UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20192020
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the transition period from __________to__________
Commission File Number: 001-36523 (Urban Edge Properties)
Commission File Number: 333-212951-01 (Urban Edge Properties LP)
URBAN EDGE PROPERTIES
URBAN EDGE PROPERTIES LP
(Exact name of Registrant as specified in its charter)
Maryland(Urban Edge Properties)47-6311266
Delaware(Urban Edge Properties LP)36-4791544
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
Maryland(Urban Edge Properties)47-6311266
Delaware(Urban Edge Properties LP)36-4791544
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
888 Seventh AvenueNew YorkNew York10019
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number including area code:(212)956-2556
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 securitiesTrading symbolName of exchange on which registered
Common shares of beneficial interest, par value $0.01 per share
UEThe New York Stock Exchange
_______________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Urban Edge Properties    Yes x   NO o         Urban Edge Properties LP     Yes x   NO o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  
Urban Edge Properties    Yes  x   NO o         Urban Edge Properties LP     Yes x   NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Urban Edge Properties:
Large Accelerated Filerx
Accelerated Filero
☐
Non-Accelerated Filero☐Smaller Reporting Company☐Emerging Growth Company☐
Urban Edge Properties LP:
Large Accelerated Filero
☐
Accelerated Filero☐Non-Accelerated FilerxSmaller Reporting Company☐Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.
Urban Edge Properties o                   Urban Edge Properties LP o   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Urban Edge Properties    YES ☐ NO x         Urban Edge Properties LP     YES ☐  NO x
As of October 25, 2019,30, 2020, Urban Edge Properties had 121,223,353 commonhad 116,701,311 common shares outstanding.




URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 20192020

TABLE OF CONTENTS

PART I
Item 1.
PART IFinancial Statements
Item 1.
Financial Statements
Consolidated Financial Statements of Urban Edge Properties:
Consolidated Balance Sheets as of September 30, 20192020 and December 31, 20182019 (unaudited)
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2020 and 2019 and 2018 (unaudited)
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2020 and 2019 and 2018 (unaudited)
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 and 2018 (unaudited)
Consolidated Financial Statements of Urban Edge Properties LP:
Consolidated Balance Sheets as of September 30, 20192020 and December 31, 20182019 (unaudited)
Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2020 and 2019 and 2018 (unaudited)
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2020 and 2019 and 2018 (unaudited)
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 and 2018 (unaudited)
Urban Edge Properties and Urban Edge Properties LP
Notes to Consolidated Financial Statements (unaudited)
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Item 4.Controls and Procedures
PART II
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6.Exhibits
Signatures







EXPLANATORY NOTE
This report combines the quarterly reports on Form 10-Q for the period ended September 30, 20192020 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, 2019,2020, UE owned an approximate 95.4%96.1% ownership interest in UELP. The remaining approximate 4.6%3.9% interest is owned by limited partners. The other limited partners of UELP are members of management, our Board of Trustees and contributors of property interests acquired. Under the limited partnership agreement of UELP, unitholders may present their common units of UELP for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time). Upon presentation of a common unit for redemption, UELP must redeem the unit for cash equal to the then value of a share of UE’s common shares, as defined by the limited partnership agreement. In lieu of cash redemption by UELP, however, UE may elect to acquire any common units so tendered by issuing common shares of UE in exchange for the common units. If UE so elects, its common shares will be exchanged for common units on a one-for-one basis. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. UE generally expects that it will elect to issue its common shares in connection with each such presentation for redemption rather than having UELP pay cash. With each such exchange or redemption, UE’s percentage ownership in UELP will increase. In addition, whenever UE issues common shares other than to acquire common units of UELP, UE must contribute any net proceeds it receives to UELP and UELP must issue to UE an equivalent number of common units of UELP. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.
The Company believes that combining the quarterly reports on Form 10-Q of UE and UELP into this single report provides the following benefits:
•enhances investors’ understanding of UE and UELP by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•eliminates duplicative disclosure and provides a more streamlined and readable presentation because a substantial portion of the disclosure applies to both UE and UELP; and
•creates time and cost efficiencies throughout the preparation of one combined report instead of two separate reports.
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 agreement, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of certain properties.
Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of UE and UELP. The limited partners of UELP are accounted for as partners’ capital in UELP’s financial statements and as noncontrolling interests in UE’s financial statements. The noncontrolling interests in UELP’s financial statements include the interests of unaffiliated partners in consolidated entities. The noncontrolling interests in UE’s financial statements include the same noncontrolling interests at UELP’s level and limited partners of UELP. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at UE and UELP levels.
To help investors better understand the key differences between UE and UELP, certain information for UE and UELP in this report has been separated, as set forth below: Item 1. Financial Statements (unaudited), which includes specific disclosures for UE and UELP, Note 14, Equity and Noncontrolling Interest and Note 16, Earnings Per Share and Unit.
This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of UE and UELP in order to establish that the requisite certifications have been made and that UE and UELP are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.




PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
URBAN EDGE PROPERTIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
 September 30, December 31,
 2019 2018
ASSETS
  
Real estate, at cost: 
  
Land$500,411
 $525,819
Buildings and improvements2,169,835
 2,156,113
Construction in progress43,671
 80,385
Furniture, fixtures and equipment7,315
 6,675
Total2,721,232
 2,768,992
Accumulated depreciation and amortization(662,713) (645,872)
Real estate, net2,058,519
 2,123,120
Right-of-use assets83,523
 —
Cash and cash equivalents441,561
 440,430
Restricted cash94,785
 17,092
Tenant and other receivables, net of allowance for doubtful accounts of $6,486 as of December 31, 201827,240
 28,563
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 as of December 31, 201875,418
 84,903
Identified intangible assets, net of accumulated amortization of $30,214 and $39,526, respectively49,527
 68,422
Deferred leasing costs, net of accumulated amortization of $16,326 and $16,826, respectively20,263
 21,277
Deferred financing costs, net of accumulated amortization of $3,543 and $2,764, respectively4,093
 2,219
Prepaid expenses and other assets18,949
 12,968
Total assets$2,873,878
 $2,798,994
    
LIABILITIES AND EQUITY 
  
Liabilities:   
Mortgages payable, net$1,547,486
 $1,550,242
Lease liabilities81,428
 —
Accounts payable, accrued expenses and other liabilities80,161
 98,517
Identified intangible liabilities, net of accumulated amortization of $68,483 and $65,058, respectively129,090
 144,258
Total liabilities1,838,165
 1,793,017
Commitments and contingencies


 


Shareholders’ equity:   
Common shares: $0.01 par value; 500,000,000 shares authorized and 121,223,353 and 114,345,565 shares issued and outstanding, respectively1,212
 1,143
Additional paid-in capital1,016,054
 956,420
Accumulated deficit(29,217) (52,857)
Noncontrolling interests:   
Operating partnership47,239
 100,822
Consolidated subsidiaries425
 449
Total equity1,035,713
 1,005,977
Total liabilities and equity$2,873,878
 $2,798,994
 September 30,December 31,
 20202019
ASSETS 
Real estate, at cost:  
Land$527,749 $515,621 
Buildings and improvements2,332,337 2,197,076 
Construction in progress42,779 28,522 
Furniture, fixtures and equipment7,199 7,566 
Total2,910,064 2,748,785 
Accumulated depreciation and amortization(719,755)(671,946)
Real estate, net2,190,309 2,076,839 
Right-of-use assets77,183 81,768 
Cash and cash equivalents646,432 432,954 
Restricted cash24,564 52,182 
Tenant and other receivables24,376 21,565 
Receivable arising from the straight-lining of rents64,171 73,878 
Identified intangible assets, net of accumulated amortization of $35,057 and $30,942, respectively54,870 48,121 
Deferred leasing costs, net of accumulated amortization of $17,054 and $16,560, respectively19,618 21,474 
Deferred financing costs, net of accumulated amortization of $4,540 and $3,765, respectively3,625 3,877 
Prepaid expenses and other assets29,167 33,700 
Total assets$3,134,315 $2,846,358 
LIABILITIES AND EQUITY  
Liabilities:
Mortgages payable, net$1,590,304 $1,546,195 
Unsecured credit facility borrowings250,000 0 
Lease liabilities75,965 79,913 
Accounts payable, accrued expenses and other liabilities68,396 76,644 
Identified intangible liabilities, net of accumulated amortization of $69,368 and $62,610, respectively125,766 128,830 
Total liabilities2,110,431 1,831,582 
Commitments and contingencies
Shareholders’ equity:
Common shares: $0.01 par value; 500,000,000 shares authorized and 116,701,311 and 121,370,125 shares issued and outstanding, respectively1,166 1,213 
Additional paid-in capital987,436 1,019,149 
Accumulated deficit(4,593)(52,546)
Noncontrolling interests:
Operating partnership39,451 46,536 
Consolidated subsidiaries424 424 
Total equity1,023,884 1,014,776 
Total liabilities and equity$3,134,315 $2,846,358 

See notes to consolidated financial statements (unaudited).

1

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,
2019 2018 2019 2018 2020201920202019
REVENUE       REVENUE
Rental revenue$90,769
 $111,733
 $289,565
 $310,895
Rental revenue$75,359 $90,769 $241,624 $289,565 
Management and development fees280
 375
 940
 1,064
Management and development fees404 280 1,003 940 
Other income194
 106
 1,217
 1,278
Other income75 194 190 1,217 
Total revenue91,243
 112,214
 291,722
 313,237
Total revenue75,838 91,243 242,817 291,722 
EXPENSES       EXPENSES
Depreciation and amortization21,496
 21,833
 65,893
 73,544
Depreciation and amortization22,888 21,496 69,658 65,893 
Real estate taxes14,490
 16,374
 45,188
 47,736
Real estate taxes14,916 14,490 44,778 45,188 
Property operating14,075
 22,328
 45,552
 61,996
Property operating13,436 14,075 39,867 45,552 
General and administrative8,353
 9,702
 28,943
 25,579
General and administrative8,700 8,353 36,600 28,943 
Casualty and impairment loss (gain), net(1)
—
 58
 9,070
 (1,248)
Casualty and impairment loss, net(1)
Casualty and impairment loss, net(1)
0 0 0 9,070 
Lease expense3,486
 2,722
 11,037
 8,210
Lease expense3,415 3,486 10,200 11,037 
Total expenses61,900
 73,017
 205,683
 215,817
Total expenses63,355 61,900 201,103 205,683 
Gain on sale of real estate39,716
 2,185
 68,219
 52,625
Gain on sale of real estate0 39,716 39,775 68,219 
Gain on sale of lease1,849
 —
 1,849
 —
Gain on sale of lease0 1,849 0 1,849 
Interest income2,706
 2,388
 7,670
 5,943
Interest income282 2,706 2,387 7,670 
Interest and debt expense(16,861) (16,756) (49,869) (48,059)Interest and debt expense(18,136)(16,861)(53,884)(49,869)
Gain on extinguishment of debt—
 —
 —
 2,524
Gain on extinguishment of debt0 0 34,908 0 
Income before income taxes56,753
 27,014
 113,908
 110,453
Income tax expense(53) (115) (1,249) (741)
Net income56,700
 26,899
 112,659
 109,712
Income (loss) before income taxesIncome (loss) before income taxes(5,371)56,753 64,900 113,908 
Income tax benefit (expense)Income tax benefit (expense)(459)(53)13,103 (1,249)
Net income (loss)Net income (loss)(5,830)56,700 78,003 112,659 
Less net (income) loss attributable to noncontrolling interests in:       Less net (income) loss attributable to noncontrolling interests in:
Operating partnership(2,662) (2,688) (6,535) (11,041)Operating partnership225 (2,662)(3,373)(6,535)
Consolidated subsidiaries2
 (11) 24
 (34)Consolidated subsidiaries0 2 0 24 
Net income attributable to common shareholders$54,040
 $24,200
 $106,148
 $98,637
Net income (loss) attributable to common shareholdersNet income (loss) attributable to common shareholders$(5,605)$54,040 $74,630 $106,148 
       
Earnings per common share - Basic:$0.45
 $0.21
 $0.89
 $0.87
Earnings per common share - Diluted:$0.45
 $0.21
 $0.89
 $0.86
Earnings (loss) per common share - Basic:Earnings (loss) per common share - Basic:$(0.05)$0.45 $0.63 $0.89 
Earnings (loss) per common share - Diluted:Earnings (loss) per common share - Diluted:$(0.05)$0.45 $0.63 $0.89 
Weighted average shares outstanding - Basic121,087
 113,890
 119,259
 113,769
Weighted average shares outstanding - Basic116,625 121,087 118,033 119,259 
Weighted average shares outstanding - Diluted121,183
 114,156
 126,489
 114,236
Weighted average shares outstanding - Diluted116,625 121,183 118,111 126,489 
(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).


2

URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
(In thousands, except share and per share amounts)
Common SharesNoncontrolling Interests (“NCI”)
 SharesAmountAdditional
Paid-In Capital		Accumulated Earnings
(Deficit)		Operating PartnershipConsolidated SubsidiariesTotal Equity
Balance, June 30, 2019121,171,003$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 shares50,000 0 435 — (2,726)— (2,291)
Units redeemed for cash— — (3,422)— (2,556)— (5,978)
Reallocation of noncontrolling interests— — 2,291 — 0 — 2,291 
Common shares issued2,350 — (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 0 2,000 — 3,310 
Balance, September 30, 2019121,223,353$1,212 $1,016,054 $(29,217)$47,239 $425 $1,035,713 
 Common Shares     Noncontrolling Interests (“NCI”)  
 Shares Amount
 Additional
Paid-In Capital		 Accumulated Earnings
(Deficit)		 Operating Partnership Consolidated Subsidiaries Total Equity
Balance, June 30, 2018114,004,276
 $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 shares179,110
 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, 2018114,175,607
 $1,141
 $951,959
 $(34,221) $103,937
 $438
 $1,023,254


Common SharesNoncontrolling Interests (“NCI”)
 SharesAmountAdditional
Paid-In Capital		Accumulated Earnings
(Deficit)		Operating PartnershipConsolidated SubsidiariesTotal Equity
Balance, June 30, 2020116,701,311$1,166 $984,933 $1,012 $39,575 $424 $1,027,110 
Net loss attributable to common shareholders— — — (5,605)— — (5,605)
Net loss attributable to noncontrolling interests— — — — (225)0 (225)
Limited partnership interests:
Reallocation of noncontrolling interests— — 1,866 — (1,866)— 0 
Share-based compensation expense— — 637 0 1,967 — 2,604 
Balance, September 30, 2020116,701,311$1,166 $987,436 $(4,593)$39,451 $424 $1,023,884 
 Common Shares     Noncontrolling Interests (“NCI”)  
 Shares Amount
 
Additional
Paid-In Capital
 
Accumulated Earnings
(Deficit)
 Operating Partnership Consolidated Subsidiaries Total Equity
Balance, June 30, 2019121,171,003
 $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 shares50,000
 —
 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 issued2,350
 —
 (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, 2019121,223,353
 $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, 2017113,827,529
 $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 shares249,110
 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, 2018114,175,607
 $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, 2018114,345,565
 $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 shares6,861,692
 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 issued47,372
 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, 2019121,223,353
 $1,212
 $1,016,054
 $(29,217) $47,239
 $425
 $1,035,713

3

Common SharesNoncontrolling Interests (“NCI”)
 SharesAmountAdditional
Paid-In Capital		Accumulated Earnings
(Deficit)		Operating PartnershipConsolidated SubsidiariesTotal Equity
Balance, December 31, 2018114,345,565$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 shares6,861,692 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 issued47,372 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, 2019121,223,353$1,212 $1,016,054 $(29,217)$47,239 $425 $1,035,713 

Common SharesNoncontrolling Interests (“NCI”)
 SharesAmountAdditional
Paid-In Capital		Accumulated Earnings
(Deficit)		Operating PartnershipConsolidated SubsidiariesTotal Equity
Balance, December 31, 2019121,370,125$1,213 $1,019,149 $(52,546)$46,536 $424 $1,014,776 
Net income attributable to common shareholders— — — 74,630 — — 74,630 
Net income attributable to noncontrolling interests— — — — 3,373 — 3,373 
Limited partnership interests:
Units redeemed for common shares1,279,389 11 8,617 — — — 8,628 
Reallocation of noncontrolling interests— — 9,724 — (18,352)— (8,628)
Common shares issued53,193 1 234 (30)— — 205 
Repurchase of common shares(5,873,923)(59)(54,082)— — — (54,141)
Dividends to common shareholders ($0.22 per share)— — — (26,647)— — (26,647)
Distributions to redeemable NCI ($0.22 per unit)— — — — (1,314)— (1,314)
Share-based compensation expense— — 5,255 — 9,208 — 14,463 
Share-based awards retained for taxes(127,473)— (1,461)— — — (1,461)
Balance, September 30, 2020116,701,311$1,166 $987,436 $(4,593)$39,451 $424 $1,023,884 

See notes to consolidated financial statements (unaudited).

