Urban Edge Properties · NYSE:UE
Urban Edge Properties — Investor Presentation (January 2015)
45 slides from Urban Edge Properties's investor presentation, Jan 5, 2015
Slide 1: Urban Edge Properties Investor Presentation
URBAN EDGE PROPERTIES INVESTOR PRESENTATION January 5, 2015
Slide 2: Forward-Looking Statements
STATEMENTS These slides and the related discussions may contain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions
Slide 3: Overview and Spin Transaction
OVERVIEW AND SPIN TRANSACTION TRANSACTION HIGHLIGHTS Urban Edge Properties Name Portfolio 79 shopping centers, three malls and a warehouse park (14.9 million owned SF) $0.20 per share (subject to Board of Trustees approval and declaration) (1) Expected Dividend for Q1 2015 and OP Units Outstanding F
Slide 4: Origins of Urban Edge
ORIGINS OF URBAN EDGE • Founded in 1946 • Grew to over 100 locations • Acquired Vornado (fan company) in 1959 • Faced financial difficulties in the 1970’s • Interstate Properties took control in 1979 • Liquidated retailer in the early 1980’s, realizing significant value from the real estate • Conver
Slide 5: Origins of Urban Edge
ORIGINS OF URBAN EDGE ·,.,. . :ed:I=C v:l .'v:l I - Bethlehem, PA 1966 NE EDGE U 5 RTIES
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS 1. High quality portfolio concentrated in the Washington, DC to Boston corridor with the New York Metropolitan Region representing two-thirds of total NOI (1) • Average Population / Income (3 Miles) • Average Supermarket Sales PSF • Weighted Average Base Rent PSF 152,149 / $86,
Slide 7: Portfolio Quick Facts
PORTFOLIO PORTFOLIO QUICK FACTS Number of Assets 83 Average Shopping Center Size (SF) 177k Average Shopping Center Age (years) ~38 NOI (%) (1)(2) Puerto Rico Ground & Space Leases 5% Single-tenant 9% Community 15% Warehouse < 1% Power 51% Mall 25% Note: (1) As of September 30, 2014 (2) Excludes thir
Slide 8: DC to Boston Corridor
DC TO BOSTON CORRIDOR • 71 of the company’s 83 properties are situated in the DC to Boston corridor, representing ~85% of NOI (1) • Most heavily urbanized region in the US • Contains 50 million people • 931 people per square mile, over 10x higher than the US average Note: (1) NOI is based on YTD NOI
Slide 9: New York Metropolitan Region
NEW YORK METROPOLITAN REGION • New York Metropolitan Region represents ~66% of NOI (1) • 45 properties • 9.3 million SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income 9
Slide 10: Puerto Rico
PUERTO RICO • Puerto Rico represents ~12% of NOI (1) • 2 properties • 1.0 million SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income 10
Slide 11: California
CALIFORNIA • California represents ~2% of NOI (1) • 4 properties • 126,000 SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income 11
Slide 12: Portfolio Highlights: Population Within 3-Mile Ring
PORTFOLIO HIGHLIGHTS POPULATION WITHIN 3-MILE RING UE 152,149 FRT EQY ROIC WRI KIM BFS REG RPAI CDR BRX DDR RPT 60,000 85,000 110,000 135,000 160,000 Source: International Strategy & Investment Group, LLC; 2012E 3-mile ring population 12 134,377 116,949 108,088 99,066 98,009 97,259 94,656 83,559 73,
Slide 13: Portfolio Highlights: Average Household Income
