Market Overview

Urban Edge Properties Reports Second Quarter 2018 Results

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Urban Edge Properties (NYSE:UE) (the "Company") today announced its
results for the quarter ended June 30, 2018.

Financial Results(1)(2)

  • Generated net income of $59.8 million, or $0.47 per diluted share, for
    the quarter compared to net income of $14.9 million, or $0.13 per
    diluted share for the second quarter of 2017 and $82.8 million, or
    $0.65 per diluted share, for the six months ended June 30, 2018
    compared to $69.7 million, or $0.63 per diluted share, for the six
    months ended June 30, 2017.
  • Generated Funds from Operations applicable to diluted common
    shareholders ("FFO") of $39.6 million, or $0.31 per share, for the
    quarter compared to $38.7 million, or $0.34 per share, for the second
    quarter of 2017 and $83.7 million, or $0.66 per share, for the six
    months ended June 30, 2018 compared to $112.1 million, or $1.01 per
    share, for the six months ended June 30, 2017.
  • Generated FFO as Adjusted of $41.6 million, or $0.33 per share, for
    the quarter compared to $38.3 million, or $0.33 per share, for the
    second quarter of 2017 and $82.9 million, or $0.65 per share, for the
    six months ended June 30, 2018 compared to $73.9 million, or $0.66 per
    share, for the six months ended June 30, 2017.

Operating Results(1)

  • Same-property cash Net Operating Income ("NOI") increased by 0.1% over
    the second quarter of 2017, and by 1.5% compared to the six months
    ended June 30, 2017. Second quarter results were negatively impacted
    by the following:
    • Las Catalinas in Puerto Rico - $0.6 million lower NOI primarily
      due to tenant vacancies and rent reductions, and
    • Bergen Town Center and The Shops at Bruckner - $0.5 million lower
      NOI due to expected vacancies on spaces planned for redevelopment.

    Excluding these properties, same-property cash NOI would have
    increased by 3.2% for the quarter ended June 30, 2018.

  • Same-property cash NOI including properties in redevelopment increased
    by 0.4% compared to the second quarter of 2017 and by 1.8% compared to
    the six months ended June 30, 2017 and were impacted by the same
    factors noted above. Excluding the properties listed above,
    same-property cash NOI including properties in redevelopment would
    have increased by 3.3% for the quarter ended June 30, 2018.
  • Reported same-property retail portfolio occupancy of 98.5%, an
    increase of 20 basis points compared to June 30, 2017.
  • Reported consolidated retail portfolio occupancy of 96.6%, an increase
    of 70 basis points compared to June 30, 2017. Occupancy levels as of
    June 30, 2018 were not impacted by Toys "R" Us bankruptcies.
    Subsequent to the end of the quarter, five leases comprising 237,000
    square feet (sf) were recaptured.
  • Executed 29 new leases, renewals and options totaling 435,000 sf
    during the quarter. Same-space leases totaled 355,000 sf and generated
    average rent spreads of 2.0% on a GAAP basis and (1.9)% on a cash
    basis. The negative cash spread was primarily driven by one new lease
    executed for a 36,000 sf building that was vacant for more than six
    years.

Toys "R" Us Bankruptcy

The Company had nine Toys "R" Us ("Toys") leases comprising
approximately 400,000 square feet which generated approximately $7.0
million in annual gross rents. Rents were paid in full through June 30,
2018.

The status of the nine Toys leases is as follows:

  • The Company paid $6.0 million to recapture the lease at Hudson Mall in
    Jersey City, NJ to accelerate the redevelopment of the property. The
    previous rent was well under-market at $0.43 per sf annually.
  • Raymour & Flanigan acquired the lease at Manalapan Commons in
    Manalapan, NJ.
  • Toys rejected its leases in Woodbridge, NJ, Union, NJ, Amherst, NY and
    Wilkes-Barre, PA in July 2018. Annual gross rent on these leases
    amounted to approximately $4.0 million. The Company is in active
    discussions to lease these spaces.
  • The remaining three leases are held in a separate Toys entity for
    which bankruptcy proceedings are ongoing and rent is current through
    July 2018. The three properties are located in the Bronx, NY, Cherry
    Hill, NJ, and Salem, NH.

Development, Redevelopment and Anchor Repositioning Activity

During the second quarter, the Company completed two redevelopment
projects totaling $12.4 million at a blended yield of 13.6%, consisting
of a 40,000 sf build-to-suit for Best Buy at Bergen Town Center and a
new outparcel building at Marlton Commons for Shake Shack and honeygrow.