4

URBAN EDGE PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 Nine Months Ended September 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income$78,003 $112,659 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization68,852 65,645 
Casualty and impairment loss, net0 9,070 
Gain on sale of real estate(39,775)(68,219)
Gain on sale of lease0 (1,849)
Gain on extinguishment of debt(34,908)0 
Amortization of deferred financing costs2,113 2,170 
Amortization of below market leases, net(6,803)(13,933)
Noncash lease expense5,655 6,329 
Straight-lining of rent9,503 120 
Share-based compensation expense14,463 10,269 
Rental revenue deemed uncollectible21,464 1,107 
Change in operating assets and liabilities:  
Tenant and other receivables(24,276)1,337 
Deferred leasing costs(1,110)(3,239)
Prepaid expenses and other assets(11,656)(2,377)
Lease liabilities(5,017)(5,471)
Accounts payable, accrued expenses and other liabilities(1,679)1,975 
Net cash provided by operating activities74,829 115,593 
CASH FLOWS FROM INVESTING ACTIVITIES  
Real estate development and capital improvements(18,266)(71,005)
Acquisitions of real estate(92,132)0 
Proceeds from sale of operating properties54,402 111,440 
Proceeds from sale of operating lease0 6,943 
Insurance proceeds0 12,677 
Net cash (used in) provided by investing activities(55,996)60,055 
CASH FLOWS FROM FINANCING ACTIVITIES  
Debt repayments(87,567)(3,907)
Debt issuance costs(2,298)(2,643)
Dividends to common shareholders(26,647)(79,489)
Distributions to redeemable noncontrolling interests(1,314)(4,427)
Taxes withheld for vested restricted shares(1,461)(633)
Borrowings under unsecured credit facility250,000 0 
Proceeds from mortgage loan borrowings90,250 0 
Repurchase of common shares(54,141)0 
Proceeds related to the issuance of common shares205 253 
Payment for redemption of units0 (5,978)
Net cash provided by (used in) financing activities167,027 (96,824)
Net increase in cash and cash equivalents and restricted cash185,860 78,824 
Cash and cash equivalents and restricted cash at beginning of period485,136 457,522 
Cash and cash equivalents and restricted cash at end of period$670,996 $536,346 
 Nine Months Ended September 30,
 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES 
  
Net income$112,659
 $109,712
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Depreciation and amortization65,645
 74,025
Casualty and impairment loss, net9,070
 —
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 costs2,170
 2,159
Amortization of below market leases, net(13,933) (29,767)
Amortization of right-of-use assets6,329
 —
Straight-lining of rent120
 (381)
Share-based compensation expense10,269
 6,494
Provision for doubtful accounts—
 2,588
Change in operating assets and liabilities: 
  
Tenant and other receivables2,444
 (12,812)
Deferred leasing costs(3,239) (3,441)
Prepaid and other assets(2,377) (1,359)
Accounts payable, accrued expenses and other liabilities(3,496) (3,947)
Net cash provided by operating activities115,593
 88,122
CASH FLOWS FROM INVESTING ACTIVITIES 
  
Real estate development and capital improvements(71,005) (90,703)
Acquisition of real estate—
 (4,931)
Proceeds from sale of operating properties111,440
 57,593
Proceeds from sale of operating lease6,943
 —
Insurance proceeds12,677
 1,300
Net cash provided by (used in) investing activities60,055
 (36,741)
CASH FLOWS FROM FINANCING ACTIVITIES 
  
Debt repayments(3,907) (3,153)
Debt issuance costs(2,643) —
Dividends to common shareholders(79,489) (75,122)
Distributions to redeemable noncontrolling interests(4,427) (8,301)
Taxes withheld for vested restricted shares(633) (385)
Proceeds related to the issuance of common shares253
 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 cash78,824
 (35,265)
Cash and cash equivalents and restricted cash at beginning of period457,522
 500,841
Cash and cash equivalents and restricted cash at end of period$536,346
 $465,576

See notes to consolidated financial statements (unaudited).



5

Nine Months Ended September 30,Nine Months Ended September 30,
2019 201820202019
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Cash payments for interest, net of amounts capitalized of $1,277 and $2,769, respectively$48,776
 $49,549
Cash payments for interest, net of amounts capitalized of $513 and $1,277, respectivelyCash payments for interest, net of amounts capitalized of $513 and $1,277, respectively$52,771 $48,776 
Cash payments for income taxes1,589
 757
Cash payments for income taxes482 1,589 
Cash payments for lease liabilities8,205
 —
NON-CASH INVESTING AND FINANCING ACTIVITIES   NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures included in accounts payable and accrued expenses13,444
 24,100
Accrued capital expenditures included in accounts payable and accrued expenses7,330 13,444 
Write-off of fully depreciated and impaired assets43,625
 10,407
Write-off of fully depreciated and impaired assets10,748 43,625 
Operating lease liabilities arising from obtaining right-of-use assets98,980
 —
Mortgage debt forgiven in foreclosure—
 11,537
Mortgage debt forgiven in refinancingMortgage debt forgiven in refinancing30,000 0 
Assumption of debt through the acquisition of real estateAssumption of debt through the acquisition of real estate72,473 0 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASHRECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASHRECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period$440,430
 $490,279
Cash and cash equivalents at beginning of period$432,954 $440,430 
Restricted cash at beginning of period17,092
 10,562
Restricted cash at beginning of period52,182 17,092 
Cash and cash equivalents and restricted cash at beginning of period$457,522
 $500,841
Cash and cash equivalents and restricted cash at beginning of period$485,136 $457,522 
   
Cash and cash equivalents at end of period$441,561
 $449,307
Cash and cash equivalents at end of period$646,432 $441,561 
Restricted cash at end of period94,785
 16,269
Restricted cash at end of period24,564 94,785 
Cash and cash equivalents and restricted cash at end of period$536,346
 $465,576
Cash and cash equivalents and restricted cash at end of period$670,996 $536,346 

 See notes to consolidated financial statements (unaudited).

6

URBAN EDGE PROPERTIES LP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except unit and per unit amounts)
 September 30, December 31,
 2019 2018
ASSETS
  
Real estate, at cost: 
  
Land$500,411
 $525,819
Buildings and improvements2,169,835
 2,156,113
Construction in progress43,671
 80,385
Furniture, fixtures and equipment7,315
 6,675
Total2,721,232
 2,768,992
Accumulated depreciation and amortization(662,713) (645,872)
Real estate, net2,058,519
 2,123,120
Right-of-use assets83,523
 —
Cash and cash equivalents441,561
 440,430
Restricted cash94,785
 17,092
Tenant and other receivables, net of allowance for doubtful accounts of $6,486 as of December 31, 201827,240
 28,563
Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 as of December 31, 201875,418
 84,903
Identified intangible assets, net of accumulated amortization of $30,214 and $39,526, respectively49,527
 68,422
Deferred leasing costs, net of accumulated amortization of $16,326 and $16,826, respectively20,263
 21,277
Deferred financing costs, net of accumulated amortization of $3,543 and $2,764, respectively4,093
 2,219
Prepaid expenses and other assets18,949
 12,968
Total assets$2,873,878
 $2,798,994
    
LIABILITIES AND EQUITY 
  
Liabilities:   
Mortgages payable, net$1,547,486
 $1,550,242
Lease liabilities81,428
 —
Accounts payable, accrued expenses and other liabilities80,161
 98,517
Identified intangible liabilities, net of accumulated amortization of $68,483 and $65,058, respectively129,090
 144,258
Total liabilities1,838,165
 1,793,017
Commitments and contingencies


 


Equity:   
Partners’ capital:   
General partner: 121,223,353 and 114,345,565 units outstanding, respectively1,017,266
 957,563
Limited partners: 5,793,230 and 12,736,633 units outstanding, respectively49,756
 105,447
Accumulated deficit(31,734) (57,482)
Total partners’ capital1,035,288
 1,005,528
Noncontrolling interest in consolidated subsidiaries425
 449
Total equity1,035,713
 1,005,977
Total liabilities and equity$2,873,878
 $2,798,994
 September 30,December 31,
 20202019
ASSETS 
Real estate, at cost:  
Land$527,749 $515,621 
Buildings and improvements2,332,337 2,197,076 
Construction in progress42,779 28,522 
Furniture, fixtures and equipment7,199 7,566 
Total2,910,064 2,748,785 
Accumulated depreciation and amortization(719,755)(671,946)
Real estate, net2,190,309 2,076,839 
Right-of-use assets77,183 81,768 
Cash and cash equivalents646,432 432,954 
Restricted cash24,564 52,182 
Tenant and other receivables24,376 21,565 
Receivable arising from the straight-lining of rents64,171 73,878 
Identified intangible assets, net of accumulated amortization of $35,057 and $30,942, respectively54,870 48,121 
Deferred leasing costs, net of accumulated amortization of $17,054 and $16,560, respectively19,618 21,474 
Deferred financing costs, net of accumulated amortization of $4,540 and $3,765, respectively3,625 3,877 
Prepaid expenses and other assets29,167 33,700 
Total assets$3,134,315 $2,846,358 
LIABILITIES AND EQUITY  
Liabilities:
Mortgages payable, net$1,590,304 $1,546,195 
Unsecured credit facility borrowings250,000 0 
Lease liabilities75,965 79,913 
Accounts payable, accrued expenses and other liabilities68,396 76,644 
Identified intangible liabilities, net of accumulated amortization of $69,368 and $62,610, respectively125,766 128,830 
Total liabilities2,110,431 1,831,582 
Commitments and contingencies
Equity:
Partners’ capital:
General partner: 116,701,311 and 121,370,125 units outstanding, respectively988,602 1,020,362 
Limited partners: 4,676,787 and 5,833,318 units outstanding, respectively41,012 50,156 
Accumulated deficit(6,154)(56,166)
Total partners’ capital1,023,460 1,014,352 
Noncontrolling interest in consolidated subsidiaries424 424 
Total equity1,023,884 1,014,776 
Total liabilities and equity$3,134,315 $2,846,358 

See notes to consolidated financial statements (unaudited).


7

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,
2019 2018 2019 2018 2020201920202019
REVENUE       REVENUE
Rental revenue$90,769
 $111,733
 $289,565
 $310,895
Rental revenue$75,359 $90,769 $241,624 $289,565 
Management and development fees280
 375
 940
 1,064
Management and development fees404 280 1,003 940 
Other income194
 106
 1,217
 1,278
Other income75 194 190 1,217 
Total revenue91,243
 112,214
 291,722
 313,237
Total revenue75,838 91,243 242,817 291,722 
EXPENSES       EXPENSES
Depreciation and amortization21,496
 21,833
 65,893
 73,544
Depreciation and amortization22,888 21,496 69,658 65,893 
Real estate taxes14,490
 16,374
 45,188
 47,736
Real estate taxes14,916 14,490 44,778 45,188 
Property operating14,075
 22,328
 45,552
 61,996
Property operating13,436 14,075 39,867 45,552 
General and administrative8,353
 9,702
 28,943
 25,579
General and administrative8,700 8,353 36,600 28,943 
Casualty and impairment loss (gain), net(1)
—
 58
 9,070
 (1,248)
Casualty and impairment loss, net(1)
Casualty and impairment loss, net(1)
0 0 0 9,070 
Lease expense3,486
 2,722
 11,037
 8,210
Lease expense3,415 3,486 10,200 11,037 
Total expenses61,900
 73,017
 205,683
 215,817
Total expenses63,355 61,900 201,103 205,683 
Gain on sale of real estate39,716
 2,185
 68,219
 52,625
Gain on sale of real estate0 39,716 39,775 68,219 
Gain on sale of lease1,849
 —
 1,849
 —
Gain on sale of lease0 1,849 0 1,849 
Interest income2,706
 2,388
 7,670
 5,943
Interest income282 2,706 2,387 7,670 
Interest and debt expense(16,861) (16,756) (49,869) (48,059)Interest and debt expense(18,136)(16,861)(53,884)(49,869)
Gain on extinguishment of debt—
 —
 —
 2,524
Gain on extinguishment of debt0 0 34,908 0 
Income before income taxes56,753
 27,014
 113,908
 110,453
Income tax expense(53) (115) (1,249) (741)
Net income56,700
 26,899
 112,659
 109,712
Less: net (income) loss attributable to NCI in consolidated subsidiaries2
 (11) 24
 (34)
Net income attributable to unitholders$56,702
 $26,888

$112,683

$109,678
Income (loss) before income taxesIncome (loss) before income taxes(5,371)56,753 64,900 113,908 
Income tax benefit (expense)Income tax benefit (expense)(459)(53)13,103 (1,249)
Net income (loss)Net income (loss)(5,830)56,700 78,003 112,659 
Less net loss attributable to NCI in consolidated subsidiariesLess net loss attributable to NCI in consolidated subsidiaries0 2 0 24 
Net income (loss) attributable to unitholdersNet income (loss) attributable to unitholders$(5,830)$56,702 $78,003 $112,683 
       
Earnings per unit - Basic:$0.45
 $0.21
 $0.89
 $0.87
Earnings per unit - Diluted:$0.45
 $0.21
 $0.89
 $0.86
Earnings (loss) per unit - Basic:Earnings (loss) per unit - Basic:$(0.05)$0.45 $0.64 $0.89 
Earnings (loss) per unit - Diluted:Earnings (loss) per unit - Diluted:$(0.05)$0.45 $0.63 $0.89 
Weighted average units outstanding - Basic126,277
 126,208
 126,387
 126,170
Weighted average units outstanding - Basic120,618 126,277 122,332 126,387 
Weighted average units outstanding - Diluted126,373
 126,693
 126,490
 126,636
Weighted average units outstanding - Diluted120,618 126,373 123,174 126,490 
(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).



8

URBAN EDGE PROPERTIES LP
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
(In thousands, except unit and per unit amounts)


Total SharesGeneral Partner Total Units
Limited Partners(1)
Accumulated Earnings
(Deficit)		NCI in Consolidated SubsidiariesTotal Equity
Total Shares General Partner  Total Units 
Limited Partners(1)
 Accumulated Earnings
(Deficit)		 NCI in Consolidated Subsidiaries Total Equity
Balance, June 30, 2018114,004,276
 952,098
 12,738,907
 105,204
 (35,797) 427
 1,021,932
Balance, June 30, 2019Balance, June 30, 2019121,171,003 $1,016,682 6,201,228 $53,038 $(60,461)$427 $1,009,686 
Net income attributable to unitholders—
 —
 —
 —
 26,888
 —
 26,888
Net income attributable to unitholders— — — — 56,702 — 56,702 
Net income attributable to noncontrolling interests—
 —
 —
 —
 —
 11
 11
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests— — — — — (2)(2)
Common units issued as a result of common shares issued by Urban Edge(7,779) 29
 —
 —
 (38) —
 (9)Common units issued as a result of common shares issued by Urban Edge2,350 (30)— — (31)— (61)
Equity redemption of OP units179,110
 1,472
 (179,110) —
 —
 —
 1,472
Equity redemption of OP units50,000 435 (50,000)(2,726)— — (2,291)
Cash redemption of OP unitsCash redemption of OP units— (3,422)(357,998)(2,556)— — (5,978)
Limited partnership units issued, net—
 —
 348,729
 —
 —
 —
 —
Limited partnership units issued, net— — 140,950 — — — 0 
Reallocation of noncontrolling interests—
 (1,641) —
 169
 —
 —
 (1,472)Reallocation of noncontrolling interests— 2,291 — 0 — — 2,291 
Distributions to Partners ($0.22 per unit)—
 —
 —
 —
 (27,820) —
 (27,820)Distributions to Partners ($0.22 per unit)— — — — (27,944)— (27,944)
Share-based compensation expense—
 1,142
 —
 1,101
 9
 —
 2,252
Share-based compensation expense— 1,310 — 2,000 — — 3,310 
Balance, September 30, 2018114,175,607
 $953,100
 12,908,526
 $106,474
 $(36,758) $438
 $1,023,254
Balance, September 30, 2019Balance, September 30, 2019121,223,353 $1,017,266 5,934,180 $49,756 $(31,734)$425 $1,035,713 
(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 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, 2019121,171,003
 $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 Edge2,350
 (30) —
 —
 (31) —
 (61)
Equity redemption of OP units50,000
 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, 2019121,223,353
 $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, 2017113,827,529
 $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 Edge116,158
 454
 —
 —
 (139) —
 315
Equity redemption of OP units249,110
 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, 2018114,175,607
 $953,100
 12,908,526
 $106,474
 $(36,758) $438
 $1,023,254
 Total SharesGeneral Partner Total Units
Limited Partners(2)
Accumulated
Deficit		NCI in Consolidated SubsidiariesTotal Equity
Balance, June 30, 2020116,701,311 $986,099 4,676,787 $40,911 $(324)$424 $1,027,110 
Net loss attributable to unitholders— — — — (5,830)— (5,830)
Reallocation of noncontrolling interests— 1,866 — (1,866)— — 0 
Share-based compensation expense— 637 — 1,967 — — 2,604 
Balance, September 30, 2020116,701,311 $988,602 4,676,787 $41,012 $(6,154)$424 $1,023,884 
(1)(2) Limited partners have a 10.2%3.9% common limited partnership interest in the Operating Partnership as of September 30, 20182020 in the form of units of interest in the OP Units and LTIP units.

See notes to consolidated financial statements (unaudited).

9

Total Shares General Partner  Total Units 
Limited Partners(2)
 
Accumulated Earnings
(Deficit)
 NCI in Consolidated Subsidiaries Total Equity Total SharesGeneral Partner Total Units
Limited Partners(1)
Accumulated Earnings
(Deficit)		NCI in Consolidated SubsidiariesTotal Equity
Balance, December 31, 2018114,345,565
 $957,563
 12,736,633
 $105,447
 $(57,482) $449
 $1,005,977
Balance, December 31, 2018114,345,565 $957,563 12,736,633 $105,447 $(57,482)$449 $1,005,977 
Net income attributable to unitholders—
 —
 —
 —
 112,683
 —
 112,683
Net income attributable to unitholders— — — — 112,683 — 112,683 
Net loss attributable to noncontrolling interests—
 —
 —
 —
 —
 (24) (24)Net loss attributable to noncontrolling interests— — — — — (24)(24)
Impact of ASC 842 adoption—
 —
 —
 —
 (2,918) —
 (2,918)Impact of ASC 842 adoption— — — — (2,918)— (2,918)
Common units issued as a result of common shares issued by Urban Edge47,372
 354
 —
 —
 (101) —
 253
Common units issued as a result of common shares issued by Urban Edge47,372 354 — — (101)— 253 
Equity redemption of OP units6,861,692
 54,748
 (6,861,692) (2,726) —
 —
 52,022
Equity redemption of OP units6,861,692 54,748 (6,861,692)(2,726)— — 52,022 
Cash redemption of OP units—
 (3,422) (357,998) (2,556) —
 —
 (5,978)Cash redemption of OP units— (3,422)(357,998)(2,556)— — (5,978)
Limited partnership units issued, net—
 —
 276,287
 —
 —
 —
 —
Limited partnership units issued, net— — 276,287 — — — 0 
Reallocation of noncontrolling interests—
 4,077
 —
 (56,099) —
 —
 (52,022)Reallocation of noncontrolling interests— 4,077 — (56,099)— — (52,022)
Distributions to Partners ($0.66 per unit)—
 —
 —
 —
 (83,916) —
 (83,916)Distributions to Partners ($0.66 per unit)— — — — (83,916)— (83,916)
Share-based compensation expense—
 4,579
 —
 5,690
 —
 —
 10,269
Share-based compensation expense— 4,579 — 5,690 0 — 10,269 
Share-based awards retained for taxes(31,276) (633) —
 —
 —
 —
 (633)Share-based awards retained for taxes(31,276)(633)— — — — (633)
Balance, September 30, 2019121,223,353
 $1,017,266
 5,793,230
 $49,756
 $(31,734) $425
 $1,035,713
Balance, September 30, 2019121,223,353 $1,017,266 5,793,230 $49,756 $(31,734)$425 $1,035,713 
(2)(1) 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.

