled debt maturities),~~ recurring expenditures (general & administrative expenses), expenditures related to leasing activity and distributions to shareholders and unitholders of the Operating Partnership. Our long-term capital requirements consist primarily of maturities under our long-term debt agreements, development and redevelopment costs and potential acquisitions.

At September 30, ~~2017,~~2019, we had cash and cash equivalents, including restricted cash, of ~~$380.4~~$536.3 million and no amounts drawn on our line of credit. ~~On March 7, 2017,~~In addition, we ~~amended and extended our line~~had the following sources of ~~credit. The amendment increased the credit facility size by $100 million~~capital available:



(Amounts in thousands)	September 30, 2019
Revolving credit agreement⁽¹⁾
Total commitment amount	$	600,000
Available capacity	$	600,000
Maturity	January 29, 2024

⁽¹⁾ Refer to ~~$600 million and extended the maturity date to March 7, 2021 with two six-month extension options.~~

~~On May 10, 2017, the Company issued 7.7 million common shares of beneficial interest in an underwritten public offering pursuant~~Note 6 to the ~~Company’s effective shelf registration statement previously filed~~unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form ~~S-3 (File No. 333-212951) with the SEC on August 5, 2016. This offering generated cash proceeds of $193.5 million, net of $1.3 million of issuance costs.~~10-Q.

In 2016, the Company established an at-the-market (“ATM”) equity program, pursuant to which the Company may offer and sell from time to time its common shares, par value $0.01 per share, with an aggregate gross sales price of up to $250.0 million through a consortium of broker dealers acting as sales agents. As of September 30, 2017, $241.3 million of common shares remained available for issuance under this ATM equity program and there were no common shares issued under the ATM equity program during the nine months ended September 30, 2017. From September 2016 to December 31, 2016, the Company issued 307,342 common shares at a weighted average price of $28.45 under its ATM equity program, generating cash proceeds of $8.7 million. We paid $0.1 million of commissions to distribution agents and $0.4 million in additional offering expenses related to the issuance of these common shares. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common shares and our capital needs. We have no obligation to sell the remaining shares available under the active ATM equity program.

On January 4, 2017, we issued 1.8 million OP units in connection with the acquisition of Yonkers Gateway Center at a value of $27.09 per unit. On May 24 and 25, 2017 we issued 2.6 million OP units and 1.9 million OP units, respectively, in connection with the Portfolio acquisition at a value of $27.02 per unit.

We have no debt scheduled to mature in ~~2017.~~2019 or 2020. We currently believe that cash flows from operations over the next 12 months, together with cash on hand, our ~~ATM equity program, our line of~~revolving credit agreement and our general ability to access the capital markets will be sufficient to finance our operations and fund our debt service requirements and capital expenditures.

Summary of Cash Flows

Cash and cash equivalents including restricted cash was $536.3 million at September 30, 2019, compared to $457.5 million as of December 31, 2018 and $465.6 million as of September 30, 2018, an increase of $78.8 million and $70.8 million, respectively. Our cash flow activities are summarized as follows:


	Nine Months Ended September 30,									Nine Months Ended September 30,
(Amounts in thousands)	2017			2016			Increase (Decrease)			2019			2018			Increase (Decrease)
Net cash provided by operating activities	$	114,498		$	99,183		$	15,315		$	115,593		$	88,122		$	27,471
Net cash used in investing activities	(262,329		)	(27,730		)	(234,599		)
Net cash provided by (used in) financing activities	396,403			(92,127		)	488,530
Net cash provided by (used in) investing activities										60,055			(36,741		)	96,796
Net cash used in financing activities										(96,824		)	(86,646		)	(10,178		)

~~Cash~~Operating Activities

Net cash provided by operating activities primarily consists of cash inflows from rental revenue and cash ~~equivalents including restricted cash was $388.8 million at September 30, 2017, compared to $140.2 million as of December 31, 2016, an increase of $248.6 million.~~ outflows for property operating expenses, general and administrative expenses and interest and debt expense.

Net cash provided by operating activities of ~~$114.5~~$115.6 million for the nine months ended September 30, ~~2017 was comprised~~2019 increased by $27.5 million from $88.1 million as of ~~$119.7~~September 30, 2018, driven by $15.5 million of ~~cash from operating income~~lease termination payments to acquire the Toys “R” Us leases at Bruckner Commons in the Bronx, NY and ~~a net decrease of $5.2 million~~Hudson Mall in Jersey City, NJ during the nine months ended September 30, 2018. The remaining increase in cash is due to timing of cash receipts and payments related to ~~changes in operating assets and liabilities.~~ tenant collections including the impact of recovery income.

