Urban Edge Properties
Annual Report 2018

Plain-text annual report

URBAN EDGE PROPERTIES 2018 ANNUAL REPORT To Our Shareholders, In 2018, we continued to make significant strides in positioning Urban Edge for the future in a rapidly evolving retail real estate industry. Fundamental changes such as the increasing influence of e-commerce, shifting consumer buying behavior and recent retailer bankruptcies are requiring retailers and landlords to adapt. At the same time, this changing landscape is creating opportunities for those companies with the foresight and vision to grow in this new environment. We are confident that Urban Edge will be a winner based on the strategies we have underway, our strong portfolio of urban assets and our competitive position. Specifically, we benefit from the following: 1. Our great locations. Our high-quality properties attract best-in-class retailers because of their exceptional locations. Our portfolio is concentrated in the New York metropolitan area, the most densely populated and supply constrained market in the country. Urban Edge’s portfolio has an average of 164,000 people living within a 3-mile ring, 66% higher than the average of our peers, ranking first in the shopping center sector according to Evercore ISI. While much of the United States has excess retail space, our largest submarket, Northern New Jersey, is one of the most supply constrained regions of the country with only 11 square feet of retail gross leasable area per capita. 2. Our redevelopment opportunities. Many of our properties are ripe for redevelopment and mixed-use densification including residential, office and hotel components. Most of our shopping centers are located on large tracts of land (20+ acres) where parking accounts for approximately 75% of land usage. The remaining 25% is generally a single-story, highly fungible, rectangular building that can be easily reconfigured or demolished. All told, we have $1+ billion of redevelopment opportunities within our existing asset base. 3. Our development talent. We recently hired two of the most experienced mixed-use developers in the nation, Chris Weilminster as Chief Operating Officer and Don Briggs as President of Development. Chris and Don spent the last 18+ years together at Federal Realty developing over $5 billion of some of the most iconic retail and mixed-use destinations in the country. 4. Our balance sheet. Our balance sheet is one of the strongest in the shopping center sector with low leverage and significant liquidity. Our net debt to total market capitalization ratio was 30% and our net debt to EBITDA ratio was 4.7x as of December 31, 2018. We have approximately $500 million in cash, a $600 million line of credit, $1.4 billion of unencumbered properties, no corporate debt, no crossed mortgages and no debt maturing until 2021. 1 Operating Results We just completed our fourth year of operations since our spin from Vornado Realty Trust. A summary of our results follows: FFO as Adjusted per share Same property cash NOI growth w/ redevelopment Same property occupancy rate Cash Cumulative stock return since date of spin Cumulative stock return for peers since spin(1) ____________ (1) Peer average is based on the SNL U.S. REIT Retail Shopping Center Index 2015 $1.21 4.0% 97% 2016 $1.27 3.6% 98% 2017 $1.34 5.4% 98% 2018 $1.31 1.4% 93% $200M $100M $500M $500M 9% 3% 31% 7% 26% -5% -14% -20% Our primary earnings measure, FFO as Adjusted per share, was down slightly in 2018 relative to 2017, a good outcome considering the balance sheet recapitalization that was completed in late 2017 when we raised $500 million of equity at $26 per share and closed on $1 billion of non-recourse mortgages increasing our cash balance to $500 million. While the balance sheet recapitalization diluted FFO by ~$.11/share in 2018, we believe it was prudent to raise this capital to fund our long-term growth plan. During 2018, we also lost rent from several bankrupt tenants such as Toys “R” Us, Fallas and National Wholesale Liquidators, dropping our occupancy rate by just under 500 basis points. Importantly, these bankruptcies are opportunities allowing us to upgrade our tenant base with more vibrant and innovative retailers. Replacement rents are expected to start in late 2019 and stabilize in 2021. We now have 10 vacant anchor boxes accounting for 600,000 square feet of gross leasable area that should generate ~$15 million in annual gross rent, or $.12/share in FFO, once leased. Several of these boxes may be held back for redevelopment as these spaces may be worth more to demolish and reconfigure as part of larger redevelopments. We made great progress during 2018 completing 11 redevelopment projects by investing $54 million in our existing assets generating unleveraged returns of ~13%. We executed new and renewal leases for 1.6 million square feet of space with positive rent spreads of ~4%. After significantly outperforming our peers from 2015-2017, our stock lagged in 2018 primarily due to the outsized exposure we had to retailer bankruptcies and Puerto Rico. Our stock now trades at a ~20% discount to net asset value based on analyst estimates, the largest discount in our history as a public company. We are highly focused on strategies to bridge that discount including leasing up our vacant anchor boxes, redeveloping and acquiring selected properties with value-creation opportunities, and selling core and non-core assets at a material premium to valuations implied by our current stock price. 2 Our Real Estate Strategy As part of our strategy, we have categorized our existing assets in four distinct groups - flagship properties that have mixed-use redevelopment potential, value-add redevelopment assets, core properties and non-core assets. $ in mms except PSF Flagship Value-Add Assets Est. Gross Value Mortgage Debt Occupancy Rate Wtd. Avg Base Rent PSF (1) Wtd. Avg Pop - 3 mile Core 20 4 21 $1,400 $1,400 $1,000 $400 93% $25.07 290,000 $730 88% $21.59 200,000 $420 97% $16.09 150,000 Non-Core 39 $400 $20 96% Total 84 $4,200 $1,570 93% $11.86 150,000 $78,000 $17.90 200,000 $105,000 Wtd. Avg HH Inc - 3 mile $113,000 $105,000 $106,000 ____________ (1) Excludes industrial buildings Flagship Mixed-Use Development Strategy Our flagship assets include four large-scale, highly-productive shopping centers that are situated in densely populated communities surrounded by high-rise residential and office buildings. We believe there is a significant opportunity to further densify these properties by creating mixed-use environments and attracting differentiated retailers. These assets are Bergen Town Center in Paramus, NJ, Bruckner Commons in Bronx, NY, Hudson Mall in Jersey City, NJ and Yonkers Gateway Center in Yonkers, NY. We are moving forward to complete master plans for each of these assets and execute on those redevelopments. We are also evaluating several acquisition and joint venture opportunities with owners of large-scale retail assets seeking to densify their properties with mixed-uses, but who lack the expertise to execute plans that are founded on the creation of a great retail environment centered on an immersive public realm. We estimate that our existing flagship properties have the potential for ~$1 billion of investment over the next 5-7 years to drive long-term value. Funding will likely include a combination of our own capital, the sale of development rights and joint venture partners. Value-Add Redevelopment Strategy Our value-add portfolio includes 21 properties that contain high-impact, smaller-scale redevelopment opportunities that can be executed relatively quickly and include some alternative uses including residential, industrial and self- storage. We will continue to acquire value-add properties that meet our investment criteria, are well located with the potential to become the aggregators within their sub-markets and that are accretive to net asset value. Our primary focus is the DC to Boston corridor. We expect to invest $250-$500 million into our existing value-add properties over the next several years. Core Properties Strategy This portion of our portfolio consists of stable, well-located, fully-occupied centers with strong tenant credits offering moderate NOI growth. Our plan is to actively manage these assets to maximize value and evaluate seeding a portion of these assets into a new joint venture or possibly selling them over a measured time period at a significant premium 3 to valuations implied by our current stock price. Proceeds would ideally be used to fund our flagship and value-add investment programs. Non-Core Properties Strategy Our non-core portfolio comprises an eclectic mix of 39 smaller properties valued at approximately $400 million, representing less than 10 percent of our gross asset value. These properties are typically located in secondary markets where we do not have a meaningful presence. Given the strong investment sales market for assets of this size, we will seek to divest these assets over a measured time period. Leadership Team Attracting and retaining the best and brightest real estate professionals is at the top of our playbook. We take great pride in the leaders that make our company successful. Chris Weilminster and Don Briggs bring a fresh perspective and have provided new energy to our leasing and development teams. Herb Eilberg, our Chief Investment Officer, remains steadfast and disciplined in his search for high-quality assets. Rob Milton, our General Counsel, keeps a watchful eye over all legal and compliance matters. Mark Langer, our Chief Financial Officer and my long-time business partner, remains focused on ensuring our balance sheet and liquidity will enable us to grow no matter what financial cycle we are in. He is supported by Jennifer Holmes, our Chief Accounting Officer, who is highly effective at driving new efficiencies within our accounting and reporting processes. Our entire management team is fortunate to have passionate, high-energy and motivated employees who continually get the job done while meeting high standards. Well-Positioned to Execute on Our Opportunities All in all, we are excited about what the future holds for Urban Edge as we execute on our long-term strategy. We will take advantage of opportunities to pursue mixed-use projects, redevelop and differentiate the properties in our value- add portfolio, acquire properties that can be redeveloped, and reduce our exposure to core and non-core assets through joint ventures and asset sales at prices that reflect a significant premium to our current market valuation. Brick-and-mortar retail is alive but clearly in flux. We are confident that our competitive advantages of portfolio quality, mixed-use and redevelopment expertise and capital allocation position us for continued success. In closing, I would like to recognize and thank our extraordinary Board of Trustees whose focus remains on ensuring our long-term strategy best positions us to maximize shareholder value. Thank you for your trust and confidence in investing with us. Sincerely, Jeffrey S. Olson Chairman and Chief Executive Officer March 28, 2019 4 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. FFO, FFO as Adjusted, cash NOI and same-property cash NOI are non- GAAP measures commonly used by the Company and investing public to understand and evaluate our operating results and performance. The Company believes net income is the most directly comparable GAAP financial measure to FFO, FFO as Adjusted, cash NOI and same-property cash NOI. Reconciliations of these measures to net income have been provided in the tables below. 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 years ended December 31, 2018, 2017, 2016 and 2015. Net income is considered the most directly comparable GAAP measure. Year Ended December 31, 2018 Year Ended December 31, 2017 Year Ended December 31, 2016 Year Ended December 31, 2015 (in thousands) (per share) (2) (in thousands) (per share) (2) (in thousands) (per share) (2) (in thousands) (per share) (2) Net income $ 116,963 $ 0.92 $ 72,938 $ 0.62 $ 96,630 $ 0.91 $ 41,348 $ 0.39 Less net income attributable to noncontrolling interests in: Operating partnership Consolidated subsidiaries Net income attributable to common shareholders Adjustments: Rental property depreciation and amortization Gain on sale of real estate Real estate impairment loss Limited partnership interests in operating partnership FFO applicable to diluted common shareholders(1) Tax impact from hurricane Maria Executive transition costs Environmental remediation costs Transaction costs Construction rental abatement Tenant bankruptcy settlement income Casualty (gain) loss, net Gain (loss) on extinguishment of debt Impact of tenant bankruptcies One-time equity awards related to the spin-off Debt restructuring expenses Severance costs Benefit related to income taxes Real estate tax settlement income related to prior periods Income from acquired leasehold interest FFO as Adjusted applicable to diluted common shareholders(1) (11,768) (45) (0.09) — (5,824) (44) (0.05) — (5,812) (3) (0.05) — (2,547) (16) (0.02) — 105,150 0.83 67,070 0.57 90,815 0.86 38,785 0.37 98,644 (52,625) 5,574 11,768 168,511 2,344 1,932 584 491 291 (329) (777) (2,524) (5,075) — — — — — — 0.79 (0.42) 0.04 0.09 1.33 0.02 0.02 0.01 — — — (0.01) (0.02) (0.04) — — — — — — 81,401 (202) 3,467 5,824 157,560 (1,767) — — 278 902 (655) 6,092 35,336 — — — — — — 0.68 — 0.03 0.05 1.33 (0.01) — — — 0.01 (0.01) 0.05 0.30 — — — — — — (39,215) (0.33) 55,484 (15,618) — 5,812 136,493 — — — 1,405 — 0.53 (0.15) — 0.05 1.29 — — — 0.01 — 56,619 — — 2,547 97,951 — — 1,379 24,011 — 0.54 — — 0.02 0.93 — — 0.01 0.23 — (2,378) (0.02) (3,738) (0.04) — — — — — — — — — — — — (625) (0.01) — — — — — — — 7,143 1,034 693 — (532) — — — — 0.07 0.01 — — — — $ 165,448 $ 1.31 $ 158,531 $ 1.34 $ 134,895 $ 1.27 $ 127,941 $ 1.21 Weighted average diluted common shares - FFO(1) ____________ (1) Operating Partnership ("OP") and Long-Term Incentive Plan ("LTIP") Units are excluded from the calculation of earnings per diluted share because their 118,392 126,584 105,375 106,099 inclusion is anti-dilutive. FFO includes earnings allocated to unitholders as the inclusion of these units is dilutive to FFO per share. (2) Individual items may not add up due to total rounding. Reconciliation of Net Income to Cash NOI and Same-Property Cash NOI The following table reflects the reconciliation of cash NOI, same-property cash NOI (with and without redevelopment) to net income, the most directly comparable GAAP measure, for the years ended December 31, 2018 and 2017. (Amounts in thousands) Net income Management and development fee income from non-owned properties Income tax expense (benefit) Other income Depreciation and amortization General and administrative expense Casualty and impairment loss, net Gain on sale of real estate Interest income Interest and debt expense (Gain) loss on extinguishment of debt Non-cash revenue and expenses Cash NOI(1) Adjustments: Non-same property cash NOI Lease termination payments Natural disaster related operating loss Construction rental abatement Tenant bankruptcy settlement and lease termination income Environmental remediation costs Same-property cash NOI Adjustments: Cash NOI related to properties being redeveloped Same-property cash NOI including properties in redevelopment For the year ended December 31, 2018 2017 $ $ 116,963 (1,469) 3,519 (146) 99,422 34,984 4,426 (52,625) (8,336) 64,868 (2,524) (32,117) 226,965 (51,132) 15,500 40 291 (1,028) 584 72,938 (1,535) (278) (118) 82,281 30,691 7,382 (202) (2,248) 56,218 35,336 (47,161) 233,304 (44,623) — 1,267 902 (975) — $ $ 191,220 $ 189,875 20,431 211,651 $ 18,937 208,812 __________________ (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 but includes bad debt expense. 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 years ended December 31, 2017 and 2016. Net income is considered the most directly comparable GAAP measure. (Amounts in thousands) Net income Depreciation and amortization Interest and debt expense Income tax expense (benefit) Gain on sale of real estate Real estate impairment loss EBITDAre Adjustments for Adjusted EBITDAre: Construction rental abatement Transaction costs Impact of tenant bankruptcies Tenant bankruptcy settlement income Casualty (gain) loss, net Executive transition costs Environmental remediation costs (Gain) loss on extinguishment of debt Income from acquired leasehold interest Adjusted EBITDAre Year Ended December 31, 2018 2017 $ 116,963 $ 99,422 64,868 3,519 (52,625) 5,574 237,721 291 491 (5,075) (329) (777) 1,932 584 (2,524) — $ 232,314 $ 72,938 82,281 56,218 (278) (202) 3,467 214,424 902 278 — (655) 6,092 — — 35,336 (39,215) 217,162 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the annual period ended December 31, 2018 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) Delaware (Urban Edge Properties LP) 47-6311266 36-4791544 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 888 Seventh Avenue, New York, New York (Address of Principal Executive Offices) 10019 (Zip Code) Registrant’s telephone number including area code: Securities registered pursuant to Section 12(b) of the Act: Urban Edge Properties Title of Each Class Common Shares, $.01 par value per share Name of Each Exchange on Which Registered New York Stock Exchange Urban Edge Properties LP Title of Each Class None Name of Each Exchange on Which Registered N/A Securities registered pursuant to Section 12(g) of the Act: Urban Edge Properties: None Urban Edge Properties LP: None _______________________________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Urban Edge Properties YES NO Urban Edge Properties LP YES NO Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Urban Edge Properties YES NO Urban Edge Properties LP YES NO 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 NO Urban Edge Properties LP YES NO 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 NO Urban Edge Properties LP YES NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Urban Edge Properties Urban Edge Properties LP Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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 Filer Accelerated Filer Non-Accelerated Filer Smaller Reporting Company Emerging Growth Company Urban Edge Properties LP: Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Smaller 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. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Urban Edge Properties Urban Edge Properties LP Urban Edge Properties YES NO Urban Edge Properties LP YES NO As of June 29, 2018, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the Common Shares held by nonaffiliates of the Registrant was approximately $2.6 billion based upon the last reported sale price of $22.87 per share on the New York Stock Exchange on such date. As of January 31, 2019, Urban Edge Properties had 114,333,219 common shares outstanding. There is no public trading market for the common units of Urban Edge Properties LP. As a result, the aggregate market value of the common units held by non-affiliates of Urban Edge Properties LP cannot be determined. DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates by reference information from certain portions of the Urban Edge Properties’ definite proxy statement for the 2019 annual meeting of shareholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year. EXPLANATORY NOTE This report combines the annual reports on Form 10-K for the year ended December 31, 2018 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 December 31, 2018, UE owned an approximate 90.0% ownership interest in UELP. The remaining approximate 10.0% interest is owned by limited partners. The other limited partners of UELP are Vornado Realty L.P., members of management, our Board of Trustees, and contributors of property interests acquired. Under the limited partnership agreement of UELP, unitholders may present their common units of UELP for redemption at any time (subject to restrictions agreed upon at the time of issuance of the units that may restrict such right for a period of time). Upon presentation of a common unit for redemption, UELP must redeem the unit for cash equal to the then value of a share of UE’s common shares, as defined by the limited partnership agreement. In lieu of cash redemption by UELP, however, UE may elect to acquire any common units so tendered by issuing common shares of UE in exchange for the common units. If UE so elects, its common shares will be exchanged for common units on a one-for- one basis. This one-for-one exchange ratio is subject to specified adjustments to prevent dilution. UE generally expects that it will elect to issue its common shares in connection with each such presentation for redemption rather than having UELP pay cash. With each such exchange or redemption, UE’s percentage ownership in UELP will increase. In addition, whenever UE issues common shares other than to acquire common units of UELP, UE must contribute any net proceeds it receives to UELP and UELP must issue to UE an equivalent number of common units of UELP. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT. The Company believes that combining the annual reports on Form 10-K 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: Part II, Item 8. Financial Statements which includes specific disclosures for UE and UELP, and Note 14, Equity and Noncontrolling Interests, Note 16, Earnings Per Share and Unit and Note 17 thereto, Quarterly Financial Data. This report also includes separate Part II, Item 9A. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of UE and UELP in order to establish that the requisite certifications have been made and that UE and UELP are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350. URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP ANNUAL REPORT ON FORM 10-K YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS PART I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Item 3. Item 4. Properties Legal Proceedings Mine Safety Disclosures PART II Item 5. Item 6. Item 7. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Item 9. Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. Item 16. PART III Directors, Executive Officers, and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accounting Fees and Services PART IV Exhibits and Financial Statement Schedules Form 10-K Summary Signatures 1 5 18 18 22 22 23 26 29 47 48 86 86 91 91 91 92 92 92 93 93 96 PART I - FINANCIAL INFORMATION ITEM 1. BUSINESS The Company Urban Edge Properties (“UE”, “Urban Edge” or the “Company”) (NYSE: UE) is a Maryland REIT 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 our real estate and other assets. UE and UELP were created in 2014 to own the majority of Vornado Realty Trust’s (“Vornado”) (NYSE: VNO) former shopping center business (the “UE Business”), and separated from Vornado in January 2015. Our portfolio is currently comprised of 83 shopping centers, four malls and a warehouse park totaling approximately 16.3 million square feet (sf) with a consolidated occupancy rate of 93.1%. Unless the context otherwise requires, “we”, “us” and “our” refer to UE after giving effect to the transfer of the UE Business from Vornado, and for periods prior to such transfer, refer to the UE Business while owned by Vornado. 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 the exception of the Company’s taxable REIT subsidiary (“TRS”), to 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 (including any alternative minimum tax, which, for corporations, was repealed under the TCJA (defined below) 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, the Company is subject to certain foreign and state and local income taxes, including a 29% non-resident withholding tax on its two Puerto Rico malls, which are included in income tax expense in the consolidated statements of income. Company Strategies Our goal is to be a leading owner and operator of retail real estate in major urban markets, with a focus on the New York metropolitan area. We believe urban markets offer attractive acquisition and redevelopment opportunities resulting from high population density, strong demand from consumers for differentiated live-work-play environments with access to public transportation, above average retailer sales trends, a limited supply of institutional quality assets and a strong supply of older, undermanaged assets that remain privately owned. We seek to create value through the following primary strategies: Maximizing the value of existing properties through proactive management. We intend to maximize the value of each of our assets through comprehensive, proactive management encompassing: continuous asset evaluation for highest-and-best-use; efficient and cost-conscious day-to-day operations that minimize retailer operating expense and enhance property quality; and targeted leasing to desirable tenants. Leasing is a critical value-creation function that includes: • Monitoring retailer sales, merchandising, store operations, timeliness of payments, overall financial condition and related factors; • Being constantly aware of each asset’s competitive position and recommending physical improvements or adjusting merchandising if circumstances warrant; • Continuously canvassing trade areas to identify unique operators that can distinguish a property and enhance its offerings; • Maintaining regular contact with the brokerage community to stay abreast of new merchants, potential relocations, new supply and overall trade area dynamics; • Conducting regular portfolio reviews with key merchants; • Building and nurturing deep relationships with retailer decision-makers; • Focusing on spaces with below-market leases that might be recaptured; • Understanding the impact of options, exclusives, co-tenancy and other restrictive lease provisions; and • Optimizing required capital investment in every transaction. 1 Actively investing. We intend to acquire properties in our target markets that meet our criteria for risk-adjusted return and enhance the overall quality of our existing portfolio. Investment considerations include: • • • • • • • Geography: We focus primarily on the New York metropolitan area and secondarily on the Washington, DC to Boston corridor. We intend to invest in our existing core markets, and, overtime, may expand into new markets that have similar characteristics. Product: We generally seek large properties that provide scale relative to the competition and optionality for redevelopment to meet the changing demands of the local community. Tenancy: We consider tenant mix, sales performance and related occupancy cost, lease term, lease provisions, omni- channel capabilities, susceptibility to e-commerce disruption and other factors. Our tenant base comprises a diverse group of merchants, including department stores, supermarkets, discounters, entertainment offerings, health clubs, DIY stores, in-line specialty shops, restaurants and other food and beverage vendors and service providers. Rent: We consider existing rents relative to market rents and target submarkets that have potential for market rent growth as evidenced by strong retailer sales performance. Competition and Barriers-to-Entry: We seek assets in underserved, high barrier-to-entry markets in densely populated, affluent trade areas. We believe that properties located in such markets present more attractive risk-return profile relative to other markets. Access and Visibility: We seek assets with convenient access and good visibility. Physical Condition: We consider aesthetics, functionality, building and site conditions and environmental matters in evaluating asset quality. Constantly evaluating our portfolio and, where appropriate, engaging in selective dispositions. We regularly evaluate each property and intend to dispose of those properties that do not meet our investment criteria. Maintaining capital discipline. We intend to keep our balance sheet flexible and capable of supporting growth. We expect to generate increasing levels of cash flow from internally generated funds and to have substantial borrowing capacity under our existing revolving credit agreement and from potential secured debt financing on our existing assets. Significant Tenants None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2018, 2017 and 2016. The Home Depot, Inc. is our largest tenant and accounted for approximately $22.6 million, or 5.5% of our total revenue for the year ended December 31, 2018. Employees Our headquarters are located at 888 Seventh Avenue, New York, NY 10019. As of December 31, 2018, we had 116 employees. Available Information Copies of our Annual Reports on Form 10 K, Quarterly Reports on Form 10 Q, Current Reports on Form 8 K, and amendments to those reports, as well as Reports on Forms 3, 4 and 5 regarding officers, trustees or 10% beneficial owners of us, filed or furnished pursuant to Section 13(a), 15(d) or 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge through our website (www.uedge.com) as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. Also available on our website are copies of our Audit Committee Charter, Compensation Committee Charter, Corporate Governance and Nominating Committee Charter, Code of Business Conduct and Ethics and Corporate Governance Guidelines. In the event of any changes to these charters or the code or guidelines, changed copies will also be made available on our website. Copies of these documents are also available directly from us free of charge. Our website also includes other financial information, including certain non-GAAP financial measures, none of which is a part of this Annual Report on Form 10-K. Copies of our filings under the Exchange Act are also available free of charge from us, upon request. 2 Supplement to Material U.S. Federal Income Tax Consequences This summary supplements and updates the discussion contained under the caption “Material U.S. Federal Income Tax Consequences” in the prospectus dated August 5, 2016, contained in our Registration Statement on Form S-3 filed with the SEC on August 5, 2016 and any prospectus supplements thereto, should be read in conjunction therewith and is subject to the qualifications set forth therein. This summary is for general information purposes only and is not tax advice. This discussion does not address all aspects of taxation that may be relevant to particular holders of our securities in light of their personal investment or tax circumstances. The reference to the “PATH Act” in the second paragraph in the section titled “Investments in Partnerships” on page 44 of the prospectus is replaced with the “Bipartisan Budget Act of 2015.” The Tax Cuts and Jobs Act The recently enacted Tax Cuts and Jobs Act (the “TCJA”), generally applicable for tax years beginning after December 31, 2017, made significant changes to the Code, including a number of provisions of the Code that affect the taxation of businesses and their owners, including REITs and their stockholders, and, in certain cases, that modify the tax rules discussed in the accompanying prospectus. Among other changes, the TCJA made the following changes: • For tax years beginning after December 31, 2017 and before January 1, 2026, (i) the U.S. federal income tax rates on ordinary income of individuals, trusts and estates have been generally reduced and (ii) non-corporate taxpayers are permitted to take a deduction for certain pass-through business income, including dividends received from REITs that are not designated as capital gain dividends or qualified dividend income, subject to certain limitations. • The maximum U.S. federal income tax rate for corporations has been reduced from 35% to 21%, and corporate alternative minimum tax has been eliminated for corporations, which would generally reduce the amount of U.S. federal income tax payable by our taxable REIT subsidiaries (“TRSs”) and by us to the extent we were subject to corporate U.S. federal income tax (for example, if we distributed less than 100% of our taxable income or recognized built-in gains in assets acquired from C corporations). In addition, the maximum withholding rate on distributions by us to non-U.S. stockholders that are treated as attributable to gain from the sale or exchange of a U.S. real property interest is reduced from 35% to 21%. • Certain new limitations on the deductibility of interest expense now apply which may affect the deductibility of interest paid or accrued by us or our TRSs. • Certain new limitations on net operating losses now apply which may affect net operating losses generated by us or our TRSs. • A U.S. tax-exempt stockholder that is subject to tax on its unrelated business taxable income (“UBTI”) will generally be required to separately compute its taxable income and loss for each unrelated trade or business activity for purposes of determining its UBTI. • New accounting rules generally require us to recognize income items for federal income tax purposes no later than when we take the item into account for financial statement purposes, which may accelerate our recognition of certain income items. This summary does not purport to be a detailed discussion of the changes to U.S. federal income tax laws as a result of the enactment of the TCJA. Technical corrections or other amendments to the TCJA or further administrative and regulatory guidance interpreting the TCJA may be forthcoming at any time. We cannot predict the long-term effect of the TCJA or any future law changes on REITs or their stockholders. Investors are urged to consult their own tax advisors regarding the effect of the TCJA based on their particular circumstances. Consolidated Appropriations Act The Consolidated Appropriations Act amended various provisions of the Code and implicates certain tax-related disclosures contained in the prospectus. The discussion contained in the second and third paragraphs under “Qualified Shareholders and Qualified Foreign Pension Funds” on page 55 of the prospectus is replaced with the following paragraph: For these purposes, a qualified shareholder is generally a non-U.S. stockholder that (i)(A) is eligible for treaty benefits under an income tax treaty with the United States that includes an exchange of information program, and the principal class of interests of which is listed and regularly traded on one or more stock exchanges as defined by the treaty, or (B) is a foreign limited partnership 3 organized in a jurisdiction with an exchange of information agreement with the United States and that has a class of regularly traded limited partnership units (having a value greater than 50% of the value of all partnership units) on the New York Stock Exchange or Nasdaq, (ii) is a “qualified collective investment vehicle” (within the meaning of Section 897(k)(3)(B) of the Code) and (iii) maintains records of persons holding 5% or more of the class of interests described in clauses (i)(A) or (i)(B) above. However, in the case of a qualified shareholder having one or more “applicable investors,” the exception described in the first sentence of this paragraph will not apply to the applicable percentage of the qualified shareholder’s stock (with “applicable percentage” generally meaning the percentage of the value of the interests in the qualified shareholder held by applicable investors after applying certain constructive ownership rules). The applicable percentage of the amount realized by a qualified shareholder on the disposition of our stock or with respect to a distribution from us attributable to gain from the sale or exchange of a USRPI will be treated as amounts realized from the disposition of USRPIs. Such treatment shall also apply to applicable investors in respect of distributions treated as a sale or exchange of stock with respect to a qualified shareholder. For these purposes, an “applicable investor” is a person who generally holds an interest in the qualified shareholder and holds more than 10% of our stock applying certain constructive ownership rules. The discussion contained in the fourth paragraph under “Qualified Shareholders and Qualified Foreign Pension Funds” on page 55 of the prospectus is replaced with the following paragraph: For periods on or after December 18, 2015, for FIRPTA purposes neither a “qualified foreign pension fund” nor any entity all of the interests of which are held by a qualified foreign pension fund is treated as a non-U.S. stockholder. A “qualified foreign pension fund” is an organization or arrangement (i) created or organized in a foreign country, (ii) established by a foreign country (or one or more political subdivisions thereof) or one or more employers to provide retirement or pension benefits to current or former employees (including self-employed individuals) or their designees as a result of, or in consideration for, services rendered, (iii) which does not have a single participant or beneficiary that has a right to more than 5% of its assets or income, (iv) which is subject to government regulation and with respect to which annual information about its beneficiaries is provided, or is otherwise available, to relevant local tax authorities and (v) with respect to which, under its local laws, (A) contributions that would otherwise be subject to tax are deductible or excluded from its gross income or taxed at a reduced rate, or (B) taxation of its investment income is deferred, or such income is excluded from its gross income or taxed at a reduced rate. Recent FATCA Proposed Treasury Regulations On December 18, 2018, the Internal Revenue Service promulgated proposed regulations under Sections 1471-1474 of the Code (commonly referred to as FATCA), which proposed regulations eliminate FATCA withholding on gross proceeds and thus implicate certain tax-related disclosures contained in the prospectus. While these regulations have not yet been finalized, taxpayers are generally entitled to rely on the proposed regulations (subject to certain limited exceptions) As a result, the discussion in under “Withholdable Payments to Foreign Financial Entities and Other Foreign Entities” on pages 56 and 69 of the prospectus replaced with the following paragraph: Pursuant to Sections 1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax (“FATCA withholding”) may be imposed on certain payments to you or to certain foreign financial institutions, investment funds and other non-U.S. persons receiving payments on your behalf if you or such persons fail to comply with information reporting requirements. Such payments will include U.S.-source dividends and, subject to the proposed Treasury Regulations discussed below, the gross proceeds from the sale or other disposition of stock that can produce U.S.-source dividends. Payments of dividends that you receive in respect of shares could be affected by this withholding if you are subject to the FATCA information reporting requirements and fail to comply with them or if you hold Urban Edge Properties shares through a non-U.S. person (e.g., a foreign bank or broker) that fails to comply with these requirements (even if payments to you would not otherwise have been subject to FATCA withholding). While withholding under FATCA would have applied to payments of gross proceeds from a sale or other disposition of Urban Edge Properties shares on or after January 1, 2019, recently proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued. You should consult your own tax advisors regarding the relevant U.S. law and other official guidance on FATCA withholding. 