PORTFOLIO HIGHLIGHTS AVERAGE HOUSEHOLD INCOME WITHIN 3-MILE RING FRT $95,170 BFS REG UE ROIC RPT EQY KIM RPAI DDR WRI BRX CDR $ 60,000 $ 70,000 $ 80,000 $ 90,000 $ 100,000 Source: International Strategy & Investment Group, LLC; 3-mile ring 2012E average household income. Note: Urban Edge Information
Slide 14: Portfolio Highlights: Average Base Rent
PORTFOLIO HIGHLIGHTS Strong demographic profile and high barrier-to-entry market presence drive rents AVERAGE BASE RENT – 3Q2014 (1) FRT $25.36 UE REG BFS ROIC EQY WRI RPAI DDR KIM RPT CDR BRX $10.00 $14.00 $18.00 $22.00 $26.00 Source: Comparable data per Green Street Advisors November 2014 Strip Ce
Slide 15: Portfolio Highlights: Historical Occupancy
PORTFOLIO HIGHLIGHTS HIGH AND STABLE HISTORICAL OCCUPANCY (1) 100.0% 98.0% 96.0% 95.4% 94.0% 92.0% 90.0% 2009 2010 2011 2012 2013 3Q 2014 Note: (1) Data as of September 30, 2014. Figures represent owned square feet and exclude warehouses 16 95.6% 94.9% 95.0% 95.0% 94.5%
Slide 16: Tenant Profile
TENANT PROFILE Diverse, high quality retailer base TOP TENANTS (% of ANNUALIZED CASH RENTAL REVENUE) (1) 8.0% 6.0% • 73% of rental revenue received from tenants 4.0% 2.0% 0.0% TENANT DATA ABR PSF # of Stores Credit Ratings Sq. Feet (000s) (4) $16.23 7 A2 / A 865 $7.29 9 Aa2 / AA 1,439 $15.57 16 A3 /
Slide 17: Management and Board of Trustees
MANAGEMENT AND BOARD OF TRUSTEES BOARD OF TRUSTEES MANAGEMENT TEAM TRUSTEE AFFILIATION NAME ROLE Jeffrey Olson Chairman and CEO, Urban Edge Properties Jeffrey Olson Chairman and Chief Executive Officer Michael Gould Former Chairman and CEO, Bloomingdale’s Matthew Iocco Interim Chief Financial Office
Slide 18: Growth Strategy
GROWTH STRATEGY LEASING REDEVELOPMENT DEVELOPMENT ACQUISITIONS Revitalization of existing assets Build on excess land Expand existing assets Retail division has delivered projects in excess of ~$1.0 billion over the past ten years Expand footprint by leveraging experience and relationships in core m
Slide 19: Strategy Execution Core Competencies
STRATEGY EXECUTION CORE COMPETENCIES •Identification •Adaptation •Acquisition •Construction •Planning •Commissioning & turnover •Budgeting •Completing leasing •Design •Operating •Pre-leasing 20
Slide 20: Leasing: Las Catalinas Mall, Puerto Rico
LEASING Las Catalinas Mall, Puerto Rico • Centrally located, easily accessible mall serving the densely populated Caguas region • Merchandising dominated by island-based retailers, many of which are struggling in the current weak economy 21
Slide 21: Leasing: Las Catalinas Mall, Puerto Rico
LEASING Las Catalinas Mall, Puerto Rico • Remerchandise with strong mainland retailers looking for 2nd or 3rd locations after Plaza Las Americas and/or Plaza Carolina 11 7 6 13 12 5 4 2 3 1 9 8 10 • Significant representation of island-based merchants 1. P.F. Chang’s 2. Forever 21 8. Shoe Carnival 9
Slide 22: Leasing: Walnut Creek, California
LEASING Walnut Creek, California Existing • 29,000 SF Barnes & Noble lease significantly undermarket at $45 PSF rent expires January 31, 2016 • Next to Apple Store and across Olympic Boulevard from Neiman Marcus and Broadway Plaza, which is undergoing a major expansion and renovation • Enormous appe
Slide 23: Leasing: Walnut Creek, California