Investing Activities

Net cash flow provided by or used in investing activities is impacted by the timing and extent of ~~$262.3~~our real estate development, capital improvements, and acquisition and disposition activities during the period.

Net cash provided by investing activities of $60.1 million for the nine months ended September 30, ~~2017 was comprised of (i) $211.4~~2019, increased by $96.8 million ~~of acquisitions of real estate and (ii) $55.9 million of real estate development and capital improvements, offset by (iii) $5.0 million of proceeds from sale of real estate. Net~~compared to net cash ~~provided by financing~~used in investing activities of ~~$396.4~~$36.7 million for the nine months ended September 30, ~~2017 was comprised~~2018 due to (i) $53.8 million increase in cash provided by the sale of ~~(i) $348.2~~properties, (ii) $19.7 million decrease in cash used for real estate development and capital improvements at existing properties, (iii) $11.4 million increase in cash from insurance proceeds ~~from~~for physical property damages received in the ~~issuance~~nine months ended September 30, 2019, (iv) $6.9 million increase due to the sale of ~~common shares~~an operating lease and ~~(ii) $225.5~~(v) $4.9 million ~~proceeds from borrowings, offset~~decrease in cash used for acquisitions.

Financing Activities

Net cash flow used in financing activities is impacted by ~~(iii) $88.6 million for~~the timing and extent of issuances of debt ~~repayments, (iv) $77.1 million of~~and equity securities, distributions paid to common shareholders and unitholders of the Operating Partnership ~~(v) $11.3~~as well as principal and other payments associated with our outstanding indebtedness.

Net cash used in financing activities of $96.8 million for the nine months ended September 30, 2019, increased by $10.2 million from $86.6 million for the nine months ended September 30, 2018 due to (i) $6.0 million paid to redeem units in 2019, (ii) $2.6 million of cash used to amend our revolving credit agreement in 2019, (iii) $0.8 million increase in debt ~~issuance costs,~~repayments, (iv) $0.5 million increase in distributions to shareholders and ~~(vi) $0.3~~unitholders and (v) $0.2 million ~~of taxes withheld~~increase in tax withholdings on vested restricted ~~units.~~

stock.

Financing Activities and Contractual Obligations

Below is a summary of our outstanding debt and ~~maturities~~weighted average interest rate as of September 30, ~~2017.~~2019.

Interest Rate at Principal Balance at
(Amounts in thousands) Maturity September 30, 2017 September 30, 2017
Cross-collateralized mortgage loan:
Fixed Rate 9/10/2020 4.39% $ 507,993
Variable Rate⁽¹⁾
9/10/2020 2.59% 38,756
Total cross collateralized 546,749
First mortgages secured by:
Englewood⁽³⁾
10/1/2018 6.22% 11,537
Montehiedra Town Center, Senior Loan⁽²⁾
7/6/2021 5.33% 86,383
Montehiedra Town Center, Junior Loan⁽²⁾
7/6/2021 3.00% 30,000
Plaza at Cherry Hill⁽⁸⁾
5/24/2022 2.84% 28,930
Westfield - One Lincoln⁽⁸⁾
5/24/2022 2.84% 4,730
Plaza at Woodbridge⁽⁸⁾
5/25/2022 2.84% 55,340
Bergen Town Center 4/8/2023 3.56% 300,000
Shops at Bruckner⁽⁶⁾
5/1/2023 3.90% 12,304
Hudson Mall⁽⁷⁾
12/1/2023 5.07% 25,170
Yonkers Gateway Center⁽⁹⁾
4/6/2024 4.16% 33,601
Las Catalinas 8/6/2024 4.43% 130,000
North Bergen (Tonnelle Avenue)⁽⁵⁾
4/1/2027 4.18% 100,000
Manchester Plaza 6/1/2027 4.32% 12,500
Millburn Gateway Center 6/1/2027 3.97% 24,000
Mount Kisco (Target)⁽⁴⁾
11/15/2034 6.40% 14,562
Total mortgages payable 1,415,806
Unamortized debt issuance costs (7,740 )
Total mortgages payable, net of unamortized debt issuance costs $ 1,408,066