The Company has $207 million of active redevelopment projects underway
expected to generate a 7% unleveraged yield of which $87 million remains
to be funded.

The Company's largest projects include Bergen Town Center and Bruckner
Commons. At Bergen, construction is underway on a 47,000 sf Burlington
expected to open in spring 2019. Enhanced food offerings include Cava
Grill, Ruth's Chris Steakhouse and a daytime café. At Bruckner, ShopRite
opened in June and Burlington opened in July.

Disposition Activity

On April 26, 2018, the Company sold MacArthur Commons in Allentown, PA
for $55.3 million consistent with its plan to dispose of assets in
non-core markets. The Company recognized a $50.4 million gain in
connection with the sale.

Balance Sheet Highlights at June 30, 2018(1)(3)(4)

  • Total market capitalization of approximately $4.5 billion comprising
    126.7 million, fully-diluted common shares valued at $2.9 billion and
    $1.6 billion of debt.
  • Net debt to total market capitalization of 24%.
  • Net debt to Adjusted Earnings before interest, tax, depreciation and
    amortization for real estate ("EBITDAre") of 4.6x.
  • $514.0 million of cash and cash equivalents, including restricted
    cash, and no amounts drawn on the $600 million revolving credit
    facility.
 
(1) Refer to "Non-GAAP Financial Measures" and "Operating Metrics" for
definitions and additional detail.
(2) Refer to page 8 for a reconciliation of net income to FFO and FFO as
Adjusted for the quarter and six months ended June 30, 2018.
(3) Refer to page 10 for a reconciliation of net income to EBITDAre and
annualized Adjusted EBITDAre for the quarter and six months ended
June 30, 2018.
(4) Net debt as of June 30, 2018 is calculated as total consolidated
debt of $1.6 billion less total cash and cash equivalents, including
restricted cash, of $514.0 million.
 

Non-GAAP Financial Measures

The Company uses certain non-GAAP performance measures, in addition to
the primary GAAP presentations, as we believe these measures improve the
understanding of the Company's operational results. We continually
evaluate the usefulness, relevance, limitations, and calculation of our
reported non-GAAP performance measures to determine how best to provide
relevant information to the investing public, and thus such reported
measures are subject to change. The Company's non-GAAP performance
measures have limitations as they do not include all items of income and
expense that affect operations, and accordingly, should always be
considered as supplemental financial results. The following non-GAAP
measures are commonly used by the Company and investing public to
understand and evaluate our operating results and performance:

