Urban Edge Properties · NYSE:UE
Urban Edge Properties — Merger or Acquisition (December 2014)
51 slides from Urban Edge Properties's merger presentation, Dec 15, 2014
Slide 1: Analyst Presentation
ANALYST PRESENTATION December 15, 2014
Slide 2: Statements
STATEMENTS These slides and the related discussions may contain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are not guarantees of performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions
Slide 3: Overview and Spin Transaction
OVERVIEW AND SPIN TRANSACTION TRANSACTION HIGHLIGHTS Name Urban Edge Properties Exchange / Ticker NYSE / UE Portfolio 79 shopping centers, three malls and a warehouse park (14.9 million owned SF) Distribution Ratio One Urban Edge common share for every two Vornado common shares (1) Expected Dividend
Slide 4: Origins of Urban Edge
ORIGINS OF URBAN EDGE • Founded in 1946 • Converted to a REIT in 1993 • In many ways, Urban Edge with 55 shopping centers is the Vornado of 1993 • Grew to over 100 locations • 44 shopping centers were • 79 shopping centers • Acquired Vornado (fan once anchored by Two Guys company) in 1959 • 44 shopp
Slide 5: Origins of Urban Edge
ORIGINS OF URBAN EDGE Bethlehem, PA 1966 5
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS 1. High quality portfolio concentrated in the Washington, DC to Boston corridor with the New York Metropolitan Region representing two-thirds of total NOI (1) • Average Population / Income (3 Miles) 152,149 / $86,062 (2) • Average Supermarket Sales PSF $724 (3) • Weighted Avera
Slide 7: Portfolio
PORTFOLIO PORTFOLIO QUICK FACTS Number of Assets 83 Total Owned Square Footage (MM) 14.9 Average Shopping Center Size (SF) 177k Occupancy % (1) 95.4% Average Shopping Center Age (years) ~38 NOI (%) (1)(2) Puerto Rico Single- Ground & tenant Warehouse Space 9% < 1% Leases Community 5% 15% Power 51% M
Slide 8: DC to Boston Corridor
DC TO BOSTON CORRIDOR • 71 of the company’s 83 properties are situated in the DC to Boston corridor, representing ~85% of NOI (1) • Most heavily urbanized region in the US • Contains 50 million people • 931 people per square mile, over 10x higher than the US average Note: (1) NOI is based on YTD NOI
Slide 9: New York Metropolitan Region
NEW YORK METROPOLITAN REGION • New York Metropolitan Region represents ~66% of NOI (1) • 45 properties • 9.3 million SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income 9
Slide 10: Puerto Rico
PUERTO RICO • Puerto Rico represents ~12% of NOI (1) • 2 properties • 1.0 million SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income 10
Slide 11: California
CALIFORNIA • California represents ~2% of NOI (1) • 4 properties • 126,000 SF Note: (1) NOI is based on YTD NOI as of September 30, 2014. Excludes third-party fee income 11
Slide 12: Portfolio Highlights: Population Within 3-Mile Ring
PORTFOLIO HIGHLIGHTS POPULATION WITHIN 3-MILE RING UE 152,149 FRT 134,377 EQY 116,949 ROIC 108,088 WRI 99,066 KIM 98,009 BFS 97,259 REG 94,656 RPAI 83,559 CDR 73,272 BRX 72,125 DDR 69,396 RPT 67,016 60,000 85,000 110,000 135,000 160,000 Source: International Strategy & Investment Group, LLC; 2012E 3
Slide 13: Portfolio Highlights: Average Household Income