 Total SharesGeneral Partner Total Units
Limited Partners(2)
Accumulated Earnings
(Deficit)		NCI in Consolidated SubsidiariesTotal Equity
Balance, December 31, 2019121,370,125 $1,020,362 5,833,318 $50,156 $(56,166)$424 $1,014,776 
Net income attributable to unitholders— — — — 78,003 — 78,003 
Common units issued as a result of common shares issued by Urban Edge53,193 235 122,858 — (30)— 205 
Equity redemption of OP units1,279,389 8,628 (1,279,389)0 — — 8,628 
Repurchase of common shares(5,873,923)(54,141)— — — — (54,141)
Reallocation of noncontrolling interests— 9,724 — (18,352)— — (8,628)
Distributions to Partners ($0.22 per unit)— — — — (27,961)— (27,961)
Share-based compensation expense— 5,255 — 9,208 — — 14,463 
Share-based awards retained for taxes(127,473)(1,461)— — — — (1,461)
Balance, September 30, 2020116,701,311 $988,602 4,676,787 $41,012 $(6,154)$424 $1,023,884 
(2) Limited partners have a 3.9% common limited partnership interest in the Operating Partnership as of September 30, 2020 in the form of units of interest in the OP Units and LTIP units.

See notes to consolidated financial statements (unaudited).


10

URBAN EDGE PROPERTIES LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 Nine Months Ended September 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES  
Net income$78,003 $112,659 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization68,852 65,645 
Casualty and impairment loss, net0 9,070 
Gain on sale of real estate(39,775)(68,219)
Gain on sale of lease0 (1,849)
Gain on extinguishment of debt(34,908)0 
Amortization of deferred financing costs2,113 2,170 
Amortization of below market leases, net(6,803)(13,933)
Noncash lease expense5,655 6,329 
Straight-lining of rent9,503 120 
Share-based compensation expense14,463 10,269 
Rental revenue deemed uncollectible21,464 1,107 
Change in operating assets and liabilities:  
Tenant and other receivables(24,276)1,337 
Deferred leasing costs(1,110)(3,239)
Prepaid expenses and other assets(11,656)(2,377)
Lease liabilities(5,017)(5,471)
Accounts payable, accrued expenses and other liabilities(1,679)1,975 
Net cash provided by operating activities74,829 115,593 
CASH FLOWS FROM INVESTING ACTIVITIES  
Real estate development and capital improvements(18,266)(71,005)
Acquisitions of real estate(92,132)0 
Proceeds from sale of operating properties54,402 111,440 
Proceeds from sale of operating lease0 6,943 
Insurance proceeds0 12,677 
Net cash (used in) provided by investing activities(55,996)60,055 
CASH FLOWS FROM FINANCING ACTIVITIES  
Debt repayments(87,567)(3,907)
Debt issuance costs(2,298)(2,643)
Distributions to partners(27,961)(83,916)
Taxes withheld for vested restricted units(1,461)(633)
Borrowings under unsecured credit facility250,000 0 
Proceeds from mortgage loan borrowings90,250 0 
Repurchase of common shares(54,141)0 
Proceeds related to the issuance of common shares205 253 
Payment for redemption of units0 (5,978)
Net cash provided by (used in) financing activities167,027 (96,824)
Net increase in cash and cash equivalents and restricted cash185,860 78,824 
Cash and cash equivalents and restricted cash at beginning of period485,136 457,522 
Cash and cash equivalents and restricted cash at end of period$670,996 $536,346 
 Nine Months Ended September 30,
 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES 
  
Net income$112,659
 $109,712
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Depreciation and amortization65,645
 74,025
Casualty and impairment loss, net9,070
 —
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 costs2,170
 2,159
Amortization of below market leases, net(13,933) (29,767)
Amortization of right-of-use assets6,329
 —
Straight-lining of rent120
 (381)
Share-based compensation expense10,269
 6,494
Provision for doubtful accounts—
 2,588
Change in operating assets and liabilities: 
  
Tenant and other receivables2,444
 (12,812)
Deferred leasing costs(3,239) (3,441)
Prepaid and other assets(2,377) (1,359)
Accounts payable, accrued expenses and other liabilities(3,496) (3,947)
Net cash provided by operating activities115,593
 88,122
CASH FLOWS FROM INVESTING ACTIVITIES 
  
Real estate development and capital improvements(71,005) (90,703)
Acquisition of real estate—
 (4,931)
Proceeds from sale of operating properties111,440
 57,593
Proceeds from sale of operating lease6,943
 —
Insurance proceeds12,677
 1,300
Net cash provided by (used in) investing activities60,055
 (36,741)
CASH FLOWS FROM FINANCING ACTIVITIES 
  
Debt repayments(3,907) (3,153)
Debt issuance costs(2,643) —
Distributions to partners(83,916) (83,423)
Taxes withheld for vested restricted units(633) (385)
Proceeds related to the issuance of common shares253
 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 cash78,824
 (35,265)
Cash and cash equivalents and restricted cash at beginning of period457,522
 500,841
Cash and cash equivalents and restricted cash at end of period$536,346
 $465,576

See notes to consolidated financial statements (unaudited).



11

Nine Months Ended September 30,Nine Months Ended September 30,
2019 201820202019
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION  
Cash payments for interest, net of amounts capitalized of $1,277 and $2,769, respectively$48,776
 $49,549
Cash payments for interest, net of amounts capitalized of $513 and $1,277, respectivelyCash payments for interest, net of amounts capitalized of $513 and $1,277, respectively$52,771 $48,776 
Cash payments for income taxes1,589
 757
Cash payments for income taxes482 1,589 
Cash payments for lease liabilities8,205
 —
NON-CASH INVESTING AND FINANCING ACTIVITIES   NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures included in accounts payable and accrued expenses13,444
 24,100
Accrued capital expenditures included in accounts payable and accrued expenses7,330 13,444 
Write-off of fully depreciated and impaired assets43,625
 10,407
Write-off of fully depreciated and impaired assets10,748 43,625 
Operating lease liabilities arising from obtaining right-of-use assets98,980
 —
Mortgage debt forgiven in foreclosure—
 11,537
Mortgage debt forgiven in refinancingMortgage debt forgiven in refinancing30,000 0 
Assumption of debt through the acquisition of real estateAssumption of debt through the acquisition of real estate72,473 0 
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASHRECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASHRECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period$440,430
 $490,279
Cash and cash equivalents at beginning of period$432,954 $440,430 
Restricted cash at beginning of period17,092
 10,562
Restricted cash at beginning of period52,182 17,092 
Cash and cash equivalents and restricted cash at beginning of period$457,522
 $500,841
Cash and cash equivalents and restricted cash at beginning of period$485,136 $457,522 
   
Cash and cash equivalents at end of period$441,561
 $449,307
Cash and cash equivalents at end of period$646,432 $441,561 
Restricted cash at end of period94,785
 16,269
Restricted cash at end of period24,564 94,785 
Cash and cash equivalents and restricted cash at end of period$536,346
 $465,576
Cash and cash equivalents and restricted cash at end of period$670,996 $536,346 

 See notes to consolidated financial statements (unaudited).


12

URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.ORGANIZATION
1.ORGANIZATION

Urban Edge Properties (“UE”, “Urban Edge” or the “Company”) (NYSE: UE) is a Maryland real estate investment trust focused on managing, developing, redeveloping, and acquiring retail real estate in 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 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, 2019,2020, Urban Edge owned approximately 95.4%96.1% of the outstanding common OP Units with the remaining limited OP Units held by members of management, 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, 2019,2020, our portfolio consisted of 7372 shopping centers, 4 malls and a2 warehouse park,parks, totaling approximately 15.015.1 million square feet (“sf”).
2.BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
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, 20192020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019.2020. 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, 2018,2019, as filed with the Securities Exchange Commission (“SEC”).

The consolidated balance sheets as of September 30, 20192020 and December 31, 20182019 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, 20192020 and 20182019 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 Companycertain prior year balances have been reclassified Property rentals and Tenant reimbursement incomein order 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 dueconform to the adoption of (“ASU 2016-02”) ASC 842 current period presentation.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. 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.income as of September 30, 2020. We aggregate all of our properties into 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.
13

3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Real Estate —Real estate is carried at cost, net of accumulated depreciation and amortization. Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations that improve or extend the useful lives of assets are capitalized. As real estate is undergoing redevelopment activities, all property operating expenses directly associated with and attributable to the redevelopment, including interest, are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the property when completed. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of redeveloped property, the excess is charged to impairment expense. The capitalization period begins when redevelopment activities are underway and ends when the project is substantially complete. Depreciation is recognized on a straight-line basis over estimated useful lives which range from one to 40 years.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities and we allocate the purchase price based on these assessments on a relative fair value basis. We assess fair value based on estimated cash flow projections utilizing appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases, acquired in-place leases and tenant relationships) and acquired intangible liabilities (including below-market leases) at their estimated fair value. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired.

Our properties are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Such events and changes include macroeconomic conditions, including those caused by global pandemics, like the recent coronavirus disease pandemic (“COVID-19” or the “COVID-19 pandemic”), which resulted in property operational disruption and indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis taking into account the appropriate capitalization rate in determining a future terminal value. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimated fair value may be based on discounted future cash flows utilizing appropriate discount and capitalization rates and, in addition to available market information, third-party appraisals, broker selling estimates or sale agreements under negotiation. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows change based on uncertain market conditions, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.

Tenant and Other Receivables and Changes in Collectibility Assessment — Tenant receivables include unpaid amounts billed to tenants, disputed enforceable charges and accrued revenues for future billings to tenants for property expenses. We evaluate the collectibility of amounts due from tenants and disputed enforceable charges on both a lease-by-lease and a portfolio-level, which result from the inability of tenants to make required payments under their operating lease agreements. In light of the recent and ongoing COVID-19 pandemic, the Company is closely monitoring changes in the collectibility assessment of its tenant receivables as a result of certain tenants suffering adverse financial consequences. We recognize changes in the collectibility assessment of these operating leases as adjustments to rental revenue in accordance with ASC 842 Leases. Management exercises judgment in assessing collectibility and considers payment history, current credit status and publicly available information about the financial condition of the tenant, among other factors. Tenant receivables, including receivables arising from the straight-lining of rents, are written-off directly when management deems that the collectibility of substantially all future lease payments from a specific lease is not probable of collection, at which point, the Company will begin recognizing revenue from such leases prospectively, based on actual amounts received. This adjustment effectively reduces cumulative income recognized since lease commencement from an accrual basis to cash basis. In addition, future revenue recognition is limited to amounts paid by the lessee. We will generally return to an accrual basis of accounting, if and when, all delinquent payments become current under the terms of the lease agreement and collectability of substantially all the remaining contractual lease payments is reasonably probable.

During the three and nine months ended September 30, 2020, rental revenue deemed uncollectible of $8.4 million and $21.5 million, respectively, was classified as a reduction to rental revenue based on our assessment of the probability of collecting substantially all of the remaining rents for certain tenants. Additionally, we recognized write-offs of $4.7 million and $10.7 million, respectively, related to receivables arising from the straight-lining of rents as a result of tenants impacted by the COVID-19 pandemic.

14

Recently Issued Accounting Literature — Effective for the fiscal period beginning January 1, 2019,2020, we adopted (“ASU 2016-02”) ASC 842 Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of 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 for 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 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 finance lease ROU asset and interest expense on the 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 paid directly by tenants have not been recognized as rental revenue, real estate taxes and property operating expenses on the 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. In connection with the fiscal period beginning January 1, 2020.adoption of ASU 2016-03, we also adopted (i) ASU 2018-19 Codification Improvements to ASC 326, Financial Instruments - Credit Losses, (ii)ASU 2019-04, Codification Improvements to ASC 326, Financial Statements - Credit Losses, Topic 815, Derivatives and Hedging and Topic 825, Financial Instruments, (iii) ASU 2019-05 Financial Instruments - Credit Losses (ASC 326): Targeted Transition Relief and (iv)ASU 2019-11 Codification Improvements to ASC 326, Financial Instruments - Credit Losses. ASU 2016-13 introduces a new model for estimating credit losses for certain types of


financial instruments and also modifies the impairment model with new methodology for estimating credits losses. In November 2018, the FASB issued ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments—Instruments — Credit Losses, which included amendments to clarify receivables arising from operating leases are within the scope ASC 842.842 Leases. Due to the adoption of ASC 842 on January 1, 2019, the Company includes credit losses related to operating lease receivablesrental revenue deemed uncollectible as a reduction to rental revenue in "Rental revenue" in the consolidated statements of income.As of September 30, 2020, the Company did not have any material outstanding financial instruments. The Company does not expect the adoption of ASU 2016-13 to have a materialhas had no impact onto our consolidated financial statements.statements and disclosures.

In August 2018,December 2019, the FASB issued ASU 2018-132019-12 Disclosure Framework-Changes toIncome Taxes (ASC 740): Simplifying the Disclosure RequirementsAccounting for Fair Value MeasurementIncome Taxes to ASC 820, Fair Value Measurement., which enhances and simplifies various aspects of the income tax accounting. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2018-132019-12 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019.2020. Early adoption is permitted. We elected to early adopt ASU 2018-13 effective January 1, 2019. Thedo not expect the adoption of this update did notASU 2019-12 to have a material impact on our consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We currently do not anticipate the need to modify our existing debt agreements as a result of reference rate reform in the current year, however if any modification is executed as a result of reference rate reform, the Company will elect the optional expedient available under ASU 2020-04, which allows entities to account for the modification as if the modification was not substantial. We will disclose the nature of and reason for electing the optional expedient in each interim and annual financial statement period if and when applicable through December 31, 2022.

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief, that lessors provide to mitigate the economic effects of COVID-19 on lessees, is a lease modification under ASC 842. Instead, when the cash flows resulting from the lease concession granted for COVID-19 rent relief are substantially the same or less than the cash flows of the original contract, an entity may elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract).

The FASB stated that there are multiple ways to account for deferrals, none of which the FASB believes are more preferable than the others. Two of those methods are: (i) account for the concessions as if no changes to the lease contract were made; under that accounting, a lessor would continue to increase its lease receivable and continue to recognize income, referred to as the (“receivable approach”); or (ii) account for the deferred payments or abatements as variable lease payments; under that accounting, a lessor would recognize the payment as income in profit or loss in the period in which the changes in facts and circumstances on which the variable lease payments are based occurred, referred to as the (“variable approach”).

The Company is evaluating its election on a disaggregated basis, with such election applied consistently to leases with similar characteristics and similar circumstances. As of September 30, 2020, the Company granted rent deferrals with an aggregate deferral amount of $2.6 million, with $2.4 million accounted for under the receivable approach by electing the Lease Modification Q&A and $0.2 million accounted for as modifications due to term extensions of the leases. The Company also granted abatements with an aggregate abatement amount of $0.8 million as of September 30, 2020, with $0.4 million accounted for under short term arrangements, $0.1 million accounted for under the variable approach and $0.3 million accounted for as modifications due to the executed agreements including other rental term modifications, such as term extensions and substantial changes in cash flows. The Company remains in active discussions with its impacted tenants to grant further concessions. The full future impact of the Lease Modification Q&A is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 and the elections made by the Company at the time of entering into such concessions. Refer to Note 10 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q.

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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
4.     ACQUISITIONS AND DISPOSITIONS

Acquisitions
During the nine months ended September 30, 2019, 0 acquisitions were completed by the Company. During the nine months ended September 30, 2020, we closed on the following acquisitions:
Date PurchasedProperty NameCityStateSquare FeetPurchase Price
(in thousands)
February 12, 2020Kingswood CenterBrooklynNY130,000 $90,212 
February 12, 2020Kingswood CrossingBrooklynNY110,000 77,077 
2020 Total$167,289 (1)
(1) The total purchase price for the properties acquired during the nine months ended September 30, 2020 includes $2.5 million of transaction costs incurred related to the acquisitions.

On February 12, 2020, the Company acquired Kingswood Center and Kingswood Crossing for $167.3 million, including transaction costs. The properties are located along Kings Highway in the Midwood neighborhood of Brooklyn, NY and were funded via 1031 exchanges using cash proceeds from dispositions. Additionally, as part of the acquisition of Kingswood Center, the Company assumed a $65.5 million mortgage, which matures in 2028.

A portion of the acquisition of Kingswood Crossing was completed as a reverse Section 1031 like-kind exchange. We entered into a reverse Section 1031 like-kind exchange agreement with third-party intermediaries, which, for a maximum of 180 days, allowed us to defer for tax purposes, gains on the sale of other properties identified and sold within the period. Until the earlier of the termination of the exchange agreements or 180 days after the respective acquisition dates, the third-party intermediaries are the legal owner of the properties; however, we controlled the activities that most significantly impact each property and retained all of the economic benefits and risks associated with each property. Therefore, at the date of acquisition, we determined that we were the primary beneficiary of these variable interest entities and consolidated the properties and their operations as of the acquisition date.

The aggregate purchase price of the above property acquisitions has been allocated as follows:
Property NameLandBuildings and improvements
Identified intangible assets(1)
Identified intangible liabilities(1)
Debt premiumTotal Purchase Price
(in thousands)
Kingswood Center$15,690 $76,766 $9,263 $(4,534)$(6,973)$90,212 
Kingswood Crossing8,150 64,159 4,768 0 0 77,077 
2020 Total$23,840 $140,925 $14,031 $(4,534)$(6,973)$167,289 
(1)As of September 30, 2019, we2020, the remaining weighted average amortization periods of the identified intangible assets and identified intangible liabilities acquired 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 which8.7 years and 10.8 years, respectively.

Dispositions
During 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 ofnine months ended September 30, 2019,2020, we disposed of 3 properties and received proceeds of $58.1 million, net of selling costs, resulting in a $39.8 million net gain on sale of real estate. The sale of all 3 dispositions 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.
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 servecompleted as 1031 exchanges forwith Kingswood Crossing as a result of the sales occurring within 180 days of the Company’s dispositions and the required equity will be funded using proceeds from dispositions.
Dispositionsacquisition.
During the three months ended September 30, 2019, we disposed of 6 properties and received proceeds of $77.6 million, net of selling costs, resulting in a $39.7 million net gain on sale of real estate. During the nine months ended September 30, 2019, we disposed of 8 properties and received proceeds of $111.4 million, net of selling costs, resulting in a $68.2 million net gain on sale of real estate.
During the three and nine months ended September 30, 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 derecognized the lease’s ROU asset and corresponding
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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.

Real Estate Held for Sale
As of September 30, 2019, our property in Lawnside, NJ was classified as held for sale based on an executed contract of 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 sale is legally binding. The aggregate asset amount of this property was $3.5 million, and was included in prepaid expenses and other assets in our consolidated balance sheets as of September 30, 2019.