  • FFO: The Company believes FFO is a useful, supplemental measure of its
    operating performance that is a recognized metric used extensively by
    the real estate industry and, in particular REITs. FFO, as defined by
    the National Association of Real Estate Investment Trusts ("NAREIT")
    and the Company, is net income (computed in accordance with GAAP),
    excluding gains (or losses) from sales of depreciated real estate
    assets, real estate impairment losses, rental property depreciation
    and amortization expense. The Company believes that financial
    analysts, investors and shareholders are better served by the
    presentation of comparable period operating results generated from FFO
    primarily because it excludes the assumption that the value of real
    estate assets diminish predictably. 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 as Adjusted: The Company provides disclosure of FFO as Adjusted
    because it believes it is a useful supplemental measure of its core
    operating performance that facilitates comparability of historical
    financial periods. FFO as Adjusted is calculated by making certain
    adjustments to FFO to account for items the Company does not believe
    are representative of ongoing core operating results including
    non-comparable revenues and expenses. The Company's method of
    calculating FFO as Adjusted may be different from methods used by
    other REITs and, accordingly, may not be comparable to such other
    REITs.
  • Cash NOI: The Company uses cash NOI internally to make investment and
    capital allocation decisions and to compare the unlevered performance
    of our properties to our peers. The Company believes cash NOI is
    useful to investors as a performance measure because, when compared
    across periods, cash NOI reflects the impact on operations from trends
    in occupancy rates, rental rates, operating costs and acquisition and
    disposition activity on an unleveraged basis, providing perspective
    not immediately apparent from operating income or net income. The
    Company calculates cash NOI using net income as defined by GAAP
    reflecting only those income and expense items that are incurred at
    the property level, adjusted for the following items: lease
    termination fees, bankruptcy settlement income, non-cash rental income
    and ground rent expense and income or expenses that we do not believe
    are representative of ongoing operating results, if any.
  • Same-property Cash NOI: The Company provides disclosure of cash NOI on
    a same-property basis, which includes the results of properties that
    were owned and operated for the entirety of the reporting periods
    being compared totaling 77 properties for the three months ended
    June 30, 2018 and 2017 and 75 properties for the six months ended
    June 30, 2018 and 2017. Information provided on a same-property basis
    excludes properties under development, redevelopment or that involve
    anchor repositioning where a substantial portion of the gross leasable
    area ("GLA") is taken out of service and also excludes properties
    acquired, sold, or under contract to be sold during the periods being
    compared. As such, same-property 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.
    While there is judgment surrounding changes in designations, a
    property is removed from the same-property pool when it is designated
    as a redevelopment property because it is undergoing significant
    renovation or retenanting pursuant to a formal plan that is expected
    to have a significant impact on its operating income. 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. The Company has also
    provided disclosure of cash NOI on a same-property basis adjusted to
    include redevelopment properties. Same-property cash NOI may include
    other adjustments as detailed in the Reconciliation of Net Income to
    cash NOI and same-property cash NOI included in the tables
    accompanying this press release.
  • EBITDAre and Adjusted EBITDAre: EBITDAre and Adjusted EBITDAre are
    supplemental, non-GAAP measures utilized by us in various financial
    ratios. The White Paper on EBITDAre, approved by NAREIT's Board of
    Governors in September 2017, defines EBITDAre as net income (computed
    in accordance with GAAP), adjusted for interest expense, income tax
    expense, depreciation and amortization, losses and gains on the
    disposition of depreciated property, impairment write-downs of
    depreciated property and investments in unconsolidated joint ventures,
    and adjustments to reflect the entity's share of EBITDAre of
    unconsolidated joint ventures. EBITDAre and Adjusted EBITDAre are
    presented to assist investors in the evaluation of REITs, as a measure
    of the Company's operational performance as they exclude various items
    that do not relate to or are not indicative of our operating
    performance and because they approximate key performance measures in
    our debt covenants. Accordingly, the Company believes that the use of
    EBITDAre and Adjusted EBITDAre, as opposed to income before income
    taxes in various ratios, provides meaningful performance measures
    related to the Company's ability to meet various coverage tests for
    the stated periods. The Company also presents the ratio of net debt
    (net of cash) to annualized Adjusted EBITDAre as of June 30, 2018, and
    net debt (net of cash) to total market capitalization, which it
    believes is useful to investors as a supplemental measure in
    evaluating the Company's balance sheet leverage. The presentation of
    EBITDAre and Adjusted EBITDAre are consistent with EBITDA and Adjusted
    EBITDA as presented in prior periods.

The Company believes net income is the most directly comparable GAAP
financial measure to the non-GAAP performance measures outlined above.
Reconciliations of these measures to net income have been provided in
the tables accompanying this press release.

Operating Metrics

The Company presents certain operating metrics related to our properties
including occupancy, leasing activity and rental rates. Operating
metrics are used by the Company and are useful to investors in
facilitating an understanding of the operational performance for our
properties.

Occupancy metrics represent the percentage of occupied gross leasable
area based on executed leases (including properties in development and
redevelopment) and includes leases signed, but for which rent has not
yet commenced. Same-property retail portfolio occupancy includes
shopping centers and malls that have been owned and operated for the
entirety of the reporting periods being compared totaling 77 properties
for the three months ended June 30, 2018 and 2017 and 75 properties for
the six months ended June 30, 2018 and 2017. Occupancy metrics presented
for the Company's same-property retail portfolio excludes properties
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 within the past 12 months,
properties sold, or under contract to be sold during the periods being
compared.

Executed new leases, renewals and exercised options are presented on a
same-space basis. Same-space leases represent those leases signed on
spaces for which there was a previous lease with comparable gross
leasable area.

ADDITIONAL INFORMATION

For a copy of the Company's supplemental disclosure package, please
access the "Investors" section of UE's website at www.uedge.com.
Our website also includes other financial information, including our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and amendments to those reports.

ABOUT URBAN EDGE

Urban Edge Properties is a NYSE listed real estate investment trust
focused on managing, acquiring, developing, and redeveloping retail real
estate in urban communities, primarily in the New York metropolitan
region. Urban Edge owns 88 properties totaling 16.3 million square feet
of gross leasable area.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Press Release 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 Press Release. 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 factors include,
among others, the Company's ability to complete its active development,
redevelopment and anchor repositioning projects, the Company's ability
to pursue, finance and complete acquisition opportunities, the Company's
ability to engage in the projects in its planned expansion and
redevelopment pipeline, the Company's ability to achieve the estimated
unleveraged returns for such projects and acquisitions, the estimated
remediation and repair costs related to Hurricane Maria at the affected
properties. 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 our Annual Report on Form 10-K for the year ended
December 31, 2017 and the other documents filed by the Company with the
Securities and Exchange Commission.