4 ITEM 1A. RISK FACTORS Risk factors that may materially and adversely affect our business, results of operations and financial condition are summarized below. These risks have been separated into three groups: (1) Risks Related to Our Business and Operations and to Our Status as a REIT, (2) Risks Related to Our Common Shares and (3) Risks Related to Our Organization and Structure. The risks and uncertainties described herein may not be the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial, may also adversely affect our business. See “Forward-Looking Statements” contained herein. RISKS RELATED TO OUR BUSINESS AND OPERATIONS AND TO OUR STATUS AS A REIT There are inherent risks associated with real estate investments and the real estate industry, particularly retail real estate, each of which could have an adverse impact on our financial performance and the value of our properties. Real estate investments are subject to various risks, many of which are beyond our control. Our operating and financial performance and the value of our properties can be affected by many of these risks, including, but not limited to, the following: • • • • • • • • • the convenience and quality of competing retail properties and other retailing platforms such as e-commerce; local real estate conditions, such as an oversupply of retail space or a reduction in demand for retail space, resulting in vacancies or compromising our ability to rent space on favorable terms; adverse changes in the financial condition of tenants at our properties, including financial difficulties, lease defaults or bankruptcies; national, regional and local economies, which may be negatively impacted by inflation, deflation, government deficits, high unemployment rates, severe weather or other natural disasters, decreased consumer confidence, industry slowdowns, reduced corporate profits, lack of liquidity and other adverse business conditions; civil unrest, acts of war, terrorist attacks and natural or man-made disasters, including seismic activity and floods, which may result in uninsured and underinsured losses; changes in the enforcement or creation of laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning and tax laws, government fiscal policies and the Americans with Disabilities Act (“ADA”); the illiquid nature of real estate investments, which may limit our ability to sell properties at the terms desired or at terms favorable to us; competition for investment opportunities from other real estate investors with significant capital, including other REITs, real estate operating companies and institutional investment funds; and fluctuations in interest rates and the availability and cost of financing, which could adversely affect our ability and the ability of potential buyers and tenants of our properties, to obtain financing on favorable terms or at all. During a period of economic slowdown or recession, or the public perception that such a period may occur, declining demand for real estate could result in a general decline in rents or an increased incidence of defaults among our existing tenants, and, consequently, our properties may fail to generate revenues sufficient to meet operating, debt service and other expenses. As a result, we may have to borrow funds to cover fixed costs, and our cash flow, financial condition and results of operations could be adversely affected. As such, the market price of our common shares, and our ability to service debt obligations and pay dividends and other distributions to security holders could be adversely affected. E-commerce may have an adverse impact on our tenants and our business. E-commerce continues to gain popularity and growth in Internet sales is likely to continue in the future. E-commerce could result in a downturn in the business of some of our current tenants and could affect the way other current and future tenants lease space. For example, the migration towards e-commerce has led many omnichannel retailers to prune the number and size of their traditional “brick and mortar” locations to increasingly rely on e-commerce and alternative distribution channels. Many tenants also permit merchandise purchased on their websites to be picked up at, or returned to, their physical store locations, which may have the effect of decreasing the reported amount of their in-store sales and the amount of rent we are able to collect from them (particularly with respect to those tenants who pay rent based on a percentage of their in-store sales). We cannot predict with certainty how growth in e-commerce will impact the demand for space at our properties or how much revenue will be generated at traditional store locations in the future. If the shift towards e-commerce causes declines in the “brick and mortar” sales generated by our tenants and/or causes our tenants to reduce the size or number of their retail locations in the future, our cash flow, financial condition and results of operations could be materially and adversely affected. 5 Retail real estate is a competitive business. Competition in the retail real estate industry is intense. We compete with a large number of public and private retail real estate companies, including property owners and developers. We compete with these companies to attract customers to our properties, as well as to attract anchor, non-anchor and other tenants. We also compete with these companies for development, redevelopment and acquisition opportunities. Other owners and developers may attempt to take existing tenants from our shopping centers by offering lower rents or other incentives to compel them to relocate. This competition could have a material adverse effect on our ability to lease space and on the amount of rent and expense reimbursements that we receive. We depend on leasing space to tenants on economically favorable terms and on collecting rent from tenants who ultimately may not be able to pay. Our financial results depend significantly on leasing space in our properties to tenants on economically favorable terms. A majority of our income depends on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the tenants and generally provide for reimbursement of real estate taxes and expenses of operating the property. Economic and/or competitive conditions may impact the success of our tenants’ retail operations and therefore the amount of rent and expense reimbursements we receive from our tenants. While demand for our retail spaces has been strong, there can be no assurance in our ability to maintain our occupancy levels on favorable terms. Any reduction in our tenants’ abilities to pay base rent, percentage rent or other charges on a timely basis will decrease our income, funds available to pay indebtedness and funds available for distribution to shareholders. If a tenant does not pay its rent, we might not be able to enforce our rights as landlord without delays and might incur substantial legal and other costs. During periods of economic adversity, there may be an increase in the number of tenants that cannot pay their rent and an increase in vacancy rates, which could materially and adversely affect our cash flow, financial condition and results of operations. We may be unable to renew leases or relet space as leases expire. When our tenants decide not to renew their leases upon their expiration, we may not be able to relet the space. Spaces that accounted for approximately 7.8% of our annualized base rent for the fiscal year ended December 31, 2018 were vacant as of December 31, 2018, excluding leases signed but not commenced. In addition, leases accounting for approximately 24% of our annualized base rent for the fiscal year ended December 31, 2018 are scheduled to expire within the next three years. Even if tenants do renew or we can relet the space, the terms of the renewal or reletting, taking into account among other things, the cost of improvements to the property and leasing commissions, may be less favorable than the terms in the expired leases. In addition, changes in space utilization by our tenants may impact our ability to renew or relet space without the need to incur substantial costs in renovating or redesigning the internal configuration of the relevant property. If we are unable to promptly renew the leases or relet the space at similar rates or if we incur substantial costs in renewing or reletting the space, our cash flow and ability to service debt obligations and pay dividends and other distributions to security holders could be adversely affected. Bankruptcy or insolvency of tenants may decrease our revenues, net income and available cash. From time to time, some of our tenants have declared bankruptcy and other tenants may declare bankruptcy or become insolvent in the future. For example, during the year ended December 31, 2018, Toys “R” Us Inc. (“Toys “R” Us”), Sears Holding Corporation (“Sears”), National Stores Inc. (“Fallas”) and National Wholesale Liquidators filed for Chapter 11 bankruptcy protection. See Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources included in Part II, Item 7. in this Annual Report on Form 10-K and the Notes to Consolidated Financial Statements included in Part II, Item 8. in this Annual Report on Form 10-K. Tenants who file for bankruptcy protection have the legal right to reject any or all of their leases and close related stores. In the event that a tenant with a significant number of leases in our properties files for bankruptcy and rejects its leases, we could experience a significant reduction in our revenues and we may not be able to collect all pre-petition amounts owed by that party, which may adversely affect our cash flow, financial condition and results of operations. The bankruptcy or insolvency of a major tenant at one of our properties could also negatively impact our ability to lease other existing or future vacancies at any such property. In addition, our leases generally do not contain restrictions designed to ensure the ongoing creditworthiness of our tenants. The bankruptcy or insolvency of a major tenant could result in a lower level of net income, which may adversely affect our cash flow, financial condition and results of operations and decrease funds available to pay our indebtedness or make distributions to shareholders. See Part I, Item 2. “Properties” in this Annual Report on Form 10-K. 6 A significant number of our properties are located in the New York metropolitan area and are affected by the economic cycles there. Because a significant number of our properties are located in the New York metropolitan area, we are particularly susceptible to adverse economic and other developments in that area. Notably, as of December 31, 2018, two of our New York metropolitan area properties in the aggregate generated in excess of 15% of our annualized base rent (The Outlets at Bergen Town Center and Tonnelle Commons in New Jersey). Collectively, our New York metropolitan area properties in the aggregate generated in excess of 70% of our annualized base rent as of December 31, 2018. Real estate markets are subject to economic downturns and we cannot predict the economic conditions in the New York metropolitan area in either the short-term or long-term. Poor economic or market conditions in the New York metropolitan area, may adversely affect our cash flow, financial condition and results of operations. Risks related to Puerto Rico. Our two malls in Puerto Rico make up approximately 9% of our Net Operating Income. Puerto Rico faces significant fiscal and economic challenges, including its government filing for bankruptcy protection in 2017. In addition, Hurricanes Irma and Maria placed significant, lasting stress on the island’s already strained economy and infrastructure. These factors have led to an ongoing emigration trend of Puerto Rico residents to the United States and elsewhere. The combination of these circumstances could result in less disposable income for the purchase of goods sold in our malls and the inability of merchants to pay rent and other charges. Any of these events could negatively impact our ability to lease space on terms and conditions we seek and could have a material adverse effect on our business and results of operations. As of December 31, 2018, the Company has individual, non-recourse mortgages on each of its Puerto Rico properties as follows: a $114.9 million mortgage, comprised of a senior and junior loan, maturing in July 2021 secured by The Outlets at Montehiedra and a $130 million mortgage maturing in August 2024 secured by the Las Catalinas Mall. Natural disasters could have a concentrated impact on us. We own properties near the Atlantic Coast and in Puerto Rico which are subject to natural disasters such as hurricanes, floods and storm surges. We also have four properties in California that could be impacted by earthquakes. As a result, we could become subject to business interruption, significant losses and repair costs, such as those we experienced from Hurricane Maria, which damaged and caused the temporary closure of our two properties in Puerto Rico. The Company maintains comprehensive, all-risk property and rental value insurance coverage on our properties, however losses resulting from a natural disaster may be subject to a deductible or not fully covered and such losses could adversely affect our cash flow, financial condition and results of operations. Some of our properties depend on anchor or major tenants and decisions made by these tenants, or adverse developments in the businesses of these tenants, could materially and adversely affect our business, results of operations and financial condition. Some of our properties have anchor or major tenants that generally occupy larger spaces, sometimes pay a significant portion of a property’s total rent and often contribute to the success of other tenants by drawing customers to a property. If an anchor or major tenant closes, such closure could adversely affect the property even if the tenant continues to pay rent due to the loss of the anchor or major tenant’s drawing power. Additionally, closure of an anchor or major tenant could result in lease terminations by, or reductions in rent from, other tenants if the other tenants’ leases have co-tenancy clauses that permit cancellation or rent reduction if an anchor tenant closes. Retailer consolidation, store rationalization, competition from internet sales and general economic conditions may decrease the number of potential tenants available to fill available anchor tenant spaces. As a result, in the event one or more anchor tenants were to leave one or more of our centers, we cannot be sure that we would be able to lease the vacant space on equivalent terms or at all. In addition, we may not be able to recover costs owed to us by the closed tenant. In certain cases, some anchor and non-anchor tenants may be able to terminate their leases if they do not achieve defined sales levels. Development and redevelopment activities have inherent risks, which could adversely impact our cash flow, financial condition and results of operations. We may develop or redevelop properties when we believe that doing so is consistent with our business strategy. As of December 31, 2018, we had five properties in our redevelopment project pipeline and 14 active redevelopment projects. We have invested a total of approximately $146 million in our active projects, which are at various stages of completion, and based on our current plans and estimates, we anticipate it will cost an additional $50.5 million to complete our active projects. Our five pipeline projects are estimated to cost $50 - 55 million. We anticipate engaging in additional development and redevelopment activities in the future. In addition to the risks associated with real estate investments in general as described elsewhere, the risks associated with future development and redevelopment activities include: • • • expenditure of capital and time on projects that may never be completed; failure or inability to obtain financing on favorable terms or at all; inability to secure necessary zoning or regulatory approvals; 7 • • • • • • higher than estimated construction or operating costs, including labor and material costs; inability to complete construction on schedule due to a number of factors, including inclement weather, labor disruptions, construction delays, delays or failure to receive zoning or other regulatory approvals, acts of terror or other acts of violence, or natural disasters (such as fires, seismic activity or floods); significant time lag between commencement and stabilization resulting in delayed returns and greater risks due to fluctuations in the general economy, shifts in demographics and competition; decrease in customer traffic during the redevelopment period causing a decrease in tenant sales; inability to secure key anchor or other tenants at anticipated pace of lease-up or at all; and occupancy and rental rates at a newly completed project that may not meet expectations. If any of the above events were to occur, they may hinder our growth and may have an adverse effect on our cash flow, financial condition and results of operations. In addition, new development and significant redevelopment activities, regardless of whether they are ultimately successful, typically require substantial time and attention from management. We face significant competition for acquisitions of properties, which may reduce the number of acquisition opportunities available to us and increase the costs of these acquisitions. The current market for acquisitions of properties in our core markets continues to be competitive. This competition may increase the demand for the types of properties in which we typically invest and, therefore, increase the prices paid for such acquisition properties. We also face significant competition for attractive acquisition opportunities from an indeterminate number of investors, including publicly-traded and privately-held REITs, private equity investors and institutional investment funds, some of which have greater financial resources, greater ability to borrow funds and the willingness to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices. This competition will increase if investments in real estate become more attractive relative to other forms of investment. Competition for investments may reduce the number of suitable investment opportunities available to us and may have the effect of increasing prices paid for such acquisition properties and, as a result, adversely affecting our ability to grow through acquisitions. Our operating results at acquired properties may not meet our financial expectations. Our ability to complete acquisitions on favorable terms and successfully operate or develop them is subject to the following risks: • we may incur significant costs and divert management attention in connection with the evaluation and negotiation of potential acquisitions, including ones that are subsequently not completed; • we may be unable to finance acquisitions on favorable terms and in the time period we desire, or at all; • we may be unable to quickly and efficiently integrate new acquisitions, particularly the acquisition of portfolios of properties, into our existing operations; • we may acquire properties that are not initially accretive to our results upon acquisition, and we may not successfully manage and lease those properties to meet our expectations; and • we may acquire properties subject to liabilities and without any recourse, or with only limited recourse to former owners, with respect to unknown liabilities for clean-up of undisclosed environmental contamination, claims by tenants or other persons to former owners of the properties and claims for indemnification by general partners, trustees, officers and others indemnified by the former owners of the properties. If we are unable to complete acquisitions on favorable terms, or efficiently integrate such acquisitions, our cash flow, financial condition and results of operations could be adversely affected. It may be difficult to dispose of real estate quickly, which may limit our flexibility. Real estate is relatively difficult to dispose of quickly. Consequently, we may have limited ability to promptly change our portfolio in response to changes in economic or other conditions. Moreover, our ability to dispose of, or finance real estate may be materially and adversely affected during periods of uncertainty or unfavorable conditions in the credit markets as we or potential buyers of our real estate may experience difficulty in obtaining financing. To dispose of low basis deferral or tax-protected properties efficiently we from time to time use like-kind exchanges, which are intended to qualify for non-recognition of taxable gain, but can be difficult to consummate and result in the property for which the disposed assets are exchanged inheriting their low tax bases and other tax attributes (including tax protection covenants). These challenges related to dispositions may limit our flexibility. 8 Many real estate costs are fixed, even if income from our properties decreases. Our financial results depend primarily on leasing space in our properties to tenants on terms favorable to us. Costs associated with operating real estate, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from operations may be reduced if a tenant does not pay its rent or we are unable to rent our properties on favorable terms. A number of properties in our portfolio are subject to ground or building leases; if we are found to be in breach of a ground or building lease or are unable to renew a ground or building lease, we could be materially and adversely affected. A number of the properties in our portfolio are either completely or partially on land that is owned by third parties and leased to us pursuant to ground or building leases. Accordingly, we only own a long-term leasehold or similar interest in those properties. If we are found to be in breach of a ground or building lease and that breach cannot be cured, we could lose our interest in the improvements and the right to operate the property. In addition, unless we can purchase a fee interest in the underlying land or building or extend the terms of these leases before or at their expiration, as to which no assurance can be given, we will lose our interest in the improvements and the right to operate these properties. However, in certain cases, our ability to exercise such options is subject to the condition that we are not in default under the terms of the ground or building lease at the time that we exercise such options, and we can provide no assurances that we will be able to exercise our options at such time. If we were to lose the right to operate a property due to a breach or non-renewal of the ground or building lease, we would be unable to derive income from such property, which could materially and adversely affect us. Loss of our key personnel could adversely affect the value of our business, results of operations and financial condition. We are dependent on our key executive personnel. Although we believe qualified replacements could be found for these key executives in the event of a departure, the loss of one or more of their services, market knowledge and business relationships, could materially and adversely affect our business, results of operations and financial condition. In September 2018, the Company’s former Chief Operating Officer retired concurrently with the hiring of a new one and a new President of Development. Our business and operations would suffer in the event of system failures. Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for our information technology (“IT”) infrastructure, our systems are vulnerable to damages from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. We have placed reliance on third party managed services to perform a number of IT-related functions. We implemented a new information technology platform in August 2017, including a new enterprise resources planning (“ERP”) system. We may experience system difficulties related to our new platform and integrating the services provided by third parties. If we experience a system failure or accident that causes interruptions in our operations, we could experience material and adverse disruptions to our business. We may also incur additional costs to remedy damages caused by such disruptions. We face risks associated with security and cyber security breaches. We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the internet, malware, computer viruses, attachments to emails, persons inside our organization or persons with access to systems, and other significant disruptions of our IT networks and related systems. Similarly, vendors from whom we receive outsourced IT-related services, including third-party platforms, face the same risks, which could in turn affect us. Our internal and outsourced IT networks and related systems are essential to the operation of our business and our ability to perform day to day operations. Although (i) we make efforts to maintain the security and integrity of our IT networks and related systems and ensure that our vendors do and (ii) we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we or our vendors may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk. A breach or significant and extended disruption in the functioning of our systems, including our primary website, may damage our reputation and cause us to lose customers, tenants and revenues, generate third-party claims, result in the unintended and/or unauthorized public disclosure or the misappropriation of proprietary, personal identifying and confidential information, and require us to incur significant expenses to address and remediate or otherwise resolve these kinds of issues, and we may not be able to recover these expenses in whole or in any part from our service providers, responsible parties, or insurance carriers which could have a material adverse effect on our business and operations. 9 We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/or sell real estate. Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused such release. The presence of contamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure at or from our properties. Most of our properties have been subjected to varying degrees of environmental assessment at various times. To date, these environmental assessments have not revealed any environmental condition material and adverse to our business. However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to contamination or changes in cleanup or compliance requirements could result in significant costs to us. Generally, our tenants must comply with environmental laws and meet remediation requirements. Our leases typically impose obligations on our tenants to indemnify us from any compliance costs we may incur as a result of the environmental conditions on the property caused by the tenant. If a lease does not require compliance or if a tenant fails to or cannot comply, we could be forced to pay these costs. If not addressed, environmental conditions could impair our ability to sell or re-lease the affected properties in the future or result in lower sales prices or rent payments, which could adversely impact our cash flow, financial condition and results of operations. Some of our potential losses may not be covered by 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 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 and (iii) numerous other insurance policies including trustees’ and officers’ insurance, workers’ compensation and automobile-related liabilities insurance. The Company’s insurance includes coverage for acts of terrorism 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 maintains coverage for certain cybersecurity losses with limits of $5 million per occurrence and in the aggregate providing first and third-party coverage including network interruption, event management, cyber extortion and claims for media content, security and privacy liability. Insurance premiums are typically charged directly to each of the retail properties and warehouses 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 coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future and expect premiums across most property 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. 10 Future terrorist acts and shooting incidents could harm the demand for, and the value of, our properties. Over the past several years, a number of highly publicized terrorist acts and shootings have occurred at domestic and international retail properties. In the event concerns regarding safety were to alter shopping habits or deter customers from visiting shopping centers, our tenants would be adversely affected as would the general demand for retail space. Additionally, if such incidents were to continue, insurance for such acts may become limited or subject to substantial cost increases. Such an incident at one of our properties, particularly one in which we generate a significant amount of revenue, could materially and adversely affect our business, results of operations and financial condition. Our assets may be subject to impairment charges. Our long-lived assets, including real estate held for investment, are carried at net book value unless circumstances indicate that the carrying value of the assets may not be recoverable. Our properties are reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. When assets are identified as held for sale, we estimate the sales prices net of selling costs of such assets. If, in our opinion, the net sales prices of the assets which have been identified for sale are expected to be less than the net book value of the assets, an impairment charge is recorded and we write down the asset to fair value. An impairment charge may also be recorded for any asset if it is probable, in our estimation, that the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property are less than the carrying value of the property. Recording an impairment charge results in an immediate reduction in our income in the period in which the charge is taken, which could materially and adversely affect our results of operations and financial condition. Compliance or failure to comply with the Americans with Disabilities Act, safety regulations or other requirements could result in substantial costs. The ADA generally requires that public buildings including our properties meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants and/or legal fees to their counsel. We could be required under the ADA to make substantial alterations to, and capital expenditures at, one or more of our properties, including the removal of access barriers, which could materially and adversely affect our business, results of operations and financial condition. Our properties are subject to various federal, state and local regulatory requirements such as state and local fire and life safety regulations. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures. If we incur substantial costs to comply with the ADA and any other legislation, our cash flow, financial condition and results of operations could be adversely affected. Changes in accounting principles, or interpretations thereof, could have a significant impact on our financial position and results of operations. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These principles are subject to interpretation by the U.S. Securities and Exchange Commission and various bodies formed to interpret and create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls. For example, in February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-02, Leases, which requires lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months, regardless of classification. Implementing ASUs, as well as other new accounting guidance may require us to make significant upgrades to and investments in our ERP systems, and could result in significant adverse changes to our financial statements. For additional information regarding updated standards, see the section titled “Recently Issued Accounting Literature” in Note 3 to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. We face possible adverse changes in tax law. Changes in U.S. federal, state and local tax laws or regulations, with or without retroactive application, could have a negative effect on us. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify to be taxed as a REIT and/or the U.S. federal income tax consequences to our investors and to the Company of such qualification. Any changes to the Code and Treasury Regulations promulgated thereunder that apply to determine the taxability of our separation from Vornado have been the subject of change and may continue to be the subject of change, possibly with retroactive application, which could have a negative effect on our shareholders and could adversely affect our business, results of operations and financial condition, and the amount of cash available for payment of dividends. Even changes that do not impose greater taxes on us could potentially result in adverse consequences to our shareholders. 11 The Tax Cut and Jobs Act The TCJA makes major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their stockholders. Among the changes made by the TCJA are permanently reducing the generally applicable corporate tax rate, reducing the tax rate applicable to individuals and other non-corporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026, eliminating or modifying certain previously allowed deductions (including substantially limiting interest deductibility and, for individuals, the deduction for non-business state and local taxes), and providing for preferential rates of taxation through a deduction of up to 20% (subject to certain limitations) on most ordinary REIT dividends and certain trade or business income of non-corporate taxpayers. The decrease in corporate tax rates could decrease the attractiveness of the REITs, including the Company, relative to companies that are not REITs. The TCJA also imposes new limitations on the deduction of net operating losses, which may result in us having to make additional taxable distributions to our stockholders in order to comply with REIT distribution requirements or avoid taxes on retained income and gains. The effect of the significant changes made by the TCJA is highly uncertain, and administrative and regulatory guidance will be required in order to fully evaluate the effect of many provisions. The effect of any technical corrections with respect to the TCJA could have an adverse effect on us or our stockholders. Investors should consult their tax advisors regarding the implications of the TCJA on their investment in us. Our existing tax protection agreements, and any tax protection agreements that we enter into in the future, could limit our flexibility with respect to disposing of certain of properties or refinancing our indebtedness. In connection with certain contributions of properties to UELP, we and UELP have entered into tax protection agreements with the contributors of such properties that generally provide that if we dispose of any interest in the contributed properties in a taxable transaction within a certain time period, subject to certain exceptions, we may be required to indemnify the contributors for their tax liabilities attributable to the built-in gain that existed with respect to such property interests, and certain tax liabilities incurred as a result of such tax protection payments. Therefore, although it may be in our stockholders’ best interests that we sell a contributed property, it may be economically prohibitive for us to do so because of these obligations. In the future, we and UELP may enter into additional tax protection agreements which could further limit our flexibility to sell or otherwise dispose of our properties. In addition, one of our current tax protection agreements requires, and any tax protection agreements we enter into in the future may require, UELP to maintain for specified periods of time secured debt on certain of our assets and/or allocate partnership debt to certain contributors of properties to enable them to continue to defer recognition of their taxable gain with respect to the contributed properties. If the failure of UELP to maintain such levels of debt causes any such contributor to recognize gain, we may be required to deliver to such contributor a cash payment intended to approximate the contributor’s tax liability resulting from such failure and certain tax liabilities incurred as a result of such tax protection payment. This tax protection agreement may restrict UELP’s ability to repay or refinance debt or require UELP to maintain more or different debt than UELP would otherwise require for our business. Covenants in our existing financing agreements may restrict our operating, financing, redevelopment, development, acquisition and other activities. The mortgages on our properties contain customary covenants such as those that limit our ability, without the prior consent of the lender, to further mortgage the applicable property or to reduce insurance coverage. Our existing revolving credit facility contains, and any debt that we may obtain in the future may contain, customary restrictions, requirements and other limitations on our ability to incur indebtedness, including covenants (i) that limit our ability to incur debt based upon (1) our ratio of total debt to total assets, (2) our ratio of secured debt to total assets, (3) our ratio of earnings before interest, tax, depreciation and amortization (EBITDA) to interest expense and (4) our ratio of EBITDA to fixed charges, and (ii) that require us to maintain a certain level of unencumbered assets to unsecured debt. Our ability to borrow is subject to compliance with these and other covenants. Failure to comply with our covenants could cause a default under the applicable debt instrument and we may then be required to repay such debt with capital from other sources or to give possession of a secured property to the lender. Under those circumstances, other sources of capital may not be available to us or may be available only on unattractive terms. Risks related to our outstanding debt. If we are unable to obtain debt financing or refinance existing indebtedness upon maturity on terms favorable to us, our financial condition and results of operations would likely be adversely affected. In addition, the cost of our existing variable rate debt may increase, especially in a rising interest rate environment, and we may not be able to refinance our existing debt in sufficient amounts or on acceptable terms. As of December 31, 2018, we had $169.5 million of variable rate debt and our $600 million revolving credit facility, on which no balance is outstanding at December 31, 2018, bears interest at a floating rate based on the London Interbank Offered Rate (“LIBOR”) plus an applicable margin, and we may continue to borrow additional funds at variable interest rates in the future. Increases in interest rates would increase the interest expense on our variable rate debt and reduce our cash flow, which could (i) adversely affect our ability to service our debt and meet our other obligations and (ii) reduce the amount we are able to distribute to our shareholders. If the cost or amount of our indebtedness increases or we cannot refinance our debt in 12 sufficient amounts or on acceptable terms, we are at risk of default on our obligations, which could have a material adverse effect on us. Defaults on secured indebtedness may result in foreclosure. In the event that we default on mortgages in the future, either as a result of ceasing to make debt service payments or failing to meet applicable covenants, the lenders may accelerate the related debt obligations and foreclose and/or take control of the properties that secure their loans. As of December 31, 2018, we had $1.6 billion of secured debt outstanding and 31 of our properties were encumbered by secured debt. Further, for tax purposes, the foreclosure of a mortgage may result in the recognition of taxable income related to the extinguished debt without us having received any accompanying cash proceeds. As a result, since we are structured as a REIT, we may be required to identify and utilize sources for distributions to our shareholders related to such taxable income in order to avoid incurring corporate tax or to meet the REIT distribution requirements imposed by the Code. We may not be able to obtain capital to make investments. We depend primarily on external financing to fund the growth of our business because one of the requirements of the Code for a REIT is that it distributes at least 90% of its taxable income, excluding net capital gains, to its shareholders. There is a separate requirement to distribute net capital gains or pay a corporate level tax in lieu thereof. Our access to debt or equity financing depends on the willingness of third parties to lend to or to make equity investments and on conditions in the capital markets generally. There can be no assurance that new financing or other capital will be available or available on acceptable terms. The failure to obtain financing or other capital could materially and adversely affect our business, results of operations and financial condition. For information about our available sources of funds, see Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources included in Part II, Item 7. in this Annual Report on Form 10-K and the Notes to Consolidated Financial Statements included in Part II, Item 8. in this Annual Report on Form 10-K. We may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates. Although we believe that we will remain organized and will continue to operate so as to qualify as a REIT for federal income tax purposes, we may fail to remain so qualified. Qualifications are governed by highly technical and complex provisions of the Code for which there are only limited judicial or administrative interpretations and that depend on various facts and circumstances that are not entirely within our control. In addition, legislation, new regulations, administrative interpretations or court decisions may significantly change the relevant tax laws and/or the federal income tax consequences of qualifying as a REIT. If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under statutory relief provisions, we could not deduct distributions to shareholders in computing our taxable income and would have to pay federal income tax on our taxable income at regular corporate rates. The federal income tax payable would include any applicable alternative minimum tax (which, for corporations, was repealed for tax years beginning after December 31, 2017 under the TCJA). If we had to pay federal income tax, the amount of money available to distribute to shareholders and pay our indebtedness would be reduced for the year or years involved, and we would no longer be required to make distributions to shareholders. In addition, we would also be disqualified as a REIT for the four taxable years following the year during which qualification was lost unless we were entitled to relief under the relevant statutory provisions. We are also required to pay certain corporate-level taxes on our assets located in Puerto Rico and such taxes may increase if recently proposed taxes are implemented. REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan. To qualify to be taxed as a REIT, and assuming that certain other requirements are also satisfied, we generally must distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to our shareholders each year so that U.S. federal corporate income tax does not apply to earnings that we distribute. To the extent that we satisfy this distribution requirement and qualify for taxation as a REIT, but distribute less than 100% of our REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, we will be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our shareholders in a calendar year is less than a minimum amount specified under U.S. federal income tax laws. We intend to distribute 100% of our REIT taxable income to our shareholders. From time to time, we may generate taxable income greater than our cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the effect of limitations on interest and net operating loss deductibility under the TCJA, the creation of reserves, or required debt or amortization payments. If we do not have other funds available in these situations, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of our shares or debt securities to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and the 4% 13 excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Further, amounts distributed will not be available to fund investment activities. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our shares. Any restrictions on our ability to incur additional indebtedness or make certain distributions could preclude us from meeting the 90% distribution requirement. Decreases in funds from operations due to unfinanced expenditures for acquisitions of properties or increases in the number of shares outstanding without commensurate increases in funds from operations would adversely affect our ability to maintain distributions to our shareholders. Consequently, there can be no assurance that we will be able to make distributions at the anticipated distribution rate or any other rate. Risks related to Section 1031 Exchanges. From time to time we may dispose of properties in transactions that are intended to qualify as “like kind exchanges” under Section 1031 of the Code (“Section 1031 Exchanges”). It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable. In such case, our taxable income and earnings and profits would increase. In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties. As a result, we may be required to borrow funds in order to pay additional dividends or taxes, and the payment of such taxes could cause us to have less cash available to distribute to our shareholders. In addition, if a Section 1031 Exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question, including any information reports we sent our shareholders. Moreover, it is possible that legislation could be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or not possible for us to dispose of properties on a tax deferred basis. We are subject to litigation that may negatively impact our cash flow, financial condition and results of operations. We are a defendant from time to time in lawsuits and regulatory proceedings relating to our business. Due to the inherent uncertainties of litigation and regulatory proceedings, we may not be able to accurately predict the ultimate outcome of any such litigation or proceedings. A significant unfavorable outcome could negatively impact our cash flow, financial condition and results of operations. If the distribution by each of Vornado and VRLP together with certain related transactions does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Vornado and Vornado shareholders could be subject to significant tax liabilities. Vornado received a private letter ruling from the IRS to the effect that the distribution of UE common shares by each of Vornado and its operating partnership, Vornado Realty L.P. (“VRLP”), together with certain related transactions, will, with respect to UE, VRLP, Vornado and the shareholders of Vornado, qualify as transactions that are generally tax-free for U.S. federal income tax purposes under Sections 351 and 355 of the Code. Vornado obtained an opinion from of Roberts & Holland LLP, special tax counsel to Vornado, satisfactory to the Vornado Board of Trustees, to the effect that the distribution of UE common shares by each of Vornado and VRLP, together with certain related transactions, with respect to UE, VRLP, Vornado and the shareholders of Vornado, qualifies as transactions that are generally tax-free for U.S. federal income tax purposes under Sections 351, 355, and 731 of the Code, including with respect to certain matters relating to these transactions that are not covered by the private letter ruling from the IRS. The private letter ruling is, and the opinion of Roberts & Holland LLP is based on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of Vornado and UE (including those relating to the past and future conduct of Vornado and UE). If any of these representations, statements or undertakings are, or become, inaccurate or incomplete, or if Vornado or UE breach any of their respective covenants in the separation documents, the private letter ruling from the IRS and the opinion of Roberts & Holland LLP may be invalid and the conclusions reached therein could be jeopardized. In such case, the IRS could assert that the distribution of UE common shares by each of Vornado and VRLP, together with certain related transactions, should be treated as a taxable transaction. The opinion of Roberts & Holland LLP is not binding on the IRS or any courts. If the distribution, together with certain related transactions, fails to qualify for tax-free treatment, in general, Vornado would recognize taxable gain as if it had sold the UE common shares in a taxable sale for its fair market value and Vornado shareholders who received UE common shares in the distribution could be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. Risk related to the terms of our agreements related to our separation from Vornado. In connection with the separation and distribution, we entered into certain agreements with Vornado, including a separation agreement between UE and Vornado (the “Separation Agreement”) and a tax matters agreement between UE and Vornado (the “Tax Matters Agreement”). These agreements govern certain aspects of our relationship with Vornado. For example, the Tax Matters Agreement governs Vornado’s and UE’s respective rights, responsibilities and obligations with respect to taxes and liabilities, including taxes arising in the ordinary course of business, taxes, if any, incurred as a result of any failure of the spin and certain related transactions to qualify as tax-free for U.S. federal income tax purposes, tax attributes, tax returns, tax elections, 14 tax contests and certain other tax matters. Pursuant to the agreement, UE may be required to indemnify Vornado against additional taxes resulting from any violation of a covenant or any inaccuracy or falsity of a representation made by UE under the agreement. The Separation Agreement also contains indemnification provisions which may make us financially responsible for substantially all liabilities that may exist relating to our business activities, whether incurred prior to or after the separation and distribution, as well as those obligations of Vornado that we assumed pursuant to the Separation Agreement. These indemnity obligations could be substantial. The terms of our Agreements, including those relating to tax and indemnification, were determined while we were still a wholly- owned subsidiary of Vornado. They were determined by persons who were, at the time, employees, officers or trustees of Vornado or its subsidiaries and, accordingly, had a conflict of interest. For example, during the period in which the terms of those agreements were prepared, we did not have a board of trustees that was independent of Vornado. As a result, the terms of those agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties. Arm’s-length negotiations between Vornado and an unaffiliated third party in another form of transaction, such as a buyer in a sale of a business transaction, may have resulted in more favorable terms to the unaffiliated third party. See “Certain Relationships and Related Person Transactions.” There is no assurance that Vornado can satisfy its indemnification obligations to us or that such indemnification can fully offset the related liabilities. Pursuant to the Separation Agreement, Vornado has agreed to retain and indemnify us for certain liabilities. However, third parties could seek to hold us responsible for any of such liabilities and there can be no assurance that Vornado will be able to fully satisfy its indemnification obligations. Even if we ultimately succeed in recovering from Vornado any amounts for which we are held liable, such indemnification may be insufficient to fully offset the financial impact of such liabilities and we may be temporarily required to bear these losses while seeking recovery from Vornado. RISKS RELATED TO OUR COMMON SHARES The market prices and trading volume of our equity securities may be volatile. The market prices of our equity securities depend on various factors which may be unrelated to our operating performance or prospects. We cannot assure you that the market prices of our equity securities, including our common shares, will not fluctuate or decline significantly in the future. A number of factors could negatively affect, or result in fluctuations in, the prices or trading volume of equity securities, including: • • • • • • • • • • • • • • • actual or anticipated changes in our operating results and changes in expectations of future financial performance; our operating performance and the performance of other similar companies; changes in the real estate industry, and in the retail industry, including growth in e-commerce, catalog companies and direct consumer sales; our strategic decisions, such as acquisitions, dispositions, spin-offs, joint ventures, strategic investments or changes in business strategy; equity issuances or buybacks by us or the perception that such issuances or buybacks may occur or adverse reaction market reaction to any indebtedness we incur; increases in market interest rates; decreases in our distributions to shareholders; changes in real estate valuations or market valuations of similar companies; additions or departures of key management personnel; publication of research reports about us or our industry by securities analysts, or negative speculation in the press or investment community; the passage of legislation or other regulatory developments that adversely affect us, our tax status, or our industry; changes in accounting principles; our failure to satisfy the listing requirements of the NYSE; our failure to comply with the requirements of the Sarbanes Oxley Act; our failure to qualify as a REIT; and 15 • general market conditions, including factors unrelated to our performance. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on our cash flow, financial condition and results of operations. We cannot guarantee the timing, amount, or payment of dividends on our common shares. Although we expect to pay regular cash dividends, the timing, declaration, amount and payment of dividends to shareholders falls within the discretion of the Board of Trustees. The Board of Trustees’ decisions regarding the payment of dividends depends on factors such as our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other considerations that it deems relevant. Our ability to pay dividends depends on our ongoing ability to generate cash from operations and access to the capital markets. We cannot guarantee that we will pay dividends in the future. Your percentage of ownership in the Company may be diluted in the future. In the future, your ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise. For example, in August 2016, we entered into distribution agreements with various financial institutions as part of our implementation of a continuous equity offering program (the "ATM Program") under which we may sell up to $250 million in common shares, par value of $0.01 per share, from time to time in “at-the-market” offerings or certain other transactions, and in 2017 we issued 13.95 million common shares in two separate offerings. In addition, we have and anticipate that we will continue to grant compensatory equity awards to our trustees, officers, employees, advisers and consultants who will provide services to us. The issuance of additional common shares, including sales under the ATM Program and awards to our executives, would dilute the interests of our current shareholders, and could depress the market price of our common shares, impair our ability to raise capital through the sale of additional equity securities, or impact our ability to pay dividends. We cannot predict the effect that future sales of our common shares or other equity-related securities including the issuance of Operating Partnership units would have on the market price of our common shares. In addition, the Company’s Declaration of Trust authorizes us to issue, without the approval of our shareholders, one or more classes or series of preferred shares having such designation, voting powers, preferences, rights and other terms, including preferences over our common shares respecting dividends and other distributions, as the Board of Trustees generally may determine. The terms of one or more classes or series of preferred shares could dilute the voting power or reduce the value of our common shares. For example, we could grant the holders of preferred shares the right to elect some number of our trustees in all events or on the occurrence of specified events, or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred shares could affect the residual value of the common shares. Increases in market interest rates may result in a decrease in the value of our publicly-traded equity securities. One of the factors that may influence the prices of our publicly-traded equity securities is the interest rate on our debt and the dividend yield on our common shares relative to market interest rates. If market interest rates, which are currently at low levels relative to historical rates, rise, our borrowing costs could rise and result in less funds being available for distribution. Therefore, we may not be able to, or we may choose not to, provide a higher distribution rate on our common stock. In addition, fluctuations in interest rates could adversely affect the market value of our properties. These factors could result in a decline in the market prices of our publicly-traded equity securities. RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE The Company’s Declaration of Trust sets limits on the ownership of our shares. Generally, for us to maintain a qualification as a REIT under the Code, not more than fifty percent (50%) in value of the outstanding shares of beneficial interest of the Company may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of the Company’s taxable year. The Code defines “individuals” for purposes of the requirement described in the preceding sentence to include some types of entities. Under the Company’s Declaration of Trust, no person or entity (or group thereof) may own more than 9.8% (in value or number of shares, whichever is more restrictive) of our outstanding shares of any class or series, with some exceptions for persons or entities approved by the Board of Trustees. A transfer of shares of beneficial interest of the Company to a person who, as a result of the transfer, violates the ownership limit will be void under certain circumstances, and, in any event, would deny that person any of the economic benefits of owning shares in excess of the ownership limit. These restrictions on transferability and ownership may delay, deter or prevent a change in control of the Company or other transaction that might involve a premium price or otherwise be in the best interest of the shareholders. 16 The Company’s Declaration of Trust limits the removal of members of the Board of Trustees. The Company’s Declaration of Trust provides that, subject to the rights of holders of one or more classes or series of preferred shares to elect or remove one or more trustees, a trustee may be removed only for cause and only by the affirmative vote of two- thirds of the votes entitled to be cast in the election of trustees. This provision, when coupled with the exclusive power of the Board of Trustees to fill vacancies on the Board of Trustees, precludes shareholders from removing incumbent trustees except for cause and upon a substantial affirmative vote and filling the vacancies created by the removal with their own nominees. These limitations may delay, deter or prevent a change in control of the Company or other transactions that might involve a premium price or otherwise be in the best interest of our shareholders. Maryland law contains provisions that may reduce the likelihood of certain takeover transactions. Certain provisions of Maryland law, may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of our shares, including: • • “Business combination” provisions that, subject to certain exceptions, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting shares at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose fair price or super majority shareholder voting requirements on these combinations; and “Control share” provisions that provide that holders of “control shares” of the Company (defined as shares that, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise voting power in the election of trustees within one of three increasing ranges) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of the voting power of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to their control shares, except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. As permitted by Maryland law, the Company’s Bylaws provide that we will not be subject to the control share provisions of Maryland law. However, we cannot assure you that the Board of Trustees will not revise the Company’s Bylaws in order to be subject to such control share provisions in the future. Certain provisions of Maryland law permit the board of trustees of a Maryland real estate investment trust with at least three independent trustees and a class of shares registered under the Exchange Act, without shareholder approval and regardless of what is currently provided in its declaration of trust or bylaws, to implement certain corporate governance provisions, some of which (for example, implementing a classified board) are not currently applicable to us. These provisions may have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for the Company or of delaying, deferring or preventing a change in control under circumstances that otherwise could provide the holders of shares of our shares with the opportunity to realize a premium over the then current market price. We may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions. The Company’s Declaration of Trust and Bylaws authorize the Board of Trustees in its sole discretion and without shareholder approval, to: • • • • cause the Company to issue additional authorized, but unissued, common or preferred shares; classify or reclassify, in one or more classes or series, any unissued common or preferred shares; set the preferences, rights and other terms of any classified or reclassified shares that the Company issues; and increase the number of shares of beneficial interest that the Company may issue. The Board of Trustees can establish a class or series of common or preferred shares whose terms could delay, deter or prevent a change in control of the Company or other transaction that might involve a premium price or otherwise be in the best interest of the Company’s shareholders. The Company’s Declaration of Trust and Bylaws contain other provisions that may delay, deter or prevent a change in control of the Company or other transaction that might involve a premium price or otherwise be in the best interest of our shareholders and the Company. 17 ITEM 1B. UNRESOLVED STAFF COMMENTS There are no unresolved comments from the staff of the Securities and Exchange Commission as of the date of this Annual Report on Form 10-K. ITEM 2. PROPERTIES As of December 31, 2018, our portfolio is comprised of 83 shopping centers, four malls and a warehouse park totaling approximately 16.3 million square feet. We own 64 shopping centers 100% in fee simple and own a 95% interest in Walnut Creek (Mt. Diablo). We lease 18 of our shopping center properties under ground and/or building leases as indicated in the table below. Where a property is subject to a ground and/or building lease to a third party, we have included the year of contractual maturity of the lease next to the name of the property. As of December 31, 2018, we had $1.6 billion of outstanding mortgage indebtedness which is secured by our properties. The following pages provide details of our properties as of December 31, 2018. Property SHOPPING CENTERS AND MALLS: California: Signal Hill Vallejo (leased through 2043)(3) Walnut Creek (Olympic) Walnut Creek (Mt. Diablo)(4) Connecticut: Newington Maryland: Baltimore (Towson)(6) Glen Burnie Rockville Wheaton (leased through 2060)(3) Massachusetts: Cambridge (leased through 2033)(3) Chicopee Milford (leased through July 2019)(3) Springfield Missouri: Manchester(6) New Hampshire: Salem (leased through 2102)(3) New Jersey: Bergen Town Center - East, Paramus Bergen Town Center - West, Paramus Brick Carlstadt (leased through 2050)(3) Cherry Hill (Cherry Hill Commons) Cherry Hill (Plaza at Cherry Hill)(6) Total Square Feet (1) Percent Leased(1) Weighted Average Annual Rent per sq ft (2) Major Tenants 45,000 45,000 31,000 7,000 100.0% 100.0% 100.0% 100.0% $26.49 12.00 70.00 Best Buy Best Buy Anthropologie 122.00 Z Gallerie 189,000 100.0% 9.97 Walmart, Staples 155,000 100.0% 129,000 100.0% 94,000 66,000 98.0% 100.0% 48,000 224,000 83,000 182,000 100.0% 100.0% 100.0% 100.0% 24.02 10.21 27.56 16.70 Staples, HomeGoods, Golf Galaxy, Tuesday Morning, Five Below, Ulta, Kirkland's, Sprouts Gavigan's Home Furnishings, Pep Boys Regal Entertainment Group Best Buy 24.57 PetSmart, A.C. Moore (lease not commenced) 5.50 9.01 5.60 Walmart Kohl's Walmart 131,000 100.0% 11.12 Academy Sports, Bob's Discount Furniture, Pan-Asia Market 37,000 —% — 253,000 966,000 97.5% 97.9% 278,000 78,000 264,000 420,000 100.0% 100.0% 70.2% 73.3% 21.78 32.63 19.75 23.67 10.61 13.16 Lowe's, REI, Kirkland's, Best Buy Target, Century 21, Whole Foods Market, Burlington (under construction), Marshalls, Nordstrom Rack, Saks Off 5th, HomeGoods, H&M, Bloomingdale's Outlet, Nike Factory Store, Old Navy, Nieman Marcus Last Call Studio Kohl's, ShopRite, Marshalls, Kirkland's Stop & Shop Walmart LA Fitness, Aldi, Raymour & Flanigan, Restoration Hardware, Total Wine, Guitar Center, Sam Ash Music 18 East Brunswick 427,000 100.0% East Hanover (200 - 240 Route 10 West) 343,000 98.2% East Hanover (280 Route 10 West) 28,000 100.0% East Rutherford Garfield Hackensack Hazlet Jersey City (Hudson Mall)(6) Jersey City (Hudson Commons) Kearny Lawnside Lodi (Route 17 North) Lodi (Washington Street) Manalapan Marlton Middletown Millburn(6) Montclair Morris Plains(6) North Bergen (Kennedy Blvd) North Bergen (Tonnelle Ave) North Plainfield Paramus (leased through 2033)(3) Rockaway South Plainfield (leased through 2039)(3) Totowa Turnersville Union (2445 Springfield Ave) Union (Route 22 and Morris Ave) Watchung Westfield (One Lincoln Plaza)(6) Woodbridge (Woodbridge Commons) 197,000 280,000 275,000 95,000 382,000 236,000 104,000 151,000 171,000 85,000 98.3% 100.0% 100.0% 100.0% 81.7% 100.0% 98.2% 100.0% —% 87.6% 208,000 100.0% 218,000 231,000 104,000 100.0% 98.9% 98.8% 21,000 100.0% 182,000 62,000 410,000 241,000 66.1% 100.0% 100.0% 100.0% 63,000 100.0% 189,000 56,000 97.8% 96.3% 271,000 100.0% 98,000 100.0% 232,000 276,000 170,000 22,000 226,000 100.0% 83.1% 98.3% 89.9% 95.2% Woodbridge (Plaza at Woodbridge)(6) 414,000 61.7% New York: Bronx (1750-1780 Gun Hill Road) Bronx (Bruckner Boulevard)(6) Bronx (Shops at Bruckner)(6) Buffalo (Amherst) Commack (leased through 2021)(3) Dewitt (leased through 2041)(3) Freeport (Meadowbrook Commons) (leased through 2040)(3) Freeport (Freeport Commons) Huntington Inwood Mt. Kisco New Hyde Park (leased through 2029)(3) 77,000 100.0% 371,000 114,000 311,000 47,000 46,000 44,000 173,000 204,000 100,000 189,000 101,000 81.3% 72.1% 85.0% 100.0% 100.0% 100.0% 100.0% 96.4% 100.0% 96.4% 100.0% 15.09 20.39 34.71 12.75 14.78 23.67 3.70 16.85 12.37 19.53 16.40 — 21.88 18.47 15.33 13.60 25.25 26.20 25.70 14.83 20.65 11.41 47.18 14.97 21.65 17.45 9.94 17.85 17.06 17.31 34.99 12.70 17.92 36.23 25.96 41.04 9.97 20.69 22.51 22.31 21.95 15.70 19.73 16.46 20.21 Lowe's, Kohl's, Dick's Sporting Goods, P.C. Richard & Son, T.J. Maxx, LA Fitness The Home Depot, Dick's Sporting Goods, Saks Off Fifth, Marshalls, Forever21 Red, Paper Store REI Lowe's Walmart, Burlington, Marshalls, PetSmart, Ulta The Home Depot, Staples, Petco, 99 Ranch Stop & Shop(5) Marshalls, Big Lots, Retro Fitness, Staples, Old Navy Lowe's, P.C. Richard & Son LA Fitness, Marshalls, Ulta (lease not commenced), Starbucks (lease not commenced) The Home Depot, PetSmart Blink Fitness, Aldi Best Buy, Bed Bath & Beyond, Raymour & Flanigan, Modell's Sporting Goods, PetSmart Kohl's, ShopRite, PetSmart Kohl's, Stop & Shop Trader Joe's, CVS, PetSmart Whole Foods Market Kohl's Food Bazaar Walmart, BJ's Wholesale Club, PetSmart, Staples Costco, The Tile Shop, La-Z-Boy, Petco, Da Vita Dialysis (lease not commenced) 24 Hour Fitness ShopRite, T.J. Maxx Staples, Party City The Home Depot, Bed Bath & Beyond, buybuy Baby, Marshalls, Staples Haynes Furniture Outlet (DBA The Dump), Verizon Wireless The Home Depot Lowe's, Office Depot BJ's Wholesale Club Five Guys, PNC Bank Walmart, Family Discount Furniture (lease not commenced) Best Buy, Raymour & Flanigan, Lincoln Tech, Harbor Freight, Retro Fitness Planet Fitness, Aldi Kmart, Marshalls, ShopRite, Burlington Marshalls, Old Navy BJ's Wholesale Club, T.J. Maxx, HomeGoods, LA Fitness PetSmart, Ace Hardware Best Buy Bob's Discount Furniture The Home Depot, Staples Kmart, Marshalls, Old Navy, Petco Stop & Shop Target, Stop & Shop Stop & Shop 19 Oceanside Queens Rochester Rochester (Henrietta) (leased through 2056)(3) Staten Island West Babylon Yonkers Gateway Center(6) Pennsylvania: Bensalem Bethlehem Broomall Glenolden Lancaster Springfield (leased through 2025)(3) Wilkes-Barre (461 - 499 Mundy Street) Wyomissing (leased through 2065)(3) York South Carolina: Charleston (leased through 2063)(3) Virginia: Norfolk (leased through 2069)(3) Tyson’s Corner (leased through 2035)(3) Puerto Rico: Las Catalinas Montehiedra(6) 16,000 46,000 205,000 165,000 165,000 66,000 438,000 185,000 153,000 169,000 102,000 228,000 41,000 179,000 76,000 111,000 100.0% 71.2% 100.0% 100.0% 91.7% 97.6% 98.5% 100.0% 95.6% 100.0% 100.0% 100.0% 100.0% 79.6% 100.0% 100.0% 28.00 39.62 3.08 4.61 24.30 17.73 17.27 12.91 8.18 10.25 12.77 5.07 22.99 11.60 16.69 9.21 Party City Walmart Kohl's Western Beef, Planet Fitness, Mavis Discount Tire Best Market, Rite Aid Burlington, Best Buy, DSW, PetSmart, Alamo Drafthouse Cinema, Marshalls (under construction), Homesense (under construction) Kohl's, Ross Dress for Less, Staples, Petco Giant Food, Petco Giant Food, Planet Fitness, A.C. Moore, PetSmart Walmart Lowe's, Community Aid, Mattress Firm PetSmart Bob's Discount Furniture, Ross Dress for Less, Marshalls, Petco, Tuesday Morning LA Fitness, PetSmart Ashley Furniture, Tractor Supply Company, Aldi, Crunch Fitness 45,000 100.0% 15.10 Best Buy 114,000 38,000 100.0% 100.0% 356,000 539,000 87.8% 93.2% 7.08 43.04 31.16 18.10 BJ's Wholesale Club Best Buy Kmart, Forever 21 Kmart, The Home Depot, Marshalls, Caribbean Cinemas, Tiendas Capri Total Shopping Centers and Malls 15,407,000 92.6% $17.90 WAREHOUSES: East Hanover Warehouses(6) 942,000 100.0% 5.34 J & J Tri-State Delivery, Foremost Groups, PCS Wireless, Fidelity Paper & Supply, Meyer Distributing, Consolidated Simon Distributors, Givaudan Flavors, Reliable Tire Total Urban Edge Properties 16,349,000 93.1% $17.12 (1) Percent leased is expressed as the percentage of gross leasable area subject to a lease. (2) Weighted average annual base rent per square foot is the current base rent on an annualized basis. It includes executed leases for which rent has not commenced and excludes tenant expense reimbursements, free rent periods, concessions and storage rent. Excluding ground leases where the Company is the lessor, the weighted average annual rent per square foot for our retail portfolio is $20.39 per square foot. (3) The Company is a lessee under a ground or building lease. Ground and building lease terms include exercised options and options that may be exercised in future periods. For building leases, the total square feet disclosed for the building will revert to the lessor upon lease expiration. At Salem, the ground lease is for a portion of the parking area only. (4) Our ownership of Walnut Creek (Mt. Diablo) is 95%. (5) The tenant never commenced operations at this location but continues to pay rent. (6) Not included in the same-property pool for the purposes of calculating same-property cash NOI for the years ended December 31, 2018 and 2017. As of December 31, 2018, we had approximately 1,200 leases. Tenant leases for under 10,000 square feet generally have lease terms of five years or less. Tenant leases for 10,000 square feet or more generally have lease terms of 10 to 25 years, and are considered anchor leases with one or more renewal options available upon expiration of the initial lease term. The majority of our leases provide for reimbursements of real estate taxes, insurance and common area maintenance charges (including roof and structure in shopping centers, unless it is the tenant’s direct responsibility), and percentage rents based on tenant sales volume. Percentage rents accounted for less than 1% of our total revenues for the year ended December 31, 2018. 20 Occupancy The following table sets forth the consolidated retail portfolio occupancy rate (excluding warehouses), square footage and weighted average annual base rent per square foot of properties in our retail portfolio as of December 31 for the last five years: Total square feet Occupancy rate Average annual base rent per sf 2018 2017 2016 2015 2014 15,407,000 15,743,000 13,831,000 13,901,000 13,880,000 92.6% $17.90 96.0% $17.38 97.2% $17.07 96.2% $16.64 95.8% $16.57 December 31, The following table sets forth the occupancy rate, square footage and weighted average annual base rent per square foot of our warehouses as of December 31 for the last five years: 2018 942,000 100.0% $5.34 2017 942,000 100.0% $5.15 December 31, 2016 942,000 91.7% $4.77 2015 942,000 79.1% $4.80 2014 942,000 60.8% $4.41 Total square feet Occupancy rate Average annual base rent per sf Major Tenants The following table sets forth information for the 10 largest tenants by total revenues for the year ended December 31, 2018: Tenant The Home Depot, Inc. Walmart Inc. Lowe’s Companies, Inc. The TJX Companies, Inc.(1) Best Buy Co., Inc. Ahold Delhaize(2) Kohl's Corporation PetSmart, Inc. Sears Holdings Corporation(3) BJs Wholesale Club Number of Stores 7 9 6 16 10 8 8 12 4 4 Square Feet 920,000 1,439,000 976,000 567,000 442,000 590,000 716,000 287,000 547,000 454,000 % of Total Square Feet 5.6% 8.8% 6.0% 3.5% 2.7% 3.6% 4.4% 1.8% 3.3% 2.8% 2018 Revenues 22,602,038 $ 20,163,580 13,993,991 12,920,519 11,938,446 11,367,240 9,678,229 8,936,052 8,025,751 7,889,202 % of Total Revenues 5.5% 4.9% 3.4% 3.1% 2.9% 2.7% 2.3% 2.2% 1.9% 1.9% (1) Includes Marshalls (11), T.J. Maxx (3) and HomeGoods (2). (2) Includes Stop & Shop (6) and Giant Food (2). (3) Includes Kmart (4). Sears Holdings Corporation declared bankruptcy on October 15, 2018. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources included in Part II, Item 7. in this Annual Report on Form 10-K and the Notes to Consolidated Financial Statements included in Part II, Item 8. in this Annual Report on Form 10-K for further information. 21 Lease Expirations The following table sets forth the anticipated expirations of tenant leases in our consolidated retail portfolio for each year from 2019 through 2029 and thereafter, assuming no exercise of renewal options or early termination rights: Year Month-To-Month 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Thereafter Sub-total/Average Vacant Total(2) Number of Expiring Leases Square Feet of Expiring Leases Percentage of Retail Properties Square Feet Weighted Average Annual Base Rent of Expiring Leases Total Per Square Foot 21 109 112 89 91 82 88 41 60 54 44 38 52 881 133 1,014 51,000 695,000 1,332,000 867,000 1,271,000 1,655,000 1,854,000 617,000 678,000 782,000 524,000 1,127,000 2,818,000 14,271,000 1,136,000 15,407,000 0.3% 4.5% 8.6% 5.6% 8.2% 10.8% 12.1% 4.0% 4.4% 5.1% 3.4% 7.3% 18.3% 92.6% 7.4% 100.0% $ 1,426,980 15,005,050 25,188,120 20,097,060 19,141,260 28,565,300 29,385,900 10,538,360 9,803,880 16,367,260 13,576,840 21,852,530 41,396,420 $ $ 255,022,770 N/A 255,022,770 $27.98 21.59 (1) 18.91 (1) 23.18 15.06 17.26 15.85 17.08 14.46 20.93 25.91 19.39 14.69 $17.87 N/A N/A (1) We expect to achieve moderate increases in average rents as we renew or re-lease these spaces. (2) Total lease count excludes warehouse tenant leases, temporary tenant leases and cart and kiosk leases. ITEM 3. LEGAL PROCEEDINGS We are party to various legal actions that arise in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters is not expected to have a material adverse effect on our financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 22 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES PART II Urban Edge Properties Market Information and Dividends Our common shares are listed on the NYSE under the symbol “UE”. Our common shares began “regular way” trading on January 15, 2015. As of February 12, 2019, there were approximately 1,507 holders of record of our common shares. 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 the exception of the Company’s taxable REIT subsidiary (“TRS”), to 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 (including any alternative minimum tax, which, for corporations, was repealed under the TCJA (defined above) for tax years beginning after December 31, 2017) and may not be able to qualify as a REIT for the four subsequent taxable years. Future distributions will be declared and paid at the discretion of the Board of Trustees and will depend upon cash generated by operating activities, our financial condition, capital requirements, annual dividend requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, and such other factors as our Board of Trustees deems relevant. Our total annual dividends per common share for 2018 were $0.88 per share. The annual dividend amount may differ from dividends as calculated for federal income tax purposes. Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a shareholder as ordinary dividend income. However, the TCJA provides a deduction of up to 20% of a non-corporate taxpayer’s ordinary REIT dividends with such deduction scheduled to expire for taxable years beginning after December 31, 2025. Distributions in excess of current and accumulated earnings and profits will be treated as a nontaxable reduction of the shareholder’s basis in such shareholder’s shares, to the extent thereof, and thereafter as taxable capital gains. Distributions that are treated as a reduction of the shareholder’s basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the shareholder’s shares. No assurances can be given regarding what portion, if any, of distributions in 2018 or subsequent years will constitute a return of capital for federal income tax purposes. During a year in which a REIT earns a net long-term capital gain, the REIT can elect under Section 857(b)(3) of the Code to designate a portion of dividends paid to shareholders as capital gain dividends. If this election is made, the capital gain dividends are generally taxable to the shareholder as long-term capital gains. As of December 31, 2017, the Company elected, for tax purposes, to treat the wholly-owned limited partnership that holds its Allentown property as a taxable REIT subsidiary (“TRS”). A TRS is a corporation, other than a REIT, in which we directly or indirectly hold stock, which has made a joint election with us to be treated as a TRS under Section 856(l) of the Code. A TRS is required to pay regular U.S. federal income tax, and state and local income tax where applicable, as a non-REIT “C” corporation. The Allentown legal entity restructuring resulted in a capital gain recognized for tax purposes in 2017. Consequently, the Company determined that $0.37 of the $0.88 dividends distributed to shareholders in 2017 represented long-term capital gains. No capital gains associated with the property’s sale on April 26, 2018 were recognized for tax purposes in 2018. The Company’s 2018 consolidated financial statements will reflect the TRS’ federal and state corporate income taxes associated with the TRS’ 2018 operating activities. As of December 31, 2018, this TRS has been liquidated and will not subject the Company to income tax beyond 2018. We have determined the dividends paid on our common shares during 2018 and 2017 qualify for the following tax treatment: Total Distribution per Share Ordinary Dividends Long Term Capital Gains Return of Capital $ 2018 2017 $ 0.88 0.88 $ 0.88 0.51 — $ 0.37 — — 23 Total Shareholder Return Performance The following performance graph compares the cumulative total shareholder return of our common shares with the Russell 2000 Index, the S&P 500 Index, SNL U.S. REIT Equity Index and the SNL REIT Retail Shopping Center Index as provided by SNL Financial LC, from January 15, 2015 (the date of our separation from Vornado) to December 31, 2018, assuming an investment of $100 and the reinvestment of all dividends into additional common shares during the holding period. Historical stock performance is not necessarily indicative of future results. The performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference this annual report into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts. COMPARISON OF CUMULATIVE TOTAL RETURN(1) (1) $100 invested on January 15, 2015 in stock or index, including reinvestment of dividends. Stock/Index UE S&P 500 Russell 2000 Cumulative(1) Total Return % (19.3) 36.5 23.4 100 100 100 101.4 104.7 99.7 122.6 117.2 120.9 1/15/2015 12/31/2015 12/31/2016 12/31/2017 12/31/2018 Total Return $ as of SNL U.S. REIT Equity SNL U.S. REIT Retail Shopping Center (1) Cumulative total return is for the period from the separation date on January 15, 2015 to December 31, 2018. 