5.     IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES
 
Our identified intangible assets (acquired in-place and above-market leases) and liabilities (acquired below-market leases), net of accumulated amortization, were $49.5$54.9 million and $129.1$125.8 million, respectively, as of September 30, 20192020 and $68.4$48.1 million and $144.3$128.8 million, respectively, as of December 31, 2018.2019.

Amortization of acquired below-market leases, net of acquired above-market leases resulted, in additional rental income of $2.1$2.3 million and $13.9$6.8 million for the three and nine months ended September 30, 2019, respectively,2020 and $19.3$2.1 million and $29.8$13.9 million for the same periods in 2018.2019.
 
Amortization of acquired in-place leases andinclusive of customer relationships resulted in additional depreciation and amortization expense of $1.7$2.1 million and $5.7$6.3 million for the three and nine months ended September 30, 2019, respectively,2020, and $2.7$1.7 million and $11.2$5.7 million for the same periods in 2018.2019.

The following table sets forth the estimated annual amortization income and expense related to intangible assets and liabilities for the remainder of 20192020 and the five succeeding years:
(Amounts in thousands) Below-Market Above-Market  (Amounts in thousands)Below-MarketAbove-MarketIn-Place Lease
Year Operating Lease Amortization Operating Lease Amortization In-Place LeasesYearOperating Lease AmortizationOperating Lease AmortizationAmortization
2019(1)
 $2,402
 $(282) $(1,701)
2020 9,547
 (996) (6,124)
2020(1)
2020(1)
$2,430 $(257)$(2,174)
2021 9,409
 (797) (4,934)20219,681 (860)(7,595)
2022 9,332
 (433) (4,032)20229,605 (495)(5,995)
2023 9,285
 (327) (3,702)20239,559 (386)(4,859)
2024 9,038
 (266) (3,264)20249,324 (321)(4,366)
202520259,151 (142)(3,732)
(1) Remainder of 2019.2020.


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6.     MORTGAGES PAYABLE AND UNSECURED DEBT
 
The following is a summary of mortgages payable as of September 30, 20192020 and December 31, 2018.2019.
 Interest Rate atSeptember 30,December 31,
(Amounts in thousands)MaturitySeptember 30, 202020202019
First mortgages secured by: 
Variable rate
Cherry Hill (Plaza at Cherry Hill)(1)
5/24/20221.76%$28,930 $28,930 
Westfield (One Lincoln Plaza)(1)
5/24/20221.76%4,730 4,730 
Woodbridge (Plaza at Woodbridge)(1)
5/25/20221.76%55,340 55,340 
Jersey City (Hudson Commons)(2)
11/15/20242.06%28,724 29,000 
Watchung(2)
11/15/20242.06%26,742 27,000 
Bronx (1750-1780 Gun Hill Road)(2)
12/1/20242.06%25,295 24,500 
Total variable rate debt169,761 169,500 
Fixed rate
Bergen Town Center - West, Paramus4/8/20233.56%300,000 300,000 
Bronx (Shops at Bruckner)5/1/20233.90%10,510 10,978 
Jersey City (Hudson Mall)(4)
12/1/20235.07%23,085 23,625 
Yonkers Gateway Center(5)
4/6/20244.16%28,897 30,122 
Las Catalinas(8)
8/6/20247.43%128,822 129,335 
Brick12/10/20243.87%50,000 50,000 
North Plainfield12/10/20253.99%25,100 25,100 
Middletown12/1/20263.78%31,400 31,400 
Rockaway12/1/20263.78%27,800 27,800 
East Hanover (200 - 240 Route 10 West)12/10/20264.03%63,000 63,000 
North Bergen (Tonnelle Ave)4/1/20274.18%100,000 100,000 
Manchester6/1/20274.32%12,500 12,500 
Millburn6/1/20273.97%23,488 23,798 
Totowa12/1/20274.33%50,800 50,800 
Woodbridge (Woodbridge Commons)12/1/20274.36%22,100 22,100 
East Brunswick12/6/20274.38%63,000 63,000 
East Rutherford1/6/20284.49%23,000 23,000 
Brooklyn (Kingswood Center)(6)
2/6/20285.07%71,916 0 
Hackensack3/1/20284.36%66,400 66,400 
Marlton12/1/20283.86%37,400 37,400 
East Hanover Warehouses12/1/20284.09%40,700 40,700 
Union (2445 Springfield Ave)12/10/20284.01%45,600 45,600 
Freeport (Freeport Commons)12/10/20294.07%43,100 43,100 
Montehiedra(9)
6/1/20305.00%81,571 83,202 
Montclair8/15/20303.15%7,250 0 
Garfield12/1/20304.14%40,300 40,300 
Mt Kisco(3)
11/15/20346.40%13,090 13,488 
Montehiedra (junior loan)(9)
—0%0 30,000 
Total fixed rate debt1,430,829 1,386,748 
 Total mortgages payable1,600,590 1,556,248 
Unamortized debt issuance costs(10,286)(10,053)
Total mortgages payable, net of unamortized debt issuance costs1,590,304 1,546,195 
Unsecured credit facilities:
Revolving credit agreement(7)
1/29/20241.21%250,000 0 
Total unsecured credit facilities250,000 0 
Total debt outstanding$1,840,304 $1,546,195 
(1)Bears interest at one month LIBOR plus 160 bps. The mortgage loans encumbered by these properties were modified during the second quarter of 2020 to contain a payment deferral period from June 1, 2020 through August 1, 2020.
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    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)(2)Bears interest at one month LIBOR plus 190 bps. The mortgage loans encumbered by these properties were modified during the second quarter of 2020 to contain an interest-only payment period from May 1, 2020 through July 1, 2020.
Bears interest at one month LIBOR plus 160 bps.
(2)
Bears interest at one month LIBOR plus 190 bps.
(3)
The mortgage payable balance on the loan secured by Mt Kisco includes $0.9 million 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.

(3)The mortgage payable balance on the loan secured by Mt Kisco includes $0.9 million of unamortized debt discount as of both September 30, 2020 and December 31, 2019. The effective interest rate including amortization of the debt discount is 7.31% as of September 30, 2020.
(4)The mortgage payable balance on the loan secured by Hudson Mall includes $0.8 million and $1.0 million of unamortized debt premium as of September 30, 2020 and December 31, 2019, respectively. The effective interest rate including amortization of the debt premium is 3.91% as of September 30, 2020.
(5)The mortgage payable balance on the loan secured by Yonkers Gateway Center includes $0.5 million and $0.6 million of unamortized debt premium as of September 30, 2020 and December 31, 2019, respectively. The effective interest rate including amortization of the debt premium is 3.74% as of September 30, 2020.
(6)The mortgage payable balance on the loan secured by Kingswood Center includes $6.4 million of unamortized debt premium as of September 30, 2020. The effective interest rate including amortization of the debt premium is 3.74% as of September 30, 2020.
(7)Bears interest at one month LIBOR plus 1.05% as of September 30, 2020.
(8)In April 2020, the non-recourse mortgage loan on Las Catalinas Mall was defaulted on and became subject to incremental default interest of 3.00% while the outstanding balance remains unpaid. We currently remain in active negotiations with the special servicer and no determination has been made as to the timing or ultimate resolution of this matter.
(9)On June 1, 2020, we refinanced the mortgage secured by The Outlets at Montehiedra in Puerto Rico, whereby the $30 million junior loan plus accrued interest of $5.4 million was forgiven and the senior loan was replaced by a new $82 million 10-year fixed rate mortgage, bearing interest at 5.00%.

(4)
The mortgage payable balance on the loan secured by Hudson Mall includes $1.1 million and $1.2 million of 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 $0.6 million and $0.7 million of unamortized debt premium as of September 30, 2019 and December 31, 2018, respectively. The effective interest rate including amortization of the debt premium is 3.77% as of September 30, 2019.

The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately $1.2$1.3 billion as of September 30, 2019.2020. 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, 2019,2020, 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,covenants with the court order was received approving the sale and discharging the receiverexception of all assets and liabilitiesthose related to the property. We recognized a gainour mortgage loan on extinguishment of debt of $2.5 million as a result of the forgiveness of outstandingLas Catalinas Mall. The mortgage debt of $11.5 million, which is includedon Las Catalinas Mall has been in gain on extinguishment of debt in the consolidated statement of income for the nine months ended September 30, 2018.default since April 2020.

As of September 30, 2019,2020, the principal repayments of the Company’s total outstanding debt for the next five years and thereafter are as follows:
(Amounts in thousands)  (Amounts in thousands) 
Year Ending December 31,  Year Ending December 31,
2019(1)
 $1,472
2020 7,515
2020(1)
2020(1)
$3,067 
2021 122,645
202112,956 
2022 99,976
2022101,490 
2023 344,368
2023347,158 
2024 274,316
2024529,208 
2025202535,382 
Thereafter 707,711
Thereafter821,329 
(1) Remainder of 2019.2020.

Revolving Credit Agreement
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 increasedAgreement to increase the credit facility size by $100 million to $600 million and extended the maturity date to March 7, 2021, with 2 six-month extension options. 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.

In March 2020, the Company borrowed $250 million under the Agreement. As of September 30, 2020, $350 million of credit remained available to be drawn. Financing costs associated with executing the Agreement of $3.6 million and $3.9 million as of September 30, 2020 and December 31, 2019, respectively, are included in deferred financing costs, net in the consolidated balance sheets.

On June 3, 2020, we entered into a third amendment to the Agreement, which among other things, modifies certain definitions and the measurement period for certain financial covenants to a trailing four-quarter period instead of the most recent quarter period annualized. Company borrowings under the Agreement are subject to interest at LIBOR plus 1.05% to 1.50% and 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. NaN amounts have been drawn
19

Subsequent to dateSeptember 30, 2020, the Company repaid its $250 million outstanding borrowings under the Agreement. Financing

Mortgage on The Outlets at Montehiedra
During the second quarter of 2020, we completed the refinancing of our non-recourse mortgage on The Outlets at Montehiedra (“Montehiedra”) in Puerto Rico. Prior to the refinancing, the mortgage was comprised of an $83 million senior loan bearing interest at 5.33% and a $30 million junior loan bearing interest at 3.00%, plus total accrued interest of $5.7 million. Under the payoff provisions of the prior mortgage, the $30 million junior loan plus accrued interest of $5.4 million on the junior loan was forgiven and the senior loan was replaced by a new $82 million 10-year fixed rate mortgage, bearing interest at 5.00%. As a result of the transaction, we recognized a net gain on extinguishment of debt of $34.9 million during the nine months ended September 30, 2020, comprised of the forgiven $30 million junior loan plus accrued interest of $5.4 million, offset by the write-off of $0.4 million of unamortized deferred financing fees associatedand $0.1 million of transaction costs incurred.

The Company has provided a $12.5 million corporate guarantee if and only when Sears Holding Corporation (“Kmart”) vacates or stops paying rent. The guarantee will be released should certain financial metrics at Montehiedra be achieved even if the Kmart box remains vacant. Irrespective of whether Kmart vacates or stops paying rent, the guarantee amortizes commensurate with the Agreementloan amortization schedule and will reduce to zero in approximately six years.

Mortgage on Las Catalinas Mall
In April 2020, we notified the servicer of $4.1the $129 million non-recourse mortgage loan on Las Catalinas Mall in Puerto Rico that cash flow would be insufficient to service the debt and $2.2that we were unwilling to fund the shortfalls. Pursuant to the loan agreement, the loan is in default, is subject to incremental default interest, which increased the interest rate from 4.43% to 7.43% while the outstanding balance remains unpaid, and the lender has the ability to accelerate the full loan balance. We have accrued interest of $5.3 million related to this mortgage, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of September 30, 20192020. We currently remain in active negotiations with the special servicer and December 31, 2018, respectively, are includedno determination has been made as to the timing or ultimate resolution of this matter.

Mortgage on property in deferred financing fees, netMontclair, NJ
On August 6, 2020, the Company obtained a 10-year non-recourse mortgage loan of $7.3 million at a rate of 3.15% on its property in the consolidated balance sheets.Montclair, NJ.


7.     INCOME TAXES

7.INCOME TAXES

The Company elected to 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 its 2015 tax return for its tax year ended December 31, 2015. With exception to the Company’s taxable REIT subsidiary (“TRS”), toTo the extent the Company meets certain requirements under the Code, the Company will not be taxed on its federal taxable income. If we fail to qualify as a REIT for any taxable year, we will be subject to federal income taxes at regular corporate rates, (includingincluding any alternative minimum 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. In addition to its TRS, theThe Company is subject to certain foreign and state and local income taxes, including a 29% non-resident withholding tax on its 2 Puerto Rico malls, which are included in income tax expensebenefit (expense) in the consolidated statements of income. The Company is also subject to certain other taxes, including state and local 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 regularFor U.S. federal income tax purposes, the REIT and state and localother minority members are partners in the Operating Partnership. As such, the partners are required to report their share of taxable income on their respective 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 forreturns. However, during 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, 2019,2020, certain non-real estate operating activities non-qualifying forthat could not be performed by the REIT, purposes, commencedoccurred through the Company’s operatingtaxable REIT subsidiary (“TRS”), and the Company’s TRS and areis subject to federal, state and local income taxes. These income taxes are included in the income tax expense in the consolidated statements of income.
OurOn June 1, 2020, the Company completed a mortgage refinancing of its mall in Puerto Rico, The Outlets at Montehiedra. The debt forgiven as a part of this refinancing resulted in a write-down to our Puerto Rico tax basis in the mall equal to such amount of debt forgiven and the recognition of a deferred tax liability on the Company’s consolidated balance sheet, which amounted to $10.3 million as of September 30, 2020. Refer to Note 6 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for further information on the refinancing.
On June 5, 2020, the Company completed a legal entity restructuring of Montehiedra. Prior to the legal entity restructuring, our 2 Puerto Rico malls arewere held in a special partnership for Puerto Rico tax purposes (the general partner being a qualified REIT subsidiary or “QRS”) and subject to a 29% non-resident withholding tax which is included in income tax benefit
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(expense) in the consolidated statements of income. The legal entity restructuring resulted in a step up in our Puerto Rico tax basis in Montehiedra and the recognition of a deferred tax asset on the Company’s consolidated balance sheet, which amounted to $23.7 million as of September 30, 2020. As a result of the legal entity restructuring of Montehiedra, the Operating Partnership, and therefore, the REIT and the other minority partners, are now deemed to be engaged in a trade or business in Puerto Rico with respect to their allocable share of Montehiedra’s net income and, as such, required to file Puerto Rico income tax returns. The REIT will be subject to regular Puerto Rico corporate income taxes on its allocable share of Montehiedra’s operating activities as opposed to the former 29% non-resident withholding tax on the net income from such operating activities allocated to the Operating Partnership. The Puerto Rico corporate income tax consists of a flat 18.5% tax rate plus a graduated income surcharge tax for a maximum corporate income tax rate of 37.5%. In addition, the REIT is subject to a 10% branch profit tax on the earnings and profits generated from Montehiedra and such tax is included in income tax expense in the consolidated statements of income. TheOur other Puerto Rico property, Las Catalinas Mall, continues to be taxed as a special partnership and is subject to the 29% non-resident withholding tax.
Together, the refinancing and legal entity restructuring transactions resulted in a deferred tax expense recorded was $0.1asset, net of $13.4 million and the Company recognized an accompanying Puerto Rico income tax benefit on the Company’s consolidated statements of income during the nine months ended September 30, 2020.
As a result of the Montehiedra refinancing, the Company recognized a gain on extinguishment of debt for U.S. federal income tax purposes and implemented various tax planning strategies to limit its impact on the Company’s overall U.S. federal taxable income. The strategies implemented resulted in the recognition of a state and local income tax liability and corresponding deferred tax asset for the REIT of $1.7 million during the three and nine months ended September 30, 2020.

A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required, if based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. A valuation allowance for deferred tax assets is provided if the Company believes that it is more likely than not that it will not realize the tax benefit of deferred tax assets based on available evidence at the time the determination is made. A change in circumstances may cause the Company to change its judgment about whether a deferred tax asset will more likely than not be realized by the Company. During the three months ended September 30, 20192020, the Company recorded a $1.7 million valuation allowance against the deferred tax asset attributable to the REIT’s state and 2018, respectively,local income tax liability incurred from strategies implemented to limit the impact of the Montehiedra refinancing on the Company’s U.S. federal taxable income. As of September 30, 2020, the Company’s total valuation allowance was $1.7 million.

For the three and $1.2 million and $0.5 million for the nine months ended September 30, 20192020, the REIT’s state and 2018, respectively. Both properties are held in a special partnership forlocal income tax expense was $1.7 million and the Puerto Rico income tax reporting (the general partner being a qualified REIT subsidiary or “QRS”).

The REITbenefit was $1.3 million 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$14.8 million, respectively. During For the three and nine months ended September 30, 2019,, the Company sold its lessee position in 1 of its operating ground leasesPuerto Rico income tax expense was $0.1 million and $1.2 million, respectively. All amounts 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, 2020 and 2019 as a result of the sale. Additionally, on July 31, 2019, the Company’s lessee position are included 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 basedincome tax benefit (expense) on the incremental borrowing rateconsolidated statements 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.

income.
Accounts Receivable and Changes in Collectibility Assessment
8.     LEASES
— 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
All rental revenue was generated 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, restaurantsthree and other foodnine months ended September 30, 2020 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.




September 30, 2019, respectively. The components of rental revenue for the three and nine months ended September 30, 2020 and 2019 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
 (Amounts in thousands)
2020201920202019
Rental Revenue
Fixed lease revenue$53,396 $66,478 $174,141 $209,858 
Variable lease revenue21,963 24,291 67,483 79,707 
Total rental revenue$75,359 $90,769 $241,624 $289,565 
 (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 revenue24,291
 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 cost596
 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 leases16.1 years
Weighted-average discount rates - operating leases3.97%


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
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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 or non-recurring basis as of September 30, 20192020 and December 31, 2018.2019.

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, mortgages payable and mortgages payable.unsecured credit facility borrowings. Cash and cash equivalents are carried at cost, which approximates fair value. The fair valuevalues of our mortgages payable isand unsecured credit facility borrowings are 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 valuevalues of mortgages payable isand unsecured credit facility borrowings are classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of September 30, 20192020 and December 31, 2018.2019.
 As of September 30, 2020As of December 31, 2019
(Amounts in thousands)Carrying AmountFair ValueCarrying AmountFair Value
Assets:    
Cash and cash equivalents$646,432 $646,432 $432,954 $432,954 
Liabilities:    
Mortgages payable(1)
$1,600,590 $1,617,137 $1,556,248 $1,590,503 
Unsecured credit facility250,000 250,000 — — 
  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

(1) Carrying amounts exclude unamortized debt issuance costs of $10.5$10.3 million and $11.9$10.1 million as of September 30, 20192020 and December 31, 2018,2019, respectively.