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 Press Release. 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 Press Release.

 

URBAN EDGE PROPERTIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

       
June 30, December 31,
2018 2017
ASSETS
Real estate, at cost:
Land $ 530,658 $ 521,669
Buildings and improvements 2,060,960 2,010,527
Construction in progress 125,664 133,761
Furniture, fixtures and equipment 6,615   5,897  
Total 2,723,897 2,671,854
Accumulated depreciation and amortization (616,284 ) (587,127 )
Real estate, net 2,107,613 2,084,727
Cash and cash equivalents 500,930 490,279
Restricted cash 13,057 10,562
Tenant and other receivables, net of allowance for doubtful accounts
of $6,176 and $4,937, respectively
23,017 20,078
Receivable arising from the straight-lining of rents, net of
allowance for doubtful accounts of $562 and $494, respectively
84,378 85,843
Identified intangible assets, net of accumulated amortization of
$39,770 and $33,827, respectively
76,310 87,249
Deferred leasing costs, net of accumulated amortization of $15,809
and $14,796, respectively
20,291 20,268
Deferred financing costs, net of accumulated amortization of $2,252
and $1,740, respectively
2,731 3,243
Prepaid expenses and other assets 12,228   18,559  
Total assets $ 2,840,555   $ 2,820,808  
 
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, net $ 1,551,788 $ 1,564,542
Accounts payable and accrued expenses 80,768 69,595
Identified intangible liabilities, net of accumulated amortization
of $68,938 and $65,832, respectively
168,540 180,959
Other liabilities 17,527   15,171  
Total liabilities 1,818,623   1,830,267  
Commitments and contingencies
Shareholders' equity:
Common shares: $0.01 par value; 500,000,000 shares authorized and
114,004,276 and 113,827,529 shares issued and outstanding,
respectively
1,140 1,138
Additional paid-in capital 950,958 946,402
Accumulated deficit (33,307 ) (57,621 )
Noncontrolling interests:
Operating partnership 102,714 100,218
Consolidated subsidiaries 427   404  
Total equity 1,021,932   990,541  
Total liabilities and equity $ 2,840,555   $ 2,820,808  
 
 

URBAN EDGE PROPERTIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share amounts)

       
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
REVENUE
Property rentals $ 74,546 $ 64,708 $ 144,268 $ 127,206
Tenant expense reimbursements 26,222 23,881 54,894 47,652
Management and development fees 347 351 689 830
Income from acquired leasehold interest 39,215
Other income 855   561   1,172   662  
Total revenue 101,970   89,501   201,023   215,565  
EXPENSES
Depreciation and amortization 30,441 23,701 51,711 39,529
Real estate taxes 15,587 14,711 31,362 28,103
Property operating 20,492 11,088 37,159 24,456
General and administrative 8,236 7,841 15,877 15,973
Casualty and impairment loss (gain), net 35 303 (1,306 ) 3,467
Ground rent 2,752 2,436 5,488 5,106
Provision for doubtful accounts 1,273   906   2,509   1,099  
Total expenses 78,816   60,986   142,800   117,733  
Operating income 23,154 28,515 58,223 97,832
Gain on sale of real estate 50,440 50,440
Interest income 2,031 336 3,555 463
Interest and debt expense (15,659 ) (13,627 ) (31,303 ) (26,742 )
Gain (loss) on extinguishment of debt     2,524   (1,274 )
Income before income taxes 59,966 15,224 83,439 70,279
Income tax expense (192 ) (304 ) (626 ) (624 )
Net income 59,774 14,920 82,813 69,655
Less net income attributable to noncontrolling interests in:
Operating partnership (6,025 ) (1,326 ) (8,353 ) (5,464 )
Consolidated subsidiaries (12 ) (11 ) (23 ) (22 )
Net income attributable to common shareholders $ 53,737   $ 13,583   $ 74,437   $ 64,169  
 
Earnings per common share - Basic: $ 0.47   $ 0.13   $ 0.65   $ 0.63  
Earnings per common share - Diluted: $ 0.47   $ 0.13   $ 0.65   $ 0.63  
Weighted average shares outstanding - Basic 113,739   104,063   113,708   101,863  
Weighted average shares outstanding - Diluted 113,942   104,260   114,151   111,224  
 

Reconciliation of Net Income to FFO and FFO as Adjusted

The following table reflects the reconciliation of net income to FFO and
FFO as Adjusted for the three and six months ended June 30, 2018. Net
income is considered the most directly comparable GAAP measure. Refer to
"Non-GAAP Financial Measures" on page 3 for a description of FFO and FFO
as Adjusted.