⁽¹⁾	~~Subject to a LIBOR floor of 1.00%, bears interest at LIBOR plus 136 bps.~~



(Amounts in thousands)	Principal balance at September 30, 2019			Weighted Average Interest Rate at September 30, 2019
Mortgages payable:
Fixed rate debt	$	1,388,503		4.12%
Variable rate debt⁽¹⁾	169,500			3.84%
Total mortgages payable	1,558,003			4.09%
Unamortized debt issuance costs	(10,517		)
Total mortgages payable, net of unamortized debt issuance costs	$	1,547,486

⁽¹⁾ As of September 30, 2019, $80.5 million of our variable rate debt bears interest at one month LIBOR plus 190 bps and $89 million of our variable rate debt bears interest at one month LIBOR plus 160 bps.


⁽²⁾	~~As part of the planned redevelopment of Montehiedra Town Center, we committed to fund $20.0 million for leasing and capital expenditures which has been fully funded as of September 30, 2017.~~

⁽³⁾

On March 30, 2015, we notified the lender that due to tenants vacating, the property’s operating cash flow would be insufficient to pay its debt service. As of September 30, 2017, we were in default and the property was transferred to receivership. Urban Edge no longer manages the property but will remain its title owner until the receiver disposes of the property. We have determined this property is held in a VIE for which we are the primary beneficiary. Accordingly, as of September 30, 2017 we consolidated Englewood and its operations. The consolidated balance sheet included total assets and liabilities of $12.4 million~~and $14.6 million, respectively.~~


⁽⁴⁾	The mortgage payable balance on the loan secured by Mount Kisco (Target) includes $1.0 million and $1.1 million of unamortized debt discount as of September 30, 2017 and December 31, 2016. The effective interest rate including amortization of the debt discount is 7.26% as of September 30, 2017.

⁽⁵⁾


⁽⁶⁾	~~On January 17, 2017, we assumed the existing mortgage secured by the Shops at Bruckner in connection with our acquisition of the property’s leasehold interest.~~


⁽⁷⁾	On February 2, 2017, we assumed the existing mortgage secured by Hudson Mall in connection with our acquisition of the property. The mortgage payable balance on the loan secured by Hudson Mall includes $1.6 million of unamortized debt premium as of September 30, 2017. The effective interest rate including amortization of the debt premium is 3.37%~~as of September 30, 2017.~~


⁽⁸⁾	~~Bears interest at one month LIBOR plus 160 bps.~~


⁽⁹⁾	Reflects the $33 million existing mortgage assumed in connection with the acquisition of Yonkers Gateway Center on May 24, 2017. The mortgage payable balance on the loan secured by Yonkers Gateway Center includes $0.9 million of unamortized debt premium as of September 30, 2017. The effective interest rate including amortization of the debt premium is 1.77%~~as of September 30, 2017.~~

The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately ~~$1.3~~$1.2 billion as of September 30, ~~2017.~~2019. Our mortgage loans contain covenants that limit our ability to incur additional indebtedness on these properties and in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity. As of September 30, ~~2017,~~2019, we were in compliance with all debt covenants.

On January 15, 2015, we entered into a $500 million Revolving Credit Agreement (the “Agreement”) with certain financial institutions. On March 7, 2017, we amended and extended the Agreement. The amendment increased the credit facility size by $100 million to $600 million and extended the maturity date to March 7, 2021 with two six-month extension options. ~~Borrowings~~On July 29, 2019, we entered into a second amendment to the Agreement to extend the maturity date to January 29, 2024 with two six-month extension options. Company borrowings under the Agreement are subject to interest at LIBOR plus ~~1.15%~~an applicable margin of 1.05% to 1.50% and ~~we are required to pay~~ an annual facility fee of 15 to 30 basis points. Both the spread over LIBOR and the facility fee are based on our current leverage ratio and are subject to increase if our leverage ratio increases above predefined thresholds. The Agreement contains customary financial covenants, including a maximum leverage ratio of 60% and a minimum fixed charge coverage ratio of 1.5x. No amounts have been drawn to date under the Agreement.

In the event that LIBOR is discontinued, the interest rates for our debt following such event will be based on either alternate base rates or agreed upon replacement rates. Such an event would not affect our ability to borrow or maintain already outstanding borrowings, although it could result in higher interest rates.