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. Such events and changes include macroeconomic conditions, including those caused by global pandemics, such as COVID-19, which may result in property operational disruption and indicate that the carrying amount may not be recoverable.
No impairment charges were recognized during the three and nine months ended September 30, 2020.
During the three months ended June 30, 2019, the Company recognized impairment charges of $18.7 million on 2 retail properties that the Company intendsintended to market and sell within the next two years.sell. 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. AggregateThe impairment charges of $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.



10.     COMMITMENTS AND CONTINGENCIES
There are various legal actions against us in the ordinary course of business. After consultation with legal counsel, we have concluded that the outcome of such matters will not have a material adverse effect on our financial condition, results of operations or cash flows.

Redevelopment
As of September 30, 2019,2020, we had approximately $42.5$132.4 million of active development, redevelopment and anchor repositioning projects underway,under way, of which $8.3$91.3 million remains to be funded. BasedFurther, while we have identified future projects
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in our development pipeline, we are under no obligation to execute and fund any of these projects and each of these projects is being reevaluated considering market conditions. The Company has updated many of its active project stabilization dates to reflect the impact of the COVID-19 pandemic on current plansits contractors, tenants and estimates, we anticipate the remaining amounts will be expended over the next two years.vendors.

Insurance 
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 insurance with limits of $500 million per occurrence and in the aggregate for properties in the U.S. and $139$147 million for properties in Puerto Rico, subject to the terms, conditions, exclusions, deductibles and sub-limits when applicable for certain perils such as floods and earthquakes, (iii) pollution insurance with limits of $50 million for properties in the U.S. and (iii)Puerto Rico and (iv) numerous other insurance policies including trustees’ and officers’ insurance, cyber, workers’ compensation and automobile-related liabilities insurance. The Company’s insurance includes coverage for acts of terrorism 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, the Company maintainsThe Company’s coverage for certain cybersecurity losses with limits of $5 million per occurrence and in the aggregate providingprovides first and third-party coverage including network interruption, event management, cyber extortion and claims for media content, security and privacy liability.
The Company’s coverage for pollution related losses provides certain remediation and business interruption coverage for specified pollution incidents, which includes the presence of viruses. The Company has filed insurance claims related to COVID-19 and is pursuing available coverage.
Insurance premiums are typically charged directly to each of the retail properties and warehouses but not all of the cost of such premiums are recovered. The Company is responsible for deductibles, 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 available coverage. We cannot anticipate what coverage will be available on commercially reasonable terms in the 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 and other agreements contain customary covenants requiring 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, such requirement could materially and adversely affect our ability to finance our properties and expand our portfolio.

Environmental Matters
Each of our properties has been subjected to varying degrees of environmental assessment at various times. Based on these assessments, we have accrued costs of $1.0 million and $2.7 million on our consolidated balance sheets as of September 30, 2020 and December 31, 2019, respectively, for remediation costs for environmental contamination at certain properties. While this accrual reflects our best estimates of the potential costs of remediation at these properties, there can be no assurance that the actual costs will not exceed these amounts. Although we are not aware of any other material environmental 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.

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, damaging our 2 properties in Puerto Rico. During the nine months ended September 30, 2018, the Company received $1.5 million in casualty insurance proceeds, which were partially offset by $0.3 million of hurricane related costs, resulting in net casualty gains of $1.2 million included in casualty and impairment loss (gain), net on the accompanying consolidated statements of income.

During the three and nine months ended September 30, 2018, the Company recognized a $0.1 million net casualty gain and $0.4 million of business interruption losses, respectively. For the nine months ended September 30, 2018, losses of $0.8 million pertained to rent abatements due to tenants that had not reopened since the 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.

In June 2019, the Company reached a settlement agreement with its carrier regarding its final insurance recovery related to Hurricane Maria for $14.3 million, of which $3.3 million was previously received, subject to deductibles of $2.3 million. We recognized an $8.7 million casualty gain in the nine months ended September 30, 2019 as a result of the remaining insurance proceeds from the settlement agreement for our two2 malls in Puerto Rico.



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Environmental MattersPandemic-Related Contingencies
EachOn January 30, 2020, the spread of the COVID-19 outbreak was declared a Public Health Emergency of International Concern by the World Health Organization ("WHO"). On March 11, 2020, WHO characterized the COVID-19 outbreak as a pandemic. Since March, the continually evolving COVID-19 pandemic impacted our tenants and business operations. The Company has taken precautions to protect the safety, health and well-being of its employees and tenants.
The Company has concentrated operations in the New York metropolitan area and, although local and state governments implemented various phased reopening plans for nonessential businesses during the third quarter of 2020, certain tenants continued to face adverse financial consequences from reduced business operations and social distancing requirements as a result of the COVID-19 pandemic. As of November 3, 2020, 98% of our properties has been subjected to varying degreesportfolio's gross leasable area was open for business and the Company collected approximately 83% of environmental assessment at various times. Based on these assessments, we have accrued coststhird quarter rental revenue billed and 86% of $1.6October rental revenue billed. As of September 30, 2020, the Company executed rent deferrals with an aggregate deferral amount of $2.6 million and $1.7 million on our consolidated balance sheetsa weighted average payback period of approximately six months. Additionally, as of September 30, 20192020, the Company executed rent abatements with an aggregate abatement amount of $0.8 million.
The Company currently remains in active discussions and December 31, 2018, respectively,negotiations with its impacted tenants and anticipates granting further rent concessions or other lease-related relief, such as the deferral of lease payments for remediation costs for environmental contamination at certain properties. While this accrual reflects our best estimatesa period of time to be paid over the remaining term of the potential costslease. We are evaluating rent relief requests on a case-by-case basis, however not all requests for rent relief may be granted. The Company is not currently aware of remediationany other loss contingencies related to the COVID-19 pandemic that would require recognition at these properties, there canthis time, with the exception of abatements already discussed with tenants or deferrals that may not be no assurance thatcollected.
The Company is closely monitoring changes in the actual costs will not exceed these amounts.collectibility assessment of its tenant receivables as a result of certain tenants suffering adverse financial consequences due to the COVID-19 pandemic. During the three and nine months ended September 30, 2018,2020, rental revenue deemed uncollectible of $8.4 million and $21.5 million, respectively, was classified as a reduction to rental revenue based on our assessment of the Companyprobability of collecting substantially all of the remaining rents for certain tenants. Additionally, we recognized $0.6write-offs of $4.7 million and $10.7 million, respectively, related to receivables arising from the straight-lining of environmental remediation costs within property operating expenses onrents as a result of tenants impacted by the consolidated statements of income. Although we are not aware of any other material environmental 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.COVID-19 pandemic.

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”),Given the parent company of Kmart,economic environment brought upon by COVID-19, certain tenants experienced liquidity or financial hardships and 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.

Duringduring the three and nine months ended September 30, 2019,2020. Although some of these tenants intend to exit the Chapter 11 bankruptcy process and resume operations, the outcomes of such proceedings are unknown and the Company received $0.1is currently exploring leasing alternatives for these spaces. Specifically, Century 21 Department Stores LLC (“Century 21”) filed for Chapter 11 bankruptcy protection on September 10, 2020. Prior to bankruptcy, the Company had one lease with Century 21 in Paramus, NJ comprising approximately 157,000 sf, which generated $4.4 million and $1.2 million of bankruptcy settlement income in annual rental revenue. In connection with the bankruptcy, proceedingsthe Company recognized a write-off of Toys "R" Us$2.5 million of receivables arising from the straight-lining of rents, and recognized $0.9 million and $2.1 million as rental revenue deemed uncollectible (classified within rental revenue) for the three and nine months ended September 30, 2020. Additionally, 24 Hour Fitness USA, Inc. (“Toys “R” Us”24 Hour Fitness”). The settlement proceeds were used to offset outstanding credit losses and the remaining proceeds were recorded to other income. filed for Chapter 11 bankruptcy protection on June 15, 2020. Prior to liquidation in 2018,bankruptcy, the Company had leasesone lease with Toys “R” Us at 9 locations24 Hour Fitness in Paramus, NJ comprising approximately 54,000 sf, which generated $3.1 million in annual rental revenue. In connection with annual grossthe bankruptcy, the Company recognized a write-off of $3.5 million of receivables arising from the straight-lining of rents, of $7.6 million. No determination has been madeand recognized $0.5 million and $1.3 million as rental revenue deemed uncollectible (classified within rental revenue) for the three and nine months ended September 30, 2020, respectively. Subsequent to the amount or timing of additional bankruptcy settlement proceeds, if any, that may be received.third quarter, 24 Hour Fitness communicated its intentions to continue operations at the Company's location.








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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
(Amounts in thousands)September 30, 2020December 31, 2019
Other assets$7,520 $7,460 
Deferred tax asset, net(1)
10,023 0 
Real estate held for sale0 6,574 
Deposits for acquisitions0 10,000 
Prepaid expenses:
Real estate taxes6,806 6,491 
Insurance3,107 1,520 
Licenses/fees1,711 1,655 
Total Prepaid expenses and other assets$29,167 $33,700 
 Balance at
(Amounts in thousands)September 30, 2019 December 31, 2018
Assets held for sale$3,453
 $—
Other assets4,289
 2,765
Prepaid expenses:   
Real estate taxes6,513
 6,911
Insurance3,165
 2,509
Licenses/fees1,529
 783
Total Prepaid expenses and other assets$18,949
 $12,968
(1) The balance as of September 30, 2020 comprises the deferred tax asset, net resulting from the refinancing and restructuring transactions, which occurred in June 2020 at the Company's mall in Puerto Rico, The Outlets at Montehiedra, offset by the property’s preexisting deferred tax liability, net balance and valuation allowance.




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 atBalance at
(Amounts in thousands)September 30, 2019 December 31, 2018(Amounts in thousands)September 30, 2020December 31, 2019
Deferred tenant revenue$27,305
 $28,697
Deferred tenant revenue$24,942 $26,224 
Accrued interest payableAccrued interest payable9,958 9,729 
Accrued capital expenditures and leasing costs17,669
 29,754
Accrued capital expenditures and leasing costs9,777 7,893 
Accrued interest payable9,398
 8,950
Security deposits5,827
 5,396
Security deposits6,129 5,814 
Deferred tax liability, net5,279
 5,532
Deferred tax liability, net(1)
Deferred tax liability, net(1)
283 5,137 
Accrued payroll expenses4,941
 5,747
Accrued payroll expenses5,900 5,851 
Other liabilities and accrued expenses9,742
 7,371
Other liabilities and accrued expenses11,407 15,996 
Accrued rent(1)
—
 7,070
Total accounts payable, accrued expenses and other liabilities$80,161
 $98,517
Total accounts payable, accrued expenses and other liabilities$68,396 $76,644 
(1)In The balance as of December 31, 2019 comprises the deferred tax liabilities, net in connection with the adoptionCompany’s 2 malls in Puerto Rico, with a $4.0 million net liability resulting from The Outlets at Montehiedra and $1.1 million net liability resulting from Las Catalinas Mall. As a result of ASC 842 on January 1, 2019, we reclassified $7.1 millionthe refinancing and restructuring transactions which occurred in June 2020 at The Outlets at Montehiedra, the Company’s deferred tax liability, net balance as of accrued rent and adjusted the carrying values of our ROU assets by the corresponding amount.September 30, 2020 exclusively comprises Las Catalinas Mall.


13.     INTEREST AND DEBT EXPENSE
 
The following table sets forth the details of interest and debt expense in the consolidated statements of income:
 Three Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands)2020201920202019
Interest expense$17,433 $16,131 $51,771 $47,699 
Amortization of deferred financing costs703 730 2,113 2,170 
Total Interest and debt expense$18,136 $16,861 $53,884 $49,869 
 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 costs730
 720
 2,170
 2,159
Total Interest and debt expense$16,861
 $16,756
 $49,869

$48,059




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14.     EQUITY AND NONCONTROLLING INTEREST

At-The-MarketShare Repurchase Program
In 2016,March 2020, the Company established an at-the-market (“ATM”) equityCompany’s Board of Trustees authorized a share repurchase program pursuantfor up to which$200 million of the Company’s common shares. Under the program, the Company may offer and sellrepurchase its shares from time to time itsin the open market or in privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18. The amount and timing of the purchases will depend on a number of factors including the price and availability of the Company’s shares, trading volume and general market conditions. The share repurchase program does not obligate the Company to acquire any particular amount of common shares par value $0.01 perand may be suspended or discontinued at any time at the Company’s discretion.
During the third quarter of 2020, no shares were repurchased by the Company. Cumulative total purchases since inception are 5.9 million shares at a weighted average share with an aggregate gross sales price of up$9.22 amounting to $250.0 million through a consortium of broker dealers acting as sales agents. During the three and nine months ended September 30, 2019 and 2018, respectively, 0 common shares were issued under the ATM equity program. The Company’s ATM program expired in August 2019. We had 0 obligation to sell the remaining shares available under the ATM equity program.$54.1 million.

Dividends and Distributions
Beginning in the second quarter, we temporarily suspended our dividend as a result of the COVID-19 pandemic and resulting uncertainty, and as such, no dividends were declared on our common shares or OP units during the three months ended September 30, 2020. During the three months ended September 30, 2019, and 2018, respectively, the Company declared dividendsdistributions on our common shares and OP unit distributionsunits of $0.22 per share/unit. During the nine months ended September 30, 20192020 and 20182019, respectively, the Company declared dividendsdistributions on our common shares and OP unit distributionsunits of $0.22 and $0.66 per share/unit in the aggregate.
Noncontrolling Interests in Operating Partnership
Redeemable noncontrollingNoncontrolling interests in the Operating Partnership 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. 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 property acquisitions in 2017.
The total of the OP units and LTIP units represent a 4.7%3.9% and 6.2%4.1% weighted-average interest in the Operating Partnership for the three and nine months ended September 30, 2019,2020, 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 1-for-one basis, solely at our election. Holders of outstanding OP units may redeem their units for cash or the Company’s common shares on a 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 (loss) attributable to noncontrolling interest is presented separately in our consolidated statements of income.


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15.     SHARE-BASED COMPENSATION

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)2020201920202019
Share-based compensation expense components:
Restricted share expense$199 $297 $653 $1,384 
Stock option expense432 992 4,559 3,062 
LTIP expense(1)
1,023 1,171 6,323 3,374 
Performance-based LTI expense(2)
944 828 2,886 2,315 
Deferred share unit (“DSU”) expense6 22 42 134 
Total Share-based compensation expense$2,604 $3,310 $14,463 $10,269 
 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 expense992
 546
 3,062
 1,650
LTIP expense1,171
 285
 3,374
 659
Outperformance Plan (“OPP”) expense828
 825
 2,315
 2,365
Deferred share unit (“DSU”) expense22
 71
 134
 94
Total Share-based compensation expense$3,310
 $2,252
 $10,269
 $6,494
(1) LTIP expense includes the time-based portion of the 2018, 2019 and 2020 LTI Plans.
(2) Performance-based LTI expense includes the 2015 and 2017 OPP plans and the performance-based portion of the 2018, 2019 and 2020 LTI Plans.


The total share-based compensation expense recognized for the nine months ended September 30, 2020 includes $5.6 million of accelerated amortization of unvested equity awards in connection with the executive transition of our former President of Development and the amount for the nine months ended September 30, 2019 includes $0.4 million of accelerated amortization of unvested equity awards in connection with the executive transition of our former Chief Operating Officer. Equity award activity during the nine months ended September 30, 20192020 included: (i) 276,4822,208,304 stock options vested, (ii) 297,195 LTIP units granted, (ii) 180,213 stock options granted, (iii) 34,638 restricted shares granted,341,022 LTIP units vested, (iv) 693,441 stock options vested, (v) 96,37850,285 restricted shares vested and (vi) 80,681 LTIP units vested.(v) 31,679 restricted shares granted.

20192020 Long-Term Incentive Plan

On April 4, 2019,February 20, 2020, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 20192020 Long-Term Incentive Plan (“20192020 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 (i) the passage of time (one-third of the fair value of the program) and (ii) 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 35th 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 55th 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 75th percentile 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.



program). 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 atotal grant date fair value of $2.0 million.under the 2020 LTI Plan was $8.8 million comprising performance-based and time-based awards.

Units Granted to Trustees
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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)2019 2018 2019 2018(Amounts in thousands, except per share amounts)2020201920202019
Numerator:       Numerator:
Net income attributable to common shareholders$54,040
 $24,200
 $106,148
 $98,637
Less: Earnings allocated to unvested participating securities(43) (44) (89) (177)
Net income available for common shareholders - basic$53,997
 $24,156

$106,059

$98,460
Net income (loss) attributable to common shareholdersNet income (loss) attributable to common shareholders$(5,605)$54,040 $74,630 $106,148 
Less: (Earnings) loss allocated to unvested participating securitiesLess: (Earnings) loss allocated to unvested participating securities4 (43)(50)(89)
Net income (loss) available for common shareholders - basicNet income (loss) available for common shareholders - basic$(5,601)$53,997 $74,580 $106,059 
Impact of assumed conversions:       Impact of assumed conversions:
OP and LTIP units—
 —
 5,883
 200
OP and LTIP units0 0 0 5,883 
Net income available for common shareholders - dilutive$53,997
 $24,156

$111,942

$98,660
Net income (loss) available for common shareholders - dilutiveNet income (loss) available for common shareholders - dilutive$(5,601)$53,997 $74,580 $111,942 
       
Denominator:       Denominator:
Weighted average common shares outstanding - basic121,087
 113,890
 119,259
 113,769
Weighted average common shares outstanding - basic116,625 121,087 118,033 119,259 
Effect of dilutive securities(1):
       
Effect of dilutive securities(1):
Stock options using the treasury stock method—
 78
 —
 36
Restricted share awards96
 188
 102
 194
Restricted share awards0 96 78 102 
Assumed conversion of OP and LTIP units—
 —
 7,128
 237
Assumed conversion of OP and LTIP units0 0 0 7,128 
Weighted average common shares outstanding - diluted121,183
 114,156
 126,489
 114,236
Weighted average common shares outstanding - diluted116,625 121,183 118,111 126,489 
       
Earnings per share available to common shareholders:       Earnings per share available to common shareholders:
Earnings per common share - Basic$0.45
 $0.21
 $0.89
 $0.87
Earnings per common share - Diluted$0.45
 $0.21
 $0.89
 $0.86
Earnings (loss) per common share - BasicEarnings (loss) per common share - Basic$(0.05)$0.45 $0.63 $0.89 
Earnings (loss) per common share - DilutedEarnings (loss) per common share - Diluted$(0.05)$0.45 $0.63 $0.89 
(1) For the three months ended September 30, 2019 and 2018,the three and nine months September 30, 2020, 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.