8.9 (23.6) 105.7 102.4 97.1 98.9 100 100 118.7 142.8 138.7 114.5 91.1 80.7 136.5 123.4 108.9 76.4 24 Operating Partnership Market Information and Distributions There is no established public market for our general and common limited partnership interests in the operating partnership (“OP Units”). As of February 12, 2019, there were 114,333,219 general partnership units outstanding and 12,736,633 common limited partnership units outstanding, held by approximately 1,507 and 35 holders of record, respectively. Under the limited partnership agreement of UELP, unitholders may present their common units 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. During the year ended December 31, 2018, 429,110 units were redeemed for common shares. Recent Sales of Unregistered Shares During the three months ended December 31, 2018, the Company issued an aggregate of 180,000 common shares in exchange for 180,000 common limited partnership units held by certain limited partners of the Operating Partnership. All common shares were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partner who received the common shares. Each time the Company issues common shares (other than in exchange for common limited partnership units when such units are presented for redemption), it contributes the proceeds of such issuance to the Operating Partnership in return for an equivalent number of partnership units with rights and preferences analogous to the shares issued. During the three months ended, December 31, 2018, in connection with issuances of common shares by the Company pursuant to the Urban Edge Properties 2015 Employee Share Purchase Plan, the Operating Partnership issued an aggregate of 12,791 common limited partnership units to the Company in exchange for approximately $0.3 million, the aggregate proceeds of such common share issuances to the Company. Such units were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act. Purchases of Equity Securities by the Issuer and Affiliated Purchasers During 2018, 32,482 restricted common shares were forfeited by former employees in connection with their departure from the Company. We did not repurchase any of our equity securities during the three months ended December 31, 2018. Our employees will at times surrender common shares owned by them to satisfy statutory minimum federal, state and local tax obligations associated with the vesting of their restricted common shares. During the three months ended December 31, 2018, no restricted common shares were surrendered. Equity Compensation Plan Information Information regarding equity compensation plans is presented in Part III, Item 12 of this Annual Report on Form 10-K and incorporated herein by reference. 25 ITEM 6. SELECTED FINANCIAL DATA The following table includes selected consolidated and combined financial data set forth for the Company and the Operating Partnership as of and for each of the five years in the period ended December 31, 2018. The consolidated balance sheets as of December 31, 2018 and December 31, 2017 reflects the consolidation of properties that are wholly-owned and properties in which we own less than 100% interest, but in which we have a controlling interest. The consolidated statements of income for the year ended December 31, 2018, December 31, 2017 and December 31, 2016 include the consolidated accounts of the Company. This selected financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and our audited consolidated financial statements and related notes included in Part II, Items 7 and 8, respectively, of this Annual Report on Form 10-K. Urban Edge Properties (Amounts in thousands, except per share amounts) Operating Data: Rental revenue(1) Management and development fees Income from acquired leasehold interest Other income Total revenue Total expenses Operating income Net income Net income attributable to operating partnership Net income attributable to consolidated subsidiaries Net income attributable to common shareholders(2) $ Year Ended December 31, 2018 2017 2016 2015(4) 2014(4) $ 411,298 $ 365,082 $ 321,719 $ 316,484 $ 314,479 1,469 — 1,393 414,160 292,295 121,865 116,963 (11,768) (45) 105,150 1,535 39,215 1,210 407,042 245,278 161,764 1,759 — 2,498 325,976 192,958 133,018 72,938 (5,824) (44) 67,070 $ 96,630 (5,812) (3) 90,815 $ $ 2,261 — 4,200 322,945 224,869 98,076 41,348 (2,547) (16) 38,785 $ 535 — 662 315,676 193,236 122,440 65,794 — (22) 65,772 Earnings per common share - Basic(3): Earnings per common share - Diluted(3): Weighted average shares outstanding - Basic(3) Weighted average shares outstanding - Diluted(3) Dividends declared per common share (1) In accordance with ASC 205 Presentation of Financial Statements, the Company reclassified Property rentals and Tenant reimbursement 113,863 114,051 118,390 107,132 99,248 99,278 99,364 99,794 99,252 99,248 0.92 0.62 0.91 0.39 0.66 0.61 0.91 0.92 0.39 0.88 0.66 0.82 0.88 0.80 — income to Rental revenue as reflected in this Form 10-K. (2) Net income earned prior to January 15, 2015 is attributable to Vornado as it was the sole shareholder prior to January 15, 2015. (3) The common shares outstanding at the date of separation are reflected as outstanding for all periods prior to the separation. (4) The consolidated and combined statement of income for the year ended December 31, 2015 includes the consolidated accounts of the Company and the combined accounts of the UE Business. Accordingly, the results presented for the year ended December 31, 2015 reflect the aggregate operations, changes in cash flows and equity on a carved-out and combined basis for the period from January 1, 2015 through the date of separation and on a consolidated basis subsequent to the date of separation. The financial data for the periods prior to the separation date are prepared on a carved-out and combined basis from the consolidated financial statements of Vornado as the UE Business was under the control of Vornado prior to January 15, 2015. 26 (Amounts in thousands) Balance Sheet Data as of period end: Real estate, net of accumulated depreciation Total assets Mortgages payable, net Total liabilities Noncontrolling interests in operating partnership Total equity Other Data: Cash flow Statement Data: Provided by operating activities Used in investing activities Used in (provided by) financing activities Urban Edge Properties LP (Amounts in thousands, except per unit amounts) Operating Data: Rental revenue(1) Management and development fees Income from acquired leasehold interest Other income Total revenue Total expenses Operating income Net income 2018 Year Ended December 31, 2016 2017 2015 2014 $ 2,123,120 2,798,994 1,550,242 1,793,017 100,822 1,005,977 $ 2,084,727 2,820,808 1,564,542 1,830,267 100,218 990,541 $ 1,597,423 1,904,138 1,197,513 1,408,021 35,451 496,117 $ 1,575,530 1,918,931 1,233,983 1,447,477 33,177 471,454 $ 1,555,301 1,731,176 1,278,182 1,472,313 — 258,863 137,040 (64,803) (115,556) 157,898 (295,732) 498,489 137,249 (59,230) (115,858) 138,078 (66,415) 93,795 105,688 (45,586) (63,807) Year Ended December 31, 2018 2017 2016 2015(4) 2014(4) $ 411,298 $ 365,082 $ 321,719 $ 316,484 $ 314,479 1,759 2,261 1,469 — 1,393 414,160 292,295 121,865 116,963 (45) 116,918 1,535 39,215 1,210 407,042 245,278 161,764 2,498 325,976 192,958 133,018 72,938 (44) 72,894 $ 96,630 (3) 96,627 $ $ 535 662 315,676 193,236 122,440 65,794 (22) 65,772 4,200 322,945 224,869 98,076 41,348 (16) 41,332 $ Net income attributable to consolidated subsidiaries Net income attributable to unitholders(2) $ Earnings per unit - Basic(3): Earnings per unit - Diluted(3): Weighted average units outstanding - Basic(3) Weighted average units outstanding - Diluted(3) Distributions declared per unit 0.88 (1) In accordance with ASC 205, the Company reclassified Property rentals and Tenant reimbursement income to Rental revenue as reflected in 126,386 118,390 106,099 104,965 105,374 105,276 126,198 105,455 117,779 104,965 0.62 0.63 0.80 0.61 0.63 0.88 0.92 0.91 0.91 0.39 0.92 0.39 0.82 — this Form 10-K. (2)Net income earned prior to January 15, 2015 is attributable to Vornado as it was the sole unitholder prior to January 15, 2015. (3) The units outstanding at the date of separation are reflected as outstanding for all periods prior to the separation. (4) The consolidated and combined statement of income for the year ended December 31, 2015 includes the consolidated accounts of the Company and the combined accounts of the UE Business. Accordingly, the results presented for the year ended December 31, 2015 reflect the aggregate operations, changes in cash flows and equity on a carved-out and combined basis for the period from January 1, 2015 through the date of separation and on a consolidated basis subsequent to the date of separation. The financial data for the periods prior to the separation date are prepared on a carved-out and combined basis from the consolidated financial statements of Vornado as the UE Business was under common control of Vornado prior to January 15, 2015. 27 (Amounts in thousands) Balance Sheet Data as of period end: Real estate, net of accumulated depreciation Total assets Mortgages payable, net Total liabilities Total equity Other Data: Cash flow Statement Data: Provided by operating activities Used in investing activities Used in (provided by) financing activities 2018 Year Ended December 31, 2016 2015 2017 2014 $ 2,123,120 2,798,994 1,550,242 1,793,017 1,005,977 $ 2,084,727 2,820,808 1,564,542 1,830,267 990,541 $ 1,597,423 1,904,138 1,197,513 1,408,021 496,117 $ 1,575,530 1,918,931 1,233,983 1,447,477 471,454 $ 1,555,301 1,731,176 1,278,182 1,472,313 258,863 137,040 (64,803) (115,556) 157,898 (295,732) 498,489 137,249 (59,230) (115,858) 138,078 (66,415) 93,795 105,688 (45,586) (63,807) 28 ITEM 7. 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 “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Annual Report on Form 10-K. 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 estimated remediation and repair costs related to natural disasters at the affected properties and the loss of or bankruptcy of a major tenant and the impact of any such event. 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 this Annual Report on Form 10-K for the year ended December 31, 2018. 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 Annual Report on Form 10-K. 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 Annual Report on Form 10-K. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K. Executive 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 our 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 December 31, 2018, Urban Edge owned approximately 90.0% of the outstanding common OP Units with the remaining limited OP Units held by Vornado Realty L.P., members of management, our 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 that 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 December 31, 2018, our portfolio comprised 83 shopping centers, four malls and a warehouse park totaling approximately 16.3 million square feet. Operating Strategy. Our operating strategy is to maximize the value of our existing assets through proactive management encompassing: continuous asset evaluation for highest-and-best-use; efficient and cost-conscious operations that minimize retailer operating expense and enhance property quality; and targeted leasing to desirable tenants. During 2018 we: • • • • • increased same-property cash Net Operating Income (“NOI”)(1) by 0.7% over the year ended December 31, 2017; reported a decline of same-property retail portfolio occupancy(2) to 93.2% from 96.6% as of December 31, 2017; reported a decline of consolidated retail portfolio occupancy(3) to 92.6% from 96.0% as of December 31, 2017 due to tenant bankruptcies; signed 44 new leases totaling 433,113 square feet, including 15 new leases on a same-space(4) basis totaling 221,585 square feet at an average rental rate of $11.51 per square foot on a GAAP basis and $10.77 per square foot on a cash basis, and resulting in average rent spreads of (1.4)% on a GAAP basis and (11.6)% on a cash basis; and renewed or extended 77 leases totaling 1,216,572 square feet, all on a same-space basis, at an average rental rate of $19.25 per square foot on a GAAP basis and $18.86 per square foot on a cash basis and, generating average rent spreads of 12.8% on a GAAP basis and 5.4% on a cash basis. 29 Investment Strategy. Our investment strategy is to selectively deploy capital through redevelopment and development of our existing assets and through acquisitions in our target markets that are expected to generate attractive risk-adjusted returns. At the same time, we plan to sell assets that no longer meet our investment criteria. During 2018, we: • • • • • increased the number of active development and redevelopment projects; active projects have a total expected investment of $196.5 million of which $50.5 million remains to be funded; completed projects at The Outlets at Montehiedra in San Juan, PR, Bergen Town Center in Paramus, NJ, West End Commons in North Plainfield, NJ, Goucher Commons in Towson, MD, Marlton Commons in Marlton, NJ, Lawnside Commons in Lawnside, NJ, Governors Commons in Glen Burnie, MD, Cherry Hill Commons in Cherry Hill, NJ and Rockaway River Commons in Rockaway, NJ of which $1.0 million remains to be funded; identified approximately $52.5 million of additional development and redevelopment projects expected to be completed over the next several years; acquired four retail assets, at an aggregate purchase price of $4.9 million and 26,050 sf, all adjacent to centers currently owned by us; and completed the sale of our property in Allentown, PA for $54.3 million, net of selling costs and the sale of land in Cherry Hill, NJ for $3.3 million, net of selling costs. Capital Strategy. Our capital strategy is to keep our balance sheet strong, flexible and capable of supporting growth by using cash flow from operations, refinancing debt when opportunities are favorable, issuing debt when appropriate and reinvesting funds from selective asset sales. During 2018, we: • • • extinguished $11.5 million of mortgage debt secured by our former property in Englewood, NJ and recognized a $2.5 million gain on extinguishment of debt as a result of the property’s foreclosure sale; drew no amounts on our revolving credit agreement, of which $600 million remains available; and ended the year with cash and cash equivalents, including restricted cash, of $457.5 million and debt, net of cash, to total market capitalization of 30.1%. 2019 Outlook. We seek growth in earnings, funds from operations, and cash flows primarily by: • • • • leasing vacant spaces, extending expiring leases at higher rents, processing the exercise of tenant options and, when possible, replacing underperforming tenants with tenants that can pay higher rents; expediting the delivery of space to and the collection of rents from tenants with executed leases that have not yet commenced; creating additional value from our existing assets by redevelopment of existing space, development of new space and pad sites, and by anchor repositioning; and disposing of non-core assets and, when possible, reinvesting the proceeds in existing properties and in acquiring additional properties meeting our investment criteria. (1)Refer to page 39 for a reconciliation to the nearest GAAP measure. (2)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 is taken out of service and also excludes properties acquired, sold, or under contract to be sold during the periods being compared and totals 75 properties for the years ended December 31, 2018 and December 31, 2017. (3)Our retail portfolio includes shopping centers and malls and excludes warehouses. (4)The “same-space” designation is used to compare leasing terms (cash leasing spreads) from the prior tenant to the new/current tenant. In some cases, leases are excluded from "same-space" because the gross leasable area of the prior lease is combined/divided to form a larger/smaller, non-comparable space. 30 Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP”, requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenue and expenses. These estimates are prepared using management’s best judgment, after considering past and current events and economic conditions. In addition, certain information relied upon by management in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from consultations with third party experts. Actual results could differ from these estimates. A discussion of possible risks which may affect these estimates is included in “Item 1A. Risk Factors” of this Annual Report on Form 10-K. Management considers an accounting estimate to be critical if changes in the estimate could have a material impact on our consolidated results of operations or financial condition. Our significant accounting policies are more fully described in Note 3 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K; however, the most critical accounting policies, which involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows: Real Estate — The nature of our business as an owner, redeveloper and operator of retail shopping centers means that we invest significant amounts of capital into our properties. Depreciation, amortization and maintenance costs relating to our properties constitute substantial costs for us as well as the industry as a whole. Real estate is capitalized and depreciated on a straight-line basis in accordance with GAAP and consistent with industry standards based on our best estimates of the assets’ physical and economic useful lives which range from 3 to 40 years. We periodically review the estimated lives of our assets and implement changes, as necessary, to these estimates. These assessments have a direct impact on our net income. 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. Real estate undergoing redevelopment activities is also carried at cost but no depreciation is recognized. 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. Generally, a redevelopment is considered substantially completed and ready for its intended use upon completion of tenant improvements, but no later than one year from completion of major construction activity. We make judgments as to the time period over which to capitalize such costs and these assumptions have a direct impact on net income because capitalized costs are not subtracted in calculating net income. 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. 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. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities based on their relative fair values at date of acquisition. In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases is estimated based on the present value of the difference between the contractual amounts, including fixed rate below-market renewal options, to be paid pursuant to the in-place leases and our estimate of the market lease rates and other lease provisions for comparable leases measured over a period equal to the estimated remaining term of the lease. Tenant related intangibles and improvements are amortized on a straight-line basis over the related lease term, including any bargain renewal options. 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. We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in the calculation of in-place leases. If the value of below-market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a lease terminates prior to its stated expiration, all unamortized amounts relating to that lease are written off. Our properties are individually reviewed for impairment whenever events or changes in circumstances 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. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. 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, 31 anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. The carrying value of a property may also be individually reassessed in the event a casualty occurs at that property. Casualty events may include property damage from a natural disaster or fire. When such an event occurs, management estimates the net book value of assets damaged over the property’s total gross leasable area and adjusts the property’s carrying value to reflect the damages. Estimates are subjective and may change if additional damage is later assessed. Revenue Recognition — We have the following revenue sources and revenue recognition policies: • Rental revenue comprises revenue from property rentals and tenant expense reimbursements, as designated within tenant operating leases. Property Rentals: We generate revenue from minimum lease payments from tenant operating leases. These rents are recognized over the noncancelable terms of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases in accordance with ASC 840 Leases. We satisfy our performance obligations over time, under the noncancelable lease term, commencing when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a lease incentive to tenants, we recognize the incentive as a reduction of rental revenue on a straight-line basis over the remaining term of the lease. The underlying leased asset remains on our consolidated balance sheet and continues to depreciate. In addition to minimum lease payments, certain rental income derived from our tenant leases is contingent and dependent on percentage rent. 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. Tenant expense reimbursements: In accordance with ASC 840, revenue arises from tenant leases, which provide for the recovery of all or a portion of the operating expenses, real estate taxes and capital improvements of the respective property. This revenue is accrued in the period the expenses are incurred. • Income from acquired leasehold interest: Income from acquired leasehold interest was revenue generated in connection with the write-off of an unamortized intangible liability balance related to the below-market ground lease as well as the balance of the straight-line receivable balance, upon acquisition of the leasehold interest of the property. This revenue was recognized in accordance with ASC 840. • Other Income: Other income is generated in connection with certain services provided to tenants for which we earn a fee. This revenue is recognized as the services are transferred in accordance with ASC 606, with the exception of lease termination fee income, which is recognized when received in accordance with ASC 840. • Management and development fees: We generate management and development fee income from contractual property management agreements with third parties. This revenue is recognized as the services are transferred in accordance with ASC 606. Recent Accounting Pronouncements See Note 3 to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recent accounting pronouncements that may affect us. Additionally, see Note 7 to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recent amendments to the Internal Revenue Code. 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 is primarily 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. 32 Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions, dispositions, developments and redevelopments. The results of operations of any acquired properties are included in our financial statements as of the date of acquisition. The following provides an overview of our key non-GAAP measures based on our consolidated results of operations (refer to cash NOI, same-property cash NOI and Funds From Operations applicable to diluted common shareholders (“FFO”) described later in this section): (Amounts in thousands) Year Ended December 31, 2018 2017 Net income FFO applicable to diluted common shareholders(1) Cash NOI(2) Same-property cash NOI(2) (1) Refer to page 40 for a reconciliation to the nearest generally accepted accounting principles (“GAAP”) measure. (2) Refer to page 39 for a reconciliation to the nearest GAAP measure. 116,963 191,220 226,965 168,511 $ $ 72,938 157,560 233,304 189,875 33 Comparison of the Year Ended December 31, 2018 to December 31, 2017 Net income for the year ended December 31, 2018 was $117.0 million, compared to net income of $72.9 million for the year ended December 31, 2017. 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 year ended December 31, 2018 as compared to the same period of 2017: (Amounts in thousands) Total revenue Depreciation and amortization Real estate taxes Property operating expenses General and administrative Casualty and impairment loss, net Provision for doubtful accounts Gain on sale of real estate Interest income Interest and debt expense Gain (loss) on extinguishment of debt Income tax (expense) benefit For the year Ended December 31, 2018 2017 $ Change $ 414,160 $ 407,042 $ 99,422 63,655 74,222 34,984 4,426 4,138 52,625 8,336 64,868 2,524 (3,519) 82,281 59,737 50,894 30,691 7,382 3,445 202 2,248 56,218 (35,336) 278 7,118 17,141 3,918 23,328 4,293 (2,956) 693 52,423 6,088 8,650 37,860 (3,797) Total revenue increased by $7.1 million to $414.2 million in the year ended December 31, 2018 from $407.0 million in the year ended December 31, 2017. The increase is primarily attributable to: • • • • • • $22.4 million increase as a result of the write-off of below-market lease intangible liabilities related to our recapture of four out of nine Toys “R” Us leases and one Fallas lease; $9.8 million increase as a result of acquisitions net of dispositions; $8.2 million increase in property rentals due to rent commencements, lease modifications and contractual rent increases; $5.1 million increase in tenant expense reimbursements due to an increase in recoverable expenses and revenue from recoverable capital projects; and $0.8 million decrease in rent abatements at our two malls in Puerto Rico as a result of Hurricane Maria, and at our property, Bergen Town Center, in Paramus, NJ, as a result of a construction rental abatements, partially offset by $39.2 million lower income from acquired leasehold interest due to the write-off of the unamortized intangible liability related to the below-market ground lease acquired and existing straight-line receivable balance in connection with the acquired ground lease at Shops at Bruckner, in the first quarter of 2017. Depreciation and amortization increased by $17.1 million to $99.4 million in the year ended December 31, 2018 from $82.3 million in the year ended December 31, 2017. The increase is primarily attributable to: • • • • $13.3 million increase as a result of the write-off of the existing tenant improvements and intangible assets related to recaptured leases and early lease terminations; $5.0 million increase as a result of acquisitions net of dispositions; and $3.2 million increase from completed development projects and tenant improvements, partially offset by $4.4 million decrease as a result of the write-off of the existing intangible assets at Yonkers Gateway Center upon acquisition of the remaining fee and leasehold interests in the second quarter of 2017. Real estate taxes increased by $3.9 million to $63.7 million in the year ended December 31, 2018 from $59.7 million in the year ended December 31, 2017. The increase is primarily attributable to: • • $2.0 million increase due to higher assessed values and tax rates and decrease in capitalized real estate taxes due to development projects placed into service; and $1.9 million increase as a result of acquisitions net of dispositions. Property operating expenses increased by $23.3 million to $74.2 million in the year ended December 31, 2018 from $50.9 million in the year ended December 31, 2017. The increase is primarily attributable to: • $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; 34 • • • $4.2 million in additional common area maintenance projects; $3.0 million increase as a result of acquisitions net of dispositions; and $0.6 million increase in accrued environmental remediation costs. General and administrative expenses increased by $4.3 million to $35.0 million in the year ended December 31, 2018 from $30.7 million in the year ended December 31, 2017. The increase is primarily attributable to: • • • $2.6 million higher stock-compensation expense due to additional equity awards granted; and $1.9 million of costs associated with hiring a new Chief Operating Officer and a new President of Development and severance expenses related to the termination of a prior executive, partially offset by $0.2 million decrease in legal and other professional fees. Casualty and impairment losses of $4.4 million were recognized in the year ended December 31, 2018 as a result of the following events: • • $5.6 million of real estate impairment losses recognized on our properties in Salem, NH, as a result of the vacancy caused by the Toys “R” Us bankruptcy, and in West Babylon, NY, as a result of an executed letter of intent, partially offset by $1.2 million net casualty gain recognized as result of Hurricane Maria, consisting of $1.5 million of insurance proceeds, offset by $0.3 million of hurricane related expenses. Casualty and impairment losses of $7.4 million were recognized in the year ended December 31, 2017 as a result of the following events: • • $3.5 million real estate impairment loss on our property in Eatontown, NJ, prior to sale on June 30, 2017; and $3.9 million casualty loss incurred as a result of Hurricane Maria, consisting of a $2.2 million write-off of the estimated net book value of the fixed assets damaged by the hurricane, and $1.7 million of hurricane related expenses. Provision for doubtful accounts increased by $0.7 million to $4.1 million in the year ended December 31, 2018 from $3.4 million in the year ended December 31, 2017. The increase is primarily attributable to additional reserves for troubled tenants. A gain on sale of real estate of $52.6 million was recognized in the year ended December 31, 2018 comprised of $50.4 million as a result of the sale of our property in Allentown, PA on April 26, 2018 and $2.2 million as a result of the sale of a 5.7 acre land parcel on July 5, 2018 at our property, Cherry Hill Commons, in Cherry Hill, NJ. In the year ended December 31, 2017 we recognized a $0.2 million gain on sale of real estate as a result of the sale of excess land at our property in Kearny, NJ on September 8, 2017. Interest income increased by $6.1 million to $8.3 million in the year ended December 31, 2018 from $2.2 million in the year ended December 31, 2017. The increase is primarily attributable to an increase in cash investments and an increase in interest rates. Interest and debt expense increased by $8.7 million to $64.9 million in the year ended December 31, 2018 from $56.2 million in the year ended December 31, 2017. The increase is primarily attributable to: • • • $5.6 million net increase in interest due to the refinancing of the $544 million cross-collateralized mortgage loan into 18 new individual, non-recourse mortgage financings totaling $710 million closed in the fourth quarter of 2017; $2.5 million increase in interest from loans issued and assumed on acquisitions, partially offset by a decrease due to the extinguishment of debt at Englewood in the first quarter of 2018; and $0.6 million decrease in interest capitalized related to the completion of development projects. We recognized a $2.5 million gain on extinguishment of debt in the year ended December 31, 2018 as a result of the foreclosure sale and forgiveness of the $11.5 million mortgage debt secured by our property in Englewood, NJ. Loss on extinguishment of debt of $35.3 million was recognized in the year ended December 31, 2017 as a result of the following events: • • $34.1 million charge related to the early debt extinguishment in connection with the refinancing of our $544 million cross-collateralized mortgage consisting of a $31.1 million defeasance expense and $3.0 million write-off of unamortized deferred financing fees; and $1.3 million charge from the refinancing of our mortgage loan secured by our Tonnelle Commons property in North Bergen, NJ, consisting of a $1.1 million prepayment penalty and $0.2 million of unamortized deferred financing fees on the original loan. We recognized income tax expense of $3.5 million in the year ended December 31, 2018 attributable to: • • • $2.3 million from the impact of changes in deferred taxes attributable to losses and capitalized costs related to Hurricane Maria; $1.0 million resulting from non-hurricane related operating activities at our Puerto Rico properties; and $0.2 million resulting from the Company’s TRS activities. We recognized an income tax benefit of $0.3 million in the year ended December 31, 2017 driven by the losses from Hurricane Maria in 2017. 35 Comparison of the Year Ended December 31, 2017 to December 31, 2016 Net income for the year ended December 31, 2017 was $72.9 million, compared to net income of $96.6 million for the year ended December 31, 2016. 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 year ended December 31, 2017 as compared to the same period of 2016: (Amounts in thousands) Total revenue Property operating expenses General and administrative expenses Depreciation and amortization Real estate taxes Casualty and impairment loss Provision for doubtful accounts Gain on sale of real estate Interest and debt expense Loss on extinguishment of debt Income tax benefit (expense) For the year ended December 31, 2017 2016 $ Change $ 407,042 $ 325,976 $ 50,894 30,691 82,281 59,737 7,382 3,445 202 56,218 35,336 278 45,280 28,843 56,145 51,429 — 1,214 15,618 51,881 — (804) 81,066 5,614 1,848 26,136 8,308 7,382 2,231 (15,416) 4,337 35,336 1,082 Total revenue increased by $81.1 million to $407.0 million in the year ended December 31, 2017 from $326.0 million in the year ended December 31, 2016. The increase is primarily attributable to: • • • • • • $39.2 million in income from acquired leasehold interest due to the write-off of the unamortized intangible liability related to the below-market ground lease acquired in connection with the acquisition of the ground lease at Shops at Bruckner; $32.6 million increase as a result of acquisitions net of dispositions; $6.3 million increase in tenant expense reimbursements due to an increase in recoverable expenses and revenue from recoverable capital projects; and $4.5 million increase in property rentals due to rent commencements, contractual rent increases and an increase in percentage rental income, net of tenant vacancies primarily at properties undergoing development, partially offset by $1.3 million decrease in other income due to a decrease in tenant bankruptcy settlement income received during 2017; and $0.2 million decrease in management and development fee income. Property operating expenses increased by $5.6 million to $50.9 million in the year ended December 31, 2017 from $45.3 million in the year ended December 31, 2016. The increase is primarily attributable to an increase in common area maintenance expenses as a result of acquisitions that closed in 2017. General and administrative expenses increased by $1.8 million to $30.7 million in the year ended December 31, 2017 from $28.8 million in the year ended December 31, 2016. The increase is primarily attributable to: • • • $2.4 million net increase in employment costs including $1.7 million increase in share based compensation expense and $0.5 million severance expense; and $0.6 million net increase in legal, other professional fees and costs related to information technology, partially offset by $1.1 million decrease in transaction costs. Depreciation and amortization increased by $26.1 million to $82.3 million in the year ended December 31, 2017 from $56.1 million in the year ended December 31, 2016. The increase is primarily attributable to: • • • $23.1 million increase as a result of acquisitions net of dispositions that closed in 2017 and 2016; and $3.4 million increase from development projects and tenant improvements placed into service in 2017 and 2016, partially offset by $0.4 million decrease in tenant intangibles due to write-offs from tenants vacating in 2016. Real estate taxes increased by $8.3 million to $59.7 million in the year ended December 31, 2017 from $51.4 million in the year ended December 31, 2016. The increase is primarily attributable to: • • $5.0 million increase as a result of acquisitions net of dispositions that closed in 2017 and 2016; and $3.3 million increase due to higher assessed values and tax refunds received in 2016. 36 Casualty and impairment losses of $7.4 million were recognized in the year ended December 31, 2017 as a result of the following events: • • $3.5 million real estate impairment loss on our property in Eatontown, NJ, prior to sale on June 30, 2017; and $3.9 million casualty loss incurred as a result of Hurricane Maria, consisting of a $2.2 million write-off of the estimated net book value of the fixed assets damaged by the hurricane, and $1.7 million of hurricane related expenses. Provision for doubtful accounts increased by $2.2 million to $3.4 million in the year ended December 31, 2017 from $1.2 million in the year ended December 31, 2016 primarily due to $1.3 million provision for doubtful accounts recorded for tenants impacted by Hurricane Maria. We recognized a gain on the sale of real estate in 2017 of $0.2 million as a result of the sale of excess land at our property in Kearny, NJ on September 8, 2017. We recognized a gain on the sale of real estate of $15.6 million as a result of the sale of our property in Waterbury, CT on June 9, 2016. Interest and debt expense increased by $4.3 million to $56.2 million in the year ended December 31, 2017 from $51.9 million in the year ended December 31, 2016. The increase is primarily attributable to: • • • • • $4.5 million increase in interest from loans issued and assumed on acquisitions closed since December 2016; $3.6 million increase in interest due to 18 new individual, non-recourse mortgage financings totaling $710 million closed during the fourth quarter of 2017; and $0.5 million increase in interest due to the mortgage loan refinancing secured by our Tonnelle Commons property in North Bergen, NJ, partially offset by $4.1 million net decrease in interest due to principal paydowns and refinancing of the $544 million cross-collateralized mortgage loan; and $0.2 million increase of interest capitalized related to additional development projects. Loss on extinguishment of debt of $35.3 million in the year ended December 31, 2017 was recognized as a result of the following events: • • $34.1 million charge related to the early debt extinguishment in connection with the refinancing of our $544 million cross-collateralized mortgage consisting of a $31.1 million defeasance expense and $3.0 million write-off of unamortized deferred financing fees; and $1.3 million charge from the refinancing of our mortgage loan secured by our Tonnelle Commons property in North Bergen, NJ, consisting of a $1.1 million prepayment penalty and $0.2 million of unamortized deferred financing fees on the original loan. Income tax expense decreased by $1.1 million resulting in an income tax benefit of $0.3 million in the year ended December 31, 2017 from $0.8 million of expense in the year ended December 31, 2016 primarily due to the impact of the losses from Hurricane Maria in 2017. 37 Non-GAAP Financial Measures Throughout this section, we have provided certain information on a “same-property” cash basis which includes the results of operations that were owned and operated for the entirety of the reporting periods being compared, totaling 75 properties for the years ended December 31, 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 is taken out of service and also excludes properties acquired, sold, or under contract to be sold during the periods being compared. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when a property is considered to be a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan and is expected to have a significant impact on property operating income based on the retenanting that is occurring. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally one year after at least 80% of the expected NOI from the project is realized on a cash basis. Acquisitions are moved into the same-property pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment. We calculate same-property cash NOI using net income as defined by GAAP reflecting only those income and expense items that are incurred at the property level, 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. The most directly comparable GAAP financial measure to cash NOI is net income. Cash NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. We calculate cash NOI by adjusting GAAP operating income to add back depreciation and amortization expense, general and administrative expenses, casualty and real estate impairment losses and non-cash ground rent expense, and deduct non-cash rental income resulting from the straight-lining of rents and amortization of acquired below market leases net of above market leases. We use cash NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. Further, we believe cash NOI is useful to investors as a performance measure because, when compared across periods, cash NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from operating income or net income. As such, cash NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition or disposition of properties during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company’s properties. Cash NOI and same-property cash NOI should not be considered substitutes for operating income or net income and may not be comparable to similarly titled measures employed by others. Same-property cash NOI increased by $1.3 million, or 0.7%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. 38 The following table reconciles net income to cash NOI and same-property cash NOI for the years ended December 31, 2018 and 2017. (Amounts in thousands) Net income Management and development fee income from non-owned properties Income tax expense (benefit) Other income Depreciation and amortization General and administrative expense Casualty and impairment loss, net(1) Gain on sale of real estate Interest income Interest and debt expense (Gain) loss on extinguishment of debt Non-cash revenue and expenses Cash NOI(2) Adjustments: Non-same property cash NOI(2)(3) Lease termination payments Natural disaster related operating loss(4) Construction rental abatement Tenant bankruptcy settlement and lease termination income Environmental remediation costs Same-property cash NOI Adjustments: Cash NOI related to properties being redeveloped(5) For the year ended December 31, 2018 2017 $ $ 116,963 (1,469) 3,519 (146) 99,422 34,984 4,426 (52,625) (8,336) 64,868 (2,524) (32,117) 226,965 (51,132) 15,500 40 291 (1,028) 584 72,938 (1,535) (278) (118) 82,281 30,691 7,382 (202) (2,248) 56,218 35,336 (47,161) 233,304 (44,623) — 1,267 902 (975) — $ 191,220 $ 189,875 20,431 18,937 Same-property cash NOI including properties in redevelopment (1) The year ended December 31, 2018 reflects impairment losses recognized at our properties in Salem, NH and West Babylon, NY, partially offset by insurance proceeds, net of hurricane-related expenses. The year ended December 31, 2017 includes hurricane-related expenses, a write-off of the net book value of assets damaged and real estate impairment losses. 211,651 208,812 $ $ (2) 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 but includes bad debt expense. (3) Non-same property cash NOI includes cash NOI related to properties being redeveloped and properties acquired or disposed. (4) The year ended December 31, 2018 reflects rental and tenant reimbursement losses, offset by reversals of provisions for payments received from tenants at Las Catalinas. The year ended December 31, 2017 reflects rental and tenant reimbursement losses and provisions for outstanding amounts due from tenants at Las Catalinas. (5) The year ended December 31, 2018 excludes rental and tenant reimbursement losses, partially offset by a reversal of provisions for payments received from tenants at Montehiedra. The year ended December 31, 2017 excludes rental and tenant reimbursement losses as well as provisions for outstanding amounts due from tenants at Montehiedra. 39 Funds From Operations FFO applicable to diluted common shareholders for the year ended December 31, 2018 was $168.5 million compared to $157.6 million for the year ended December 31, 2017. 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, rental property depreciation and amortization expense. We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period to period both internally and among our peers because this non-GAAP measure excludes net gains on sales of depreciable real estate, real estate impairment losses, rental property depreciation and amortization expense which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. FFO does not represent cash flows from operating activities in accordance with GAAP, should not be considered an alternative to net income as an indication of our performance, and is not indicative of cash flow as a measure of liquidity or our ability to make cash distributions. FFO may not be comparable to similarly titled measures employed by others. (Amounts in thousands) Net income Less net income attributable to noncontrolling interests in: Operating partnership Consolidated subsidiaries Net income attributable to common shareholders Adjustments: Rental property depreciation and amortization Real estate impairment loss Gain on sale of real estate Limited partnership interests in operating partnership(1) For the year ended December 31, 2018 2017 $ 116,963 $ 72,938 (11,768) (45) 105,150 98,644 5,574 (52,625) 11,768 (5,824) (44) 67,070 81,401 3,467 (202) 5,824 FFO applicable to diluted common shareholders (1) Represents earnings 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. The calculations of FFO applicable to diluted common shareholders include earnings allocated to LTIP and OP unitholders. The calculations of the weighted average share totals for the years ended December 31, 2018 and December 31, 2017 include the redeemable shares outstanding as their inclusion is dilutive. 157,560 168,511 $ $ 40 Liquidity and Capital Resources Due to the nature of our business, we typically generate significant amounts of cash from operations; however, the cash generated from operations is primarily paid to our shareholders and unitholders of the Operating Partnership in the form of distributions. Our status as a REIT requires that we distribute 90% of our REIT taxable income each year. Our Board of Trustees declared a quarterly dividend of $0.22 per common share and OP Unit for each of the four quarters in 2018, or an annual rate of $0.88. We expect to pay regular cash dividends, however, the timing, declaration, amount and payment of distributions to shareholders and unitholders of the Operating Partnership falls within the discretion of our Board of Trustees. Our Board of Trustees’ decisions regarding the payment of dividends depends on many factors, such as maintaining our REIT tax status, our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other factors. Property rental income is our primary source of cash flow and is dependent on a number of factors including our occupancy level and rental rates, as well as our tenants’ ability to pay rent. Our properties provide us with a relatively consistent stream of cash flow that enables us to pay operating expenses, debt service and recurring capital expenditures. Other sources of liquidity to fund cash requirements include proceeds from financings, equity offerings and asset sales. Our short-term liquidity requirements consist of normal recurring operating expenses, lease obligations, regular debt service requirements, 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 December 31, 2018, we had cash and cash equivalents, including restricted cash, of $457.5 million and no amounts drawn on our revolving credit agreement. In addition, the Company has the following sources of capital available: (Amounts in thousands) ATM equity program(1) Original offering amount Available capacity Revolving credit agreement(2) Total commitment amount Year Ended December 31, 2018 $ $ $ 250,000 241,300 600,000 Available capacity Maturity(3) (1) Refer to Note 14 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. (2) Refer to Note 6 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. (3) On March 7, 2017, we amended and extended our revolving credit agreement. The amendment increased the credit facility size by $100 March 7, 2021 600,000 $ million to $600 million and extended the maturity date to March 7, 2021 with two six-month extension options. We have no debt scheduled to mature in 2019. We currently believe that cash flows from operations over the next 12 months, together with cash on hand, our ATM equity program, our revolving credit agreement and our general ability to access the capital markets will be sufficient to finance our operations and fund our debt service requirements and capital expenditures. Summary of Cash Flows Cash and cash equivalents including restricted cash was $457.5 million at December 31, 2018, compared to $500.8 million as of December 31, 2017, a decrease of $43.3 million. Our cash flow activities are summarized as follows: (Amounts in thousands) 2018 Year Ended December 31, 2017 2016 Net cash provided by operating activities $ Net cash used in investing activities Net cash (used in) provided by financing activities $ 137,040 (64,803) (115,556) $ 157,898 (295,732) 498,489 137,249 (59,230) (115,858) 41 Operating Activities Net cash provided by operating activities primarily consists of cash inflows from tenant rent and tenant expense reimbursements and cash outflows for property operating expenses, general and administrative expenses and interest and debt expense. Net cash provided by operating activities of $137.0 million for the year ended December 31, 2018, decreased by $20.9 million from $157.9 million as of December 31, 2017, 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. The remaining decrease in cash is due to the timing of cash receipts and payments related to changes in operating assets and liabilities. Net cash provided by operating activities of $157.9 million for the year ended December 31, 2017, increased by $20.7 million from $137.2 million as of December 31, 2016 driven by $21.2 million net increase in cash provided by operating activities, offset by a $0.5 million net decrease in cash due to timing of cash receipts and payments related to changes in operating assets and liabilities. Investing Activities Net cash flow 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 $64.8 million for the year ended December 31, 2018, decreased by $230.9 million from $295.7 million as of December 31, 2017 due to a (i) $206.5 million decrease in cash used for acquisitions in 2018, (ii) $52.6 million increase in cash provided by dispositions driven by the sale of our property in Allentown, PA and the sale of land in Cherry Hill, NJ, (iii) $1.3 million of insurance proceeds for physical property damages caused by Hurricane Maria at our two properties in Puerto Rico and by a tornado at our property in Wilkes-Barre, PA, partially offset by (iv) $29.4 million increase in cash used for real estate development and capital improvements at existing properties. Net cash used in investing activities of $295.7 million for the year ended December 31, 2017, increased by $236.5 million from $59.2 million for the year ended December 31, 2016 due to a (i) $202.1 million increase in cash used in acquiring nine real estate assets during 2017, with total gross leasable area of 2.0 million sf, (ii) $19.4 million increase in cash used for real estate development and capital improvements at existing properties, and (iii) $14.9 million decrease in cash provided by dispositions due to the sale of our property in Waterbury, CT on June 9, 2016. Financing Activities Net cash flow 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 used in financing activities was $115.6 million for the year ended December 31, 2018, as compared to net cash provided by financing activities of $498.5 million for the year ended December 31, 2017. The difference is attributable to (i) $935.7 million of proceeds from borrowings due to mortgage loans assumed and issued in 2017, (ii) $347.9 million decrease in cash provided by proceeds from the issuance of common shares due to multiple equity offerings in 2017, (iii) $6.5 million increase in distributions to partners and (iv) $0.1 million increase in tax withholdings on vested restricted shares, partially offset by (v) $536.5 million used to purchase marketable securities in connection with debt defeasance in 2017, (vi) $125.4 million decrease in cash used in repaying debt (vii) $13.2 million decrease in cash used in issuing debt, and (viii) $1.1 million decrease in cash paid to extinguish debt. Net cash provided by financing activities of $498.5 million for the year ended December 31, 2017 increased by $614.3 million from net cash used in financing activities of $115.9 million for the year ended December 31, 2016. The difference is attributable to (i) $935.7 million of proceeds from borrowings due to mortgage loans assumed and issued in 2017, (ii) $339.5 million of proceeds from the issuance of common shares in 2017 attributable to an underwritten public offering, and a direct sale of common shares with a large institutional investor, partially offset by (iii) $536.5 million of cash used in purchasing marketable securities in connection with debt defeasance in 2017, (iv) $91.2 million increase in cash used in repaying debt, (v) $18.5 million increase in distributions to partners, (vi) $13.2 million increase in cash used in issuing debt, (vii) $1.1 million increase in cash used to extinguish debt attributable to the refinancing of our Tonnelle Commons mortgage loan in 2017, and (viii) $0.3 million increase in tax withholdings on vested restricted shares. 42 Financing Activities and Contractual Obligations Below is a summary of our outstanding debt and weighted average interest rate as of December 31, 2018. (Amounts in thousands) Mortgages payable: Fixed rate debt Variable rate debt(1) Principal balance at December 31, 2018 Weighted Average Interest Rate at December 31, 2018 $ 1,392,659 169,500 1,562,159 (11,917) 4.12% 4.09% 4.12% Total mortgages payable Unamortized debt issuance costs Total mortgages payable, net of unamortized debt issuance costs $ 1,550,242 (1) As of December 31, 2018, $80.5 million of our variable rate debt bears interest at one month LIBOR plus 190 bps and $89.0 million bears interest at one month LIBOR plus 160 bps. The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately $1.3 billion as of December 31, 2018. 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, certain redevelopment projects and/or yield maintenance upon repayment prior to maturity. As of December 31, 2018, we were in compliance with all debt covenants. On January 15, 2015, we entered into a $500 million Revolving Credit Agreement (the “Agreement”) with certain financial institutions. On March 7, 2017, we amended and extended the Agreement. The amendment increased the credit facility size by $100 million to $600 million and extended the maturity date to March 7, 2021 with two six-month extension options. Borrowings under the Agreement are subject to interest at LIBOR plus 1.10% to 1.55% and an annual facility fee of 15 to 35 basis points. Both the spread over LIBOR and the facility fee are based on our current leverage ratio and are subject to increase if our leverage ratio increases above predefined thresholds. The Agreement contains customary financial covenants including a maximum leverage ratio of 60% and a minimum fixed charge coverage ratio of 1.5x. No amounts have been drawn to date under the Agreement. Based on our current leverage ratio as of December 31, 2018, our borrowing rate is LIBOR plus 1.15% and our annual facility fee is 0.20%. During 2017, our property in Englewood, NJ was transferred to a receiver. On January 31, 2018, the property was sold at a foreclosure sale and on February 23, 2018, the court order was received approving the sale and discharging the receiver of all assets and liabilities related to the property. We recognized a gain on extinguishment of debt of $2.5 million as a result of the forgiveness of outstanding mortgage debt of $11.5 million, which is included in the consolidated statement of income for the year ended December 31, 2018. We have contractual obligations related to our mortgage loans described further in Note 6 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. In addition, we have contractual obligations for certain properties that are subject to long-term ground and building leases where a third party owns and has leased the underlying land to us. We also have non-cancelable operating leases pertaining to office space from which we conduct our business. Below is a summary of our contractual obligations as of December 31, 2018: (Amounts in thousands) Contractual cash obligations Long-term debt obligations(1) Operating lease obligations Commitments Due by Period Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years $ $ 1,986,824 132,578 2,119,402 $ $ 68,280 10,640 78,920 $ $ 256,197 18,571 274,768 $ $ 548,980 17,832 566,812 $ $ 1,113,367 85,535 1,198,902 (1) Includes interest and principal payments. Interest on variable rate debt is computed using rates in effect as of December 31, 2018. Additional contractual obligations that have been excluded from this table are as follows: • Obligations related to construction and development contracts, since amounts are not fixed or determinable. Such contracts will generally be due over the next two years; • Obligations related to maintenance contracts, since these contracts typically can be canceled upon 30 to 60 days’ notice without penalty; 43 • Obligations related to employment contracts with certain executive officers, since all agreements are subject to cancellation by either the Company or the executive without cause upon notice; and • Recorded debt premiums or discounts that are not obligations. Capital Expenditures The following summarizes capital expenditures presented on a cash basis for the years ended December 31, 2018 and 2017: (Amounts in thousands) Capital expenditures: Development and redevelopment costs Capital improvements Tenant improvements and allowances Total capital expenditures Year Ended December 31, 2018 2017 $ $ 107,157 $ 4,750 5,079 116,986 $ 60,477 13,181 7,568 81,226 As of December 31, 2018, we had approximately $196.5 million of active redevelopment, development and anchor repositioning projects at various stages of completion and $54.1 million of completed projects, an increase of $1.5 million from $249.1 million of projects as of December 31, 2017. We have advanced these projects $61.4 million since December 31, 2017 and anticipate that these projects will require an additional $51.5 million over the next two years to complete. We expect to fund these projects using cash on hand, proceeds from dispositions, using secured debt or issuing equity. 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 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 and (iii) numerous other insurance policies including trustees’ and officers’ insurance, workers’ compensation and automobile-related liabilities insurance. The Company’s insurance includes coverage for acts of terrorism 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 maintains coverage for certain cybersecurity losses with limits of $5 million per occurrence and in the aggregate providing first and third-party coverage including network interruption, event management, cyber extortion and claims for media content, security and privacy liability. Insurance premiums are typically charged directly to each of the retail properties and warehouses 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 coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future and expect premiums across most property 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. Hurricane-Related Charges On September 20, 2017, Hurricane Maria made landfall, damaging our two properties in Puerto Rico. During the year ended December 31, 2017, the Company incurred a $2.2 million charge reflecting the net book value of assets damaged and incurred $1.7 million of hurricane-related expenses, included in casualty and impairment loss, net on the accompanying consolidated statements of income. During the year ended December 31, 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, net on the accompanying consolidated statements of income. 44 During the year ended December 31, 2018, the Company recognized $0.3 million of business interruption losses, comprised of $0.7 million of 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 to provision for doubtful accounts for payments received from tenants on rents previously reserved. During the year ended December 31, 2017, the Company recognized $2.2 million of business interruption losses, net of $1.8 million in cash advances received from its insurance carrier. Losses of $0.9 million pertained to rent abatements when the malls were closed or inoperable as a result of the hurricane, recorded as a reduction of rental revenue, and $1.3 million was recorded as a provision for doubtful accounts for unpaid rents. No determination has been made as to the total amount or timing of additional insurance payments that may be received as a result of the hurricane. 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 $1.7 million and $1.2 million on our consolidated balance sheets as of December 31, 2018 and December 31, 2017, 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. During the year ended December 31, 2018, the Company recognized $0.6 million of environmental remediation costs included in property operating expenses on 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. Bankruptcies Although our base rent 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 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 During the year ended December 31, 2018, Toys “R” Us, Sears, Fallas, and National Wholesale Liquidators filed for Chapter 11 bankruptcy protection. During September 2017, Toys “R” Us filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code and announced an orderly wind-down of its U.S. business and liquidation of all U.S. stores on March 15, 2018. Prior to the liquidation, the Company had leases with Toys “R” Us at nine locations with annual rental revenue of $7.6 million. The status of the Toys “R” Us leases is as follows: • The Company paid $15.5 million to recapture the leases at Hudson Mall in Jersey City, NJ in July 2018 and Bruckner Commons in the Bronx, NY in September 2018 to accelerate the redevelopment of these properties. The previous rents were well under-market. • Raymour & Flanigan acquired the lease at Manalapan Commons in Manalapan, NJ in July 2018. • Toys “R” Us rejected its leases in Woodbridge, NJ, Union, NJ, Amherst, NY and Wilkes-Barre, PA in July 2018 and Cherry Hill, NJ and Salem, NH in October 2018. Annual gross rent on these leases amounted to approximately $5.7 million. The Company is in active discussions to lease these spaces. In connection with the Toys “R” Us bankruptcy, the Company recognized a write-off of $21.6 million of below-market intangible liabilities (classified within rental revenue), $15.5 million of lease termination payments (classified within property operating expense) and a $1.0 million write-off of reserves on receivables from straight-line rents in the year ended December 31, 2018. Fallas filed for Chapter 11 bankruptcy protection on August 6, 2018. Prior to the tenant vacating, the Company had one lease with Fallas at the Shops at Bruckner in the Bronx, NY comprising approximately 38,000 sf which generated $1.4 million in annual rental revenue. In connection with the bankruptcy, the Company recognized a write-off of $0.8 million of below-market intangible liabilities (classified within rental revenue) in the year ended December 31, 2018. The Company is currently exploring leasing alternatives for this space. Sears filed for Chapter 11 bankruptcy protection on October 15, 2018. The Company has four Kmart leases with Sears comprising approximately 547,000 sf, which generate $8.5 million in annual rental revenue. Sears recently announced the acquisition of its assets by ESL Investments, Inc. (“ESL”) for approximately $5.2 billion. Kmart closed its stores at Las Catalinas in Puerto Rico 45 and in Huntington, NY at the end of January 2019; however, property rents have been paid on all four Kmart locations through February 2019 and it is not clear whether ESL will attempt to assume or reject these leases. The Company is monitoring the proceedings and considering its alternatives. National Wholesale Liquidators filed for Chapter 11 bankruptcy protection on October 24, 2018. The Company had one lease with National Wholesale Liquidators in Lodi, NJ comprising approximately 171,000 sf, which generated $3.1 million in annual rental revenue. This lease was rejected and returned to us on November 30, 2018. In connection with the bankruptcy, the Company recorded a $0.8 million write-off of reserves on receivables from straight-line rents in the year ended December 31, 2018. The Company is currently exploring leasing alternatives, including mixed-use development at this property. 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 off-balance sheet arrangements as of December 31, 2018 or December 31, 2017. 46 ITEM 7A. 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. As of December 31, 2018, all of our variable rate debt outstanding had rates indexed to LIBOR. (Amounts in thousands) Variable Rate Fixed Rate December 31, Balance $ $ 169,500 1,392,659 1,562,159 (1) 2018 Weighted Average Interest Rate 4.09% 4.12% 2017 Effect of 1% Change in Base Rates December 31, Balance $ $ 1,695 — (2) 1,695 $ $ 169,500 1,408,817 1,578,317 (1) Weighted Average Interest Rate 3.10% 4.14% (1) Excludes unamortized debt issuance costs of $11.9 million and $13.8 million as of December 31, 2018 and December 31, 2017, 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 increase by approximately $13.9 million based on outstanding balances as of December 31, 2018. 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 December 31, 2018, we did not have any hedging instruments in place. Fair Value of Debt The estimated fair value of our consolidated debt is calculated based on current market prices and discounted cash flows at the current rate at which similar loans would be made to borrowers with similar credit ratings for the remaining term of such debt. As of December 31, 2018, the estimated fair value of our consolidated debt was $1.5 billion. 47 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm for Urban Edge Properties Report of Independent Registered Public Accounting Firm for Urban Edge Properties LP Urban Edge Properties Consolidated Balance Sheets as of December 31, 2018 and 2017 Urban Edge Properties Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016 Urban Edge Properties Consolidated Statement of Changes in Equity for the years ended December 31, 2018, 2017 and 2016 Urban Edge Properties Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 Urban Edge Properties LP Consolidated Balance Sheets as of December 31, 2018 and 2017 Urban Edge Properties LP Consolidated Statements of Income for the years ended December 31, 2018, 2017 and 2016 Urban Edge Properties LP Consolidated Statement of Changes in Equity for the years ended December 31, 2018, 2017 and 2016 Urban Edge Properties LP Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 Notes to Consolidated Financial Statements CONSOLIDATED FINANCIAL STATEMENT SCHEDULES Schedule II – Valuation and Qualifying Accounts Schedule III – Real Estate and Accumulated Depreciation Page 49 50 51 52 53 54 56 57 58 59 61 98 99 48 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Trustees Urban Edge Properties New York, New York Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Urban Edge Properties (the "Company") as of December 31, 2018 and 2017, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2018 and the related notes and schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2018, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 13, 2019, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. DELOITTE & TOUCHE LLP New York, New York February 13, 2019 We have served as the Company's auditor since 2014. 49 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Partners of Urban Edge Properties LP New York, New York Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Urban Edge Properties LP (the "Operating Partnership") as of December 31, 2018 and 2017, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2018 and the related notes and schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Operating Partnership's internal control over financial reporting as of December 31, 2018, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 13, 2019 expressed an unqualified opinion on the Operating Partnership 's internal control over financial reporting. Basis for Opinion These financial statements and financial statement schedules are the responsibility of the Operating Partnership 's management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. DELOITTE & TOUCHE LLP New York, New York February 13, 2019 We have served as the Operating Partnership's auditor since 2016. 50 URBAN EDGE PROPERTIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) ASSETS Real estate, at cost: Land Buildings and improvements Construction in progress Furniture, fixtures and equipment Total Accumulated depreciation and amortization Real estate, net Cash and cash equivalents Restricted cash Tenant and other receivables, net of allowance for doubtful accounts of $6,486 and $4,937, respectively Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 and $494, respectively Identified intangible assets, net of accumulated amortization of $39,526 and $33,827, respectively Deferred leasing costs, net of accumulated amortization of $16,826 and $14,796, respectively Deferred financing costs, net of accumulated amortization of $2,764 and $1,740, respectively Prepaid expenses and other assets Total assets LIABILITIES AND EQUITY Liabilities: Mortgages payable, net Accounts payable, accrued expenses and other liabilities Identified intangible liabilities, net of accumulated amortization of $65,058 and $65,832, respectively Total liabilities Commitments and contingencies Shareholders’ equity: Common shares: $0.01 par value; 500,000,000 shares authorized and 114,345,565 and 113,827,529 shares issued and outstanding, respectively Additional paid-in capital Accumulated deficit Noncontrolling interests: Operating partnership Consolidated subsidiaries Total equity Total liabilities and equity See notes to consolidated financial statements. December 31, December 31, 2018 2017 $ 525,819 2,156,113 80,385 6,675 2,768,992 (645,872) 2,123,120 440,430 17,092 28,563 $ 521,669 2,010,527 133,761 5,897 2,671,854 (587,127) 2,084,727 490,279 10,562 20,078 84,903 85,843 68,422 87,249 21,277 2,219 12,968 $ 2,798,994 20,268 3,243 18,559 $ 2,820,808 $ 1,550,242 98,517 144,258 $ 1,564,542 84,766 180,959 1,793,017 1,830,267 1,143 1,138 956,420 (52,857) 946,402 (57,621) 100,822 100,218 449 1,005,977 $ 2,798,994 404 990,541 $ 2,820,808 51  URBAN EDGE PROPERTIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) Year Ended December 31, 2018 2017 2016 REVENUE Rental revenue Management and development fees Income from acquired leasehold interest Other income Total revenue EXPENSES Depreciation and amortization Real estate taxes Property operating General and administrative Casualty and impairment loss, net Ground rent Provision for doubtful accounts Total expenses Operating income Gain on sale of real estate Interest income Interest and debt expense Gain (loss) on extinguishment of debt Income before income taxes Income tax (expense) benefit Net income Less net income attributable to noncontrolling interests in: Operating partnership Consolidated subsidiaries Net income attributable to common shareholders Earnings per common share - Basic: Earnings per common share - Diluted: Weighted average shares outstanding - Basic Weighted average shares outstanding - Diluted $ $ $ $ $ $ $ $ 411,298 1,469 — 1,393 414,160 99,422 63,655 74,222 34,984 4,426 11,448 4,138 292,295 121,865 52,625 8,336 (64,868) 2,524 120,482 (3,519) 116,963 (11,768) (45) 105,150 0.92 0.92 113,863 114,051 $ $ $ $ 365,082 1,535 39,215 1,210 407,042 82,281 59,737 50,894 30,691 7,382 10,848 3,445 245,278 161,764 202 2,248 (56,218) (35,336) 72,660 278 72,938 (5,824) (44) 67,070 0.62 0.61 107,132 118,390 See notes to consolidated financial statements. 321,719 1,759 — 2,498 325,976 56,145 51,429 45,280 28,843 — 10,047 1,214 192,958 133,018 15,618 679 (51,881) — 97,434 (804) 96,630 (5,812) (3) 90,815 0.91 0.91 99,364 99,794 52 URBAN EDGE PROPERTIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (In thousands, except share and per share amounts) Common Shares Noncontrolling Interests (“NCI”) Shares Amount Additional Paid-In Capital Accumulated Earnings (Deficit) Operating Partnership Consolidated Subsidiaries Total Equity Balance, January 1, 2016 99,290,952 $ 993 $ 475,369 $ (38,442) $ 33,177 $ 357 $ 471,454 Net income attributable to common shareholders Net income attributable to noncontrolling interests — — Common shares issued 465,534 Dividends on common shares ($0.82 per share) Distributions to redeemable NCI ($0.82 per unit) Share-based compensation expense Share-based awards retained for taxes — — — (1,586) Balance, December 31, 2016 99,754,900 — — 4 — — — — 997 — — — — — 9,293 — — 3,751 (38) 90,815 — (348) (81,240) — 149 — — 5,812 — — (5,071) 1,533 — 488,375 (29,066) 35,451 — — 105,200 348,582 — — 4,532 (287) 67,070 — — — (319) (95,381) — 75 — 5,824 65,884 — — (9,471) 2,530 — — — — 14,083,137 141 — — — (10,508) — — — — 113,827,529 1,138 946,402 (57,621) 100,218 — — 429,110 — 106,116 — — — — — 4 — 2 — — — — — 3,500 1,263 647 — — 4,992 (17,190) (1) (384) 105,150 — — — — (172) (100,244) — 30 — 11,768 — (4,767) — — (11,116) 4,719 — Net income attributable to common shareholders Net income attributable to noncontrolling interests Limited partnership units issued Common shares issued Dividends on common shares ($0.88 per share) Distributions to redeemable NCI ($0.88 per unit) Share-based compensation expense Share-based awards retained for taxes Balance, December 31, 2017 Net income attributable to common shareholders Net income attributable to noncontrolling interests Limited partnership interests: Units redeemed for common shares Reallocation of noncontrolling interests Common shares issued Dividends to common shareholders ($0.88 per share) Distributions to redeemable NCI ($0.88 per unit) Share-based compensation expense Share-based awards retained for taxes — 3 — — — — — 360 — 44 — — — — — — 404 — 45 — — — — — — — 90,815 5,815 8,949 (81,240) (5,071) 5,433 (38) 496,117 67,070 5,868 171,084 348,404 (95,381) (9,471) 7,137 (287) 990,541 105,150 11,813 3,504 (3,504) 477 (100,244) (11,116) 9,741 (385) Balance, December 31, 2018 114,345,565 $ 1,143 $ 956,420 $ (52,857) $ 100,822 $ 449 $ 1,005,977 See notes to consolidated financial statements. 53 URBAN EDGE PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Year Ended December 31, 2018 2017 2016 $ 116,963 $ 72,938 $ 96,630 Depreciation and amortization Income from acquired leasehold interest Casualty and impairment loss Gain on sale of real estate (Gain) loss on extinguishment of debt Amortization of deferred financing costs Amortization of below market leases, net Straight-lining of rent Share-based compensation expense Provision for doubtful accounts Change in operating assets and liabilities: Tenant and other receivables Deferred leasing costs Prepaid and other assets Accounts payable, accrued expenses and other liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Real estate development and capital improvements Acquisition of real estate Proceeds from sale of operating properties Insurance proceeds Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Debt repayments Dividends to common shareholders Distributions to redeemable noncontrolling interests Debt issuance costs Taxes withheld for vested restricted shares Payment on extinguishment of debt Purchase of marketable securities in connection with debt defeasance Proceeds related to the issuance of common shares Proceeds from borrowings Net cash (used in) provided by financing activities Net (decrease) increase in cash and cash equivalents and restricted cash Cash and cash equivalents and restricted cash at beginning of year Cash and cash equivalents and restricted cash at end of year $ See notes to consolidated financial statements. 100,063 — 5,574 (52,625) (2,524) 2,879 (33,975) (735) 9,741 4,138 (13,327) (4,675) 1,867 3,676 137,040 (118,765) (4,931) 57,593 1,300 (64,803) (4,288) (100,244) (11,116) — (385) — — 477 — (115,556) (43,319) 500,841 457,522 $ 82,511 (39,215) 5,637 (202) 35,336 2,876 (9,502) 352 7,137 3,445 (13,749) (4,110) (4,432) 18,876 157,898 (89,344) (211,393) 5,005 — (295,732) (129,640) (95,381) (9,471) (13,193) (287) (1,138) (536,505) 348,404 935,700 498,489 360,655 140,186 500,841 $ 57,178 — — (15,618) — 2,830 (7,776) 227 5,433 1,214 (78) (3,815) 141 883 137,249 (69,901) (9,267) 19,938 — (59,230) (38,458) (81,240) (5,071) — (38) — — 8,949 — (115,858) (37,839) 178,025 140,186 54 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Year Ended December 31, 2018 2017 2016 $ 65,699 757 Cash payments for interest net of amounts capitalized of $3,313, $3,926 and $3,763, respectively Cash payments for income taxes NON-CASH INVESTING AND FINANCING ACTIVITIES 25,661 Accrued capital expenditures included in accounts payable and accrued expenses 11,537 Mortgage debt forgiven in foreclosure 24,307 Write-off of fully depreciated assets — Acquisition of real estate through issuance of OP units — Acquisition of real estate through assumption of debt — Marketable securities transferred in connection with debt defeasance — Defeasance of mortgages payable RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 490,279 Cash and cash equivalents at beginning of year 10,562 Restricted cash at beginning of year 500,841 Cash and cash equivalents and restricted cash at beginning of year $ $ Cash and cash equivalents at end of year Restricted cash at end of year Cash and cash equivalents and restricted cash at end of year $ $ 440,430 17,092 457,522 See notes to consolidated financial statements. $ 55,140 $ 51,137 1,237 1,277 14,651 — 3,286 171,084 69,659 536,590 (505,473) $ $ $ $ 131,654 8,532 140,186 490,279 10,562 500,841 $ $ $ $ 12,492 — 4,585 — — — — 168,983 9,042 178,025 131,654 8,532 140,186 55 URBAN EDGE PROPERTIES LP CONSOLIDATED BALANCE SHEETS (In thousands, except unit and per unit amounts) ASSETS Real estate, at cost: Land Buildings and improvements Construction in progress Furniture, fixtures and equipment Total Accumulated depreciation and amortization Real estate, net Cash and cash equivalents Restricted cash Tenant and other receivables, net of allowance for doubtful accounts of $6,486 and $4,937, respectively Receivable arising from the straight-lining of rents, net of allowance for doubtful accounts of $134 and $494, respectively Identified intangible assets, net of accumulated amortization of $39,526 and $33,827, respectively Deferred leasing costs, net of accumulated amortization of $16,826 and $14,796, respectively Deferred financing costs, net of accumulated amortization of $2,764 and $1,740, respectively Prepaid expenses and other assets Total assets LIABILITIES AND EQUITY Liabilities: Mortgages payable, net Accounts payable, accrued expenses and other liabilities Identified intangible liabilities, net of accumulated amortization of $65,058 and $65,832, respectively Total liabilities Commitments and contingencies Equity: Partners’ capital: General partner: 114,345,565 and 113,827,529 units outstanding, respectively Limited partners: 12,736,633 and 12,812,954 units outstanding, respectively Accumulated deficit Total partners’ capital Noncontrolling interest in consolidated subsidiaries Total equity Total liabilities and equity See notes to consolidated financial statements. December 31, December 31, 2018 2017 $ 525,819 2,156,113 80,385 6,675 2,768,992 (645,872) 2,123,120 440,430 17,092 28,563 $ 521,669 2,010,527 133,761 5,897 2,671,854 (587,127) 2,084,727 490,279 10,562 20,078 84,903 85,843 68,422 87,249 21,277 2,219 12,968 $ 2,798,994 20,268 3,243 18,559 $ 2,820,808 $ 1,550,242 98,517 144,258 $ 1,564,542 84,766 180,959 1,793,017 1,830,267 957,563 105,447 (57,482) 1,005,528 947,540 105,495 (62,898) 990,137 449 1,005,977 $ 2,798,994 404 990,541 $ 2,820,808 56 URBAN EDGE PROPERTIES LP CONSOLIDATED STATEMENTS OF INCOME (In thousands, except unit and per unit amounts) Year Ended December 31, 2018 2017 2016 REVENUE Rental revenue Management and development fees Income from acquired leasehold interest Other income Total revenue EXPENSES Depreciation and amortization Real estate taxes Property operating General and administrative Casualty and impairment loss, net Ground rent Provision for doubtful accounts Total expenses Operating income Gain on sale of real estate Interest income Interest and debt expense Gain (loss) on extinguishment of debt Income before income taxes Income tax (expense) benefit Net income Less: net income attributable to NCI in consolidated subsidiaries Net income attributable to unitholders Earnings per unit - Basic: Earnings per unit - Diluted: Weighted average units outstanding - Basic Weighted average units outstanding - Diluted $ $ $ $ $ $ $ $ 411,298 1,469 — 1,393 414,160 99,422 63,655 74,222 34,984 4,426 11,448 4,138 292,295 121,865 52,625 8,336 (64,868) 2,524 120,482 (3,519) 116,963 (45) 116,918 0.92 0.92 126,198 126,386 $ $ $ $ 365,082 1,535 39,215 1,210 407,042 82,281 59,737 50,894 30,691 7,382 10,848 3,445 245,278 161,764 202 2,248 (56,218) (35,336) 72,660 278 72,938 (44) 72,894 0.62 0.61 117,779 118,390 See notes to consolidated financial statements. 