Capital Expenditures

The following summarizes capital expenditures presented on a cash basis for the nine months ended September 30, ~~2017~~2019 and ~~2016:~~2018:


	Nine Months Ended September 30,				Nine Months Ended September 30,
(Amounts in thousands)	2017		2016		2019		2018
Capital expenditures:
Development and redevelopment costs(1)	$	39,781	$	38,835	$	55,640	$	71,830
Capital improvements(1)	4,237		4,081		10,736		14,704
Tenant improvements and allowances	4,877		2,752		4,629		2,388
Total capital expenditures	$	48,895	$	45,668	$	71,005	$	88,922

⁽¹⁾Amounts for the nine months ended September 30, 2019 and 2018 have been reclassified to conform with current period presentation.

As of September 30, ~~2017,~~2019, we had approximately ~~$199.4~~$42.5 million of active redevelopment, development and anchor repositioning projects at various stages of completion, ~~and $36.5 million~~a decrease of ~~completed projects, an increase of $44.2~~$154.0 million from ~~$191.7~~$196.5 million of projects as of December 31, ~~2016.~~2018. We have advanced these projects ~~$40.3~~and incurred $18.5 million of additional spend since December 31, ~~2016 and~~2018. We anticipate that these projects will require an additional ~~$114.4~~$8.3 million over the next two years to complete. We expect to fund these projects using cash on hand, proceeds from dispositions, ~~borrowings under our line of credit and/or using~~ secured debt, or proceeds from issuing equity.

Commitments and Contingencies

~~Loan Commitments~~

In January 2015, we completed a modification of the $120.0 million, 6.04% mortgage loan secured by Montehiedra. As part of the planned redevelopment of the property, we committed to fund $20.0 million for leasing and other capital expenditures which has been fully funded as of September 30, 2017.

Insurance

We continue to monitor the state of the insurance market and the scope and costs of ~~coverage for acts of terrorism. However, we~~available coverage. We cannot anticipate what coverage will be available on commercially reasonable terms in the ~~future. Our mortgage~~future and expect premiums across most coverage lines to increase in light of recent events. The incurrence of uninsured losses, costs or uncovered premiums could materially and adversely affect our business, results of operations and financial condition.

Certain of our loans ~~are non-recourse~~ and other agreements contain customary covenants requiring ~~adequate~~the maintenance of insurance coverage. Although we believe that we currently have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders or other counterparties insist on greater coverage than we are able to obtain, itsuch requirement could materially and adversely affect our ability to finance our properties and expand our portfolio.

Tornado-Related Charges

Hurricane-Related Charges

On September 20, 2017, Hurricane Maria made landfall, ~~on Puerto Rico and damaged~~damaging our two ~~properties. The~~properties in Puerto Rico. During the nine months ended September 30, 2018, the Company ~~estimates it will spend approximately $6.5~~received $1.5 million ~~repairing its properties and expects~~in casualty insurance proceeds, ~~to cover these~~which were partially offset by $0.3 million of hurricane related costs, resulting in ~~addition to business interruption losses, subject to applicable deductibles estimated to be approximately $2.5 million. Based~~net casualty gains of $1.2 million included in casualty and impairment loss (gain), net on ~~management’s estimates, which are subject to change,~~the accompanying consolidated statements of income.

~~All anchor tenants are open~~

~~The Company has comprehensive, all-risk property and rental value insurance coverage on these properties, including business interruption, with a limit~~$3.3 million was previously received, subject to deductibles of ~~$139~~$2.3 million. We recognized an $8.7 million per occurrence and in the aggregate and with sub-limits for certain perils such as floods, earthquakes, civil authority and service interruption. Our deductible for windstorm is 2% of total insured value and business interruption coverage has a deductible equal to three days of cessation of operations. No determination has been made as to the total amount or timing of insurance payments that may be receivedcasualty gain as a result of the ~~hurricane.~~settlement agreement related to our two malls in Puerto Rico.

Environmental Matters

Each of our properties has been subjected to varying degrees of environmental assessment at various times. Based on these assessments, ~~and the projected remediation costs,~~ we have accrued costs of ~~$1.2~~$1.6 million and ~~$1.3~~$1.7 million on our consolidated balance sheets as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, for ~~potential~~ remediation costs for environmental contamination at ~~two~~certain properties. While this accrual reflects our best estimates of the potential costs of remediation at these properties, ~~$0.1 million has currently been expended during the nine months ended September 30, 2017 and~~ there can be no assurance that the actual costs will not exceed ~~this amount. With respect to our~~these amounts. During the nine months ended September 30, 2018, the Company recognized $0.6 million of environmental remediation costs within property operating expenses on the consolidated statements of income. Although we are not aware of any other ~~properties, the environmental assessments did not reveal~~

~~any~~ material environmental ~~contamination. However,~~contamination, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites, or changes in cleanup requirements would not result in significant costs to us.