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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)2020201920202019
Numerator:
Net income (loss) attributable to unitholders$(5,830)$56,702 $78,003 $112,683 
Less: net (income) loss attributable to participating securities4 (43)(50)(89)
Net income (loss) available for unitholders$(5,826)$56,659 $77,953 $112,594 
Denominator:
Weighted average units outstanding - basic120,618 126,277 122,332 126,387 
Effect of dilutive securities issued by Urban Edge0 96 78 102 
Unvested LTIP units0 0 764 1 
Weighted average units outstanding - diluted120,618 126,373 123,174 126,490 
Earnings per unit available to unitholders:
Earnings (loss) per unit - Basic$(0.05)$0.45 $0.64 $0.89 
Earnings (loss) per unit - Diluted$(0.05)$0.45 $0.63 $0.89 
 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 - basic126,277
 126,208
 126,387
 126,170
Effect of dilutive securities issued by Urban Edge96
 267
 102
 229
Unvested LTIP units—
 218
 1
 237
Weighted average units outstanding - diluted126,373
 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



29

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 factorspredict and include, among others,others: (i) the economic, political and social impact of, e-commerce;and uncertainty relating to, the COVID-19 pandemic, including (a) the effectiveness or lack of effectiveness of governmental relief in providing assistance to large and small businesses, particularly our retail tenants, that have suffered significant declines in revenues as a result of mandatory business shut-downs, “shelter-in-place” or “stay-at-home” orders and social distancing practices, as well as to individuals adversely impacted by the COVID-19 pandemic, (b) the duration of any such orders or other formal recommendations for social distancing and the speed and extent to which revenues of our retail tenants recover following the lifting of any such orders or recommendations, (c) the potential impact of any such events on the obligations of the Company’s tenants to make rent and other payments or honor other commitments under existing leases, (d) the potential adverse impact on returns from redevelopment projects, and (e) the broader impact of the severe economic contraction and increase in unemployment that has occurred in the short term and negative consequences that will occur if these trends are not quickly reversed; (ii) the loss of or bankruptcy of major tenants;tenants, particularly in light of the adverse impact to the financial health of many retailers that has occurred and continues to occur as a result of the COVID-19 pandemic; (iii) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration, the Company’s ability to re-lease its properties on the same or better terms, or at all, in the event of non-renewal or in the event the Company exercises its right to replace an existing tenant, particularly, in light of the adverse impact to the financial health of many retailers that has occurred and continues to occur as a result of the COVID-19 pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate physical retail locations in future; (iv) the impact of e-commerce on our tenants’ business; (v) macroeconomic conditions, such as a disruption of, or lack of access to the capital markets, as well as the recent significant decline in the Company’s share price from prices prior to the spread of the COVID-19 pandemic; (vi) the Company’s success in implementing its business strategy and its ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (vii) changes in general economic conditions and changes in the real estate market in particular; adverseor economic conditions in the areasmarkets in which our properties are located; natural disasters;the Company competes, and their effect on the Company’s revenues, earnings and funding sources, and on those of its tenants; (viii) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of LIBOR after 2021; (ix) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due and potential limitations on the Company’s ability to borrow funds under its existing credit facility as a result of covenants relating to the Company’s financial results; (x) potentially higher costs related to ourassociated with the Company’s development, redevelopment and anchor repositioning projects, and ourthe Company’s ability to lease these projectsthe properties at projected rates; competition(xi) the Company’s liability for acquisitions;environmental matters; (xii) damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change; (xiii) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (xiv) information technology security breaches; and (xv) the loss of key personnel; the availability of financing and changes in, and compliance with, tax law and REIT qualifications.executives. 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, 20182019 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 manages, develops, redevelops, and acquires retail real estate, 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 UE’s majority-owned partnership subsidiary and to own, through affiliates, all of the Company’s real estate properties and other assets. Unless
30

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, 2019,2020, Urban Edge owned approximately 95.4%96.1% of the outstanding common OP Units with the remaining limited OP Units held by members of management, Urban Edge’s Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership.

As of September 30, 2019,2020, our portfolio consisted of 7372 shopping centers, four malls and atwo warehouse park,parks, totaling approximately 15.015.1 million square feet.
Critical Accounting Policies and Estimates

The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20182019 contains a description of our critical accounting policies, including accounting for real estate, leases and revenue recognition. For the nine months ended September 30, 2019,2020, there were no material changes to these policies other thanwith the adoptionexception of ASU 2016-02 and updates to the Company’s policies on leases, accounts receivable and changes in collectibility assessment describedour real estate policy, which has been included in Note 3 and Note 8 to the unaudited consolidated financial statements in Part 1,I, Item 1I 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 expenditures consist of our property operating and capital 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 primarily consistconsists of interest on our mortgage 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 changes in accounting policies. The results of operations of any acquired properties are included in our financial statements as of the date of acquisition. Our results of operations are affected by national, regional and local economic conditions, as well as macroeconomic conditions, which are at times subject to volatility and uncertainty. There continues to be volatility and economic uncertainty in many markets. The current COVID-19 pandemic has increased volatility and uncertainty and has created significant economic disruption. The duration of measures taken to contain the pandemic, including mandatory business shut-downs, reduced business operations and social distancing is unknown as is the long-term consequence of such measures on consumer behavior. Specifically, the revenue and sales volume for our tenants identified as nonessential may decline significantly as demand for their services and products changes in the near term and potentially longer term. We are actively managing our business to respond to the ongoing economic and social impact and uncertainty relating to COVID-19 pandemic; however, our future near term and potentially longer term results of operations may be significantly adversely affected. See “Pandemic-Related Contingencies” under Liquidity and Capital Resources and “Item 1A. Risk Factors” for more information.






31

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,
(Amounts in thousands)2019 2018 2019 2018
Net income$56,700
 $26,899
 $112,659
 $109,712
FFO applicable to diluted common shareholders(1)
38,248
 46,342
 132,350
 130,022
Cash NOI(2)
57,373
 50,855
 176,851
 165,517
Same-property cash NOI(2)
52,144
 53,585
 150,886
 153,739
Three Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands)2020201920202019
Net income (loss)$(5,830)$56,700 $78,003 $112,659 
FFO applicable to diluted common shareholders(1)
16,880 38,248 107,330 132,350 
NOI(2)
46,019 57,373 151,020 176,851 
Same-property NOI(2)
43,483 54,440 141,701 164,317 
(1) Refer to page 38 for a reconciliation to the nearest generally accepted accounting principles (“GAAP”) measure.
(2) Refer to page 37 for a reconciliation to the nearest GAAP measure.

Development/Redevelopment Activity

The Company has eightthirteen active development, redevelopment or anchor repositioning projects with total estimated costs of $42.5$132.4 million, of which $34.2$41.1 million (or 80%31%) has been incurred as of September 30, 2019.2020. We continue to monitor the stabilization dates of these projects as a result of the impact of the COVID-19 pandemic on our tenants and vendors. The estimated stabilization dates of these projects are our best estimate assuming activity is not further impeded by COVID-19 related restrictions. As of September 30, 2020, we have $91.3 million remaining to be funded on our active projects. Further, while we have identified future projects in our development pipeline, we are under no obligation to execute and fund any of these projects and each of these projects is being reevaluated considering market conditions.

The Company completed five redevelopment projects with total estimated costs of $80.4 million during the third quarter:
Bergen Town Center in Paramus, NJ - expanded center with the addition of 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

During the threenine months ended September 30, 2019,2020, the Company acquired Kingswood Center and Kingswood Crossing for $167.3 million, including transaction costs. The properties are located along Kings Highway in the Midwood neighborhood of Brooklyn, NY. The Company plans to increase the value of these assets via lease up of existing vacancy, remerchandising where appropriate and maximizing the value of unused development rights. As part of the acquisition of Kingswood Center, we assumed a $65.5 million mortgage, which matures in 2028.
During the nine months ended September 30, 2020, we disposed of sixthree properties and received proceeds of $77.6$58.1 million, net of selling costs, resulting in a $39.7$39.8 million net gain on sale of real estate. DuringProceeds from the nine months ended September 30,dispositions, in addition to proceeds generated from some of the Company’s non-core asset sales in 2019, we disposed of eight propertieswere used to acquire Kingswood Center and received proceeds of $111.4 million, net of selling costs, resulting in a $68.2 million gain on sale of real estate. During the three and nine months ended September 30, 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.
As of September 30, 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.


We are also under contract to purchase one 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 asKingswood Crossing via 1031 exchanges and allowed for the Company’s dispositions and the required equity will be funded using proceedsdeferral of capital gains resulting from dispositions.these sales.

Equity Activity

Equity award activity during the nine months ended September 30, 20192020 included: (i) 276,4822,208,304 stock options vested, (ii) 297,195 LTIP units granted, (ii) 180,213 stock options granted, (iii) 34,638 restricted shares granted,341,022 LTIP units vested, (iv) 693,441 stock options vested, (v) 96,37850,285 restricted shares vested and (vi) 80,681 LTIP units vested.(v) 31,679 restricted shares granted. 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 price of $16.70 per unit, for total cash consideration of $6.0 million.

On April 4, 2019,February 20, 2020, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2019 Long-Term Incentive Plan (“20192020 LTI Plan”).Plan. The 20192020 LTI 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). During the nine months ended September 30, 2019,2020, the Company issued 489,319630,774 performance-based LTIP units and 112,910169,004 time-based LTIP units, respectively, in connection with the 20192020 LTI Plan.
In March 2020, the Company’s Board of Trustees authorized a share repurchase program for up to $200 million of the Company’s common shares. During the third quarter of 2020, no shares were repurchased by the Company. Cumulative total purchases since inception are 5.9 million shares at a weighted average share price of $9.22 amounting to $54.1 million. Refer to Note 1514 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for more information regarding the 2019 LTI Plan.Company’s share repurchase program.
32

























Comparison of the Three Months Ended September 30, 20192020 to September 30, 20182019
Net incomeloss for the three months ended September 30, 20192020 was $56.7$5.8 million, compared to net income of $26.9$56.7 million for the three months ended September 30, 2018.2019. 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, 20192020 as compared to the same period of 2018:2019:
 Three Months Ended September 30,  
(Amounts in thousands)2019 2018 Change
Total revenue$91,243
 $112,214
 $(20,971)
Real estate taxes14,490
 16,374
 (1,884)
Property operating expenses14,075
 22,328
 (8,253)
General and administrative8,353
 9,702
 (1,349)
Lease expense3,486
 2,722
 764
Gain on sale of real estate39,716
 2,185
 37,531
Gain on sale of lease1,849
 —
 1,849
Three Months Ended September 30,
(Amounts in thousands)20202019$ Change
Total revenue$75,838 $91,243 $(15,405)
Gain on sale of real estate— 39,716 (39,716)
Interest income282 2,706 (2,424)
Interest and debt expense18,136 16,861 1,275 
Income tax expense459 53 406 
Total revenue decreased by $21.0$15.4 million to $75.8 million in the third quarter of 2020 from $91.2 million in the third quarter of 2019 from $112.2 million in the third quarter of 2018.2019. The decrease is primarily attributable to:
•$16.58.1 million asincrease in rental revenue deemed uncollectible;
•$4.7 million increase in write-offs of receivables arising from the straight-lining of rents in connection with leases recognized on a result of the write-off of below-market lease intangible liabilities related to the recaptured Toys “R” Us leases in the third quarter of 2018;cash basis;
•$2.82.4 million as a result of property dispositions since the third quarter of 2018;
$1.9 millionnet decrease in property rentals due to lease terminations and modifications, offset by rent commencements and contractual rent increases since the third quarter of 2018;2019; and
$0.3 million due to credit losses related to operating lease receivables recognized against rental income in the third quarter of 2019 in accordance with the new lease accounting standard, as compared to being included in property operating expenses in the third quarter of 2018, partially offset by
$0.3 million increase in lease termination income; and
•$0.2 million increase due to rent abatementsdecrease in the third quarter of 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 $14.5 million in the third quarter of 2019 from $16.4 million in the third quarter of 2018. The decrease is primarily attributable to:
$1.3 milliontenant reimbursement income 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 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; andexpenses.
$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 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.
We recognized a gain on sale of real estate of $39.7 million in the thirdthird quarter of 2019 due to the sale of six operating properties. A gain on sale of real estate of $2.2
Interest income decreased by $2.4 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 $1.8to $0.3 million in the third quarter of 20192020 from $2.7 million in the third quarter of 2019. The decrease is primarily attributable to a decrease in interest rates.
Interest and debt expense increased by $1.3 million to $18.1 million in the third quarter of 2020 from $16.9 million in the third quarter of 2019. The increase is primarily attributable to:
•$1.0 million incremental interest in connection with the default of our mortgage at Las Catalinas Mall in Puerto Rico in April 2020;
•$0.8 million of interest resulting from the $250 million draw on the Company’s revolving credit agreement in March 2020; and
•$0.8 million of interest due to the saleassumption of our ground leasemortgage debt in Tysons Corner, VA.


connection with the acquisition of Kingswood Center in Brooklyn, NY in February 2020, partially offset by
•$0.9 million interest decrease on variable-rate debt due to lower interest rates; and
•$0.4 million interest decrease as a result of the refinancing of the mortgage secured by The Outlets at Montehiedra in June 2020.
Income tax expense increased by $0.4 million to $0.5 million in the third quarter of 2020 from $0.1 million in income tax expense in the third quarter of 2019. The increase is primarily attributable to state and local income tax expense resulting from tax strategies implemented to limit the impact from the cancellation of debt at the Outlets of Montehiedra on the Company’s U.S. federal taxable income, partially offset by an income tax benefit due to net losses at our Puerto Rico malls in the third quarter of 2020.











33

Comparison of the Nine Months Ended September 30, 20192020 to September 30, 20182019
Net income for the nine months ended September 30, 20192020 was $112.7$78.0 million, compared to net income of $109.7$112.7 million for the nine months ended September 30, 2018.2019. The following table summarizes certain line items from our consolidated statements of income that we believe are important in understanding our operations and/or those items which significantly changed in the nine months ended September 30, 2019 as compared to the same period of 2018:2019:
Nine Months Ended September 30,  Nine Months Ended September 30,
(Amounts in thousands)2019 2018 Change(Amounts in thousands)20202019$ Change
Total revenue$291,722
 $313,237
 $(21,515)Total revenue$242,817 $291,722 $(48,905)
Depreciation and amortization65,893
 73,544
 (7,651)
Real estate taxes45,188
 47,736
 (2,548)
Property operating expenses45,552
 61,996
 (16,444)Property operating expenses39,867 45,552 (5,685)
General and administrative28,943
 25,579
 3,364
General and administrative36,600 28,943 7,657 
Casualty and impairment (loss) gain, net(9,070) 1,248
 (10,318)
Lease expense11,037
 8,210
 2,827
Casualty and impairment loss, netCasualty and impairment loss, net— 9,070 (9,070)
Gain on sale of real estate68,219
 52,625
 15,594
Gain on sale of real estate39,775 68,219 (28,444)
Gain on sale of lease1,849
 —
 1,849
Interest income7,670
 5,943
 1,727
Interest income2,387 7,670 (5,283)
Interest and debt expense49,869
 48,059
 1,810
Interest and debt expense53,884 49,869 4,015 
Gain on extinguishment of debt—
 2,524
 (2,524)Gain on extinguishment of debt34,908 — 34,908 
Income tax expense1,249
 741
 508
Income tax (benefit) expenseIncome tax (benefit) expense(13,103)1,249 (14,352)
Total revenue decreased by $21.5$48.9 million to $242.8 million in the nine months ended September 30, 2020 from $291.7 million in the nine months ended September 30, 2019 from $313.2 million in the nine months ended September 30, 2018.2019. The decrease is primarily attributable to:
•$14.220.4 million increase in rental revenue deemed uncollectible;
•$10.7 million increase in write-offs of receivables arising from the straight-lining of rents in connection to leases with rental revenue being recognized on a cash basis;
•$7.4 million decrease in write-offs of below-market lease intangible liabilities related to recaptured leases;
•$5.84.7 million decrease as a result of property dispositions;dispositions net of acquisitions;
•$2.04.1 million decrease in tenant reimbursement income due to lower common area maintenance expenses;
•$0.8 million net decrease in other income due to a decrease in tenant bankruptcy settlement income; and
•$0.8 million net decrease in property rentals due to lease terminations and modifications, offset by rent commencements and contractual rent increases; andincreases.
$1.1 million due to credit losses related toProperty 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 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 tenant bankruptcy settlement income.
Depreciation and amortization expenses decreased by $7.7$5.7 million to $65.9$39.9 million in the nine months ended September 30, 20192020 from $73.5 million in the nine months ended September 30, 2018. The decrease is primarily attributable to:
$8.4 million decrease in depreciation and amortization as a result of write-offs of existing tenant improvements and intangible assets related to recaptured leases in the nine months ended September 30, 2018; and
$0.3 million decrease as a result of property dispositions, partially offset by
$1.0 million increase from development projects and tenant improvements placed into service.
Real estate taxes decreased by $2.5 million to $45.2 million in the nine months ended September 30, 2019 from $47.7 million in the nine months ended September 30, 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 $62.02019. The decrease is primarily attributable to:
•$5.1 million decrease in common area maintenance expenses primarily related to less snow and reduced operating costs due to temporary tenant closures in connection with COVID-19; and
•$0.9 million decrease as a result of property dispositions net of acquisitions, partially offset by
•$0.3 million increase in environmental compliance expenses.
General and administrative expenses increased by $7.7 million to $36.6 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 to2020 from $28.9 million in the nine months ended September 30, 2019 from $25.6 million in the nine months ended September 30, 2018.2019. The increase is primarily attributable to:
•$3.4 million increase in share-based compensation expense due to additional equity awards granted;
$1.1 million increase in professional fees for consulting, recruitment and legal services, partially offset by
$1.16.8 million net decreaseincrease in executive transition costs including accelerated amortization of unvested equity awards;
•$0.5 million net increase in salary expense; and
•$0.4 million net increase in transaction, severance and other expenses.
AWe recognized a casualty and impairment loss, net of $9.1 million, was recognizedin the in the nine months ended September 30, 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, comprisedon sale of $1.5 millionreal estate of insurance proceeds, offset by $0.3 million of expenses incurred as a result of Hurricane Maria in Puerto Rico.
Lease expense increased by $2.8 million to $11.0$39.8 million in the nine months ended September 30, 2019 from $8.2 million in the nine months ended September 30, 2018. The increase is primarily attributable2020 due to the recognitionsale of common area maintenancethree operating properties 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.
We recognized a gain on sale of real estate of $68.2 million in the nine months ended September 30, 2019 due to the sale of eight operating properties. A gain on sale of real estate of $52.6
Interest income decreased by $5.3 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 Allentown, PA and $2.2 million as a result of the sale of a 5.7 acre land parcel at our property, Cherry Hill Commons, in Cherry Hill, NJ.
We recognized a gain of $1.8to $2.4 million in the nine months ended September 30, 2019 due to the sale of our ground lease in Tysons Corner, VA.
Interest income increased by $1.7 million to2020 from $7.7 million in the nine months ended September 30, 2019 from $5.92019. The decrease is primarily attributable to a decrease in interest rates.
34