321,719 1,759 — 2,498 325,976 56,145 51,429 45,280 28,843 — 10,047 1,214 192,958 133,018 15,618 679 (51,881) — 97,434 (804) 96,630 (3) 96,627 0.91 0.91 105,455 106,099 57 URBAN EDGE PROPERTIES LP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (In thousands, except unit and per unit amounts) Total Shares General Partner Total Units 99,290,952 $ 476,362 6,150,224 Limited Partners(1) 35,548 $ Accumulated Earnings (Deficit) NCI in Consolidated Subsidiaries Total Equity $ (40,813) $ 357 $ 471,454 — — — — 465,534 9,297 — — — — — 3,751 (1,586) (38) — — — 228,480 — — — 99,754,900 489,372 6,378,704 — — — — 14,083,137 348,723 — — — — — — — — 1,533 — 37,081 — — — 105,200 6,434,250 65,884 — — — — 4,532 (10,508) (287) — — — — (104,852) 2,530 — 75 — 96,627 — (348) — (86,311) 149 — — 3 — — — — — 96,627 3 8,949 — (86,311) 5,433 (38) (30,696) 360 496,117 72,894 — (319) — — 44 — — — — — 404 72,894 44 348,404 171,084 (104,852) 7,137 (287) 990,541 Balance, January 1, 2016 Net income attributable to unitholders Net income attributable to noncontrolling interests Common units issued as a result of common shares issued by Urban Edge Limited partnership units issued, net Distributions to Partners ($0.82 per unit) Share-based compensation expense Share-based awards retained for taxes Balance, December 31, 2016 Net income attributable to unitholders Net income attributable to noncontrolling interests Common units issued as a result of common shares issued by Urban Edge Limited partnership units issued, net Distributions to Partners ($0.88 per unit) Share-based compensation expense Share-based awards retained for taxes Balance, December 31, 2017 113,827,529 947,540 12,812,954 105,495 (62,898) — — — — — — — — — — 45 — 649 106,116 116,918 429,110 116,918 Net income attributable to unitholders Net income attributable to noncontrolling interests Common units issued as a result of common shares issued by Urban Edge Equity redemption of OP Units Limited partnership units issued, net Reallocation of noncontrolling interests Distributions to Partners ($0.88 per unit) Share-based compensation expense Share-based awards retained for taxes 12,736,633 Balance, December 31, 2018 (1) Limited partners have a 10.0% common limited partnership interest in the Operating Partnership as of December 31, 2018 in the form of units of interest in $ 1,005,977 114,345,565 (57,482) $ (429,110) (111,360) (111,360) (17,190) 352,789 957,563 105,447 (4,767) (3,504) 3,504 1,263 4,992 3,504 9,741 4,719 (172) (385) (385) 477 449 — — — — — — — — — — 45 — — — — — — — — — — — — 30 — — — — — $ $ $ the Operating Partnership (“OP Units”) and Long-Term Incentive Plan (“LTIP”) units. See notes to consolidated financial statements. 58 URBAN EDGE PROPERTIES LP CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash provided by operating activities: Year Ended December 31, 2018 2017 2016 $ 116,963 $ 72,938 $ 96,630 Depreciation and amortization Income from acquired leasehold interest Casualty and impairment loss Gain on sale of real estate (Gain) loss on extinguishment of debt Amortization of deferred financing costs Amortization of below market leases, net Straight-lining of rent Share-based compensation expense Provision for doubtful accounts Change in operating assets and liabilities: Tenant and other receivables Deferred leasing costs Prepaid and other assets Accounts payable, accrued expenses and other liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Real estate development and capital improvements Acquisition of real estate Proceeds from sale of operating properties Insurance proceeds Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Debt repayments Distributions to partners Debt issuance costs Taxes withheld for vested restricted units Payment on extinguishment of debt Purchase of marketable securities in connection with debt defeasance Proceeds related to the issuance of common shares Proceeds from borrowings Net cash (used in) provided by financing activities Net (decrease) increase in cash and cash equivalents and restricted cash Cash and cash equivalents and restricted cash at beginning of year Cash and cash equivalents and restricted cash at end of year $ 100,063 — 5,574 (52,625) (2,524) 2,879 (33,975) (735) 9,741 4,138 (13,327) (4,675) 1,867 3,676 137,040 (118,765) (4,931) 57,593 1,300 (64,803) (4,288) (111,360) — (385) — — 477 — (115,556) (43,319) 500,841 457,522 $ 82,511 (39,215) 5,637 (202) 35,336 2,876 (9,502) 352 7,137 3,445 (13,749) (4,110) (4,432) 18,876 157,898 (89,344) (211,393) 5,005 — (295,732) (129,640) (104,852) (13,193) (287) (1,138) (536,505) 348,404 935,700 498,489 360,655 140,186 500,841 $ See notes to consolidated financial statements. 57,178 — — (15,618) — 2,830 (7,776) 227 5,433 1,214 (78) (3,815) 141 883 137,249 (69,901) (9,267) 19,938 — (59,230) (38,458) (86,311) — (38) — — 8,949 — (115,858) (37,839) 178,025 140,186 59 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash payments for interest net of amounts capitalized of $3,313, $3,926 and $3,763, respectively Cash payments for income taxes NON-CASH INVESTING AND FINANCING ACTIVITIES Year Ended December 31, 2018 2017 2016 $ 65,699 $ 55,140 $ 51,137 757 1,237 1,277 25,661 Accrued capital expenditures included in accounts payable and accrued expenses 11,537 Mortgage debt forgiven in foreclosure 24,307 Write-off of fully depreciated assets — Acquisition of real estate through issuance of OP units — Acquisition of real estate through assumption of debt — Marketable securities transferred in connection with debt defeasance — Defeasance of mortgages payable RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH 490,279 Cash and cash equivalents at beginning of year 10,562 Restricted cash at beginning of year 500,841 Cash and cash equivalents and restricted cash at beginning of year $ $ Cash and cash equivalents at end of year Restricted cash at end of year Cash and cash equivalents and restricted cash at end of year $ $ 440,430 17,092 457,522 See notes to consolidated financial statements. 14,651 — 3,286 171,084 69,659 536,590 (505,473) $ $ $ $ 131,654 8,532 140,186 490,279 10,562 500,841 $ $ $ $ 12,492 — 4,585 — — — — 168,983 9,042 178,025 131,654 8,532 140,186 60 URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 our 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 December 31, 2018, Urban Edge owned approximately 90.0% of the outstanding common OP Units with the remaining limited OP Units held by Vornado Realty L.P., members of management, our Board of Trustees and contributors of property interests acquired (“third-party unitholders”). 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 December 31, 2018, our portfolio consisted of 83 shopping centers, four malls and a warehouse park totaling approximately 16.3 million sf. 2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for annual financial information and with the instructions of Form 10-K. The consolidated financial statements as of and for the years ended December 31, 2018, 2017 and 2016 reflect the consolidation of the Company, the Operating Partnership, wholly-owned subsidiaries and those entities in which we have a controlling financial interest. All intercompany transactions have been eliminated in consolidation. In accordance with ASC 205 Presentation of Financial Statements, the Company reclassified Property rentals and Tenant reimbursement income to Rental revenue on its consolidated statements of income for the years ended December 31, 2018, 2017, and 2016, respectively, as reflected in this Form 10-K. Additionally, in accordance with ASC 205, the Company reclassified Accounts payable and accrued expenses and Other liabilities to Accounts payable, accrued expenses and other liabilities on its consolidated balance sheets for the years ended December 31, 2018 and 2017, respectively, as reflected in this Form 10-K. 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. We aggregate all of our properties into one reportable segment due to their similarities with regard to the nature and economics of the properties, tenants and operations, as well as long-term average financial performance. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 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 61 substantially complete. Depreciation is recognized on a straight-line basis over estimated useful lives which range from 3 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. 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. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. 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, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. Real Estate Held For Sale — When a real estate asset is identified by management as held for sale, we cease depreciation of the asset and estimate its fair value, net of estimated costs to sell. If the estimated fair value, net of estimated costs to sell, of an asset is less than its net carrying value, an adjustment is recorded to reflect the estimated fair value. During the year ended December 31, 2017, we recognized a $3.5 million impairment charge on our property classified as held for sale in Eatontown, NJ. Refer to Note 4, Acquisitions and dispositions in Part II, Item 8. in this Annual Report on Form 10-K. Cash and Cash Equivalents — Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and are carried at cost, which approximates fair value due to their short-term maturities. The majority of our cash and cash equivalents consists of (i) deposits at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation limit, (ii) United States Treasury Bills, and (iii) Certificate of Deposits placed through an Account Registry Service (“CDARS”). To date we have not experienced any losses on our invested cash. Restricted Cash — Restricted cash consists of security deposits and cash escrowed under loan agreements for debt service, real estate taxes, property insurance, tenant improvements, leasing commissions and capital expenditures. Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable includes unpaid amounts billed to tenants and accrued revenues for future billings to tenants for property expenses. We periodically evaluate the collectibility of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under the lease agreements. We also maintain an allowance for receivables arising from the straight- lining of rents. These receivables arise from earnings recognized in excess of amounts currently due under the lease agreements. Management exercises judgment in establishing these allowances and considers payment history and current credit status in developing these estimates. Accounts receivable are written-off when they are deemed to be uncollectible and we are no longer actively pursuing collection. Deferred Leasing Costs — Deferred leasing costs include direct salaries, third-party fees and other costs incurred by us to originate a lease. Such costs are capitalized and amortized on a straight-line basis over the term of the related leases. Deferred Financing Costs — Deferred financing costs include fees associated with our revolving credit agreement. Such fees are amortized on a straight-line basis over the terms of the related revolving credit agreement as a component of interest expense, which approximates the effective interest rate method, in accordance with the terms of the agreement. No amounts have been drawn to date under the revolving credit agreement. Revenue Recognition — We have the following revenue sources and revenue recognition policies: • Rental revenue comprises revenue from property rentals and tenant expense reimbursements, as designated within tenant operating leases. 62 Property Rentals: We generate revenue from minimum lease payments from tenant operating leases. These rents are recognized over the noncancelable terms of the related leases on a straight-line basis which includes the effects of rent steps and rent abatements under the leases in accordance with ASC 840 Leases. We satisfy our performance obligations over time, under the noncancelable lease term, commencing when the tenant takes possession of the leased space and the leased space is substantially ready for its intended use. In addition, in circumstances where we provide a lease incentive to tenants, we recognize the incentive as a reduction of rental revenue on a straight-line basis over the remaining term of the lease. The underlying leased asset remains on our consolidated balance sheet and continues to depreciate. In addition to minimum lease payments, certain rental income derived from our tenant leases is contingent and dependent on percentage rent. 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. Tenant expense reimbursements: In accordance with ASC 840, revenue arises from tenant leases, which provide for the recovery of all or a portion of the operating expenses, real estate taxes and capital improvements of the respective property. This revenue is accrued in the period the expenses are incurred. • Income from acquired leasehold interest: Income from acquired leasehold interest was revenue generated in connection with the write-off of an unamortized intangible liability balance related to the below-market ground lease as well as the balance of the straight-line receivable balance, upon acquisition of the leasehold interest of the property. This revenue was recognized in accordance with ASC 840. • Other Income: Other income is generated in connection with certain services provided to tenants for which we earn a fee. This revenue is recognized as the services are transferred in accordance with ASC 606, with the exception of lease termination fee income, which is recognized when received in accordance with ASC 840. • Management and development fees: We generate management and development fee income from contractual property management agreements with third parties. This revenue is recognized as the services are transferred in accordance with ASC 606. Noncontrolling Interests — Noncontrolling interests in consolidated subsidiaries represent the portion of equity that we do not own in those entities that we consolidate. We identify our noncontrolling interests separately within the equity section on the consolidated balance sheets. Noncontrolling interests in Operating Partnership include OP units and limited partnership interests in the Operating Partnership in the form of long-term incentive plan (“LTIP”) unit awards classified as equity. Variable Interest Entities — Certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties, or which do not have the obligation to absorb expected losses, do not have the right to receive expected residual returns, or do not have the characteristics of a controlling financial interest qualify as VIEs. VIEs are required to be consolidated by their primary beneficiary. The primary beneficiary of a VIE has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The consolidated and financial statements reflect the consolidation of VIEs in which the Company is the primary beneficiary. Earnings Per Share and Unit — Basic earnings per common share and unit is computed by dividing net income attributable to common shareholders and unitholders by the weighted average common shares and units outstanding during the period. Unvested share-based payment awards that entitle holders to receive non-forfeitable dividends, such as our restricted stock awards, are classified as “participating securities.” Because the awards are considered participating securities, the Company and the Operating Partnership are required to apply the two-class method of computing basic and diluted earnings that would otherwise have been available to common shareholders and unitholders. Under the two-class method, earnings for the period are allocated between common shareholders and unitholders and other shareholders and unitholders, based on their respective rights to receive dividends. During periods of net loss, losses are allocated only to the extent the participating securities are required to absorb their share of such losses. Diluted earnings per common share and unit reflects the potential dilution of the assumed exercises of shares including stock options and unvested restricted shares to the extent they are dilutive. Share-Based Compensation — We grant stock options, LTIP units, OP units, deferred share units, restricted share awards and performance-based units to our officers, trustees and employees. The term of each award is determined by the compensation committee of our Board of Trustees (the “Compensation Committee”), but in no event can such term be longer than ten years from the date of grant. The vesting schedule of each award is determined by the Compensation Committee, in its sole and absolute discretion, at the date of grant of the award. Dividends are paid on certain shares of unvested restricted stock, which makes the restricted stock a participating security. 63 Fair value is determined, depending on the type of award, using either the Black-Scholes option-pricing model or the Monte Carlo method, both of which are intended to estimate the fair value of the awards at the grant date. In using the Black-Scholes option- pricing model, expected volatilities and dividend yields are primarily based on available implied data and peer group companies’ historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation expense for restricted share awards is based on the fair value of our common shares at the date of the grant and is recognized ratably over the vesting period. For grants with a graded vesting schedule or a cliff vesting schedule, we have elected to recognize compensation expense on a straight-line basis. Also included in Share-based compensation expense is the unrecognized compensation expense of awards issued under Vornado’s outperformance plan (“OPP”) prior to the separation for the Company’s employees who were previously Vornado employees. The OPP unrecognized compensation expense is recognized on a straight- line basis over the remaining life of the OPP awards issued. Share-based compensation expense is included in general and administrative expenses on the consolidated and statements of income. When the Company issues common shares as compensation, it receives a like number of common units from the Operating Partnership. Accordingly, the Company’s ownership in the Operating Partnership will increase based on the number of common shares awarded under our 2015 Omnibus Share Plan. As a result of the issuance of common units to the Company for share-based compensation, the Operating Partnership accounts for share-based compensation in the same manner as the Company. Income Taxes — Our two Puerto Rico malls are subject to income taxes which are based on estimated taxable income and are included in income tax expense in the consolidated statements of income. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which these temporary differences are expected to be recovered or settled. Earnings and profits, which determine the taxability of dividends to shareholders, differs from net income reported for financial reporting purposes primarily because of differences in depreciable lives and cost bases of the malls, as well as other timing differences. Concentration of Credit Risk — A concentration of credit risk arises in our business when a national or regionally-based tenant occupies a substantial amount of space in multiple properties owned by us. In that event, if the tenant suffers a significant downturn in its business, it may become unable to make its contractual rent payments to us, exposing us to potential losses in rental revenue, expense recoveries, and percentage rent. Further, the impact may be magnified if the tenant is renting space in multiple locations. Generally, we do not obtain security from our national or regionally-based tenants in support of their lease obligations to us. We regularly monitor our tenant base to assess potential concentrations of credit risk. None of our tenants accounted for more than 10% of total revenues in the year ended December 31, 2018. As of December 31, 2018, The Home Depot was our largest tenant with seven stores which comprised an aggregate of 920,000 sf and accounted for approximately $22.6 million, or 5.5% of our total revenue for the year ended December 31, 2018. Recently Issued Accounting Literature Effective January 1, 2018, we adopted (“ASU 2017-09”) Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting will not apply if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. We applied these amendments prospectively to awards modified on and after the adoption date. The adoption of this standard resulted in no impact to our consolidated financial statements. If we encounter a change to the terms or conditions of any of our share-based payment awards we will evaluate the need to apply modification accounting based on the new guidance. The general treatment for modifications of share-based payment awards is to record the incremental value arising from the change as additional compensation cost in the period of modification. Effective January 1, 2018, we adopted (“ASU 2017-05”) Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, to clarify the scope and accounting for derecognition of nonfinancial assets using the modified retrospective approach. ASU 2017-05 eliminated the guidance specific to real estate sales and partial sales of real estate. ASU 2017-05 defines “in- substance nonfinancial assets” and includes guidance on partial sales of nonfinancial assets. The adoption of this standard resulted in no material impact to our consolidated financial statements. Effective January 1, 2018, we adopted (“ASU 2014-09”) Revenue from Contracts with Customers to ASC Topic 606, which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. We adopted the standard using the modified retrospective approach which requires applying the new standard to all existing contracts not yet 64 completed as of the effective date. We have completed our evaluation of the standard’s impact on our revenue sources. The adoption of this standard did not have a material impact on our consolidated financial statements. Effective for the fiscal period beginning January 1, 2019, we adopted (“ASU 2016-02”) 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). We initially applied the standard at the beginning of the period of adoption through the transition method issued by (“ASU 2018-11”) Leases: Targeted Improvements. 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 will determine 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 asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The new standard requires lessors to account for the leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. We have completed our evaluation of the standard’s impact on the Company’s consolidated financial statements and accounting policies. For purposes of transition, we did not elect the hindsight practical expedient but did elect the practical expedient package, which has been applied consistently to all of our leases. From a lessee perspective, the adoption will result in the recognition of a right-of-use ("ROU") asset and lease liability for 24 leases of approximately $100 million, which will be presented on our consolidated balance sheet beginning with the Quarterly Report on Form 10-Q for the period ending March 31, 2019. The standard's adoption will also impact the presentation of our consolidated income statement beginning with the Quarterly Report on Form 10-Q for the period ending March 31, 2019, due to accounting for the lease and non-lease components as a single lease component, which will be presented as "lease expense" on the consolidated statement of income. Prior to the adoption of ASC 842, related lease expense amounts were recognized within ground rent and general administrative expenses on the consolidated statement of income. From a lessor perspective, the adoption will also result 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 $0.7 million for the year ended December 31, 2018. The adoption of this standard will also result in additional quantitative and qualitative footnote disclosures beginning with the Quarterly Report on Form 10-Q for the period ending March 31, 2019. 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. 65 4. ACQUISITIONS AND DISPOSITIONS During the year ended December 31, 2018 and December 31, 2017, we closed on the following acquisitions: Date Purchased Property Name City State Square Feet Purchase Price (in thousands) January 26, 2018 February 23, 2018 February 28, 2018 May 24, 2018 938 Spring Valley Road 116 Sunrise Highway 197 West Spring Valley Ave 7 Francis Place Maywood Freeport Maywood Montclair January 4, 2017 January 17, 2017 February 2, 2017 May 24, 2017 May 24, 2017 May 24, 2017 May 24, 2017 May 24, 2017 May 25, 2017 Yonkers Yonkers Gateway Center Bronx Shops at Bruckner Jersey City Hudson Mall Yonkers Yonkers Gateway Center Cherry Hill The Plaza at Cherry Hill Manchester Manchester Plaza Millburn Gateway Center Millburn 21 E Broad St / One Lincoln Plaza Westfield The Plaza at Woodbridge Woodbridge NJ NY NJ NJ NY NY NJ NY NJ MO NJ NJ NJ $ 2,000 4,750 16,300 3,000 2018 Total $ — (2) $ 114,000 383,000 437,000 (2) 413,000 131,000 102,000 22,000 411,000 2017 Total $ 719 447 2,799 966 4,931 (1) 51,902 32,269 44,273 101,825 53,535 20,162 45,583 10,158 103,962 463,669 (1) (1) The total purchase prices for the properties acquired in the year ended December 31, 2018 and December 31, 2017, respectively, include $0.1 million and $11.3 million of transaction costs incurred in relation to the transactions. (2) On January 4, 2017, we acquired fee and leasehold interests, including the lessor position under an operating lease for the whole property. On May 24, 2017, we purchased the remaining fee and leasehold interests not previously acquired, including the lessee position under the operating lease for the whole property. The properties purchased during the year ended December 31, 2018 are all adjacent to centers currently owned by the Company. Consideration for these purchases consisted of cash. On January 4, 2017, we acquired fee and leasehold interests in Yonkers Gateway Center for $51.9 million. Consideration for this purchase consisted of the issuance of $48.8 million in OP units and $2.9 million of cash. The total number of OP units issued was 1.8 million at a value of $27.09 per unit. Transaction costs associated with this acquisition were $0.2 million. On January 17, 2017, we acquired the leasehold interest in the Shops at Bruckner for $32.3 million, consisting of the assumption of the existing debt of $12.6 million and $19.4 million of cash. The property is a 114,000 sf retail center in the Bronx, NY directly across from our Bruckner Commons shopping center. We own the land under the Shops at Bruckner and had been leasing it to the seller under a ground lease that ran through September 2044. Concurrent with the acquisition, we wrote-off the unamortized intangible liability balance related to the below-market ground lease as well as the existing straight-line receivable balance. As a result, we recognized $39.2 million of income from acquired leasehold interest in the year ended December 31, 2017. Transaction costs associated with this acquisition were $0.3 million. On February 2, 2017, we acquired Hudson Mall, a 383,000 sf retail center in Jersey City, NJ adjacent to our existing Hudson Commons shopping center. Consideration for this purchase consisted of the assumption of the existing debt of $23.8 million and $19.9 million of cash. Transaction costs associated with this acquisition were $0.6 million. On May 24 and 25, 2017, we acquired the Portfolio comprising 1.5 million sf of gross leasable area, predominantly in the New York City metropolitan area, for $325 million excluding transaction costs. The Portfolio was privately owned for more than three decades and was 83% leased as of the date of acquisition. Consideration for this purchase consisted of the issuance of $122 million in OP units, the assumption of $33 million of existing mortgage debt, the issuance of $126 million of non-recourse, secured mortgage debt and $44 million of cash. The total number of OP units issued was 4.5 million at a value of $27.02 per unit. Transaction costs associated with this acquisition were $10.2 million. 66 The aggregate purchase price of the above property acquisitions has been allocated as follows: Land Buildings and improvements Identified intangible assets(1) Identified intangible liabilities(1) Debt premium Total Purchase Price Property Name (in thousands) 938 Spring Valley Road 116 Sunrise Highway 197 West Spring Valley Ave 7 Francis Place 2018 Total Yonkers Gateway Center Shops at Bruckner Hudson Mall Yonkers Gateway Center The Plaza at Cherry Hill Manchester Plaza Millburn Gateway Center 21 E Broad St / One Lincoln Plaza The Plaza at Woodbridge $ $ $ $ $ $ 519 151 1,768 381 2,819 40,699 — 15,824 22,642 14,602 4,409 15,783 5,728 21,547 200 296 1,031 585 $ — $ — $ — $ — — — — — — — — — 2,112 $ — $ — $ — $ — $ 25,858 $ 32,979 37,593 110,635 33,666 13,756 25,387 4,305 75,017 12,029 9,930 38,162 7,800 3,256 5,360 679 11,596 (14,655) $ (12,709) (17,344) (68,694) (2,533) (1,259) (947) (554) — $ (30) (1,730) (920) — — — — 719 447 2,799 966 4,931 51,902 32,269 44,273 101,825 53,535 20,162 45,583 10,158 2017 Total $ 141,234 $ 333,338 $ 114,670 $ (4,198) (122,893) $ — (2,680) $ 103,962 463,669 (1) As of December 31, 2018, the remaining weighted average amortization periods of the identified intangible assets and identified intangible liabilities acquired in 2017 were 16.9 years and 15.1 years, respectively. As of December 31, 2017, the remaining weighted average amortization periods of the identified intangible assets and identified intangible liabilities acquired in 2017 were 17.9 years and 16.6 years, respectively. As of December 31, 2018, we were under contract to purchase an office building in Maywood, NJ, adjacent to our existing center, Bergen Town Center. The building is subject to a ground lease, which the Company will acquire the lessee position of for a purchase price of $7.1 million. The transaction is scheduled to close by the end of 2019. Dispositions On April 26, 2018, we completed the sale of our property in Allentown, PA, which was previously classified as held for sale, for $54.3 million, net of selling costs. As a result of this transaction, we recognized a $50.4 million gain on sale of real estate during the year ended December 31, 2018. On July 5, 2018, we completed the sale of land in Cherry Hill, NJ for $3.3 million, net of selling costs, resulting in a gain of $2.2 million. On June 30, 2017, we completed the sale of our property previously classified as held for sale in Eatontown, NJ, for $4.8 million, net of selling costs. Prior to the sale, the book value of this property exceeded its estimated fair value less costs to sell, and as such, an impairment charge of $3.5 million was recognized in the year ended December 31, 2017. Our determination of fair value was based on the executed contract of sale with the third-party buyer. On September 8, 2017, we completed the sale of excess land in Kearny, NJ for $0.3 million, resulting in a gain of $0.2 million. 67 5. IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES The following table summarizes our identified intangible assets and liabilities: (Amounts in thousands) In-place leases Accumulated amortization Below-market ground leases(1) Accumulated amortization Above-market leases Accumulated amortization Other intangible assets Accumulated amortization Identified intangible assets, net of accumulated amortization Below-market leases Accumulated amortization December 31, 2018 December 31, 2017 $ 75,454 (24,713) 23,730 (11,791) 7,129 (2,565) 1,635 (457) 68,422 209,316 (65,058) 144,258 $ $ 88,355 (21,557) 23,730 (10,819) 7,356 (1,228) 1,635 (223) 87,249 246,791 (65,832) 180,959 Identified intangible liabilities, net of accumulated amortization (1) Intangible assets related to below-market leases where the Company is a lessee under a ground lease. $ Amortization of acquired below-market leases, net of acquired above-market leases resulted in additional rental income of $34.0 million, $9.5 million, and $7.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. Amortization of acquired in-place leases and customer relationships resulted in additional depreciation and amortization expense of $15.1 million, $9.3 million, $2.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. Certain shopping centers are subject to ground leases or ground and building leases. Amortization of these acquired below-market leases resulted in additional rent expense of $1.0 million for each of the years ended December 31, 2018, 2017 and 2016, respectively. The following table sets forth the estimated annual amortization expense related to intangible assets and liabilities for the five succeeding years commencing January 1, 2019: (Amounts in thousands) Below-Market Above-Market Year 2019 2020 2021 2022 2023 Operating Lease Income Operating Lease Expense In-Place Leases $ 10,005 $ 9,837 9,699 9,622 9,575 1,289 $ 1,014 807 433 327 7,431 $ 6,194 4,982 4,049 3,717 Below-Market Ground Leases 972 972 622 590 590 68 6. MORTGAGES PAYABLE The following is a summary of mortgages payable as of December 31, 2018 and December 31, 2017. Maturity Interest Rate at December 31, 2018 December 31, 2018 December 31, 2017 (Amounts in thousands) First mortgages secured by: Variable rate Cherry Hill (Plaza at Cherry Hill)(1) Westfield (One Lincoln Plaza)(1) Woodbridge (Plaza at Woodbridge)(1) Jersey City (Hudson Commons)(2) Watchung(2) Bronx (1750-1780 Gun Hill Road)(2) Total variable rate debt Fixed rate Montehiedra (senior loan) Montehiedra (junior loan) Bergen Town Center - West, Paramus Bronx (Shops at Bruckner) Jersey City (Hudson Mall)(5) Yonkers Gateway Center(6) Las Catalinas Brick North Plainfield Middletown Rockaway East Hanover (200 - 240 Route 10 West) North Bergen (Tonnelle Ave)(4) Manchester Millburn Totowa Woodbridge (Woodbridge Commons) East Brunswick East Rutherford Hackensack Marlton East Hanover Warehouses Union (2445 Springfield Ave) Freeport (Freeport Commons) Garfield Mt Kisco(3) Englewood(7) Total fixed rate debt 5/24/2022 5/24/2022 5/25/2022 11/15/2024 11/15/2024 12/1/2024 7/6/2021 7/6/2021 4/8/2023 5/1/2023 12/1/2023 4/6/2024 8/6/2024 12/10/2024 12/10/2025 12/1/2026 12/1/2026 12/10/2026 4/1/2027 6/1/2027 6/1/2027 12/1/2027 12/1/2027 12/6/2027 1/6/2028 3/1/2028 12/1/2028 12/1/2028 12/10/2028 12/10/2029 12/1/2030 11/15/2034 — 3.95% 3.95% 3.95% 4.25% 4.25% 4.25% 5.33% 3.00% 3.56% 3.90% 5.07% 4.16% 4.43% 3.87% 3.99% 3.78% 3.78% 4.03% 4.18% 4.32% 3.97% 4.33% 4.36% 4.38% 4.49% 4.36% 3.86% 4.09% 4.01% 4.07% 4.14% 6.40% —% $ $ 28,930 4,730 55,340 29,000 27,000 24,500 169,500 84,860 30,000 300,000 11,582 24,326 31,704 130,000 50,000 25,100 31,400 27,800 63,000 100,000 12,500 24,000 50,800 22,100 63,000 23,000 66,400 37,400 40,700 45,600 43,100 40,300 13,987 — 1,392,659 1,562,159 (11,917) 1,550,242 $ 28,930 4,730 55,340 29,000 27,000 24,500 169,500 86,236 30,000 300,000 12,162 25,004 33,227 130,000 50,000 25,100 31,400 27,800 63,000 100,000 12,500 24,000 50,800 22,100 63,000 23,000 66,400 37,400 40,700 45,600 43,100 40,300 14,451 11,537 1,408,817 1,578,317 (13,775) 1,564,542 Total mortgages payable, net of unamortized debt issuance costs $ Total mortgages payable Unamortized debt issuance costs (1) 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 Mount Kisco (Target) includes $1.0 million of unamortized debt discount as of both December 31, 2018 and December 31, 2017, respectively. The effective interest rate including amortization of the debt discount is 7.30% as of December 31, 2018. 69 (4) On March 29, 2017, we refinanced the $74 million, 4.59% mortgage loan secured by our Tonnelle Commons property in North Bergen, NJ, increasing the principal balance to $100 million with a 10-year fixed rate mortgage, at 4.18%. As a result, we recognized a loss on extinguishment of debt of $1.3 million during the year ended December 31, 2017, comprised of a $1.1 million prepayment penalty and write-off of $0.2 million of unamortized deferred financing fees on the original loan. (5) The mortgage payable balance on the loan secured by Hudson Mall includes $1.2 million and $1.5 million of unamortized debt premium as of December 31, 2018 and December 31, 2017, respectively. The effective interest rate including amortization of the debt premium is 3.88% as of December 31, 2018. (6) The mortgage payable balance on the loan secured by Yonkers Gateway Center includes $0.7 million and $0.8 million of unamortized debt premium as of both December 31, 2018 and December 31, 2017, respectively. The effective interest rate including amortization of the debt premium is 3.71% as of December 31, 2018. (7) On January 31, 2018, our property in Englewood, NJ was sold at a foreclosure sale and on February 23, 2018, the court order was received approving the sale and discharging the receiver of all assets and liabilities related to the property. The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately $1.3 billion as of December 31, 2018. 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 December 31, 2018, we were in compliance with all debt covenants. During 2017, our property in Englewood, NJ was transferred to a receiver. On January 31, 2018, our property in Englewood, NJ was sold at a foreclosure sale and on February 23, 2018, the court order was received approving the sale and discharging the receiver of all assets and liabilities related to the property. We recognized a gain on extinguishment of debt of $2.5 million as a result of the forgiveness of outstanding mortgage debt of $11.5 million, which is included in the consolidated statement of income for the year ended December 31, 2018. As of December 31, 2018, the principal repayments for the next five years and thereafter are as follows: (Amounts in thousands) Year Ending December 31, 2019 2020 2021 2022 2023 2024 Thereafter $ 4,239 7,567 123,211 100,896 344,423 274,370 707,453 On January 15, 2015, we entered into a $500 million Revolving Credit Agreement (the “Agreement”) with certain financial institutions. On March 7, 2017, we amended and extended the Agreement. The amendment increased the credit facility size by $100 million to $600 million and extended the maturity date to March 7, 2021 with two six-month extension options. Borrowings under the Agreement are subject to interest at LIBOR plus 1.10% to 1.55% and an annual facility fee of 15 to 35 basis points. Both the spread over LIBOR and the facility fee are based on our current leverage ratio and are subject to increase if our leverage ratio increases above predefined thresholds. The Agreement contains customary financial covenants including a maximum leverage ratio of 60% and a minimum fixed charge coverage ratio of 1.5x. No amounts have been drawn to date under the Agreement. Based on our current leverage ratio as of December 31, 2018, our borrowing rate is LIBOR plus 1.15% and our annual facility fee is 0.20%. Financing fees associated with the Agreement of $2.2 million and $3.2 million as of December 31, 2018 and December 31, 2017, respectively, are included in deferred financing fees, net in the consolidated balance sheets. 