       
Three Months Ended
June 30, 2018
Six Months Ended
June 30, 2018
(in thousands)   (per share) (in thousands)   (per share)
Net income $ 59,774 $ 0.47 $ 82,813 $ 0.65
Less net income attributable to noncontrolling interests in:
Operating partnership (6,025 ) (0.05 ) (8,353 ) (0.07 )
Consolidated subsidiaries (12 )   (23 )  
Net income attributable to common shareholders 53,737 0.42 74,437 0.58
Adjustments:
Rental property depreciation and amortization 30,258 0.24 51,330 0.41
Gain on sale of real estate (50,440 ) (0.40 ) (50,440 ) (0.40 )
Limited partnership interests in operating partnership 6,025   0.05   8,353   0.07  
FFO applicable to diluted common shareholders 39,580 0.31 83,680 0.66
 
Tenant bankruptcy settlement income (114 ) (278 )
Casualty gain, net(3) (108 ) (688 ) (0.01 )
Impact of Toys "R" Us, Inc. lease terminations(2) 1,875 0.02 1,875 0.02
Environmental remediation costs 334 584
Tax impact from hurricane 58 226
Gain on extinguishment of debt     (2,524 ) (0.02 )
FFO as Adjusted applicable to diluted common shareholders $ 41,625   $ 0.33   $ 82,875   $ 0.65  
 
Weighted average diluted shares used to calculate EPS 113,942 114,151
Assumed conversion of OP and LTIP Units to common shares(1) 12,660   12,443  
Weighted average diluted common shares - FFO 126,602   126,594  
(1)   Operating Partnership ("OP") and Long-Term Incentive Plan ("LTIP")
Units are excluded from the calculation of earnings per diluted
share for the three and six months ended June 30, 2018 because their
inclusion is anti-dilutive. FFO includes earnings allocated to
unitholders as the inclusion of these units is dilutive to FFO per
share.
(2) Amount reflects a $6.0 million lease termination payment (classified
within property operating expense) and $1.0 million of a provision
for doubtful accounts for reserves recorded on straight-line rents,
partially offset by the write-off of $5.1 million of below-market
intangible liabilities (classified within property rental revenues).
(3) The following amount reflects insurance proceeds net of losses as a
result of Hurricane Maria in Puerto Rico, in September 2017, and a
tornado in Wilkes-Barre, PA, in June 2018:
(in thousands)       Three Months Ended
June 30, 2018
  Six Months Ended
June 30, 2018
Insurance proceeds, net of casualty related expenses $ (35 ) $ 1,306
Reversal of provision for doubtful accounts on previously reserved
balances
408 227
Property rental and tenant reimbursement losses (265 ) (845 )
Casualty gain, net $ 108   $ 688  
 

Reconciliation of Net Income to Cash NOI and Same-Property Cash NOI

The following table reflects the reconciliation of net income to cash
NOI, same-property cash NOI and same-property cash NOI including
properties in redevelopment for the three and six months ended June 30,
2018 and 2017. Net income is considered the most directly comparable
GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a
description of cash NOI and same-property cash NOI.

       