Interest and debt expense increased by $4.0 million to $53.9 million in the nine months ended September 30, 2018. The increase is attributable to an increase in interest rates and higher invested cash balances.
Interest and debt expense increased by $1.8 million to2020 from $49.9 million in the nine months ended September 30, 2019 from $48.1 million in the nine months ended September 30, 2018.2019. The increase is primarily attributable to:
•$1.52.1 million of interest resulting from the $250 million draw on the Company’s revolving credit agreement in March 2020;
•$2.0 million incremental interest in connection with the default of our mortgage at Las Catalinas Mall in Puerto Rico in April 2020;
•$1.6 million of interest due to the assumption of mortgage debt in connection with the acquisition of Kingswood Center in Brooklyn, NY in February 2020; and
•$0.8 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,projects, partially offset by
•$0.32.1 million interest decrease on variable-rate debt due to lower principal balances from monthly payments on fixed rate debt.interest rates; and
•$0.4 million interest decrease as a result of the refinancing of the mortgage secured by The Outlets at Montehiedra in June 2020.
We recognized a $2.5 million gain on extinguishment of debt in the nine months ended September 30, 2018 as a result of the foreclosure sale and forgiveness of the $11.5 million mortgage debt secured by our property in Englewood, NJ.
Income tax expense increased by $0.5 million to $1.2$34.9 million in the nine months ended September 30, 2019 from $0.72020 as a result of the refinancing of the mortgage secured by The Outlets at Montehiedra, consisting of the forgiveness of the $30 million junior loan plus accrued interest of $5.4 million, offset by the write-off of $0.4 million of unamortized deferred financing fees and $0.1 million of transaction costs.
Income tax expense decreased by $14.4 million resulting in an income tax benefit of $13.1 million in the nine months ended September 30, 20182020 from $1.2 million of expense in the nine months ended September 30, 2019. The decrease is primarily attributable to the tax impact of the mortgage refinancing and legal entity restructuring transactions related to our mall in Puerto Rico, The Outlets at Montehiedra, in June 2020, partially offset by state and local income tax expense resulting from tax strategies implemented to limit the impact from the cancellation of debt at the Outlets of Montehiedra on the Company’s U.S. federal taxable income and the tax impact of the insurance settlement for our two mallsreceived in Puerto Rico2019 related to Hurricane Maria.




































35

Non-GAAP Financial Measures

We use NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, 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 net income. The most directly comparable GAAP financial measure to NOI is net income. 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 NOI by adjusting net income to add back depreciation and amortization expense, general and administrative expenses, casualty and real estate impairment losses, interest and debt expense, income tax expense and non-cash lease expense, and deduct management and development fee income from non-owned properties, gains on sale of real estate, interest income, non-cash rental income resulting from the straight-lining of rents and amortization of acquired below market leases net of above market leases. NOI should not be considered a substitute for net income and may not be comparable to similarly titled measures employed by others. The Company has historically defined this metric as "Cash NOI." There have been no changes to the calculation of this metric. However, the Company has decided to refer to this metric as "NOI" instead of "Cash NOI" to further clarify that, consistent with the definition of this metric, the revenue and expenses reflected in this metric include some accrued amounts and are not limited to amounts for which the Company actually received or made cash payment during the applicable period.

We calculate same-property NOI using net income as defined by GAAP reflecting only those income and expense items that are reflected in NOI (as described above) and excluding 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 or sold during the periods being compared. We also exclude for the following items in calculating same-property NOI: lease termination fees, bankruptcy settlement income, and income and expenses that we do not believe are representative of ongoing operating results, if any. As such, same-property 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, which the Company believes to be useful to investors. Same-property NOI should not be considered a substitute for net income and may not be comparable to similarly titled measures employed by others. The Company has historically defined this metric as "same-property Cash NOI." There have been no changes to the calculation of this metric.

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 73which total 74 properties for the three months ended September 30, 2020 and 2019 and 2018 and7273 properties for the nine months ended September 30, 2019 2020 and 2018.2019. 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 or 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 reflected in cash NOI, adjusted for the following items: lease termination fees, bankruptcy settlement income, and income and 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 net income to add back depreciation and amortization expense, general and administrative expenses, casualty and real estate impairment losses and non-cash 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 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 net income and may not be comparable to similarly titled measures employed by others.
Same-property cash NOI decreased by $1.4$11.0 million, or (2.7)%20.1%, for the three months ended September 30, 20192020 as compared to the three months ended September 30, 20182019 and decreased by $2.9$22.6 million, or (1.9)%13.8%, for the nine months ended September 30, 20192020 as compared to the nine months ended September 30, 2018.2019.













36









The following table reconciles net income (loss) to cash NOI and same-property cash NOI for the three and nine months ended September 30, 20192020 and 2018,2019, respectively.
 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 amortization21,496
 21,833
 65,893
 73,544
General and administrative expense8,353
 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 expense16,861
 16,756
 49,869
 48,059
Gain on extinguishment of debt—
 —
 —
 (2,524)
Income tax expense53
 115
 1,249
 741
Non-cash revenue and expenses(1,790) (19,514) (12,953) (28,595)
Cash NOI57,373
 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 redeveloped3,415
 2,992
 17,041
 15,162
Same-property cash NOI including properties in redevelopment$55,559
 $56,577

$167,927

$168,901
Three Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands)2020201920202019
Net income (loss)$(5,830)$56,700 $78,003 $112,659 
Management and development fee income from non-owned properties(404)(280)(1,003)(940)
Other expense257 251 713 799 
Depreciation and amortization22,888 21,496 69,658 65,893 
General and administrative expense8,700 8,353 36,600 28,943 
Casualty and impairment loss, net(1)
— — — 9,070 
Gain on sale of real estate— (39,716)(39,775)(68,219)
Gain on sale of lease— (1,849)— (1,849)
Interest income(282)(2,706)(2,387)(7,670)
Interest and debt expense18,136 16,861 53,884 49,869 
Gain on extinguishment of debt— — (34,908)— 
Income tax (benefit) expense459 53 (13,103)1,249 
Non-cash revenue and expenses2,095 (1,790)3,338 (12,953)
NOI(2)
46,019 57,373 151,020 176,851 
Adjustments:
Non-same property NOI(3)
(2,285)(2,559)(8,561)(10,981)
Tenant bankruptcy settlement income and lease termination income(251)(374)(758)(1,553)
Same-property NOI$43,483 $54,440 $141,701 $164,317 
NOI related to properties being redeveloped702 658 2,055 1,793 
Same-property NOI including properties in redevelopment$44,185 $55,098 $143,756 $166,110 
(1) 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) The Company has historically defined this metric as “Cash NOI.” There have been no changes to the calculation.
(3) Non-same property cash NOI includes cash NOI related to properties being redeveloped and properties acquired or disposed.disposed in the period.



















37

Funds From Operations
FFO for the three months ended September 30, 2019 was $38.2 million compared to $46.3$16.9 million for the three months ended September 30, 2018 and2020 compared to $38.2 million for the three September 30, 2019. FFO was $107.3 million for the nine months ended September 30, 2020 compared to $132.4 million for the nine months ended September 30, 2019 compared to $130.0 million for the nine months ended September 30, 2018.2019.
We calculate FFO in accordance with the National Association of Real Estate Investment Trusts’ (‘‘Nareit’’) definition. Nareit defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable real estate and land when connected to the main business of a REIT, impairments on depreciable real estate 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. We believe the presentation of comparable period operating results generated from FFO provides useful information to investors because the definition excludes items included in net income that do not relate to or are not indicative of our operating and financial performance, such as depreciation and amortization related to real estate, and items which can make periodic and peer analyses of operating and financial performance more difficult, such as gains (or losses) from sales of depreciable real estate and land when connected to the main business of a REIT and impairments on depreciable real estate or land related to a REIT's main business. 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)2019 2018 2019 2018(Amounts in thousands)2020201920202019
Net income$56,700
 $26,899
 $112,659
 $109,712
Net income (loss)Net income (loss)$(5,830)$56,700 $78,003 $112,659 
Less net (income) loss attributable to noncontrolling interests in:       Less net (income) loss attributable to noncontrolling interests in:
Operating partnership(2,662) (2,688) (6,535) (11,041)Operating partnership225 (2,662)(3,373)(6,535)
Consolidated subsidiaries2
 (11) 24
 (34)Consolidated subsidiaries— 2 — 24 
Net income attributable to common shareholders54,040
 24,200
 106,148
 98,637
Net income (loss) attributable to common shareholdersNet income (loss) attributable to common shareholders(5,605)54,040 74,630 106,148 
Adjustments:       Adjustments:
Rental property depreciation and amortization21,262
 21,639
 65,233
 72,969
Rental property depreciation and amortization22,710 21,262 69,102 65,233 
Gain on sale of real estate(39,716) (2,185) (68,219) (52,625)Gain on sale of real estate— (39,716)(39,775)(68,219)
Real estate impairment loss—
 —
 22,653
 —
Real estate impairment loss— — — 22,653 
Limited partnership interests in operating partnership(1)
2,662
 2,688
 6,535
 11,041
Limited partnership interests in operating partnership(1)
(225)2,662 3,373 6,535 
FFO applicable to diluted common shareholders$38,248
 $46,342

$132,350

$130,022
FFO applicable to diluted common shareholders$16,880 $38,248 $107,330 $132,350 
(1) Represents earnings (losses) allocated to LTIP and OP unitholders for unissued common shares which have been excluded for purposes of calculating earnings per diluted share for the periods presented.





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Liquidity and Capital Resources

Due to the nature of our business, 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 generally distribute at least 90% of our REITREIT’s ordinary 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 2019, or an annual rate of $0.88. We expect to payHistorically, we have paid regular cash dividends; however, the timing, declaration, amount and payment of distributions to shareholders and unitholders of the Operating Partnership 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.Our Board of Trustees declared a quarterly dividend of $0.22 per common share and OP unit for the first quarter of 2020. As a result of COVID-19 and the future uncertainties it has generated, the Company has temporarily suspended quarterly dividend distributions and did not declare a quarterly dividend for the second quarter or third quarter of 2020. The Company’s Board of Trustees will continue to monitor the Company’s financial performance and economic outlook and, at a later date, intends to reinstate a regular quarterly dividend of at least the amount required to continue qualifying as a REIT for US federal income tax purposes.

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 providehave historically provided us with a relatively consistent stream of cash flow that enables us to pay operating expenses, debt service and recurring capital expenditures. As discussed in more detail below, the effects of COVID-19 and the actions taken to minimize its spread have had an adverse impact on our short-term cash flow as a significant number of our tenants have not paid rent that was due in the second quarter and third quarter of 2020, and such efforts could have a significant longer term adverse impact on our cash flow and financial condition. Specifically, as of November 3, 2020, the Company collected approximately 83% of third quarter rental revenue billed and 86% of October rental revenue billed. 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, 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, 2019,2020, we had cash and cash equivalents, including restricted cash, of $536.3$671 million and no amounts drawn on$350 million available under our line of credit. In addition, we had the following sources of capital available:credit:
(Amounts in thousands)September 30, 2019
Revolving credit agreement(1)
 
Total commitment amount$600,000
Available capacity$600,000
MaturityJanuary 29, 2024
(Amounts in thousands)September 30, 2020
Revolving credit agreement(1)
Total commitment amount$600,000 
Available capacity(2)
$350,000 
MaturityJanuary 29, 2024
(1) Refer to Note 6 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q.

(2)Subsequent to September 30, 2020, the Company repaid its $250 million outstanding borrowings under the Agreement, which increased the available borrowing capacity under the Agreement to $600 million.

The Company continues to monitor the COVID-19 pandemic and its impact on our overall liquidity position and outlook. The ultimate impact COVID-19 may have on our operational and financial performance over the next 12 months is currently uncertain and will depend on certain developments, including, among others, the magnitude and duration of the COVID-19 pandemic and its impact on our tenants, including the adverse financial consequences from reduced business operations and social distancing requirements, which may impact a tenant’s ability to generate sales at sufficient levels to cover operating costs. In light of the various uncertainties resulting from the COVID-19 pandemic, the Company borrowed $250 million under its existing $600 million revolving credit agreement in March 2020 as a precautionary measure to increase the Company's cash position and facilitate financial flexibility. Our ability to utilize amounts available under our revolving credit facility will depend on our continued compliance with the applicable financial covenants and other terms of our revolving credit agreement, which may be impacted by tenant store closures and failure of tenants to pay rent. The proceeds are available to use for working capital and other corporate purposes if the Company experiences a material decrease in cash flow from property rental income as operational disruptions may persist into the future. The borrowings on the revolving credit facility were fully repaid subsequent to September 30, 2020. We have no debt scheduled to mature in 2019 or 2020.until 2022. We currently believe that cash flows from operations over the next 12 months, together with cash on hand, our revolving credit agreement available borrowings and our general ability to access the capital markets, willshould be sufficient to finance our operations and fund our debt service requirements and capital expenditures.expenditures over the next 12 months.

39

On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the COVID-19 pandemic. The Company has not applied for or received any loans authorized under the CARES Act; however, the Company may avail itself of certain tax provisions in the CARES Act that may be used to reduce taxable income.

Summary of Cash Flows
Cash and cash equivalents, including restricted cash, was $671.0 million at September 30, 2020, compared to $485.1 million at December 31, 2019 and $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$185.9 million and $70.8$134.7 million, respectively. Our cash flow activities are summarized as follows:
Nine Months Ended September 30,  Nine Months Ended September 30,
(Amounts in thousands)2019 2018 Increase (Decrease)(Amounts in thousands)20202019$ Change
Net cash provided by operating activities$115,593
 $88,122
 $27,471
Net cash provided by operating activities$74,829 $115,593 $(40,764)
Net cash provided by (used in) investing activities60,055
 (36,741) 96,796
Net cash used in financing activities(96,824) (86,646) (10,178)
Net cash (used in) provided by investing activitiesNet cash (used in) provided by investing activities(55,996)60,055 (116,051)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities167,027 (96,824)263,851 
Operating Activities
Net cash flow provided by operating activities primarily consists of cash inflows from rental revenue and cash outflows for property operating expenses, general and administrative expenses and interest and debt expense.
Net cash provided by operating activities of $115.6$74.8 million for the nine months ended September 30, 2019 increased2020 decreased by $27.5$40.8 million from $88.1$115.6 million as of September 30, 2018, driven by $15.5 million of lease termination payments to acquire the Toys “R” Us leases at Bruckner Commons in the Bronx, NY and Hudson Mall in Jersey City, NJ during the nine months ended September 30, 2018. The remaining increase in cash is2019, due to the timing and deferral of cash receipts and payments related to tenant collectionsby tenants impacted by the COVID-19 pandemic, 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 our real estate development, capital improvements, and acquisition and disposition activities during the period.
Net cash used in investing activities of $56.0 million for the nine months ended September 30, 2020, decreased by $116.1 million compared to net cash provided by investing activities of $60.1 million for the nine months ended September 30, 2019 increased by $96.8primarily due to (i) $92.1 million compared to netincrease in cash used in investing activitiesthe acquisition of $36.7real estate, (ii) $57.0 million for the nine months ended September 30, 2018 due to (i) $53.8 million increasedecrease in cash provided by the sale of properties, (ii) $19.7(iii) $12.7 million decrease in insurance proceeds due to proceeds received for physical property damages in the nine months ended September 30, 2019 and (iv) $6.9 million decrease in cash provided due to the sale of an operating lease in 2019, partially offset by (v) $52.7 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 for physical property damages received in the nine months ended September 30, 2019, (iv) $6.9 million increase due to the sale of an operating lease and (v) $4.9 million decrease in cash used for acquisitions.properties.

Financing Activities
Net cash flow provided by or used in financing activities is impacted by the timing and extent of issuances of debt and equity securities, distributions paid to common shareholders and unitholders of the Operating Partnership as well as principal and other payments associated with our outstanding indebtedness.
Net cash provided by financing activities of $167.0 million for the nine months ended September 30, 2020, increased by $263.9 million from 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, 2018primarily due to (i) $250.0 million of cash borrowings provided under the Company’s revolving credit agreement, (ii) $90.3 million of proceeds from borrowings under mortgage loans, (iii) $56.0 million decrease in distributions to partners due to the temporary suspension of dividends, (iv) $6.0 million of cash paid to redeem units in 2019 (ii) $2.6and (v) $0.3 million ofdecrease in cash used to amend our revolving credit agreement in 2019, (iii) $0.8issuing debt, partially offset by (vi) $83.7 million increase in debt repayments, (iv) $0.5(vii) $54.1 million increaseof cash paid to repurchase common shares in distributions to shareholders2020 and unitholders and (v) $0.2(viii) $0.8 million increase in tax withholdings on vested restricted stock.







40

Financing Activities and Contractual Obligations
Below is a summary of our outstanding debt and weighted average interest raterates as of September 30, 2019.2020.
(Amounts in thousands) Principal balance at September 30, 2019 Weighted Average Interest Rate at September 30, 2019(Amounts in thousands)Principal balance at September 30, 2020Weighted Average Interest Rate at September 30, 2020
Mortgages payable:   Mortgages payable:
Fixed rate debt $1,388,503
 4.12%Fixed rate debt$1,430,829 4.43%
Variable rate debt(1)
 169,500
 3.84%
Variable rate debt(1)
169,761 1.90%
Total mortgages payable 1,558,003
 4.09%Total mortgages payable1,600,590 4.43%
Unamortized debt issuance costs (10,517) Unamortized debt issuance costs(10,286)
Total mortgages payable, net of unamortized debt issuance costs $1,547,486
 Total mortgages payable, net of unamortized debt issuance costs1,590,304 
Unsecured credit facilities:Unsecured credit facilities:
Revolving credit agreement(2)
Revolving credit agreement(2)
250,000 1.21%
Total unsecured credit facilitiesTotal unsecured credit facilities250,000 1.21%
Total debt outstandingTotal debt outstanding$1,840,304 3.76%
(1) As of September 30, 2019, $80.52020, $80.8 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 of September 30, 2020, the borrowings on our revolving credit agreement were subject to one month LIBOR plus 1.05%.

