Urban Edge Properties 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES Page CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm for Urban Edge Properties (PCAOB ID No. 34 ) 38 Report of Independent Registered Public Accounting Firm for Urban Edge Properties LP (PCAOB ID No. 34 ) 40 Urban Edge Properties Consolidated Balance Sheets as of December 31, 2021 and 2020 42 Urban Edge Properties Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 43 Urban Edge Properties Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019 44 Urban Edge Properties Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 45 Urban Edge Properties LP Consolidated Balance Sheets as of December 31, 2021 and 2020 47 Urban Edge Properties LP Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 48 Urban Edge Properties LP Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019 49 Urban Edge Properties LP Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 50 Notes to Consolidated Financial Statements 52 CONSOLIDATED FINANCIAL STATEMENT SCHEDULES Schedule III – Real Estate and Accumulated Depreciation 92 37 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Trustees of Urban Edge Properties Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Urban Edge Properties and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, 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) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements 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. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Real Estate Impairment —Refer to Notes 2, 3 and 9 to the financial statements Critical Audit Matter Description The Company’s real estate assets are individually evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company’s evaluation of the recoverability of real estate assets involves the comparison of the projected undiscounted future cash flows expected to be generated by each real estate asset over the Company’s estimated holding period to the respective carrying amount. The Company’s undiscounted future cash flow analyses require management to make significant estimates, including estimated terminal values determined using appropriate capitalization rates. Total real estate assets as of December 31, 2021 had a net book value of $2.4 billion. Given that the Company’s estimated capitalization rates used in the evaluation of impairment of real estate assets is a significant assumption made by management, performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flow analyses required a high degree of auditor judgment and an increased level of effort, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s estimated capitalization rates used in the evaluation of impairment of real estate assets included the following, among others: • We tested the effectiveness of the Company’s internal controls over management’s evaluation of the recoverability of real estate, including internal controls over management’s determination of the reasonableness of the applicable capitalization rates. 38 • Inquired with management regarding the appropriateness of the capitalization rates, including considerations related to the impact of COVID-19 and evaluating the consistency of the capitalization rates used with evidence obtained in other areas of our audit. • With the assistance of our fair value specialists, we evaluated the reasonableness of the Company’s estimated capitalization rates by: ◦ Testing the source information underlying the determination of the capitalization rates by evaluating the reasonableness of the capitalization rates used by management with independent market data, focusing on key factors, including the impact of the COVID-19 pandemic, geographical location, tenant composition, and property type. ◦ Developing a range of independent estimates of capitalization rates and comparing those to the capitalization rates selected by management. /s/ DELOITTE & TOUCHE LLP New York, New York February 16, 2022 We have served as the Company’s auditor since 2014. 39 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Partners of Urban Edge Properties LP 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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, 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) (PCAOB), the Operating Partnership's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2022, expressed an unqualified opinion on the Operating Partnership’s internal control over financial reporting. Basis for Opinion These financial statements 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. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Real Estate Impairment —Refer to Notes 2, 3 and 9 to the financial statements Critical Audit Matter Description The Operating Partnership's real estate assets are individually evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. The Operating Partnership's evaluation of the recoverability of real estate assets involves the comparison of the projected undiscounted future cash flows expected to be generated by each real estate asset over the Operating Partnership's estimated holding period to the respective carrying amount. The Operating Partnership's undiscounted future cash flow analyses require management to make significant estimates, including estimated terminal values determined using appropriate capitalization rates. Total real estate assets as of December 31, 2021 had a net book value of $2.4 billion. Given that the Operating Partnership's estimated capitalization rates used in the evaluation of impairment of real estate assets is a significant assumption made by management, performing audit procedures to evaluate the reasonableness of management’s undiscounted future cash flow analyses required a high degree of auditor judgment and an increased level of effort, including the need to involve our fair value specialists. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Operating Partnership's estimated capitalization rates used in the evaluation of impairment of real estate assets included the following, among others: 40 • We tested the effectiveness of the Operating Partnership's internal controls over management’s evaluation of the recoverability of real estate, including internal controls over management’s determination of the reasonableness of the applicable capitalization rates. • Inquired with management regarding the appropriateness of the capitalization rates, including considerations related to the impact of COVID-19 and evaluating the consistency of the capitalization rates used with evidence obtained in other areas of our audit. • With the assistance of our fair value specialists, we evaluated the reasonableness of the Operating Partnership's estimated capitalization rates by: ◦ Testing the source information underlying the determination of the capitalization rates by evaluating the reasonableness of the capitalization rates used by management with independent market data, focusing on key factors, including the impact of the COVID-19 pandemic, geographical location, tenant composition, and property type. ◦ Developing a range of independent estimates of capitalization rates and comparing those to the capitalization rates selected by management. /s/ DELOITTE & TOUCHE LLP New York, New York February 16, 2022 We have served as the Operating Partnership’s auditor since 2016. 41 URBAN EDGE PROPERTIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) December 31, December 31, 2021 2020 ASSETS Real estate, at cost: Land $ 543,827 $ 568,662 Buildings and improvements 2,441,797 2,326,450 Construction in progress 212,296 44,689 Furniture, fixtures and equipment 7,530 7,016 Total 3,205,450 2,946,817 Accumulated depreciation and amortization ( 753,947 ) ( 730,366 ) Real estate, net 2,451,503 2,216,451 Operating lease right-of-use assets 69,361 80,997 Cash and cash equivalents 164,478 384,572 Restricted cash 55,358 34,681 Tenant and other receivables 15,812 15,673 Receivables arising from the straight-lining of rents 62,692 62,106 Identified intangible assets, net of accumulated amortization of $ 37,361 and $ 37,009 , respectively 71,107 56,184 Deferred leasing costs, net of accumulated amortization of $ 17,641 and $ 16,419 , respectively 20,694 18,585 Prepaid expenses and other assets 74,111 70,311 Total assets $ 2,985,116 $ 2,939,560 LIABILITIES AND EQUITY Liabilities: Mortgages payable, net $ 1,687,190 $ 1,587,532 Operating lease liabilities 64,578 74,972 Accounts payable, accrued expenses and other liabilities 84,829 132,980 Identified intangible liabilities, net of accumulated amortization of $ 35,029 and $ 71,375 , respectively 100,625 148,183 Total liabilities 1,937,222 1,943,667 Commitments and contingencies (Note 10) Shareholders’ equity: Common shares: $ 0.01 par value; 500,000,000 shares authorized and 117,147,986 and 117,014,317 shares issued and outstanding, respectively 1,170 1,169 Additional paid-in capital 1,001,253 989,863 Accumulated deficit ( 7,091 ) ( 39,467 ) Noncontrolling interests: Operating partnership 39,616 38,456 Consolidated subsidiaries 12,946 5,872 Total equity 1,047,894 995,893 Total liabilities and equity $ 2,985,116 $ 2,939,560 See notes to consolidated financial statements. 