70 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”), to 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 (including any alternative minimum tax, which, for corporations, was repealed under the TCJA (defined below) 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, the Company is subject to certain foreign and state and local income and taxes, including a 29% non-resident withholding tax on its two Puerto Rico malls, which are included in income tax 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 Tax Cuts and Jobs Act (the "Act") was signed into law. The Act 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 Act 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 to the Company’s financial statements. The Company satisfied its REIT distribution requirement by distributing $0.88 per common share in 2018. The taxability of such dividends are as follows: Year Ended December 31, 2018 2017 2016 Dividend paid per share $ 0.88 $ 0.88 $ Ordinary income Return of capital Capital gains 100% —% —% 58% —% 42% 0.82 100% —% —% The REIT and the other minority members are partners in the Operating Partnership. As such, the partners are required to report their share of taxable income on their tax returns. On December 31, 2017, the Company elected, for tax purposes, to treat the wholly-owned limited partnership that held its Allentown property as a taxable REIT subsidiary (“TRS”). A TRS is a corporation, other than a REIT, in which we directly or indirectly hold stock, which has made a joint election with us to be treated as a TRS under Section 856(l) of the Code. A TRS is required to pay regular U.S. federal income tax, and state and local income tax where applicable, as a non-REIT “C” corporation. The Allentown legal entity restructuring resulted in a capital gain recognized for tax purposes in 2017 and a step up in tax basis to the Allentown property resulting in no capital gains recognized for tax purposes in 2018 upon the property’s sale on April 26, 2018. The Company’s consolidated financial statements for the year ended December 31, 2018 reflect the TRS’ federal and state corporate income taxes associated with the operating activities at the TRS. The tax expense recorded in association with the operating activities of the TRS was $0.2 million for the year ended December 31, 2018. Our two Puerto Rico malls are subject to a 29% non-resident withholding tax which is included in income tax expense in the consolidated statements of income. The Puerto Rico tax expense recorded was $3.3 million and $0.8 million for the years ended December 31, 2018 and December 31, 2016, respectively. For the year ended December 31, 2017, the Puerto Rico tax benefit recorded was $0.3 million. Both properties are held in a special partnership for Puerto Rico tax reporting purposes (the general partner being a qualified REIT subsidiary or “QRS”). 71 Income tax expense (benefit) consists of the following: (Amounts in thousands) Income tax expense (benefit): Current: U.S. federal income tax U.S. state and local income tax Puerto Rico income tax Total current Deferred: Puerto Rico income tax Total deferred Total income tax expense (benefit) 2018 Year Ended December 31, 2017 2016 $ $ 154 101 560 815 2,704 2,704 3,519 $ $ — $ 22 674 696 (974) (974) (278) $ — — 609 609 195 195 804 A net deferred tax liability of $5.5 million is included in our consolidated balance sheet within Accounts payable, accrued expenses and other liabilities as of December 31, 2018, comprised of temporary differences related to our two Puerto Rico properties, which have resulted in a deferred tax liability of $6.6 million offset by a deferred tax asset of $1.1 million. The deferred tax liability of $6.6 million is comprised of $4.5 million of tax depreciation in excess of GAAP depreciation, $1.9 million straight-line rents and $0.2 million of amortization of acquired leases not recorded for tax purposes. The deferred tax asset of $1.1 million is comprised of $0.5 million of insurance receivables recorded for tax purposes, $0.1 million of amortization of deferred financing fees not recorded for tax purposes and $0.5 million excess of bad debt expense for tax purposes. No valuation allowance has been recorded against the Company’s deferred tax assets because the Company believes that the deferred tax assets will, more likely than not, be realized. This determination is based on the Company’s anticipated future taxable income and the reversal of the deferred tax assets. The temporary differences resulting from activity during the years ended December 31, 2018, 2017, and 2016 is recorded within Income tax expense on the consolidated statements of income. Below is a table summarizing the net deferred income tax liability balance as of December 31, 2018 and 2017: (Amounts in thousands) Balance at January 1, 2017 Change in deferred tax assets: Depreciation Amortization of deferred financing costs Provision for doubtful accounts Insurance claims receivable Change in deferred tax liabilities: Depreciation Straight-line rent Amortization of acquired leases Balance at December 31, 2017 Change in deferred tax assets: Amortization of deferred financing costs Provision for doubtful accounts Insurance claims receivable Charitable contribution Change in deferred tax liabilities: Depreciation Straight-line rent Amortization of acquired leases Balance at December 31, 2018 $ (3,802) (312) (46) 514 501 102 207 8 (2,828) (46) (200) (42) 5 (2,261) (181) 21 (5,532) 72 $ We record uncertain tax positions in accordance with ASC 740 Income Taxes on the basis of a two-step process whereby (i) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company has not recorded any uncertain tax positions for tax year 2018. The Operating Partnership is organized as a limited partnership and is generally not subject to federal income tax. Accordingly, no provision for federal income taxes has been reflected in the accompanying consolidated financial statements outside of the Company’s TRS activities. 8. FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 - observable prices based on inputs not quoted in active markets, but corroborated by market data; and Level 3 - unobservable inputs used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Financial Assets and Liabilities Measured at Fair Value on a Recurring or Non-Recurring Basis There were no financial assets or liabilities measured at fair value on a recurring or non-recurring basis as of December 31, 2018 and December 31, 2017. Financial Assets and Liabilities not Measured at Fair Value Financial assets and liabilities that are not measured at fair value on the consolidated balance sheets include cash and cash equivalents and mortgages payable. Cash and cash equivalents are carried at cost, which approximates fair value. The fair value of mortgages payable is calculated 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. The fair value of cash and cash equivalents is classified as Level 1 and the fair value of mortgages payable is classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of December 31, 2018 and December 31, 2017. (Amounts in thousands) Assets: As of December 31, 2018 As of December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value Cash and cash equivalents $ 440,430 $ 440,430 $ 490,279 $ 490,279 Liabilities: Mortgages payable(1) $ 1,579,839 (1) Carrying amounts exclude unamortized debt issuance costs of $11.9 million and $13.8 million as of December 31, 2018 and December 31, 1,543,963 1,562,159 1,578,317 $ $ $ 2017, respectively. The following market spreads were used by the Company to estimate the fair value of mortgages payable: Mortgages payable December 31, 2018 December 31, 2017 Low 1.7% High 1.9% Low 1.7% High 2.1% Nonfinancial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis We assess the carrying value of our properties for impairment, when events or changes in circumstances indicate that the carrying value may not be recoverable. During the year ended December 31, 2018, we recognized a $3.1 million impairment charge on our property in Salem, NH as a result of the loss of the anchor tenant at the property. The valuation of our property in Salem, NH was based on comparable property transactions in the property’s surrounding area. We also recognized a $2.5 million impairment charge on our property in West 73 Babylon, NY. The fair value for our property in West Babylon, NY was based on an executed letter of intent with a third-party buyer less costs to sell. The Company believes the inputs utilized to measure these 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. The impairment charges are included as an expense under casualty and impairment loss, net on our consolidated statements of income for the year ended December 31, 2018. 9. LEASES As Lessor We lease space to tenants under operating leases which expire from 2019 to 2072. The leases provide for the payment of fixed base rents payable monthly in advance as well as reimbursements of real estate taxes, insurance and maintenance costs. Retail leases may also provide for the payment by the lessee of additional rents based on a percentage of their sales. Future base rental revenue under these non-cancelable operating leases is as follows: (Amounts in thousands) Year Ending December 31, 2019 2020 2021 2022 2023 Thereafter $ 256,598 235,652 216,247 198,449 176,282 986,865 These future minimum amounts do not include additional rents based on a percentage of tenants’ sales and tenant expense reimbursements. For the years ended December 31, 2018, 2017 and 2016, rental revenue from percentage rent was $2.0 million, $1.2 million, and $0.8 million, respectively. For the years ended December 31, 2018, 2017 and 2016, rental revenue from tenant expense reimbursements was $108.7 million, $99.1 million, and $84.9 million, respectively. As Lessee We are a tenant under long-term ground leases or ground and building leases for certain of our properties. We are also a tenant under leases pertaining to office space from which we conduct our business. Lease expirations range from 2019 to 2061. Future lease payments under these agreements are as follows: (Amounts in thousands) Year Ending December 31, 2019 2020 2021 2022 2023 Thereafter $ 10,640 9,614 8,957 8,982 8,850 85,535 74 10. COMMITMENTS AND CONTINGENCIES There are various legal actions against us in the ordinary course of business. In our opinion, after consultation with legal counsel, the outcome of such matters will not have a material adverse effect on our financial condition, results of operations or cash flows. Redevelopment As of December 31, 2018, we had approximately $196.5 million of active development, redevelopment and anchor repositioning projects underway, of which $50.5 million remains to be funded. Based on current plans and estimates, we anticipate the remaining amounts will be expended over the next two years. Insurance 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 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 and (iii) numerous other insurance policies including trustees’ and officers’ insurance, workers’ compensation and automobile-related liabilities insurance. The Company’s insurance includes coverage for acts of terrorism 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 maintains coverage for certain cybersecurity losses with limits of $5 million per occurrence and in the aggregate providing first and third-party coverage including network interruption, event management, cyber extortion and claims for media content, security and privacy liability. Insurance premiums are typically charged directly to each of the retail properties and warehouses 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 coverage for acts of terrorism. However, we cannot anticipate what coverage will be available on commercially reasonable terms in the future and expect premiums across most property 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. Hurricane-Related Charges On September 20, 2017, Hurricane Maria made landfall, damaging our two properties in Puerto Rico. During the year ended December 31, 2017, the Company incurred a $2.2 million charge reflecting the net book value of assets damaged and incurred $1.7 million of hurricane-related expenses, included in casualty and impairment loss, net on the accompanying consolidated statements of income. During the year ended December 31, 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, net on the accompanying consolidated statements of income. During the year ended December 31, 2018, the Company recognized $0.3 million of business interruption losses, comprised of $0.7 million of 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 to provision for doubtful accounts for payments received from tenants on rents previously reserved. During the year ended December 31, 2017, the Company recognized $2.2 million of business interruption losses, net of $1.8 million in cash advances received from its insurance carrier. Losses of $0.9 million pertained to rent abatements when the malls were closed or inoperable as a result of the hurricane, recorded as a reduction of rental revenue, and $1.3 million was recorded as a provision for doubtful accounts for unpaid rents. No determination has been made as to the total amount or timing of additional insurance payments that may be received as a result of the hurricane. 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 $1.7 million and $1.2 million on our consolidated balance sheets as of December 31, 2018 and December 31, 2017, respectively, for remediation costs for environmental contamination at certain properties. While this 75 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. During the year ended December 31, 2018, the Company recognized $0.6 million of environmental remediation costs included in property operating expenses on 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. Bankruptcies Although our base rent 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 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 During the year ended December 31, 2018, Toys “R” Us, Sears, Fallas, and National Wholesale Liquidators filed for Chapter 11 bankruptcy protection. During September 2017, Toys “R” Us filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code and announced an orderly wind-down of its U.S. business and liquidation of all U.S. stores on March 15, 2018. Prior to the liquidation, the Company had leases with Toys “R” Us at nine locations with annual rental revenue of $7.6 million. The status of the Toys “R” Us leases is as follows: • The Company paid $15.5 million to recapture the leases at Hudson Mall in Jersey City, NJ in July 2018 and Bruckner Commons in the Bronx, NY in September 2018 to accelerate the redevelopment of these properties. The previous rents were well under-market. • Raymour & Flanigan acquired the lease at Manalapan Commons in Manalapan, NJ in July 2018. • Toys “R” Us rejected its leases in Woodbridge, NJ, Union, NJ, Amherst, NY and Wilkes-Barre, PA in July 2018 and Cherry Hill, NJ and Salem, NH in October 2018. Annual gross rent on these leases amounted to approximately $5.7 million. The Company is in active discussions to lease these spaces. In connection with the Toys “R” Us bankruptcy, the Company recognized a write-off of $21.6 million of below-market intangible liabilities (classified within rental revenue), $15.5 million of lease termination payments (classified within property operating expense) and a $1.0 million write-off of reserves on receivables from straight-line rents in the year ended December 31, 2018. Fallas filed for Chapter 11 bankruptcy protection on August 6, 2018. Prior to the tenant vacating, the Company had one lease with Fallas at the Shops at Bruckner in the Bronx, NY comprising approximately 38,000 sf which generated $1.4 million in annual rental revenue. In connection with the bankruptcy, the Company recognized a write-off of $0.8 million of below-market intangible liabilities (classified within rental revenue) in the year ended December 31, 2018. The Company is currently exploring leasing alternatives for this space. Sears filed for Chapter 11 bankruptcy protection on October 15, 2018. The Company has four Kmart leases with Sears comprising approximately 547,000 sf, which generate $8.5 million in annual rental revenue. Sears recently announced the acquisition of its assets by ESL for approximately $5.2 billion. Kmart closed its stores at Las Catalinas in Puerto Rico and in Huntington, NY at the end of January 2019; however, property rents have been paid on all four Kmart locations through February 2019 and it is not clear whether ESL will attempt to assume or reject these leases. The Company is monitoring the proceedings and considering its alternatives. National Wholesale Liquidators filed for Chapter 11 bankruptcy protection on October 24, 2018. The Company had one lease with National Wholesale Liquidators in Lodi, NJ comprising approximately 171,000 sf, which generated $3.1 million in annual rental revenue. This lease was rejected and returned to us on November 30, 2018. In connection with the bankruptcy, the Company recorded a $0.8 million write-off of reserves on receivables from straight-line rents in the year ended December 31, 2018. The Company is currently exploring leasing alternatives, including mixed-use development at this property. 76 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: (Amounts in thousands) Other assets Real estate held for sale Deposits for acquisitions Prepaid expenses: Real estate taxes Insurance Rent, licenses/fees Total Prepaid expenses and other assets Balance at December 31, 2018 December 31, 2017 $ $ 2,615 $ — 150 6,911 2,509 783 12,968 $ 3,771 3,285 406 7,094 2,793 1,210 18,559 12. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES The following is a summary of the composition of accounts payable, accrued expenses and other liabilities in the consolidated balance sheets: (Amounts in thousands) Deferred tenant revenue Accrued capital expenditures and leasing costs Accrued interest payable Deferred ground rent expense Accrued payroll expenses Security deposits Deferred tax liability, net Other liabilities and accrued expenses Total accounts payable, accrued expenses and other liabilities 13. INTEREST AND DEBT EXPENSE The following table sets forth the details of interest and debt expense: Balance at December 31, 2018 December 31, 2017 $ $ 28,697 $ 29,754 8,950 7,070 5,747 5,396 5,532 7,371 98,517 $ 28,663 18,024 9,018 6,499 5,692 5,272 2,828 8,770 84,766 (Amounts in thousands) Interest expense Amortization of deferred financing costs Total Interest and debt expense Year Ended December 31, 2017 2018 2016 $ $ 61,989 2,879 64,868 $ $ 53,342 2,876 56,218 $ $ 49,051 2,830 51,881 77 14. EQUITY AND NONCONTROLLING INTEREST At-The-Market Program In 2016, the Company established an at-the-market (“ATM”) equity program, pursuant to which the Company may offer and sell from time to time its common shares, par value $0.01 per share, with an aggregate gross sales price of up to $250.0 million through a consortium of broker dealers acting as sales agents. As of December 31, 2018, $241.3 million of common shares remained available for issuance under this ATM equity program and there were no common shares issued under the ATM equity program during the years ended December 31, 2018 and 2017, respectively. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common shares and our capital needs. We have no obligation to sell the remaining shares available under the active ATM equity program. Units of the Operating Partnership An equivalent number of common units were issued by the Operating Partnership to the Company in connection with the Company’s issuance of common shares of beneficial interest, as discussed above. The Operating Partnership’s capital includes general and common limited partnership interests in the operating partnership (“OP Units”). As of December 31, 2018, Urban Edge owned approximately 90.0% of the outstanding common OP Units with the remaining limited OP Units held by Vornado Realty L.P., members of management, our 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. Dividends and Distributions During the years ended December 31, 2018 and 2017, the Company declared common stock dividends and OP unit distributions of $0.88 per share/unit in the aggregate. We have a Dividend Reinvestment Plan (the “DRIP”), whereby shareholders may use their dividends to purchase shares. During the years ended December 31, 2018, 2017 and 2016, 8,419, 12,788 and 12,564 shares were issued under the DRIP, respectively. Noncontrolling Interests in Operating Partnership Redeemable noncontrolling interests reflected on the consolidated balance sheets of the Company are comprised of OP units and limited partnership interests in the Operating Partnership in the form of LTIP unit awards. In connection with the separation 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. As of December 31, 2018, VRLP held an interest of 4.5% in the Operating Partnership. 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 10.1% weighted-average interest in the Operating Partnership for the year ended December 31, 2018. Holders of outstanding vested LTIP units may, from and after two years from the date of issuance, redeem their LTIP units for cash, or for the Company’s common shares on a one-for-one basis, solely at our election. Holders of outstanding OP units may, at a determinable date, redeem their units for cash or the Company’s common shares on a one-for-one basis, solely at our election. Noncontrolling Interest in Consolidated Subsidiaries The noncontrolling interest relates to the 5% interest held by others in our property in Walnut Creek, CA (Mount Diablo). The net income attributable to noncontrolling interest is presented separately in our consolidated statements of income. 78 15. SHARE-BASED COMPENSATION Omnibus Share Plan On January 7, 2015 our board and initial shareholder approved the Urban Edge Properties Omnibus Share Plan, under which awards may be granted up to a maximum of 15,000,000 of our common shares or share equivalents. Pursuant to the Omnibus Share Plan, stock options, LTIP units, operating partnership units and restricted shares were granted. Outperformance Plans The Compensation Committee of the Board of Trustees of the Company approved the Company’s 2015 Outperformance Plan (“2015 OPP”) on November 3, 2015 and the Company’s 2017 Outperformance Plan (“2017 OPP”) on February 24, 2017. Both Outperformance Plans are multi-year, performance-based equity compensation plans under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units if, and only if, we outperform a predetermined total shareholder return (“TSR”) and/or outperform the market with respect to a relative TSR in any year during the requisite performance periods as described below. The aggregate notional amounts of the 2015 OPP grant and the 2017 OPP grant are $10.2 million and $12.0 million, respectively. Awards under the 2015 OPP and the 2017 OPP may be earned if we (i) achieve a TSR level greater than 7% per annum, or 21% over the three-year performance measurement period, and/or (ii) achieve a TSR equal to or above, that of the 50th percentile of a retail REIT peer group (“Peer Group”) comprised of our peer companies, over a three-year performance measurement period. Distributions on awards accrue during the measurement period, except that 10% of such distributions are paid in cash. If the designated performance objectives are achieved, LTIP units are also subject to time-based vesting requirements. Awards earned under the 2015 OPP and the 2017 OPP vest 50% in year three, 25% in year four and 25% in year five. The fair values of the 2015 OPP and the 2017 OPP on the dates of grant were $3.9 million and $4.1 million, respectively. A Monte Carlo simulation was used to estimate the fair values based on the probability of satisfying the market conditions and the projected share prices at the time of payments, discounted to the valuation dates over the three-year performance periods. For the 2015 OPP, assumptions include historical volatility (25.0%), risk-free interest rates (1.2%), and historical daily return as compared to our Peer Group (which ranged from 19.0% to 27.0%). For the 2017 OPP, assumptions include historical volatility (19.7%), risk-free interest rates (1.5%), and historical daily return as compared to our Peer Group. For both plans, such amounts are being amortized into expense over a five-year period from the dates of grant, using graded vesting attribution models. In the years ending December 31, 2018, 2017, and 2016 we recognized $1.7 million, $2.0 million and $1.1 million of compensation expense related to the 2015 and 2017 OPPs’ LTIP Units, respectively. As of December 31, 2018, there was $2.4 million of total unrecognized compensation cost related to the 2015 and 2017 OPPs’ LTIP Units, which will be recognized over a weighted-average period of 1.4 years. 2018 Long-Term Incentive Plan On February 22, 2018, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2018 Long-Term Incentive Plan ("2018 LTI Plan") under the Omnibus Share Plan, a multi-year equity compensation program, comprised of both performance-based and time-based vesting awards. Equity awards granted under the 2018 LTI Plan are weighted, in terms of grant date and fair value, 80% performance-based and 20% time-based. For the performance-based awards under the 2018 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 total shareholder return (“TSR”) meets certain criteria over the three-year performance measurement period (the “Performance Period”) beginning on February 22, 2018 and ending on February 21, 2021. The Company issued 328,107 LTIP Units under the 2018 LTI Plan. Under the Absolute TSR component (25% of the performance-based awards), 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 (75% of the performance-based awards), 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 TSR thresholds. The fair value of the performance-based award portion of the 2018 LTI Plan on the date of grant was $3.6 million using a Monte Carlo simulation to estimate the fair value through a risk-neutral premise. The time-based awards under the 2018 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, 79 where the vesting is ratably over four years. The Company granted time-based awards under the 2018 LTI Plan that represent 33,172 LTIP units with a grant date fair value of $0.7 million. Deferred Share Units Granted to Trustees The Company has authorized Trustee Deferred Share Unit Agreements (“DSU Agreements”) under the Omnibus Share Plan, in connection with the services of the trustees to the Company. Each deferred share unit (“DSU”) is equivalent to one common share of the Company. All DSUs shall vest in full on the agreed upon vesting date, provided the trustee remains in service as a member of the Board of Trustees of the Company on such date. If the service of the trustee to the Company or its affiliates terminates for any reason prior to the vesting date, any DSUs that have not vested as of such date shall automatically and without notice terminate and be forfeited. Once vested, the common shares underlying the DSUs are granted to the trustees on predetermined dates or upon their departure as trustees. During the year ended December 31, 2018, some of our trustees elected to receive a portion of their compensation in deferred share units and an aggregate of 13,656 shares were credited to those trustees based on the weighted average grant date fair value of $19.33. During the year ended December 31, 2018, the Company incurred expenses of $0.2 million related to deferred share units granted to trustees. 2018 Inducement Equity Plan The Inducement Plan was approved by the Compensation Committee of the Board of Trustees of the Company on September 26, 2018. Under the Inducement Plan, the Compensation Committee of the Board of Trustees may grant, subject to any Company performance conditions as specified by the Compensation Committee, awards to individuals who were not previously employees as an inducement material to the individual’s entry into employment with the Company. The terms and conditions of the Inducement Plan and any awards thereunder granted are substantially similar to those under the 2015 Omnibus Share Plan. As of December 31, 2018, the Company had granted an aggregate of 352,890 restricted LTIP Units and 2,000,000 stock options under the Inducement Plan with grant date fair values of $7.2 million and $9.3 million, respectively, which were granted in connection with inducing the Company’s new Chief Operating Officer and new President of Development to join the Company. Shares Under Option All stock options granted have ten-year contractual lives, containing vesting terms of three to five years. As of December 31, 2018, the weighted average contractual term of shares under option outstanding at the end of the period is 8.1 years. The following table presents stock option activity for the years ended December 31, 2018, 2017, and 2016: Outstanding at January 1, 2016 Granted Exercised Forfeited or expired Outstanding at December 31, 2016 Granted Exercised Forfeited or expired Outstanding at December 31, 2017 Granted Exercised Forfeited or expired Outstanding at December 31, 2018 Exercisable at December 31, 2018 Shares Under Options Weighted Average Exercise Price per Share Weighted Average Remaining Expected Term (In years) 2,289,139 196,713 (8,501) (5,067) 2,472,284 137,259 — (5,879) 2,603,664 2,146,885 — — 4,750,549 807,352 $ $ $ 23.89 23.52 24.46 24.46 23.86 28.36 — 23.17 24.09 21.71 — — 23.02 24.03 6.15 6.00 — — 5.33 6.01 — — 4.40 4.58 — — 4.48 — The weighted average grant date fair value of options granted in 2018, 2017 and 2016 was $4.68, $5.10, and $3.56, respectively. No options were exercised during the years ended December 31, 2017 and 2018. The total cash received from options exercised in the year ended December 31, 2016 was $0.2 million with an intrinsic value of $26 thousand. As of December 31, 2018, there was no intrinsic value for the outstanding and exercisable shares under option. 80 During the years ended December 31, 2018, 2017 and 2016, the fair value of the options granted was estimated on the grant date using the Black-Scholes pricing model with the following assumptions: February 8, 2016 February 24, 2017 February 22, 2018 September 27, 2018 Risk-free interest rate Expected option life Expected volatility 1.31% 6.25 23.94% 1.93% 6.25 25.06% 2.73% 6.25 32.23% 3.00% 7.00 30.42% The options were granted with an exercise price equivalent to the average of the high and low share price on the grant date. Restricted Shares The following table presents information regarding restricted share activity during the years ended December 31, 2018, 2017, and 2016: Shares Weighted Average Grant Date Fair Value per Share Unvested at January 1, 2016 Granted Vested Forfeited Unvested at December 31, 2016 Granted Vested Forfeited Unvested at December 31, 2017 Granted Vested Forfeited Unvested at December 31, 2018 30,717 $ 117,399 (15,977) (2,744) 129,395 104,698 (53,236) (5,427) 175,430 103,814 (84,185) (32,482) 162,577 $ 22.62 24.55 23.17 23.55 24.29 27.69 25.13 24.64 26.05 21.65 25.67 23.32 23.99 During the years ended December 31, 2018, 2017 and 2016, we granted 103,814, 104,698, and 117,399 restricted shares, respectively, that are subject to forfeiture and vest over periods ranging from one to four years. The total grant date value of the 84,185, 53,236, and 15,977 restricted shares vested during the years ended December 31, 2018, 2017 and 2016 was $2.2 million, $1.3 million and $0.4 million, respectively. Restricted Units During the years ended December 31, 2018 and 2017, respectively, there were 444,954 and 31,734 additional LTIP units issued. During the years ended December 31, 2018, 2017 and 2016, 24,722, 16,789, and 39,439 units vested, respectively. The remaining 480,227 units vest over a weighted average period of 4.0 years. 81 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: (Amounts in thousands) Share-based compensation expense components: Restricted share expense Stock option expense LTIP expense(1) Outperformance Plan (“OPP”) expense DSU expense Total Share-based compensation expense Year Ended December 31, 2017 2016 2018 $ $ 2,051 $ 1,961 $ 2,778 2,218 2,530 164 2,569 557 2,050 — 9,741 $ 7,137 $ 1,314 2,437 473 1,209 — 5,433 (1) LTIP expense excludes the expense associated with LTIP units under the 2015 OPP, 2017 OPP and 2018 LTI Plan because we recognize these expenses as part of our OPP expense. As of December 31, 2018, we had a total of $25.8 million of unrecognized compensation expense related to unvested and restricted share-based payment arrangements including unvested stock options, LTIP units, deferred share units, and restricted share awards which were granted under our Omnibus Share Plan as well as OPP awards. This expense is expected to be recognized over a weighted average period of 3.4 years. 82 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 computation of diluted EPS reflects potential dilution of securities by adding potential common shares, including stock options and unvested restricted shares, to the weighted average number of common shares outstanding for the period. For the year ended December 31, 2018, 2017 and 2016, there were options outstanding for 4,750,549, 2,603,664, and 2,472,284 shares, respectively, that potentially could be exercised for common shares. During the years ended December 31, 2017 and 2016, respectively 167,933 and 256,917 options with exercise prices ranging from $22.83 to $28.36, were included in the diluted EPS calculation as their option prices were lower than the average market prices of our common shares. During the year ended December 31, 2018, no options were included in the diluted EPS calculation as their exercise prices were higher than the average market prices of our common shares. In addition, as of December 31, 2018 there were 162,577 unvested restricted shares outstanding that potentially could become unrestricted common shares. The computation of diluted EPS for the years ended December 31, 2018, 2017 and 2016 included the 188,329, 167,100, and 114,354 weighted average unvested restricted shares outstanding, respectively, as their effect is dilutive. The effect of the redemption of OP and vested LTIP units is not reflected in the computation of basic and diluted earnings per share, as they are redeemable for common shares on a one-for-one basis. The income allocable to such units is allocated on this same basis and reflected as noncontrolling interests in the accompanying consolidated financial statements. As such, the assumed redemption of these units would have no net impact on the determination of diluted earnings per share since they would be anti- dilutive. The following table sets forth the computation of our basic and diluted earnings per share: (Amounts in thousands, except per share amounts) Numerator: Net income attributable to common shareholders Less: Earnings allocated to unvested participating securities Net income available for common shareholders - basic Impact of assumed conversions: OP and LTIP units Net income available for common shareholders - dilutive Denominator: Weighted average common shares outstanding - basic Effect of dilutive securities: Stock options using the treasury stock method Restricted share awards Assumed conversion of OP and LTIP units Weighted average common shares outstanding - diluted Earnings per share available to common shareholders: Earnings per common share - Basic Earnings per common share - Diluted Year Ended December 31, 2017 2018 2016 105,150 (184) 104,966 $ $ 67,070 (155) 66,915 $ $ 90,815 (114) 90,701 — 5,782 53 104,966 $ 72,697 $ 90,754 113,863 107,132 99,364 — 188 — 114,051 168 167 10,923 118,390 257 114 59 99,794 0.92 0.92 $ $ 0.62 0.61 $ $ 0.91 0.91 $ $ $ $ $ 83 Operating Partnership Earnings per Unit The following table sets forth the computation of basic and diluted earnings per unit: (Amounts in thousands, except per unit amounts) Numerator: Net income attributable to unitholders Less: net income attributable to participating securities Net income available for unitholders Denominator: Weighted average units outstanding - basic Effect of dilutive securities issued by Urban Edge Unvested LTIP units Weighted average units outstanding - diluted Earnings per unit available to unitholders: Earnings per unit - Basic Earnings per unit - Diluted 17. QUARTERLY FINANCIAL DATA (unaudited) Year Ended December 31, 2017 2016 2018 116,918 (200) 116,718 $ $ 72,894 (155) 72,739 $ $ 96,627 (211) 96,416 126,198 188 — 126,386 117,779 335 276 118,390 105,455 371 273 106,099 0.92 0.92 $ $ 0.62 0.61 $ $ 0.91 0.91 $ $ $ $ The following tables summarize the quarterly results of operations of Urban Edge Properties and Urban Edge Properties LP for the years ended December 31, 2018 and 2017: (Amounts in thousands, except per share/unit amounts) Total revenue Operating income Net income Net income attributable to noncontrolling interests in operating partnership Net income attributable to noncontrolling interests in consolidated subsidiaries Net income attributable to common shareholders Net income attributable to unitholders Earnings per common share - Basic Earnings per common share - Diluted Earnings per common unit - Basic Earnings per common unit - Diluted Three Months Ended, December 31, 2018 September 30, 2018 $ 100,923 $ 112,214 $ June 30, 2018 101,970 $ 24,445 7,251 39,197 26,899 23,154 59,774 March 31, 2018 99,053 35,069 23,039 (727) (11) 6,513 7,240 0.06 0.06 0.06 0.06 (2,688) (6,025) (2,328) (11) 24,200 26,888 0.21 0.21 0.21 0.21 (12) 53,737 59,762 0.47 0.47 0.47 0.47 (11) 20,700 23,028 0.18 0.18 0.18 0.18 84 (Amounts in thousands, except per share/unit amounts) Total revenue Operating income Net (loss) income Net loss (income) attributable to noncontrolling interests in operating partnership Net income attributable to noncontrolling interests in consolidated subsidiaries Net (loss) income attributable to common shareholders Net (loss) income attributable to unitholders Earnings (loss) per common share - Basic Earnings (loss) per common share - Diluted Earnings (loss) per common unit - Basic Earnings (loss) per common unit - Diluted Three Months Ended, December 31, 2017 September 30, 2017 June 30, 2017 $ 97,376 $ 94,101 $ 89,501 $ 30,742 (15,873) 33,190 19,156 28,515 14,920 March 31, 2017 126,064 69,317 54,735 1,607 (1,967) (1,326) (4,138) (11) (14,277) (15,884) (0.13) (0.13) (0.13) (0.13) (11) 17,178 19,145 0.15 0.15 0.15 0.15 (11) 13,583 14,909 0.13 0.13 0.13 0.13 (11) 50,586 54,724 0.51 0.50 0.51 0.50 85 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None. ITEM 9A. CONTROLS AND PROCEDURES Controls and Procedures (Urban Edge Properties) Evaluation of Disclosure Controls and Procedures 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 were effective to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms. Management’s Annual Report on Internal Control over Financial Reporting The management of Urban Edge Properties and subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s board of trustees, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting, which requires the use of certain estimates and judgments, and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • • • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and trustees of the Company; and Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. In designing and evaluating our control system, management recognized that any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, that may affect our operation have been or will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions that cannot be anticipated at the present time, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. 