Three Months Ended
June 30,

Six Months Ended
June 30,
(Amounts in thousands) 2018   2017 2018   2017
Net income $ 59,774 $ 14,920 $ 82,813 $ 69,655
Management and development fee income from non-owned properties (347 ) (351 ) (689 ) (830 )
Other expense (income) 4 (22 ) (73 ) (86 )
Depreciation and amortization 30,441 23,701 51,711 39,529
General and administrative expense 8,236 7,841 15,877 15,973
Casualty and impairment loss (gain), net(5) 35 303 (1,306 ) 3,467
Gain on sale of real estate (50,440 ) (50,440 )
Interest income (2,031 ) (336 ) (3,555 ) (463 )
Interest and debt expense 15,659 13,627 31,303 26,742
(Gain) loss on extinguishment of debt (2,524 ) 1,274
Income tax expense 192 304 626 624
Non-cash revenue and expenses (6,792 ) (1,452 ) (9,081 ) (42,253 )
Cash NOI(1) 54,731   58,535   114,662   113,632  
Adjustments:
Non-same property cash NOI(1)(2) (11,095 ) (9,073 ) (25,029 ) (19,099 )
Tenant bankruptcy settlement and lease termination income (813 ) (486 ) (977 ) (513 )
Natural disaster related operating (gain) loss(3) (128 ) 178
Lease termination payment 6,000 6,000
Environmental remediation costs 334     584    
Same-property cash NOI(6) $ 49,029   $ 48,976   $ 95,418   $ 94,020  
Cash NOI related to properties being redeveloped(4) 4,830   4,650   9,721   9,309  
Same-property cash NOI including properties in redevelopment(6) $ 53,859   $ 53,626   $ 105,139   $ 103,329  
(1)   Cash NOI is calculated as total property revenues less property
operating expenses excluding the net effects of non-cash rental
income and non-cash ground rent expense.
(2) Non-same property cash NOI includes cash NOI related to properties
being redeveloped and properties acquired or disposed.
(3) Amount reflects rental and tenant reimbursement losses as well as
provisions or reversal of provisions for outstanding amounts due
from tenants at Las Catalinas and Wilkes-Barre, PA that are subject
to reimbursement from the insurance company.
(4) The result for the six months ended June 30, 2018, excludes $0.5
million of rental and tenant reimbursement losses, partially offset
by a $0.1 million reversal of provisions for payments received from
tenants at Montehiedra that are subject to reimbursement from the
insurance company.
(5) The results for the three and six months ended June 30, 2018 reflect
insurance proceeds offset by hurricane-related expenses. The three
and six months ended June 30, 2017 reflect real estate impairment
losses recorded as a result of the sale of our property in
Eatontown, NJ.
(6) Results for the second quarter of 2018 were negatively impacted by
lower NOI at Las Catalinas Mall in Puerto Rico, primarily due to
tenant vacancies and rent reductions, and lower NOI at Bergen Town
Center and The Shops at Bruckner due to expected vacancies on spaces
planned for redevelopment. Excluding these amounts, same-property
cash NOI would have increased by 3.2% for the quarter and
same-property cash NOI including properties in redevelopment would
have increased by 3.3% for the quarter:
        Three Months Ended June 30,    
2018   2017 Percent Change
Same-property cash NOI $ 49,029 $ 48,976 0.1%
Less: Cash NOI of Las Catalinas, Bergen Town Center, and The Shops
at Bruckner
(10,190 ) (11,340 )  
Same-property cash NOI excluding items above 38,839   37,636   3.2%
Cash NOI related to properties being redeveloped 4,830   4,650    
Same-property cash NOI including properties in redevelopment
excluding items above
$ 43,669   $ 42,286   3.3%
 

Reconciliation of Net Income to EBITDAre and Adjusted EBITDAre

The following table reflects the reconciliation of net income to
EBITDAre and Adjusted EBITDAre for the three and six months ended
June 30, 2018. Net income is considered the most directly comparable
GAAP measure. Refer to "Non-GAAP Financial Measures" on page 3 for a
description of EBITDAre and Adjusted EBITDAre.

       
Three Months Ended June 30, Six Months Ended June 30,
(Amounts in thousands) 2018   2017 2018   2017
Net income $ 59,774 $ 14,920 $ 82,813 $ 69,655
Depreciation and amortization 30,441 23,701 51,711 39,529
Interest and debt expense 15,659 13,627 31,303 26,742
Income tax expense 192 304 626 624
Gain on sale of real estate (50,440 ) (50,440 )
Real estate impairment loss   303     3,467  
EBITDAre 55,626   52,855   116,013   140,017  
Adjustments for Adjusted EBITDAre:
Casualty gain, net(1) (108 ) (688 )
Tenant bankruptcy settlement income (114 ) (486 ) (278 ) (513 )
Impact of Toys "R" Us, Inc. lease terminations(2) 1,875 1,875
Environmental remediation costs 334 584
Transaction costs 132 183
(Gain) loss on extinguishment of debt (2,524 ) 1,274
Income from acquired leasehold interest       (39,215 )
Adjusted EBITDAre $ 57,613   $ 52,501   $ 114,982   $ 101,746  
(1)   Refer to footnote 3 on page 8, Reconciliation of Net Income to FFO
and FFO as Adjusted, for the adjustments included in this line item.
(2) Amount reflects a $6.0 million lease termination payment and a $1.0
million reserve against receivables from straight line rents,
partially offset by the write-off of $5.1 million of below-market
intangible liabilities.

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