PORTFOLIO HIGHLIGHTS AVERAGE HOUSEHOLD INCOME WITHIN 3-MILE RING FRT $95,170 BFS $91,718 REG $89,811 UE $86,062 ROIC $82,040 RPT $77,592 EQY $77,473 KIM $75,762 RPAI $73,054 DDR $71,515 WRI $70,025 BRX $68,420 CDR $67,670 $ 60,000 $ 70,000 $ 80,000 $ 90,000 $ 100,000 Source: International Strategy &
Slide 14: Portfolio Highlights: Supermarket Sales PSF
PORTFOLIO HIGHLIGHTS SUPERMARKET SALES PSF (1) (2) UE $724 EQY $625 BFS $600 REG $575 WRI $558 BRX $537 RPAI $525 RPT $505 $500 $560 $620 $680 $740 Source: Peer Company Investor Presentations Note: (1) Based on reporting supermarkets including: RPT (November 2014), RPAI (November 2014), BRX (Novembe
Slide 15: Portfolio Highlights: Average Base Rent
PORTFOLIO HIGHLIGHTS Strong demographic profile and high barrier-to-entry market presence drive rents AVERAGE BASE RENT – 3Q2014 (1) FRT $25.36 UE $19.37 REG $18.30 BFS $18.06 ROIC $17.83 EQY $16.93 WRI $15.95 RPAI $15.34 DDR $13.65 KIM $13.48 RPT $12.78 CDR $12.73 BRX $12.10 $10.00 $14.00 $18.00 $2
Slide 16: Portfolio Highlights: Historical Occupancy
PORTFOLIO HIGHLIGHTS HIGH AND STABLE HISTORICAL OCCUPANCY (1) 100.0% 98.0% 96.0% 95.6% 95.4% 94.9% 95.0% 95.0% 94.5% 94.0% 92.0% 90.0% 2009 2010 2011 2012 2013 3Q 2014 Note: (1) Data as of September 30, 2014. Figures represent owned square feet and exclude warehouses 16
Slide 17: Tenant Profile
TENANT PROFILE Diverse, high quality retailer base 8.0% TOP TENANTS (% of ANNUALIZED CASH RENTAL REVENUE) (1) • 58% of Urban Edge’s top 25 tenants by rental 6.3% revenue have investment grade ratings, 6.0% compared to peer average of 52% (2) 4.7% • 73% of rental revenue received from tenants 4.0% 3.
Slide 18: Management and Board of Trustees
MANAGEMENT AND BOARD OF TRUSTEES BOARD OF TRUSTEES MANAGEMENT TEAM TRUSTEE AFFILIATION NAME ROLE Jeffrey Olson Chairman and CEO, Urban Edge Properties Jeffrey Olson Chairman and Chief Executive Officer Steven Roth Chairman and CEO, Vornado Realty Trust Robert Minutoli Chief Operating Officer Michael
Slide 19: Growth Strategy
GROWTH STRATEGY LEASING REDEVELOPMENT DEVELOPMENT ACQUISITIONS Increase occupancy Revitalization of existing Retail division has Expand footprint by assets delivered projects in leveraging experience Increase rents excess of ~$1.0 billion and relationships in core Build on excess land over the past
Slide 20: Strategy Execution
STRATEGY EXECUTION CORE COMPETENCIES •Identification •Adaptation •Acquisition •Construction •Planning •Commissioning & turnover •Budgeting •Completing leasing •Design •Operating •Pre-leasing 20
Slide 21: Leasing: Las Catalinas Mall, Puerto Rico
LEASING Las Catalinas Mall, Puerto Rico • Centrally located, easily accessible mall serving the densely populated Caguas region • Merchandising dominated by island-based retailers, many of which are struggling in the current weak economy 21
Slide 22: Leasing: Las Catalinas Mall, Puerto Rico
LEASING Las Catalinas Mall, Puerto Rico • Remerchandise with strong mainland retailers looking for 2nd or 3rd locations after Plaza Las Americas and/or Plaza Carolina 7 6 11 13 5 12 4 2 3 1 9 8 10 Before After • Significant representation of island-based 1. P.F. Chang’s 8. Shoe Carnival merchants 2.