The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately $1.2$1.3 billion as of September 30, 2019.2020. 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, 2019,2020, we were in compliance with all debt covenants.covenants with the exception of those related to our mortgage loan on Las Catalinas Mall. The mortgage on Las Catalinas Mall has been in default since April 2020.

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. 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 borrowingsBorrowings under the Agreement are subject to interest at LIBOR plus an applicable margin of 1.05% to 1.50% and 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

On June 3, 2020, we entered into a third amendment to the Agreement. The third amendment, among other things, modifies certain definitions and the measurement period for certain financial covenants to a trailing four-quarter period instead of the most recent quarter period annualized. Under the Agreement, our financial covenants are generally measured using operating results of a trailing four-quarter period from the prior trailing four-quarter period, including the maximum leverage ratio, which measures our asset value based on net operating income, as defined in the Agreement. Net operating income is defined, in part, based on rents and other revenues received in the ordinary course of business from our properties. As a result, if cash revenue recognized during a trailing four-quarter period declines significantly from historical amounts, we may be required to repay all outstanding amounts and lose access to our revolving credit facility unless we obtain a waiver. We currently believe that with our cash on hand, we will have been drawnsufficient resources to datefinance our operations and fund our debt service requirements and capital expenditures for at least the next 12 months even if we are required to repay all outstanding borrowings under the Agreement.

In March 2020, we borrowed $250 million under the Agreement and $350 million remains available for withdrawal. Subsequent to September 30, 2020, the Company repaid its $250 million outstanding borrowings 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.




41

Capital Expenditures
The following summarizes capital expenditures presented on a cash basis for the nine months ended September 30, 20192020 and 2018:2019:
 Nine Months Ended September 30,Nine Months Ended September 30,
(Amounts in thousands) 2019 2018(Amounts in thousands)20202019
Capital expenditures:   
Capital expenditures:
Development and redevelopment costs(1)
 $55,640
 $71,830
Capital improvements(1)
 10,736
 14,704
Development and redevelopment costsDevelopment and redevelopment costs$8,984 $55,640 
Capital improvementsCapital improvements7,677 10,736 
Tenant improvements and allowances 4,629
 2,388
Tenant improvements and allowances1,605 4,629 
Total capital expenditures $71,005

$88,922
Total capital expenditures$18,266 $71,005 
(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, 2019,2020, we had approximately $42.5$132.4 million of active redevelopment, development and anchor repositioning projects at various stages of completion, a decreasean increase of $154.0$66.8 million from $196.5$65.6 million of projects as of December 31, 2018.2019. We have advanced these projects and incurred $18.5$5.4 million of additional spend since December 31, 2018.2019. We anticipate thatspending an additional $91.3 million to complete these projects, will require an additional $8.3 millionwhich we expect to occur over the next two yearssix to complete.eighteen months depending on any restrictions on construction activity. We expect to fund these projects using cash on hand, proceeds from dispositions, or from secured debt, or proceeds from issuing equity.debt.

Commitments and Contingencies
Insurance
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 insurance with limits of $500 million per occurrence and in the aggregate for properties in the U.S. and $139$147 million for properties in Puerto Rico, subject to the terms, conditions, exclusions, deductibles and sub-limits when applicable for certain perils such as floods and earthquakes, (iii) pollution insurance with limits of $50 million for properties in the U.S. and (iii)Puerto Rico and (iv) numerous other insurance policies including trustees’ and officers’ insurance, cyber, workers’ compensation and automobile-related liabilities insurance. The Company’s insurance includes coverage for acts of terrorism 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, the Company maintainsThe Company’s coverage for certain cybersecurity losses with limits of $5 million per occurrence and in the aggregate providingprovides first and third-party coverage including network interruption, event management, cyber extortion and claims for media content, security and privacy liability.
The Company’s coverage for pollution related losses provides certain remediation and business interruption coverage for specified pollution incidents, which includes the presence of viruses. The Company has filed insurance claims related to COVID-19 and is pursuing available coverage.
Insurance premiums are typically charged directly to each of the retail properties and warehouses but not all of the cost of such premiums are recovered. The Company is responsible for deductibles, 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 available coverage. We cannot anticipate what coverage will be available on commercially reasonable terms in the 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 and other agreements contain customary covenants requiring 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, such requirement could materially and adversely affect our ability to finance our properties and expand our portfolio.

Environmental Matters
Each of our properties has been subjected to varying degrees of environmental assessment at various times. Based on these assessments, we have accrued costs of $1.0 million and $2.7 million on our consolidated balance sheets as of September 30, 2020 and December 31, 2019, respectively, for remediation costs for environmental contamination at certain properties. While this accrual reflects our best estimates of the potential costs of remediation at these properties, there can be no assurance that the actual costs will not exceed these amounts. Although we are not aware of any other material environmental contamination,
42

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.

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, damaging our two properties in Puerto Rico. During the nine months ended September 30, 2018, the Company received $1.5 million in casualty insurance proceeds, which were partially offset by $0.3 million of hurricane related costs, resulting in net casualty gains of $1.2 million included in casualty and impairment loss (gain), net on the accompanying consolidated statements of income.



During the three and nine months ended September 30, 2018, the Company recognized a $0.1 million net casualty gain and $0.4 million of business interruption losses, respectively. For the nine months ended September 30, 2018, losses of $0.8 million pertained to rent abatements due to tenants that had not reopened since the 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.

In June 2019, the Company reached a settlement agreement with its carrier regarding its final insurance recovery related to Hurricane Maria for $14.3 million, of which $3.3 million was previously received, subject to deductibles of $2.3 million. We recognized an $8.7 million casualty gain in the nine months ended September 30, 2019 as a result of the remaining insurance proceeds from the settlement agreement related tofor our two malls in Puerto Rico.

Environmental MattersPandemic-Related Contingencies
EachThe Company has concentrated operations in the New York metropolitan area and, although local and state governments implemented various phased reopening plans for nonessential businesses during the third quarter of 2020, certain tenants continued to face adverse financial consequences from reduced business operations and social distancing requirements as a result of the COVID-19 pandemic. As of November 3, 2020, 98% of our properties has been subjectedportfolio's gross leasable area (97% as measured by annualized base rent) was open for business and the Company collected approximately 83% of third quarter rental revenue billed and 86% of October rental revenue billed. The Company currently remains in active discussions and negotiations with its impacted tenants and anticipates granting further rent concessions or other lease-related relief, such as the deferral of lease payments for a period of time to varying degreesbe paid over the remaining term of environmental assessment at various times. Basedthe lease. We are evaluating rent relief requests on these assessments,a case-by-case basis and not all requests for rent relief may be granted. To the extent we grant additional requests for rent relief, either in the form of rent deferral or abatement, or to the extent our tenants default on their lease obligations, it may have a negative impact on our rental revenue and net income. As of November 3, 2020, we have accrued costsexecuted or approved an approximate total of $1.6 million and $1.7 million on our consolidated balance sheets116 rent deferrals for an aggregate deferral amount of $7.1 million.
The following table sets forth information regarding the collection status of amounts billed to tenants during the three months ended September 30, 2020 as of September 30, 20192020:
(in thousands)Three Months Ended September 30, 2020
Tenant TypeTenant Billings% Collected
National$68,390 83 %
Regional9,858 72 %
Mom and pop7,009 65 %
Local franchise5,549 63 %
Temporary1,137 80 %
Total portfolio$91,943 79 %
The Company is closely monitoring changes in the collectibility assessment of its tenant receivables as a result of certain tenants suffering adverse financial consequences due to the COVID-19 pandemic. During the three and December 31, 2018,nine months ended September 30, 2020, rental revenue deemed uncollectible of $8.4 million and $21.5 million, respectively, for remediation costs for environmental contamination at certain properties. While this accrual reflectswas classified as a reduction to rental revenue based on our best estimatesassessment of the potential costsprobability of remediation at these properties, there can be no assurance thatcollecting substantially all of the actual costs will not exceed these amounts. Duringremaining rents for certain tenants. Additionally, the Company recognized write-offs of $4.7 million and $10.7 million, respectively, related to receivables arising from the straight-lining of rents as a result of tenants impacted by the COVID-19 pandemic.
We anticipate a decline in our percentage rent earned throughout 2020 as a result of reduced sales volumes from temporary store closures and changes in consumer behavior. Percentage rent accounted for less than 1% of rental revenue for the nine months ended September 30, 2018,2020 and 2019, respectively, and totaled $4.0 million for the year ended December 31, 2019.
The Company recognized $0.6 million of environmental remediation costs within property operating expenses on the consolidated statements of income. Although we areis not currently aware of any other material environmental contamination, there canloss contingencies related to the COVID-19 pandemic that would require recognition at this time, with the exception of abatements already discussed with tenants or deferred rents that may not 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.collected.

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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,Given the parent company of Kmart,economic environment brought upon by COVID-19, certain tenants experienced liquidity or financial hardships and 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.

Duringduring the three and nine months ended September 30, 2019,2020. Although some of these tenants intend to exit the Chapter 11 bankruptcy process and resume operations, the outcomes of such proceedings are unknown and the Company received $0.1is currently exploring leasing alternatives for these spaces. Specifically, Century 21 filed for Chapter 11 bankruptcy protection on September 10, 2020. Prior to bankruptcy, the Company had one lease with Century 21 in Paramus, NJ comprising approximately 157,000 sf, which generated $4.4 million and $1.2 million of bankruptcy settlement income in annual rental revenue. In connection with the bankruptcy, proceedingsthe Company recognized a write-off of Toys “R” Us. The settlement proceeds were used to offset outstanding credit losses$2.5 million of receivables arising from the straight-lining of rents and recognized $0.9 million and $2.1 million as rental revenue deemed uncollectible (classified within rental revenue) for the remaining proceeds were recorded to other income.three and nine months ended September 30, 2020. Additionally, 24 Hour Fitness USA, Inc. (“24 Hour Fitness”) filed for Chapter 11 bankruptcy protection on June 15, 2020. Prior to liquidation in 2018,bankruptcy, the Company had leasesone lease with Toys “R” Us at nine locations with24 Hour Fitness in Paramus, NJ comprising approximately 54,000 sf, which generated $3.1 million in annual rental revenue. In connection with the bankruptcy, the Company recognized a write-off of $3.5 million of receivables arising from the straight-lining of rents and recognized $0.5 million and $1.3 million as rental revenue of $7.6 million. No determination has been made asdeemed uncollectible (classified within rental revenue) for the three and nine months ended September 30, 2020, respectively. Subsequent to the amount or timing of additional bankruptcy settlement proceeds, if any, that may be received.third quarter, 24 Hour Fitness communicated its intentions to continue operations at the Company's location.

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, it is very possible that inflation will increase in future 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 material off-balance sheet arrangements as of September 30, 20192020 or December 31, 2018.2019.


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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.
 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
  
Variable Rate$169,500
 3.84% $1,695
 $169,500
 4.09%
Fixed Rate1,388,503
 4.12% —
(2) 
1,392,659
 4.12%
 $1,558,003
(1) 
  $1,695
 $1,562,159
(1) 
 
20202019
(Amounts in thousands)September 30, BalanceWeighted Average Interest RateEffect of 1% Change in Base RatesDecember 31, BalanceWeighted Average Interest Rate
Variable rate unsecured debt$250,000 1.21%$2,500 $— —%
Variable rate mortgages169,761 1.90%1,698 169,500 3.45%
Fixed rate mortgages1,430,829 4.43%— (2)1,386,748 4.12%
$1,850,590 (1)$4,198 $1,556,248 (1)
(1) Excludes unamortized debt issuance costs of $10.5$10.3 million and $11.9$10.1 million as of September 30, 20192020 and December 31, 2018,2019, respectively.
(2) If the weighted average interest rate of our fixed rate debt increased by 1% (i.e. due to refinancing at higher rates), annualized interest expense would have increased by approximately $13.9$14.3 million based on outstanding balances as of September 30, 2019.2020.

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, 2019,2020, we did not have any material 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, 2019,2020, the estimated fair value of our consolidated debt was $1.6 billion.$1.9 billion, including revolving credit agreement borrowings.

Other Market Risks

As of September 30, 2019,2020, 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, 20192020 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, 2019,2020, future estimates of fair value and the amounts which may be paid or realized in the future may differ significantly from amounts presented.


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ITEM 4.CONTROLS AND PROCEDURES
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 months ended September 30, 20192020 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.
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 months ended September 30, 20192020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS
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.
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ITEM 1A.RISK FACTORS
ITEM 1A.    RISK FACTORS
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 disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 20182019 filed with the SEC on February 13, 2019.  12, 2020, other than those disclosed below.
Actual or perceived threats associated with epidemics, pandemics or other public health crises, including the COVID-19 pandemic, could have a material adverse effect on our and our tenants’ business, financial condition, results of operations, cash flow, liquidity, and ability to access the capital markets and satisfy debt service obligations.
Epidemics, pandemics or other public health crises, including the recent COVID-19 pandemic, that impact economic and market conditions, particularly in the markets where our properties are located, and preventative measures taken to alleviate their impact, including mandatory business shutdowns, “shelter-in-place” or “stay-at-home” orders issued by local, state or federal authorities, may have a material adverse effect on our and our tenants’ business, financial condition, results of operations, liquidity, and ability to access capital markets and satisfy debt service obligations.
Our retail tenants depend on in-person interactions with their customers, and the COVID-19 pandemic has decreased customer willingness to visit, and mandated “shelter-in-place” or “stay-at-home” orders have prevented customers from visiting, our tenants’ businesses, which has and may continue to negatively impact their profitability or cash flow and ability make timely rental payments to us. As a result of our concentrated operations in the New York metropolitan area, the extent and magnitude, or perception, of the impact of the current COVID-19 pandemic on our and our tenants’ business is heightened. As of November 3, 2020, 98% of our portfolio's gross leasable area (97% as measured by annualized base rent) was open for business. We remain in active discussions and negotiations with our impacted tenants and anticipate granting further rent concessions or other lease-related relief. As of November 3, 2020, we have executed or approved an approximate total of 116 rent deferrals for an aggregate deferral amount of $7.1 million; however, the full financial impact of such rent relief is currently unknown. As of November 3, 2020 the Company collected approximately 83% of third quarter rental revenue billed and 86% of October rental revenue billed, respectively. We have experienced and expect to continue to experience a decline in our percentage rent throughout 2020 as a result of reduced sales volume from temporary store closures and changes in consumer behavior.
Moreover, the ongoing COVID-19 pandemic and restrictions intended to prevent and mitigate its spread have had, and could have, additional adverse effects on our business, including with regards to:
•the ability and willingness of our tenants to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant, particularly in light of the adverse impact to the financial health of many retailers that has occurred and continues to occur as a result of the COVID-19 pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate physical retail locations in the future;
•anticipated returns from development and redevelopment projects, which have been temporarily delayed and may, in some cases, be abandoned;
•the broader impact of the severe economic contraction due to the COVID-19 pandemic, the resulting increase in unemployment that has occurred and its effect on consumer behavior, and the negative consequences that will occur if these trends are not timely reversed;
•macroeconomic conditions, such as a disruption of, or lack of access to, the capital markets as well as the significant decline in our share price from prices prior to the spread of the COVID-19 pandemic;
•our decision to pay dividends at all, or pay them in stock, which in the case of the latter may result in our shareholders having a tax liability with respect to such dividends that exceeds the amount of cash received, if any;
•our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due and potential limitations on our ability to borrow funds under our existing credit facility as a result of covenants relating to our financial results in the second quarter of 2020 or future quarters; and
•potential reduction in our operating effectiveness as employees work remotely or if key personnel become unavailable due to illness or other personal circumstances related to COVID-19.
The COVID-19 pandemic and restrictions intended to prevent and mitigate its spread have already had a significant adverse impact on economic and market conditions around the world, including the United States and markets where our properties are located and could further trigger a period of sustained global and U.S. economic downturn or recession. While the rapid developments regarding the COVID-19 pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political and social environment presents material risks and uncertainties with respect to our and our tenants’
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business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy debt service obligations.
To the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described under the section entitled “Item 1A. Risk Factors” in our most recent annual report on Form 10-K for the year ended December 31, 2019.
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ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Urban Edge Properties
(a) RegisteredRecent 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.Not applicable.
(b) Use of Proceeds from Sales of Registered Securities: Not applicable.
(c) Issuer Purchases of Equity Securities: In March 2020, the Company’s Board of Trustees authorized a share repurchase program for up to $200 million of the Company’s shares, which does not obligate the Company to acquire any particular amount of common shares and may be suspended or discontinued at any time at the Company’s discretion. Refer to Note 14 to the unaudited consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q. Cumulative total purchases since inception are 5.9 million shares at a weighted average share price of $9.22 amounting to $54.1 million.

Urban Edge Properties LP
(a) Recent Sales of Unregistered Securities: Not applicable.
(b) Use of Proceeds from Sales of Registered Securities: Not applicable.
(c) Issuer Purchases of Equity Securities: Not applicable.


Urban Edge Properties LP
(a) Registered Sales of Unregistered Securities: Not applicable.
(b) Use of Proceeds from Registered Securities: Not applicable.
(c) Issuer Purchases of Equity Securities: Not applicable.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.

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ITEM 5.OTHER INFORMATION
ITEM 5.     OTHER INFORMATION
None.

ITEM 6.EXHIBITS
ITEM 6.    EXHIBITS

The exhibits listed below are included in, or incorporated by reference into, this Quarterly Report on Form 10-Q.

INDEX TO EXHIBITS

The following exhibits are included as part of this Quarterly Report on Form 10-Q:
Exhibit NumberExhibit Description
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
101.SCH101.SCH*Inline XBRL Taxonomy Extension Schema
101.CAL101.CAL*Inline XBRL Extension Calculation Linkbase
101.LAB101.LAB*Inline XBRL Extension Labels Linkbase
101.PRE101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase
101.DEF101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase
104104*
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.

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PART IV

SIGNATURES

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

URBAN EDGE PROPERTIES
(Registrant)
URBAN EDGE PROPERTIES
(Registrant)
/s/ Mark Langer
Mark Langer, Chief Financial Officer
Date: October 30, 2019November 5, 2020
URBAN EDGE PROPERTIES LP
By: Urban Edge Properties, General Partner
/s/ Mark Langer
Mark Langer, Chief Financial Officer
Date: October 30, 2019November 5, 2020





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