86 The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. In making this assessment, the Company’s management used the criteria set forth by the Internal Control- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). Based on this assessment, management has concluded that, as of December 31, 2018, the Company’s internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2018 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm as stated in their attestation report which is included herein. Changes in Internal Control Over Financial Reporting There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Controls and Procedures (Urban Edge Properties LP) Evaluation of Disclosure Controls and Procedures 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 were effective to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms. Management’s Annual Report on Internal Control over Financial Reporting The Operating Partnership’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Operating Partnership, defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Operating Partnership’s principal executive and principal financial officers, or persons performing similar functions, and effected by the board of trustees, management and other personnel of the Operating Partnership’s general partner, to provide reasonable assurance regarding the reliability of financial reporting, which requires the use of certain estimates and judgments, and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • • • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and trustees of the Operating Partnership’s general partner; and Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. The Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of our general partner, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. In designing and evaluating our control system, management recognized that any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required 87 to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, that may affect our operation have been or will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions that cannot be anticipated at the present time, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost- effective control system, misstatements due to error or fraud may occur and may not be detected. The Operating Partnership’s management assessed the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2018. In making this assessment, the Operating Partnership’s management used the criteria set forth by the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). Based on this assessment, management has concluded that, as of December 31, 2018, the Operating Partnership’s internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2018 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm as stated in their attestation report which is included herein. Changes in Internal Control Over Financial Reporting There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 88 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and Board of Trustees Urban Edge Properties New York, New York Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Urban Edge Properties (the "Company") as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2018, of the Company and our report dated February 13, 2019 expressed an unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate /s/ DELOITTE & TOUCHE LLP New York, New York February 13, 2019 89 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Partners of Urban Edge Properties New York, New York Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Urban Edge Properties LP (the "Operating Partnership") as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Operating Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the criteria established in Internal Control - Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2018 of the Operating Partnership and our report dated February 13, 2019 expressed an unqualified opinion on those financial statements. Basis for Opinion The Operating Partnership's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Operating Partnership's internal control over financial reporting based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP New York, New York February 13, 2019 90 ITEM 9B. OTHER INFORMATION None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by Item 10 will be included in the Proxy Statement to be filed relating to Urban Edge Properties’ 2019 Annual Meeting of Shareholders and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 will be included in the Proxy Statement to be filed relating to Urban Edge Properties’ 2019 Annual Meeting of Shareholders and is incorporated herein by reference. 91 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Equity Compensation Plan Information The following table summarizes information, as of December 31, 2018, relating to our equity compensation plans pursuant to which our common shares or other equity securities may be granted from time to time. (a) (b) (c) Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) Plan Category 3,269,880 (1) $ Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total (1) Includes an aggregate of (i) 1,943,197 common shares issuable upon exercise of outstanding options and (ii) 1,326,683 common shares issuable in exchange for common units which may, upon satisfaction of certain conditions, be issuable pursuant to outstanding LTIP Units in our Operating Partnership (“LTIP Units”). The LTIP Units outstanding as of December 31, 2018 include 558,050 LTIP Units issued pursuant to our 2017 OPP and 2018 LTI Plan, which remain subject to performance-based vesting criteria. 2,352,890 (4) 5,622,770 N/A 4,866,864 4,866,864 (3) 21.72 21.50 21.33 $ (2) The LTIP Units do not have an exercise price. Accordingly, these awards are not included in the weighted-average exercise price calculation. (3) Includes (i) 3,123,905 common shares remaining available for issuance under the Urban Edge Properties 2015 Omnibus Incentive Plan (the “Plan”) and (ii) 1,742,959 common shares remaining available under the Urban Edge Properties 2015 Employee Share Purchase Plan (“ESPP”). The number of common shares remaining available for issuance under the Plan is based on awards being granted as "Full Value Awards," as defined in the Plan, including awards such as restricted stock, LTIP Units or performance units that do not require the payment of an exercise price. If we were to grant awards other than “Full Value Awards," as defined in the Plan, including stock options or stock appreciation rights, the number of securities remaining available for future issuance under the Plan would be 6,247,810. Pursuant to the terms of the ESPP, on each January 1 prior to the tenth anniversary of the ESPP’s effective date, an additional number of common shares will be added to the maximum number of shares authorized for issuance under the ESPP equal to the lesser of (a) 0.1% of the total number of common shares outstanding on December 31 of the preceding calendar year and (b) 150,000 common shares; provided that the Compensation Committee of our Board of Trustees may act prior to January 1 of any calendar year to provide that there will be no increase in the share reserve for that calendar year, or that the increase in the share reserve for that calendar year shall be less than the increase that would otherwise occur. (4) Relates to the Urban Edge Properties 2018 Inducement Equity Plan, which is an omnibus equity plan pursuant to which we may grant a variety of equity awards pursuant to the employment inducement award exemption provided by Section 303A.08 of the New York Stock Exchange Listed Company Manual, including options, share appreciation rights, performance shares, restricted shares and other share-based awards including LTIP Units. A total of 2,352,890 common shares are authorized to be issued under the 2018 Inducement Equity Plan. The 2018 Inducement Equity Plan has a ten-year term expiring on September 20, 2028 and generally may be amended at any time by our Board of Trustees. Included in the 2,352,890 common shares authorized to be issued under the 2018 Inducement Equity Plan are an aggregate of (i) 2,000,000 common shares issuable upon exercise of outstanding options and (ii) 352,890 common shares issuable in exchange for common units which may, upon satisfaction of certain conditions, be issuable pursuant to outstanding LTIP Units in our Operating Partnership (“LTIP Units”). Additional information concerning security ownership of certain beneficial owners and management required by Item 12 will be included in the Proxy Statement to be filed relating to Urban Edge Properties’ 2019 Annual Meeting of Shareholders and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by Item 13 will be included in the Proxy Statement to be filed relating to Urban Edge Properties’ 2019 Annual Meeting of Shareholders and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by Item 14 will be included in the Proxy Statement to be filed relating to Urban Edge Properties’ 2019 Annual Meeting of Shareholders and is incorporated herein by reference. 92 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES PART IV (a)(1) Financial Statements Our consolidated financial statements and notes thereto, together with the Reports of Independent Registered Public Accounting Firm are included in Item 8 of this Annual Report on Form 10-K commencing on page 48. (2) Financial Statement Schedules Our financial statement schedules are included in Item 8 of this Annual Report on Form 10-K commencing on page 98. (3) Exhibits A list of exhibits to this Annual Report on Form 10-K is set forth on the Index to Exhibits commencing on page 94 and is incorporated herein by reference. (b) See Index to Exhibits (c) Schedules other than those listed above are omitted because they are not applicable or the information required is included in the consolidated financial statements or the notes thereto. ITEM 16. FORM 10-K SUMMARY Not applicable. 93 The following exhibits are included as part of this Annual Report on Form 10-K: INDEX TO EXHIBITS Exhibit Number 2.1 3.1 3.2 3.3 10.1 10.2 10.3† 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11† 10.12† 10.13† 10.14† 10.15† 10.16† 10.17† Exhibit Description Separation and Distribution Agreement by and among Vornado Realty Trust, Vornado Realty L.P., Urban Edge Properties and Urban Edge Properties LP, dated as of January 14, 2015 (incorporated by reference to Exhibit 2.1 to Form 8-K filed January 21, 2015) Declaration of Trust of Urban Edge Properties, as amended and restated (incorporated by reference to Exhibit 3.1 to Form 8-K filed January 21, 2015) Amended and Restated Bylaws of Urban Edge Properties (incorporated by reference to Exhibit 3.2 to Form 8-K filed January 21, 2015) Amendment No. 1 to Amended and Restated Bylaws of Urban Edge Properties (incorporated by reference to Exhibit 3.1 to Form 8-K filed February 28, 2018) Transition Services Agreement by and between Vornado Realty Trust and Urban Edge Properties, dated as of January 15, 2015 (incorporated by reference to Exhibit 10.2 to Form 8-K filed January 21, 2015) Amendment to Transition Services Agreement by and between Vornado Realty Trust and Urban Edge Properties, dated as of June 28, 2016 (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on August 5, 2016) Employee Matters Agreement by and between Vornado Realty Trust, Vornado Realty L.P., Urban Edge Properties and Urban Edge Properties LP, dated as of January 15, 2015 (incorporated by reference to Exhibit 10.4 to Form 8-K filed January 21, 2015) Tax Matters Agreement by and between Vornado Realty Trust and Urban Edge Properties, dated as of January 15, 2015 (incorporated by reference to Exhibit 10.3 to Form 8-K filed January 21, 2015) Limited Partnership Agreement of Urban Edge Properties LP, dated as of January 14, 2015 (incorporated by reference to Exhibit 10.1 to Form 8-K filed January 21, 2015) Revolving Credit Agreement among Urban Edge Properties LP, as Borrower, the Banks party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, dated as of January 15, 2015 (incorporated by reference to Exhibit 10.10 to Form 8-K filed January 21, 2015) First Amendment dated as of March 7, 2017, to Revolving Credit Agreement among Urban Edge Properties LP, as Borrower, to the Banker party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 3, 2017) Tax Protection Agreement dated as of May 24, 2017, by and among Urban Edge Properties LP; Urban Edge Properties; and Acklinis Yonkers Realty, L.L.C., Acklinis Realty Holding, LLC, Acklinis Original Building, L.L.C., A & R Woodbridge Shopping Center, L.L.C., A & R Millburn Associates, L.P., Ackrik Associates, L.P., A & R Manchester, LLC, A & R Westfield Lincoln Plaza, LLC and A & R Westfield Broad Street, LLC. (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on August 2, 2017) Contribution Agreement dated as of April 7, 2017, by and among Urban Edge Properties LP; Urban Edge Properties; and Acklinis Yonkers Realty, L.L.C., Acklinis Realty Holding, LLC, Acklinis Original Building, L.L.C., A & R Woodbridge Shopping Center, L.L.C., A & R Millburn Associates, L.P., Ackrik Associates, L.P., A & R Manchester, LLC, A & R Westfield Lincoln Plaza, LLC and A & R Westfield Broad Street, LLC. (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on August 2, 2017) Loan Agreement between VNO Bergen Mall Owner LLC and Wells Fargo Bank, National Association, dated March 25, 2013 (incorporated by reference to Exhibit 10.6 to Amendment No. 2 to Form 10 filed November 13, 2014) Urban Edge Properties 2015 Employee Share Purchase Plan (incorporated by reference to Exhibit 4.4 to Form S-8 filed February 17, 2015) Urban Edge Properties 2015 Omnibus Share Plan (incorporated by reference to Exhibit 10.5 to Form 8-K filed January 21, 2015) Urban Edge Properties 2018 Inducement Equity Plan (incorporated by reference to Exhibit 99.1 to Form S-8 filed September 26, 2018 Amendment, dated as of January 14, 2015, to Amended and Restated Employment Agreement between Vornado Realty Trust and Jeffrey Olson (incorporated by reference to Exhibit 10.11 to Form 8-K filed January 21, 2015) Amended and Restated Employment Agreement between Vornado Realty Trust and Jeffrey Olson (incorporated by reference to Exhibit 10.7 to Amendment No. 3 to Form 10 filed December 11, 2014) Employment Agreement between Urban Edge Properties and Mark Langer (incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 7, 2015) Employment Offer Letter between Urban Edge Properties and Herb Eilberg (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 4, 2016) 94 10.18† 10.19† 10.20† 10.21† 21.1* 23.1* 23.2* 24.1* 31.1* 31.2* 31.3* 31.4* 32.1** 32.2** 101.INS 101.SCH 101.CAL 101.LAB 101.PRE 101.DEF Employment Agreement between Urban Edge Properties and Christopher Weilminster (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on October 31, 2018) Employment Agreement between Urban Edge Properties and Donald Briggs (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on October 31, 2018) Employment Offer Letter between Urban Edge Properties and Robert Minutoli (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 18, 2017) Form of Indemnification Agreement between Urban Edge Properties and each of its trustees and executive officers (incorporated by reference to Exhibit 10.15 to Form 10-K/A filed on March 23, 2015) List of Subsidiaries Consent of Independent Registered Public Accounting Firm for Urban Edge Properties Consent of Independent Registered Public Accounting Firm for Urban Edge Properties LP Power of Attorney (included on signature page) 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 Certification by the Chief Financial Officer for Urban Edge Properties pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification by the Chief Executive Officer for Urban Edge Properties LP pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification by the Chief Financial Officer for Urban Edge Properties LP pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification by the Chief Executive Officer and Chief Financial Officer for Urban Edge Properties pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification by the Chief Executive Officer and Chief Financial Officer for Urban Edge Properties LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 XBRL Instance Document XBRL Taxonomy Extension Schema XBRL Extension Calculation Linkbase XBRL Extension Labels Linkbase XBRL Taxonomy Extension Presentation Linkbase XBRL Taxonomy Extension Definition Linkbase * 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. † Management contracts and compensatory plans or arrangements required to be filed pursuant to Item 15(b) of Form 10-K. 95 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. SIGNATURES URBAN EDGE PROPERTIES (Registrant) /s/ Mark Langer Mark Langer, Chief Financial Officer Date: February 13, 2019 URBAN EDGE PROPERTIES LP By: Urban Edge Properties, General Partner /s/ Mark Langer Mark Langer, Chief Financial Officer Date: February 13, 2019 96 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Urban Edge Properties in its own capacity and in its capacity as the sole general partner of Urban Edge Properties LP, and in the capacities and on the dates indicated: Signature Title Date By: /s/ Jeffrey S. Olson Chairman of the Board of Trustees February 13, 2019 Jeffrey S. Olson and Chief Executive Officer (Principal Executive Officer) By: /s/ Mark Langer Chief Financial Officer February 13, 2019 Mark Langer (Principal Financial Officer) By: /s/ Jennifer Holmes Chief Accounting Officer February 13, 2019 Jennifer Holmes (Principal Accounting Officer) By: /s/ Michael A. Gould Trustee Michael A. Gould By: /s/ Steven H. Grapstein Steven H. Grapstein Trustee By: /s/ Steven J. Guttman Trustee Steven J. Guttman By: /s/ Amy B. Lane Trustee Amy B. Lane By: /s/ Kevin P. O’Shea Trustee Kevin P. O’Shea By: /s/ Steven Roth Trustee Steven Roth February 13, 2019 February 13, 2019 February 13, 2019 February 13, 2019 February 13, 2019 February 13, 2019 97 URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS (in thousands) Column A Description Year Ended December 31, 2018: Allowance for doubtful accounts Year Ended December 31, 2017: Allowance for doubtful accounts Year Ended December 31, 2016: Allowance for doubtful accounts Column B Balance at Beginning of Year Column C Additions (Reversals) Expensed Column D Column E Uncollectible Accounts Written-Off Balance at End of Year $ 5,431 $ 4,138 $ (2,949) $ 6,620 2,593 1,926 3,445 1,214 (607) (547) 5,431 2,593 98 URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (in thousands) Initial cost to company Gross amount at which carried at close of period Description Encumbrances Land Building and improvements Costs capitalized subsequent to acquisition Land Building and improvements Total(2) Accumulated depreciation and amortization(1) Date of construction Date acquired SHOPPING CENTERS AND MALLS: Baltimore (Towson), MD Bensalem, PA Bergen Town Center - East, Paramus, NJ Bergen Town Center - West, Paramus, NJ Bethlehem, PA Brick, NJ Bronx (Bruckner Boulevard), NY Bronx (Shops at Bruckner), NY Bronx (1750-1780 Gun Hill Road), NY Broomall, PA Buffalo (Amherst), NY Cambridge (leased through 2033)(3), MA Carlstadt (leased through 2050)(3), NJ Charleston (leased through 2063)(3), SC Cherry Hill (Cherry Hill Commons), NJ Cherry Hill (Plaza at Cherry Hill), NJ Chicopee, MA Commack (leased through 2021)(3), NY Dewitt (leased through 2041)(3), NY East Hanover (200 - 240 Route 10 West), NJ East Hanover (280 Route 10 West), NJ East Rutherford, NJ Freeport (240 West Sunrise Highway) (leased through 2040)(3), NY Freeport (437 East Sunrise Highway), NY 24,500 — — — — — — — — — — — — 581 3,227 18,603 581 21,830 22,411 (6,356) 2,727 6,698 2,042 2,727 8,740 11,467 (4,509) 6,305 — 42,336 6,305 42,336 48,641 (8,768) 300,000 15,812 82,240 385,142 35,850 447,344 483,194 (121,024) — 50,000 827 1,391 5,200 1,915 11,179 13,342 837 1,391 7,105 24,521 7,942 25,912 (5,870) (15,492) 1968 1972/ 1999 1957/ 2009 1957/ 2009 1966 1968 1968 1972 2003 2003/ 2015 1966 1968 — 66,100 259,503 591 61,618 264,576 326,194 (24,862) N/A 2007 11,582 — 32,979 38 — 33,017 33,017 (2,154) N/A 2017 6,427 850 5,743 — — — 11,885 22,237 2,171 1,399 6,428 850 34,121 3,570 40,549 4,420 (9,502) (2,946) 2009 1966 2005 1966 4,056 12,446 5,107 17,138 22,245 (8,916) 1968 1968 — 97 16,458 3,634 133 308 — — — 97 97 (5) N/A 2007 16,591 16,591 (4,627) N/A 2007 3,942 3,942 (1,123) N/A 5,864 2,694 1,850 4,144 6,264 10,408 (3,970) 1964 28,930 14,602 33,666 (125) 14,602 33,541 48,143 (3,129) 895 — — 559 — 43 — 184 7,116 6,363 — 5,403 895 — — 559 — 227 895 227 N/A 1969 — (243) N/A 2006 7,116 11,766 7,116 12,325 (2,158) (6,581) N/A 1964 1957/ 1972 East Brunswick, NJ 63,000 2,417 17,169 7,512 2,417 24,681 27,098 (18,152) Rockaway, NJ 27,800 63,000 2,232 18,241 19,349 2,671 37,151 39,822 (18,719) 1962 — 23,000 — — — — — 7,075 36,727 542 — 260 — — — 7,075 37,269 7,075 37,269 (2,543) (8,109) N/A 2007 260 260 (240) N/A 2005 43,100 1,231 4,747 4,765 1,382 9,361 10,743 (6,558) 1981 1981 99 2006 1964 2017 1969 2006 1964 1957/ 1972 1962/ 1998 1962/ 1998 2007 Initial cost to company Gross amount at which carried at close of period Description Encumbrances Land Building and improvements Costs capitalized subsequent to acquisition Land Building and improvements Total(2) Accumulated depreciation and amortization(1) Date of construction Date acquired 40,300 — — 66,400 — — — 45 462 850 692 7,400 21,200 12,419 8,068 2,571 1,820 45,110 3,950 741 10,219 7,145 9,413 (2,135) 33,667 19,097 6,385 3,115 44 462 850 692 7,400 21,200 12,419 53,179 53,223 (14,338) 6,521 2,561 17,364 7,278 40,052 22,212 6,983 3,411 18,056 14,678 61,252 34,631 (3,504) (2,295) (10,415) (2,098) (10,313) (7,755) 2009 1958 1975 1963 N/A N/A N/A 1998 1958 1975 1963 2007 2007 2004 29,000 652 7,495 950 652 8,445 9,097 (3,584) 1965 1965 24,326 15,824 37,593 (3,922) 15,824 — — 309 3,140 3,376 10,315 63 2,131 296 3,140 33,671 13,704 2,194 49,495 14,000 5,334 (3,215) (4,855) (886) N/A 1938 1966 130,000 15,280 64,370 15,438 15,280 79,808 95,088 (38,631) 1996 3,164 2,896 1,226 6,060 7,286 (3,857) 1969 — — — — 12,500 37,400 31,400 1,226 238 7,606 725 4,409 1,611 283 9,446 42 13,125 7,189 13,756 3,464 5,248 2,754 6,982 13 14,140 3,147 — — — — 24,000 15,783 — 66 25,837 419 (911) 1,439 Mount Kisco, NY 13,987 22,700 114,860 — 9,182 1,104 66,751 27,829 6,411 26,700 5,576 1,840 238 7,606 1,046 4,409 1,454 283 — 15,783 448 9,267 1,104 22,614 — 2,421 9,488 9,726 (4,544) 1999 15,879 13,850 13,769 17,761 8,395 — 24,926 1,476 94,495 11,987 28,626 4 3,252 N/A 1971 N/A 1973 1963 N/A N/A 1972 1996/ 2015 1961 N/A 23,485 14,896 18,178 19,215 8,678 — 40,709 1,924 (5,292) (9,912) (696) (11,151) (6,722) — (2,096) (743) 103,762 (42,620) (7,181) (7,371) 13,091 51,240 4 5,673 — — — — — 2,421 4 — 1,200 2,052 (4) (1,401) 1970 1965 — 3,927 15 — 3,942 3,942 (3,686) N/A 2005 2,308 636 261 2,308 897 3,205 (575) 1993 1959 Garfield, NJ Glen Burnie, MD Glenolden, PA Hackensack, NJ Hazlet, NJ Huntington, NY Inwood, NY Jersey City (Hudson Commons), NJ Jersey City (Hudson Mall), NJ Kearny, NJ Lancaster, PA Las Catalinas, Puerto Rico Lawnside, NJ Lodi (Route 17 North), NJ Lodi (Washington Street), NJ Manalapan, NJ Manchester, MO Marlton, NJ Middletown, NJ Milford (leased through July 2019) (3), MA Millburn, NJ Montclair, NJ Montehiedra, Puerto Rico Morris Plains, NJ New Hyde Park (leased through 2029)(3), NY Newington, CT Norfolk (leased through 2069)(3), VA North Bergen (Kennedy Boulevard), NJ North Bergen (Tonnelle Avenue), NJ North Plainfield, NJ 25,100 Oceanside, NY Paramus (leased through 2033)(3), NJ Queens, NY Rochester (Henrietta) (leased through 2056)(3), NY Rochester, NY — — — — — 100,000 24,493 — 73,062 33,988 6,577 2,710 13,983 2,306 693 — 6,577 2,710 — — 12,569 — 14,537 12,304 3,744 14,537 63,567 14,676 2,306 12,569 16,048 97,555 21,253 5,016 12,569 30,585 (16,298) (4,056) (668) (4,310) (1,258) 2009 1955 N/A 1957/ 2009 N/A — 2,172 2,647 1,293 — — — 2,172 3,940 — 3,940 2,172 (3,604) — 1971 1966 2017 1959 1966 2002 1969/ 2015 1975 2004 1971 2017 1973 1963 1976 2017 1972 1997 1985 2007 1976 1965 2006 1989 2007 2003 2015 1971 1966 100 Initial cost to company Gross amount at which carried at close of period Description Encumbrances Land Building and improvements Costs capitalized subsequent to acquisition Land Building and improvements Total(2) Accumulated depreciation and amortization(1) Date of construction Date acquired Rockville, MD Salem (leased through 2102)(3), NH Signal Hill, CA South Plainfield (leased through 2039)(3), NJ Springfield, MA Springfield (leased through 2025)(3), PA Staten Island, NY Totowa, NJ Turnersville, NJ Tyson’s Corner (leased through 2035)(3), VA Union (2445 Springfield Avenue), NJ Union (Route 22 and Morris Avenue), NJ Vallejo (leased through 2043)(3), CA Walnut Creek (1149 South Main Street), CA Walnut Creek (Mt. Diablo), CA Watchung, NJ West Babylon, NY Westfield, NJ Wheaton (leased through 2060)(3), MD Wilkes-Barre (461 - 499 Mundy Street), PA Woodbridge (Woodbridge Commons), NJ Woodbridge (Plaza at Woodbridge), NJ Wyomissing (leased through 2065)(3), PA 2006 2006 2007 2005 1966 2004 1957 1974 — — — — — — — 50,800 — — 3,470 20,599 2,736 3,470 23,335 26,805 (8,084) N/A 2005 6,083 9,652 — (3,084) 2,940 1 2,994 9,652 5 2,941 2,999 12,593 — (901) — — 10,044 2,240 — 80 — — 12,284 12,284 80 80 (3,659) (80) N/A N/A N/A N/A 2,797 11,446 120 900 — 2,471 21,262 11,994 1,342 — 2,797 11,446 92 900 — 1,244 4,378 4,910 3,056 — — 3,715 25,640 16,932 4,398 6,512 37,086 17,024 5,298 (1,353) 1993 (9,424) (14,008) (2,341) N/A 1957/ 1999 1974 — — — N/A 2006 45,600 19,700 45,090 19,700 45,090 64,790 (13,057) N/A 2007 — — — — 27,000 — 4,730 — — 3,025 7,470 2,780 3,025 10,250 13,275 (6,041) 1962 1962 — 2,945 221 — 3,166 3,166 (1,073) N/A 2006 2,699 19,930 (1,000) 2,699 18,930 21,629 (1,552) N/A 2006 5,909 4,178 6,720 5,728 — 5,463 1,540 2,939 13,786 (4,160) 4,305 (211) 5,908 4,441 6,720 5,728 1,541 8,139 9,626 4,094 7,449 12,580 16,346 9,822 (262) (5,715) (8) (255) N/A 1994 N/A N/A 2007 1959 2007 2017 — 5,367 — — 5,367 5,367 (1,644) N/A 2006 6,053 26,646 1,932 6,053 28,578 34,631 (8,140) N/A 2007 22,100 1,509 2,675 4,997 1,539 7,642 9,181 (3,094) 1959 1959 55,340 21,547 75,017 (2,753) 17,280 76,531 93,811 (4,885) N/A 2017 Yonkers, NY 31,704 63,341 110,635 15,010 63,461 125,525 188,986 — — 2,646 1,961 — 4,607 4,607 York, PA — 409 2,568 2,504 409 5,072 5,481 (3,482) 1970 (3,887) (6,580) N/A N/A 2005 2017 1970 WAREHOUSES: East Hanover, NJ 40,700 576 7,752 30,832 691 38,469 39,160 (18,352) 1972 1972 TOTAL UE PROPERTIES 1,562,159 508,849 1,385,212 868,256 525,819 2,236,498 2,762,317 (644,367) 101 Initial cost to company Gross amount at which carried at close of period Description Encumbrances Land Building and improvements Costs capitalized subsequent to acquisition Land Building and improvements Total(2) Accumulated depreciation and amortization(1) Date of construction Date acquired Leasehold Improvements, Equipment and Other — — — 6,675 — 6,675 6,675 (1,505) TOTAL $ 1,562,159 $508,849 $ 1,385,212 $ 874,931 $525,819 $ 2,243,173 $2,768,992 $ (645,872) (1) Depreciation of the buildings and improvements are calculated over lives ranging from the life of the lease to forty years. (2) Adjusted tax basis for federal income tax purposes was $1.5 billion as of December 31, 2018. (3) The Company is a lessee under a ground or building lease. The building will revert to the lessor upon lease expiration. 102 URBAN EDGE PROPERTIES AND URBAN EDGE PROPERTIES LP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Amounts in thousands) The following is a reconciliation of real estate assets and accumulated depreciation: Real Estate Balance at beginning of period Additions during the period: Land Buildings & improvements Construction in progress Less: Impairments and assets sold or written-off Balance at end of period Accumulated Depreciation Balance at beginning of period Additions charged to operating expenses Less: Accumulated depreciation on assets written-off Balance at end of period $ $ $ Year Ended December 31, 2018 2017 2016 $ 2,671,854 $ 2,138,500 $ 2,084,642 4,120 12,394 118,389 2,806,757 (37,765) 2,768,992 587,127 80,578 667,705 (21,833) 645,872 $ $ $ 142,305 389,338 34,525 2,704,668 (32,814) 2,671,854 541,077 65,140 606,217 (19,090) 587,127 $ $ $ 2,667 18,316 47,234 2,152,859 (14,359) 2,138,500 509,112 42,989 552,101 (11,024) 541,077 103 SUBSIDIARIES OF THE REGISTRANT URBAN EDGE PROPERTIES as of February 13, 2019 EXHIBIT 21.1 Urban Edge Properties, a Maryland real estate investment trust, has only two subsidiaries: Urban Edge Properties LP, a Delaware limited partnership, and Urban Edge Properties Auto LLC, a Delaware limited liability corporation. Below is a list of the direct and indirect subsidiaries of Urban Edge Properties, and the corresponding states of incorporation or organization: Name of Subsidiary 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Amherst II UE LLC Bethlehem UE LLC Bricktown UE LLC Bricktown UE Member LLC Cherry Hill UE LLC Dover UE LLC Dover UE Member LLC East Brunswick UE II LLC East Brunswick UE Owner LLC Freeport UE LLC Freeport UE Member LLC Glen Burnie UE LLC Hackensack UE LLC Hackensack UE Member LLC Hanover UE LLC Hanover UE Member LLC Jersey City UE LLC Jersey City UE Member LLC Kearny Holding UE LLC Kearny Leasing UE LLC Lawnside UE LLC Lodi II UE LLC Lodi UE LLC Manalapan UE LLC Marlton UE LLC Marlton UE Member LLC Middletown UE LLC Middletown UE Member LLC Montclair UE II LLC Montclair UE LLC Morris Plains Holding UE LLC Morris Plains Leasing UE LLC State of Organization New York Delaware New Jersey Delaware New Jersey New Jersey Delaware Delaware Delaware New York Delaware Maryland New Jersey Delaware New Jersey Delaware New Jersey Delaware New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey New Jersey Delaware New Jersey Delaware Delaware New Jersey New Jersey New Jersey 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 New Hyde Park UE LLC Newington UE LLC North Bergen UE LLC North Plainfield UE LLC North Plainfield UE Member LLC Paramus UE LLC Patson UE Holdings LLC Patson Urban Edge GP LLC Patson Urban Edge LLC Springfield UE LLC Totowa UE LLC Totowa UE Member LLC Towson UE LLC Turnersville UE LLC UE 1105 State Highway 36 LLC UE 195 North Bedford Road LLC UE 197 Spring Valley LLC UE 2100 Route 38 LLC UE 2445 Springfield Avenue LLC UE 3098 Long Beach Road LLC UE 447 South Broadway LLC UE 675 Paterson Avenue LLC UE 675 Route 1 LLC UE 7000 Hadley Road LLC UE 713-715 Sunrise LLC UE 839 New York Avenue LLC UE 938 Spring Valley LLC UE AP 195 N. Bedford Road LLC UE AR Building LLC UE Bensalem Holding Company LLC UE Bergen East LLC UE Bergen Mall 2017 License LLC UE Bergen Mall License II LLC UE Bergen Mall LLC UE Bergen Mall Owner LLC UE Bethlehem Holding LP UE Bethlehem Properties Holding Company LLC UE Bethlehem Property LP UE Brick LLC UE Bridgeland Warehouses LLC UE Bruckner Plaza LLC UE Bruckner Shops LLC UE Burnside Plaza LLC UE Caguas/Catalinas Holding LLC UE Caguas/Catalinas Holding LP UE Camden Holding LLC New York Connecticut New Jersey New Jersey Delaware Delaware Delaware Delaware Delaware Massachusetts New Jersey Delaware Maryland New Jersey Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware New Jersey Delaware Pennsylvania Delaware Pennsylvania New Jersey New Jersey Delaware Delaware Delaware Delaware Delaware New Jersey 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 UE Catalinas GP Inc. UE Chicopee Holding LLC UE Cross Bay LLC UE DIABLO MANAGEMENT LLC UE Forest Plaza LLC UE Freeport II LLC UE Gun Hill Road LLC UE Hanover Public Warehousing LLC UE Harrison Holding Company LLC UE Henrietta Holding LLC UE Holding LP UE Hudson Mall LLC UE IT MANAGEMENT LLC UE Lancaster Leasing Company LLC UE Lodi Delaware LLC UE Management LLC UE MANAGEMENT TRS LLC UE Manchester LLC UE Marple Holding Company LLC UE Massachusetts Holding LLC UE Maywood License LLC UE Millburn LLC UE Montehiedra Acquisition LLC UE Montehiedra Acquisition LP UE Montehiedra Holding II LP UE Montehiedra Holding LLC UE Montehiedra Holding LP UE Montehiedra Inc. UE Montehiedra Lender LLC UE Montehiedra Management LLC UE Montehiedra OP LLC UE Montehiedra Out Parcel LLC UE Mundy Street LP UE New Bridgeland Warehouses LLC UE New Hanover LLC UE New Hanover Public Warehousing LLC UE New Woodbridge II LLC UE Norfolk Property LLC UE One Lincoln Plaza LLC UE PA 1 LP UE PA 10 LP UE PA 11 LP UE PA 12 LP UE PA 13 LP Delaware Massachusetts Delaware Delaware Delaware Delaware Delaware New Jersey Delaware New York Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware New Jersey Delaware New Jersey Delaware Delaware Delaware Delaware Delaware Delaware Delaware 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 UE PA 14 LP UE PA 15 LP UE PA 16 LP UE PA 17 LP UE PA 18 LP UE PA 19 LP UE PA 2 LP UE PA 20 LP UE PA 21 LP UE PA 22 LP UE PA 23 LP UE PA 24 LP UE PA 25 LP UE PA 26 LP UE PA 27 LP UE PA 28 LP UE PA 29 LP UE PA 3 LP UE PA 30 LP UE PA 31 LP UE PA 32 LP UE PA 33 LP UE PA 34 LP UE PA 35 LP UE PA 36 LP UE PA 37 LP UE PA 38 LP UE PA 39 LP UE PA 4 LP UE PA 40 LP UE PA 5 LP UE PA 6 LP UE PA 7 LP UE PA 8 LP UE PA 9 LP UE PA GP LLC UE Paramus License LLC UE Paterson Plank Road LLC UE Patson LLC UE Patson Mt. Diablo A LP UE Patson Walnut Creek LP UE Pennsylvania Holding LLC UE Philadelphia Holding Company LLC Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Pennsylvania Delaware 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 UE Property Management LLC UE Retail Management LLC UE Retail Manager LLC UE Rochester Holding LLC UE Rockaway LLC UE Rockville LLC UE Second Rochester Holding LLC UE Tonnelle 8701 LLC UE Tonnelle Commons LLC UE Tonnelle Storage LLC UE TRU Alewife Brook Pkwy LLC UE TRU Baltimore Park LP UE TRU CA LLC UE TRU Callahan Drive LP UE TRU Cherry Avenue LP UE TRU Erie Blvd LLC UE TRU Georgia Avenue LLC UE TRU Jericho Turnpike LLC UE TRU Leesburg Pike LLC UE TRU PA LLC UE TRU Sam Rittenburg Blvd LLC UE TRU West Sunrise Hwy LLC UE West Babylon LLC UE Woodbridge King George LLC UE Wyomissing Properties LP UE Yonkers II LLC UE Yonkers LLC UE York Holding Company LLC Union UE LLC Urban Edge Acquisitions LLC Urban Edge Bensalem LP Urban Edge Bethlehem LP Urban Edge Bethlehem Owner LLC Urban Edge Caguas GP Inc. Urban Edge Caguas LP Urban Edge Catalinas LP Urban Edge DP LLC Urban Edge EF Borrower LLC Urban Edge Lancaster LP Urban Edge Marple LP Urban Edge Mass LLC Urban Edge Massachusetts Holdings LLC Urban Edge Montehiedra Mezz Loan LLC Delaware Delaware Delaware New York New Jersey Delaware New York Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware New Jersey Delaware Pennsylvania Pennsylvania Pennsylvania Delaware Delaware Delaware Delaware Delaware Pennsylvania Pennsylvania Massachusetts Delaware Delaware 209 210 211 212 213 214 215 216 217 218 219 220 Urban Edge Montehiedra OP LP Urban Edge Pennsylvania LP Urban Edge Philadelphia LP Urban Edge Properties Urban Edge Properties Auto LLC Urban Edge Properties LP Urban Edge York LP Watchung UE LLC Watchung UE Member LLC Wayne UE LLC Woodbridge UE LLC Woodbridge UE Member LLC Delaware Pennsylvania Pennsylvania Maryland Delaware Delaware Pennsylvania New Jersey Delaware New Jersey New Jersey Delaware CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement No. 333-212951 on Form S-3 and Registration Statement No. 333-202125 on Form S-8 of our reports dated February 13, 2019, relating to the consolidated financial statements of Urban Edge Properties, and the effectiveness of Urban Edge Properties’ internal control over financial reporting, appearing in the Annual Report on Form 10-K of Urban Edge Properties and Urban Edge Properties LP for the year ended December 31, 2018. EXHIBIT 23.1 /s/ DELOITTE & TOUCHE LLP New York, New York February 13, 2019 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement No. 333-212951 on Form S-3 of our reports dated February 13, 2019, relating to the consolidated financial statements of Urban Edge Properties LP, and the effectiveness of Urban Edge Properties LP’s internal control over financial reporting, appearing in the Annual Report on Form 10-K of Urban Edge Properties and Urban Edge Properties LP for the year ended December 31, 2018. EXHIBIT 23.2 /s/ DELOITTE & TOUCHE LLP New York, New York February 13, 2019 CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 31.1 I, Jeffrey S. Olson, certify that: 1. I have reviewed this Annual Report on Form 10-K of Urban Edge Properties; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. February 13, 2019 /s/ Jeffrey S. Olson Jeffrey S. Olson Chairman of the Board of Trustees and Chief Executive Officer CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 31.2 I, Mark Langer, certify that: 1. I have reviewed this Annual Report on Form 10-K of Urban Edge Properties; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. February 13, 2019 /s/ Mark Langer Mark Langer Chief Financial Officer CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 31.3 I, Jeffrey S. Olson, certify that: 1. I have reviewed this Annual Report on Form 10-K of Urban Edge Properties LP; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. February 13, 2019 /s/ Jeffrey S. Olson Jeffrey S. Olson Chairman of the Board of Trustees and Chief Executive Officer of Urban Edge Properties, general partner of registrant CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 31.4 I, Mark Langer, certify that: 1. I have reviewed this Annual Report on Form 10-K of Urban Edge Properties LP; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. February 13, 2019 /s/ Mark Langer Mark Langer Chief Financial Officer of Urban Edge Properties, general partner of registrant CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsection (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code) EXHIBIT 32.1 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Urban Edge Properties, hereby certifies, to such officer’s knowledge, that: The Annual Report on Form 10-K for the year ended December 31, 2018 (the “Report”) of Urban Edge Properties fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Urban Edge Properties. February 13, 2019 /s/ Jeffrey S. Olson Name: Jeffrey S. Olson Title: Chairman of the Board of Trustees and Chief Executive Officer February 13, 2019 /s/ Mark Langer Name: Mark Langer Title: Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing). CERTIFICATION EXHIBIT 32.2 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsection (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Urban Edge Properties, hereby certifies, to such officer’s knowledge, that: The Annual Report on Form 10-K for the year ended December 31, 2018 (the “Report”) of Urban Edge Properties LP fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Urban Edge Properties LP. February 13, 2019 /s/ Jeffrey S. Olson February 13, 2019 Name: Jeffrey S. Olson Title: Chairman of the Board of Trustees and Chief Executive Officer of Urban Edge Properties, general partner of registrant /s/ Mark Langer Name: Mark Langer Title: Chief Financial Officer of Urban Edge Properties, general partner of registrant A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing). [This page intentionally left blank] [This page intentionally left blank] TRUSTEES JEFFREY S. OLSON Chairman and Chief Executive Officer, Urban Edge Properties STEVEN ROTH Chairman and Chief Executive Officer, Vornado Realty Trust MICHAEL A. GOULD Former Chairman and Chief Executive Officer, Bloomingdale’s STEVEN H. GRAPSTEIN Chief Executive Officer, Como Holdings USA, Inc. Director, David Yurman EXECUTIVE OFFICERS STEVEN GUTTMAN Founder and Principal, Storage Deluxe Former Chairman and Chief Executive Officer, Federal Realty AMY B. LANE Director, The TJX Companies Inc. GNC Holdings, Inc. and NextEra Energy KEVIN P. O’SHEA Chief Financial Officer, AvalonBay Communities JEFFREY S. OLSON Chairman and Chief Executive Officer HERBERT EILBERG Chief Investment Officer CHRISTOPHER J. WEILMINSTER Executive Vice President and Chief Operating Officer JENNIFER HOLMES Chief Accounting Officer DONALD T. BRIGGS President of Development ROBERT C. MILTON III Executive Vice President, General Counsel and Secretary MARK J. LANGER Executive Vice President and Chief Financial Officer COMPANY DATA INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP Parsippany, New Jersey TRANSFER AGENT AND REGISTRAR American Stock Transfer & Trust Co. New York, New York ANNUAL MEETING The annual meeting of shareholders of Urban Edge Properties, will be held May 8, 2019 at 9:00 a.m. at Goodwin Procter LLP, The New York Times Building, 620 Eighth Avenue, New York, NY 10018 REPORT ON FORM 10-K Shareholders may obtain a copy of the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission free of charge (except for exhibits), by writing to the Secretary, Urban Edge Properties, 888 Seventh Avenue, New York, New York 10019; or, visit the Company’s website at www.uedge.com and refer to the Company’s SEC Filings. 888 Seventh Avenue New York, NY 10019 212.956.2555 www.uedge.com 

Continue reading text version or see original annual report in PDF format above