Slide 23: Leasing: Walnut Creek, California
LEASING Walnut Creek, California Existing • 29,000 SF Barnes & Noble lease significantly undermarket at $45 PSF rent expires January 31, 2016 • Next to Apple Store and across Olympic Boulevard from Neiman Marcus and Broadway Plaza, which is undergoing a major expansion and renovation • Enormous appe
Slide 24: Leasing: Walnut Creek, California
LEASING Walnut Creek, California 24
Slide 25: Leasing: Walnut Creek, California
LEASING Walnut Creek, California Illustrative Single Tenant Option Illustrative Multiple Tenant Option 25
Slide 26: Redevelopment: Bruckner Plaza, Bronx
REDEVELOPMENT Bruckner Plaza, Bronx, New York Existing • 1963 vintage center serving a densely populated and underserved trade area with easy access to major roads and mass transit; significant frontage on the Bruckner Expressway • Anchored by Kmart, Toys “R” Us, Key Food, Marshalls and Old Navy 26
Slide 27: Redevelopment: Bruckner Plaza, Bronx
REDEVELOPMENT Bruckner Plaza, Bronx, New York Proposed • Renovate and remerchandise southern portion (Key Food, retail/office building and small retail building) and refurbish all site improvements • Significant longer term expansion potential on northern portion (Kmart and Toys “R” Us) upon expirat
Slide 28: Redevelopment: East Hanover, New Jersey
REDEVELOPMENT East Hanover, New Jersey • Older center on Rt. 10, a primary east-west arterial serving affluent areas, adjacent to the warehouse park; anchored by Home Depot, Dick's and Marshalls • Retail: renovate buildings and site work to match physical appearance to customer shopper base • Wareho
Slide 29: Redevelopment: East Hanover, New Jersey
REDEVELOPMENT East Hanover, New Jersey Existing Proposed 29
Slide 30: Redevelopment: Montehiedra Town Center
REDEVELOPMENT Montehiedra Town Center, Puerto Rico • Superior freeway location 5 miles south of San Juan, but outflanked by Plaza Las Americas (5 miles north) and Las Catalinas (8 miles south) • Convert to value/retail outlet format; no competition south of San Juan; only other outlets on the island
Slide 31: Redevelopment: Montehiedra Town Center
REDEVELOPMENT Montehiedra Town Center, Puerto Rico New Additions 31
Slide 32: Development: Bergen Town Center, Before
DEVELOPMENT Bergen Town Center, New Jersey Before • Former Bergen Mall developed by Allied Stores and opened in 1957 anchored by Stern’s and Newberry’s; Ohrbach’s added in 1967 • Partial demolition and major expansion 32
Slide 33: Development: Bergen Town Center, After
DEVELOPMENT Bergen Town Center, New Jersey After • 952,000 SF anchored by Target, Century 21 and Whole Foods; Lowe’s on adjacent owned property • Junior anchors include Marshalls, Rack, Off Fifth, Bloomingdale’s Outlet, Last Call Studio by Neiman Marcus, Nike, H&M, Old Navy and Ulta; REI and 24 Hour
Slide 34: Development: Bergen Town Center
DEVELOPMENT Bergen Town Center, New Jersey After 34
Slide 35: Development: Garfield, New Jersey, Before
DEVELOPMENT Garfield, New Jersey Before • Former Two Guys distribution facility • Total demolition and reconstruction, including extensive environmental and geotechnical remediation 35
Slide 36: Development: Garfield, New Jersey, After
DEVELOPMENT Garfield, New Jersey After • 195,000 SF anchored by Wal-Mart and Marshalls • Approvals in-hand and site work completed for 70,000 SF of additional development 36
Slide 37: Development: North Bergen, New Jersey, Before
DEVELOPMENT North Bergen, New Jersey Before • Former truck transfer terminal in densely populated, underserved NJ trade area just across the Hudson from NYC • Total demolition and reconstruction, including extensive environmental and geotechnical remediation 37
Slide 38: Development: North Bergen, New Jersey, After
DEVELOPMENT North Bergen, New Jersey After • 410,000 SF anchored by Wal-Mart (203,000 SF), BJ’s, Staples, PetSmart and Harbor Freight • Strong, productive small store line-up brings leasing to 100% 38
Slide 39: Development: North Plainfield, New Jersey, Before