LEASING Walnut Creek, California ENEDGE 24 U RTIES
Slide 24: Redevelopment: Bruckner Plaza, Bronx
REDEVELOPMENT Bruckner Plaza, Bronx, New York Existing • 1963 vintage center serving a densely populated and underserved trade area with easy access to major roads and mass transit; significant frontage on the Bruckner Expressway • Anchored by Kmart, Toys “R” Us, Key Food, Marshalls and Old Navy 25
Slide 25: Redevelopment: Bruckner Plaza, Bronx
REDEVELOPMENT Bruckner Plaza, Bronx, New York Proposed • Renovate and remerchandise southern portion (Key Food, retail/office building and small retail building) and refurbish all site improvements • Significant longer term expansion potential on northern portion (Kmart and Toys “R” Us) upon expirat
Slide 26: Redevelopment: East Hanover, New Jersey
REDEVELOPMENT East Hanover, New Jersey • Older center on Rt. 10, a primary east-west arterial serving affluent areas, adjacent to the warehouse park; anchored by Home Depot, Dick's and Marshalls • Retail: renovate buildings and site work to match physical appearance to customer shopper base • Wareho
Slide 27: Redevelopment: East Hanover, New Jersey
REDEVELOPMENT East Hanover, New Jersey Existing Proposed 28
Slide 28: Redevelopment: Montehiedra Town Center
REDEVELOPMENT Montehiedra Town Center, Puerto Rico • Superior freeway location 5 miles south of San Juan, but outflanked by Plaza Las Americas (5 miles north) and Las Catalinas (8 miles south) • Convert to value/retail outlet format; no competition south of San Juan; only other outlets on the island
Slide 29: Redevelopment: Montehiedra Town Center
REDEVELOPMENT Montehiedra Town Center, Puerto Rico New Additions NE EDGE U 30 RTIES
Slide 30: Development: Bergen Town Center, Before
DEVELOPMENT Bergen Town Center, New Jersey Before • Former Bergen Mall developed by Allied Stores and opened in 1957 anchored by Stern’s and Newberry’s; Ohrbach’s added in 1967 • Partial demolition and major expansion 31
Slide 31: Development: Bergen Town Center, After
DEVELOPMENT Bergen Town Center, New Jersey After • 952,000 SF anchored by Target, Century 21, Whole Foods and Lowe’s • Junior anchors include Marshalls, Rack, Off Fifth, Bloomingdale’s Outlet, Last Call Studio by Neiman Marcus, Nike, H&M, Old Navy, Ulta, REI and 24 Hour Fitness • Leasing exceeds 99%
Slide 32: Development: Bergen Town Center
DEVELOPMENT Bergen Town Center, New Jersey ENEDGE 33 U RTIES
Slide 33: Development: Garfield, New Jersey, Before
DEVELOPMENT Garfield, New Jersey Before • Former Two Guys distribution facility • Total demolition and reconstruction, including extensive environmental and geotechnical remediation 34
Slide 34: Development: Garfield, New Jersey, After
DEVELOPMENT Garfield, New Jersey After • 195,000 SF anchored by Wal-Mart and Marshalls • Approvals in-hand and site work completed for 70,000 SF of additional development 35
Slide 35: Development: North Bergen, New Jersey
DEVELOPMENT North Bergen, New Jersey Before • Former truck transfer terminal in densely populated, underserved NJ trade area just across the Hudson from NYC • Total demolition and reconstruction, including extensive environmental and geotechnical remediation 36
Slide 36: Redevelopment Pipeline