Bankruptcies

Although our ~~base rent~~rental revenue is supported by long-term leases, leases may be rejected in a bankruptcy proceeding and the ~~impacted~~related tenant stores may ~~close~~permanently vacate prior to lease expiration. In the event ~~that~~ a tenant with a significant number of leases or square footage in our shopping centers files for bankruptcy and rejects its leases with us, we could experience a reduction in our revenues. We monitor the operating performance and rent collections of all tenants in our shopping centers, especially those tenants in arrears or operating retail formats that are experiencing significant changes in competition, business practice, or store closings in other locations.

Sears, the parent company of Kmart, filed for Chapter 11 bankruptcy protection on October 15, 2018. The Company had four Kmart leases comprising approximately 547,000 sf, which generated $8.5 million in annual rental revenue. In January 2019, Sears announced the acquisition of its assets by ESL for approximately $5.2 billion. Property rents were paid on all four Kmart locations through April 2019. In April 2019, our Kmart leases at Las Catalinas and Huntington, NY were rejected and we recognized a $7.4 million write-off of the below-market intangible liability connected with the lease in Huntington, NY (classified within rental revenues). ESL assumed the Company’s remaining two Kmart leases at Montehiedra and at Bruckner Commons. The Company is monitoring the proceedings and considering its alternatives.

During the three and nine months ended September ~~2017,~~30, 2019, the Company received $0.1 million and $1.2 million of bankruptcy settlement income in connection with the bankruptcy proceedings of Toys “R” ~~Us filed a voluntary petition under Chapter 11 of~~Us. The settlement proceeds were used to offset outstanding credit losses and the ~~United States Bankruptcy Code. As of September 30, 2017,~~remaining proceeds were recorded to other income. Prior to liquidation in 2018, the Company had leases with Toys “R” Us at nine locations with ~~annualized base rent~~annual rental revenue of ~~$5.0~~$7.6 million. ~~We are unable~~No determination has been made as to ~~estimate~~ the ~~outcome~~amount or timing of ~~the~~additional bankruptcy ~~proceedings at this time. We are not aware of~~settlement proceeds, if any, ~~additional bankruptcies or announced store closings by any tenants in our shopping centers~~ that ~~would individually cause a material reduction in our revenues.~~may be received.

Inflation and Economic Condition Considerations

Most of our leases contain provisions designed to partially mitigate the impact of inflation. Although inflation has been low in recent periods and has had a minimal impact on the performance of our shopping centers, ~~there are more recent data suggesting~~it is very possible that inflation ~~may be a greater concern~~will increase in ~~the~~ future ~~given economic conditions and governmental fiscal policy.~~years. Most of our leases require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation, although some larger tenants have capped the amount of these operating expenses they are responsible for under the lease. A small number of our leases also include percentage rent clauses enabling us to receive additional rent based on tenant sales above a predetermined level, which sales generally increase as prices rise and are typically related to increases in the Consumer Price Index or similar inflation indices.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of September 30, ~~2017~~2019 or December 31, ~~2016.~~2018.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure to fluctuations in interest rates, which are sensitive to many factors that are beyond our control. The following table discusses our exposure to hypothetical changes in market rates of interest on interest expense for our variable rate debt and fixed-rate debt. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our debt. This analysis does not take into account all of the factors that may affect our debt, such as the effect that a changing interest rate environment could have on the overall level of economic activity or the action that our management might take to reduce our exposure to the change. This analysis assumes no change in our financial structure. Our exposure to a change in interest rates is summarized in the table below.