DEVELOPMENT North Plainfield, New Jersey Before • Excellent location with more than 3,000 linear feet of frontage on Route 22, a major east-west arterial through affluent suburbs • Older center with vacant Kmart, Pathmark and Circuit City on leased land 39
Slide 40: Development: North Plainfield, New Jersey, After
DEVELOPMENT North Plainfield, New Jersey After • Anchors replaced with Costco and Tile Shop • Texas Roadhouse signed and others in negotiation • 20,000 SF additional capacity on underutilized land • Fee interest acquired 40
Slide 41: Redevelopment Pipeline
REDEVELOPMENT PIPELINE Robust redevelopment pipeline generating strong return on capital INCREMENTAL ($000’s) PROPERTY DESCRIPTION SF COST NOI ROC Bruckner Plaza Renovate and remerchandise non-anchor buildings 112,000 24,000 Montehiedra Town Center Convert to value/retail outlet format 139,100 17,50
Slide 42: Balance Sheet – Liquidity and Leverage
BALANCE SHEET – LIQUIDITY AND LEVERAGE Significant liquidity and attractive cost of capital COMMENTARY DEBT MATURITY PROFILE ($MM / % Int. Rate) (1) • Capitalized for immediate growth Wtd. Avg. Annual Interest Rate: 4.27% Wtd. Avg. Debt Term Years: 6.5 Years $700 • Strong balance sheet with ~$1.3 bi
Slide 43: Balance Sheet – Benchmarking
BALANCE SHEET – BENCHMARKING COST OF DEBT (INTEREST %) (1) DEBT MATURITY PROFILE (YEARS) (2) UE 4.4% ROIC 6.6 FRT 4.6% UE 6.5 ROIC 4.7% WRI 6.5 WRI 5.0% FRT 5.5 BRX 5.0% RPAI 4.8 AAT 5.0% REG 4.5 DDR 5.1% EQY 4.4 KIM 5.1% DDR 4.1 REG 5.3% KIM 4.1 EQY 5.3% BRX 3.4 AKR 5.5% AAT 2.9 RPAI 5.8% AKR 2.4 4
Slide 44: Same Property NOI
SAME PROPERTY NOI FOR THE CALENDAR YEAR ENDED ($MM), FOR THE 9 MONTHS ENDED ($MM), $200 $160 $188 $184 $181 $147 $175 $145 $144 $150 $130 $125 $115 $100 $100 12/31/11 12/31/12 12/31/13 9/30/13 9/30/14 44
Slide 45: Select Financial Information
SELECT FINANCIAL INFORMATION THREE MONTHS ENDED NINE MONTHS ENDED ($MM) SEPTEMBER 30, 2014 SEPTEMBER 30, 2014 2014 ANNUALIZED (1) NOI 50.6 150.2 200.3 (2) Pro Forma OPEX Adjustments (0.7) (2.0) (2.6) (3) Tax Expense – Puerto Rico Properties (0.5) (1.6) (2.1) Indicative Cash NOI 49.4 146.6 195.6 (4)
Slide 46: Urban Edge Properties Balance Sheet
URBAN EDGE PROPERTIES BALANCE SHEET AS OF PRO FORMA AS OF ($MM) SEPTEMBER 30, 2014 ADJUSTMENTS SEPTEMBER 30, 2014 Real Estate, At Cost 2,007 - 2,007 Accumulated Depreciation and Amortization (457) - (457) Cash and Cash Equivalents 133 119 252 (1) Other Tangible Assets 35 - 35 (2) Capitalized Assets
Slide 47: Urban Edge Properties Outstanding Debt
URBAN EDGE PROPERTIES OUTSTANDING DEBT INDICATIVE ANNUALIZED BALANCE ($MM) AT INTEREST RATE (%) AT INTEREST MATURITY SEPTEMBER 30, 2014 SEPTEMBER 30, 2014 EXPENSE ($MM) (1) INTEREST TYPE Crossed collateralized mortgage on 40 properties Fixed Rate September 2020 551 4.28 23.6 Fixed (2) Variable Rate
Slide 48: Appendix
APPENDIX NOI and same property NOI are supplemental non-GAAP measures that aid in the assessment of the unlevered performance of our properties and portfolio as it relates to the total return on assets. The most directly comparable GAAP financial measure is operating income. We calculate NOI by adju
Slide 49: Urban Edge Properties EBITDA
URBAN EDGE PROPERTIES EBITDA Reconciliation of Net Income to EBITDA, Comparable EBITDA and Pro Forma Comparable EBITDA TTM PRO FORMA PRO FORMA ($000’s) 9/30/14 ADJUSTMENTS TTM 9/30/14 Net Income 46,757 (1,983) 44,774 Depreciation, Amortization and Income Taxes 57,400 - 57,400 Interest and Debt Expen
Slide 50: Urban Edge Properties Same Property NOI
URBAN EDGE PROPERTIES SAME PROPERTY NOI Reconciliation of Operating Income to NOI and Same Property NOI TTM YTD YTD ($000’s) 9/30/14 9/30/14 9/30/13 2013 2012 2011 2010 Operating Income 102,229 91,819 156,803 167,213 124,965 144,038 121,427 Depreciation and Amortization 56,184 40,586 38,445 54,043 5
Slide 51: Improving Shopping Centers In and On the Edge of Urban Communities
IMPROVING SHOPPING CENTERS IN AND ON THE EDGE OF URBAN COMMUNITIES 51
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