REDEVELOPMENT PIPELINE Robust redevelopment pipeline generating strong return on capital INCREMENTAL ($000’s) PROPERTY DESCRIPTION SF COST NOI ROC Bruckner Plaza Renovate and remerchandise non-anchor buildings 112,000 24,000 East Hanover Warehouses Upgrade of warehouse facilities 942,000 10,000 West
Slide 37: Balance Sheet – Liquidity and Leverage
BALANCE SHEET – LIQUIDITY AND Significant liquidity and attractive cost of capital LEVERAGE COMMENTARY DEBT MATURITY PROFILE ($MM / % Int. Rate) (1) Wtd. Avg. Annual Interest Rate: 4.27% Wtd. Avg. Debt Term Years: 6.5 Years • Capitalized for immediate growth • Strong balance sheet with ~$1.3 billion
Slide 38: Balance Sheet – Benchmarking
BALANCE SHEET – BENCHMARKING COST OF DEBT (INTEREST %) (1) DEBT MATURITY PROFILE (YEARS) (2) UE FRT ROIC WRI BRX AAT DDR KIM REG EQY AKR RPAI ROIC UE WRI FRT RPAI REG EQY DDR KIM BRX AAT AKR .5 4.0% 4.5% 5.0% 5.5% 6.0% 0.0 2.0 4.0 6.0 8.0 NEAR-TERM DEBT MATURITIES (3) NET DEBT / EBITDA (4) UE ROIC F
Slide 39: Appendix: NOI Non-GAAP Measures
APPENDIX NOI and same property NOI are supplemental non-GAAP measures that aid in the assessment of the unlevered performance of our properties and portfolio as it relates to the total return on assets. The most directly comparable GAAP financial measure is operating income. We calculate NOI by adju
Slide 40: Select Financial Information
SELECT FINANCIAL INFORMATION THREE MONTHS ENDED SEPTEMBER 30, 2014 NINE MONTHS ENDED SEPTEMBER 30, 2014 ($MM) 2014 ANNUALIZED (1) NOI 50.6 150.2 200.3 Pro Forma OPEX Adjustments (0.7) (2.0) (2.6) (1.6) (3) Tax Expense – Puerto Rico Properties (0.5) (2.1) Indicative Cash NOI Non-cash Adjustments to N
Slide 41: Pro Forma Balance Sheet
URBAN EDGE ($MM) PROPERTIES BALANCE SHEET AS OF SEPTEMBER 30, 2014 PRO FORMA AS OF SEPTEMBER 30, 2014 ADJUSTMENTS Real Estate, At Cost 2,007 - 2,007 Cash and Cash Equivalents 133 119 252 Capitalized Assets (2) 156 4 160 Total Assets Mortgages Payable 1,874 1,292 123 - 1,997 1,292 Accounts Payable an
Slide 42: Outstanding Debt
URBAN EDGE PROPERTIES OUTSTANDING DEBT INDICATIVE ANNUALIZED INTEREST EXPENSE ($MM)(1) BALANCE ($MM) AT SEPTEMBER 30, 2014 INTEREST RATE (%) AT SEPTEMBER 30, 2014 MATURITY INTEREST TYPE Crossed collateralized mortgage on 40 properties (2) Variable Rate September 2020 60 2.36 1.4 Variable Las Catalin
Slide 43: EBITDA Reconciliation
URBAN EDGE PROPERTIES EBITDA Reconciliation of Net Income to EBITDA, Comparable EBITDA and Pro Forma Comparable EBITDA TTM 9/30/14 PRO FORMA ADJUSTMENTS PRO FORMA TTM 9/30/14 ($000’s) Net Income 46,757 (1,983) 44,774 Interest and Debt Expense 54,289 - 54,289 EBITDA 158,446 (1,983) 156,463 Non-compar
Slide 44: Same Property NOI Reconciliation
URBAN EDGE PROPERTIES SAME PROPERTY NOI Reconciliation of Operating Income to NOI and Same Property NOI TTM 9/30/14 YTD 9/30/14 YTD 9/30/13 ($000’s) 2013 2012 2011 2010 Operating Income Depreciation and Amortization General and Administrative Real Estate Impairment Losses Transaction Costs 102,229 5
Slide 45: Improving Shopping Centers in and on the Edge of Urban Communities
IMPROVING SHOPPING CENTERS IN AND ON THE EDGE OF URBAN COMMUNITIES 47
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