	2017							2016				2019							2018
(Amounts in thousands)	September 30, Balance			Weighted Average Interest Rate	Effect of 1% Change in Base Rates			December 31, Balance			Weighted Average Interest Rate	September 30, Balance			Weighted Average Interest Rate	Effect of 1% Change in Base Rates			December 31, Balance			Weighted Average Interest Rate

Variable Rate	$	127,756		2.76%	$	1,278	⁽²⁾	$	38,756		2.36%	$	169,500		3.84%	$	1,695		$	169,500		4.09%
Fixed Rate	1,288,050			4.25%	—			1,166,804			4.26%	1,388,503			4.12%	—		⁽²⁾	1,392,659			4.12%
	$	1,415,806	⁽¹⁾		$	1,278		$	1,205,560	⁽¹⁾		$	1,558,003	⁽¹⁾		$	1,695		$	1,562,159	⁽¹⁾

⁽¹⁾Excludes unamortized debt issuance costs of ~~$7.7~~$10.5 million and ~~$8.0~~$11.9 million as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively.

⁽²⁾~~The variable~~If the weighted average interest rate ~~portion~~ of our ~~cross-collateralized~~fixed rate debt ~~is subject~~increased by 1% (i.e. due to ~~a LIBOR floor~~refinancing at higher rates), annualized interest expense would have increased by approximately $13.9 million based on outstanding balances as of ~~1% such that a change in base rates may not have a corresponding impact on the actual borrowing rate.~~September 30, 2019.

We may utilize various financial instruments to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. As of September 30, ~~2017,~~2019, we did not have any hedging instruments in place.

Fair Value of Debt

The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of September 30, ~~2017,~~2019, the estimated fair value of our consolidated debt was ~~$1.4~~$1.6 billion.

Other Market Risks

As of September 30, ~~2017,~~2019, we had no material exposure to any other market risks (including foreign currency exchange risk or commodity price risk).

In making this determination and for purposes of the SEC’s market risk disclosure requirements, we have estimated the fair value of our financial instruments at September 30, ~~2017~~2019 based on pertinent information available to management as of that date. Although management is not aware of any factors that would significantly affect the estimated amounts as of September 30, ~~2017,~~2019, future estimates of fair value and the amounts which may be paid or realized in the future may differ significantly from amounts presented.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures (Urban Edge Properties)

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective.

There have not been any changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the three ~~and nine~~ months ended September 30, ~~2017~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures (Urban Edge Properties LP)

The Operating Partnership’s management maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer of our general partner, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

The Operating Partnership’s management, with the participation of the Chief Executive Officer and Chief Financial Officer of our general partner, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of our general partner concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective.

PART II - OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

We are party to various legal actions that arise in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows.


ITEM 1A.	RISK FACTORS

~~There have been~~Except to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to the risk factors ~~previously~~ disclosed in ~~the Company’s~~Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 filed with the SEC on February ~~16, 2017.~~ 13, 2019.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Urban Edge Properties

(a) ~~Not applicable.~~Registered Sales of Unregistered Securities: During the three months ended September 30, 2019, we issued 50,000 shares of common shares in exchange for 50,000 OP Units that were held by certain limited partners of our Operating Partnership in connection with certain of our prior acquisitions. OP Units are generally redeemable for cash or, at our discretion, exchangeable into shares of our common stock on a one-for-one basis. The cash redemption amount per OP Unit is based on the market price of a share of our common stock at the time of redemption. These shares of common stock were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partners who received the shares of common stock.

(b) Use of Proceeds from Registered Securities: Not applicable.

Urban Edge Properties LP

(a) Registered Sales of Unregistered Securities: Not applicable.

(b) Use of Proceeds from Registered Securities: Not applicable.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.


ITEM 6.	EXHIBITS

~~A list of~~The exhibits tolisted below are included in, or incorporated by reference into, this Quarterly Report on Form ~~10-Q is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.~~10-Q.

INDEX TO EXHIBITS

The following exhibits are ~~filed~~included as part of this Quarterly Report on Form 10-Q:



Exhibit Number		Exhibit Description
~~31.1~~10.1		Employment Agreement between Urban Edge Properties and Jeffrey S. Olson (incorporated by reference to Exhibit 10.1 to Form 8-K filed August 9, 2019)
10.2		Second Amendment, dated as of July 29, 2019, to Revolving Credit Agreement by and among Urban Edge Properties LP, as Borrower, each of the Banks party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Form 10-Q filed July 31, 2019)
31.1*		Certification by the Chief Executive Officer for Urban Edge Properties pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~31.2~~31.2*		Certification by the Chief Financial Officer for Urban Edge Properties pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~31.3~~31.3*		Certification by the Chief Executive Officer for Urban Edge Properties LP pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~31.4~~31.4*		Certification by the Chief Financial Officer for Urban Edge Properties LP pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~32.1~~32.1**		Certification by the Chief Executive Officer and Chief Financial Officer for Urban Edge Properties pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~32.2~~32.2**		Certification by the Chief Executive Officer and Chief Financial Officer for Urban Edge Properties LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
~~101.INS~~		~~XBRL Instance Document~~
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Extension Calculation Linkbase
101.LAB		Inline XBRL Extension Labels Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)

* Filed herewith

** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

PART IV

SIGNATURES

Pursuant to the requirements of the ~~Securities~~ Exchange Act, ~~of 1934,~~ the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.



	URBAN EDGE PROPERTIES
	(Registrant)

	/s/ Mark Langer
	Mark Langer, Chief Financial Officer

	Date: ~~November 1, 2017~~October 30, 2019

	URBAN EDGE PROPERTIES LP
	By: Urban Edge Properties, General Partner

	/s/ Mark Langer
	Mark Langer, Chief Financial Officer

	Date: ~~November 1, 2017~~October 30, 2019

4247



Property Name	Land		Buildings and improvements		Identified intangible assets		Identified intangible liabilities			Debt premium			Total purchase price
(in thousands)
Yonkers Gateway Center	$	40,699	$	—	$	25,858	$	(14,655	)	$	—		$	51,902
Shops at Bruckner	—		32,979		12,029		(12,709		)	(30		)	32,269
Hudson Mall	15,824		37,593		9,930		(17,344		)	(1,730		)	44,273
Yonkers Gateway Center	22,642		110,635		38,162		(68,694		)	(920		)	101,825
The Plaza at Cherry Hill	14,602		33,666		7,800		(2,533		)	—			53,535
Manchester Plaza	4,409		13,756		3,256		(1,259		)	—			20,162
Millburn Gateway Center	15,783		25,387		5,360		(947		)	—			45,583
21 E Broad St / One Lincoln Plaza	5,728		4,305		679		(554		)	—			10,158
The Plaza at Woodbridge	21,547		75,017		11,596		(4,198		)	—			103,962
Total	$	141,234	$	333,338	$	114,670	$	(122,893	)	$	(2,680	)	$	463,669



	As of September 30, 2017				As of December 31, 2016
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents	$	380,395	$	380,395	$	131,654	$	131,654
Liabilities:
Mortgages payable⁽¹⁾	$	1,415,806	$	1,432,817	$	1,205,560	$	1,216,989



	September 30, 2017		December 31, 2016
	Low	High	Low	High
Mortgages payable	1.8%	2.2%	2.0%	2.3%



		Interest Rate at	Principal Balance at
(Amounts in thousands)	Maturity	September 30, 2017	September 30, 2017
Cross-collateralized mortgage loan:
Fixed Rate	9/10/2020	4.39%	$	507,993
Variable Rate⁽¹⁾	9/10/2020	2.59%	38,756
Total cross collateralized			546,749
First mortgages secured by:
Englewood⁽³⁾	10/1/2018	6.22%	11,537
Montehiedra Town Center, Senior Loan⁽²⁾	7/6/2021	5.33%	86,383
Montehiedra Town Center, Junior Loan⁽²⁾	7/6/2021	3.00%	30,000
Plaza at Cherry Hill⁽⁸⁾	5/24/2022	2.84%	28,930
Westfield - One Lincoln⁽⁸⁾	5/24/2022	2.84%	4,730
Plaza at Woodbridge⁽⁸⁾	5/25/2022	2.84%	55,340
Bergen Town Center	4/8/2023	3.56%	300,000
Shops at Bruckner⁽⁶⁾	5/1/2023	3.90%	12,304
Hudson Mall⁽⁷⁾	12/1/2023	5.07%	25,170
Yonkers Gateway Center⁽⁹⁾	4/6/2024	4.16%	33,601
Las Catalinas	8/6/2024	4.43%	130,000
North Bergen (Tonnelle Avenue)⁽⁵⁾	4/1/2027	4.18%	100,000
Manchester Plaza	6/1/2027	4.32%	12,500
Millburn Gateway Center	6/1/2027	3.97%	24,000
Mount Kisco (Target)⁽⁴⁾	11/15/2034	6.40%	14,562
Total mortgages payable			1,415,806
Unamortized debt issuance costs			(7,740		)
Total mortgages payable, net of unamortized debt issuance costs			$	1,408,066