42 URBAN EDGE PROPERTIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) Year Ended December 31, 2021 2020 2019 REVENUE Rental revenue $ 422,467 $ 328,280 $ 384,405 Management and development fees 1,169 1,283 1,900 Other income 1,446 532 1,344 Total revenue 425,082 330,095 387,649 EXPENSES Depreciation and amortization 92,331 96,029 94,116 Real estate taxes 63,844 60,049 60,179 Property operating 68,531 56,126 64,062 General and administrative 39,152 48,682 38,220 Casualty and impairment loss, net (1) 468 3,055 12,738 Lease expense 12,872 13,667 14,466 Total expenses 277,198 277,608 283,781 Gain on sale of real estate 18,648 39,775 68,632 Gain on sale of lease — — 1,849 Interest income 360 2,599 9,774 Interest and debt expense ( 57,938 ) ( 71,015 ) ( 66,639 ) Gain on extinguishment of debt — 34,908 — Income before income taxes 108,954 58,754 117,484 Income tax (expense) benefit ( 1,139 ) 38,996 ( 1,287 ) Net income 107,815 97,750 116,197 Less net (income) loss attributable to noncontrolling interests in: Operating partnership ( 4,296 ) ( 4,160 ) ( 6,699 ) Consolidated subsidiaries ( 833 ) ( 1 ) 25 Net income attributable to common shareholders $ 102,686 $ 93,589 $ 109,523 Earnings per common share - Basic: $ 0.88 $ 0.79 $ 0.91 Earnings per common share - Diluted: $ 0.88 $ 0.79 $ 0.91 Weighted average shares outstanding - Basic 117,029 117,722 119,751 Weighted average shares outstanding - Diluted 121,447 117,902 119,896 (1) Refer to Note 2 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. See notes to consolidated financial statements. 43 URBAN EDGE PROPERTIES CONSOLIDATED STATEMENTS 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, 2019 114,345,565 $ 1,143 $ 956,420 $ ( 52,857 ) $ 100,822 $ 449 $ 1,005,977 Net income attributable to common shareholders — — — 109,523 — — 109,523 Net income (loss) attributable to noncontrolling interests — — — — 6,699 ( 25 ) 6,674 Impact of ASC 842 adoption — — — ( 2,918 ) — — ( 2,918 ) Limited partnership interests: Units redeemed for common shares 6,995,941 69 55,788 — ( 4,279 ) — 51,578 Units redeemed for cash — — ( 3,422 ) — ( 2,556 ) — ( 5,978 ) Reallocation of noncontrolling interests — — 4,521 — ( 56,099 ) — ( 51,578 ) Common shares issued 59,895 1 569 ( 131 ) — — 439 Dividends to common shareholders ($ 0.88 per share) — — — ( 106,163 ) — — ( 106,163 ) Distributions to redeemable NCI ($ 0.88 per unit) — — — — ( 5,694 ) — ( 5,694 ) Share-based compensation expense — — 5,906 — 7,643 — 13,549 Share-based awards retained for taxes ( 31,276 ) — ( 633 ) — — — ( 633 ) Balance, December 31, 2019 121,370,125 1,213 1,019,149 ( 52,546 ) 46,536 424 1,014,776 Net income attributable to common shareholders — — — 93,589 — — 93,589 Net income attributable to noncontrolling interests — — — — 4,160 1 4,161 Limited partnership interests: Units redeemed for common shares 1,579,389 15 11,129 — — — 11,144 Reallocation of noncontrolling interests — — 8,833 — ( 19,977 ) — ( 11,144 ) Common shares issued 66,588 1 427 ( 30 ) — — 398 Repurchase of common shares ( 5,873,923 ) ( 59 ) ( 54,082 ) — — — ( 54,141 ) Dividends to common shareholders ($ 0.68 per share) — — — ( 80,480 ) — — ( 80,480 ) Distributions to redeemable NCI ($ 0.68 per unit) — — — — ( 3,386 ) — ( 3,386 ) Contributions from noncontrolling interests — — — — — 5,447 5,447 Share-based compensation expense — — 5,871 — 11,123 — 16,994 Share-based awards retained for taxes ( 127,862 ) ( 1 ) ( 1,464 ) — — — ( 1,465 ) Balance, December 31, 2020 117,014,317 $ 1,169 $ 989,863 $ ( 39,467 ) $ 38,456 $ 5,872 $ 995,893 Net income attributable to common shareholders — — — 102,686 — — 102,686 Net income attributable to noncontrolling interests — — — — 4,296 833 5,129 Limited partnership interests: Units redeemed for common shares 100,000 — 840 — ( 6,302 ) — ( 5,462 ) Reallocation of noncontrolling interests — — 8,206 — ( 2,744 ) — 5,462 Common shares issued 46,731 1 509 ( 144 ) — — 366 Dividends to common shareholders ($ 0.60 per share) — — — ( 70,166 ) — — ( 70,166 ) Distributions to redeemable NCI ($ 0.60 per unit) — — — — ( 2,864 ) — ( 2,864 ) Contributions from noncontrolling interests — — — — — 6,241 6,241 Share-based compensation expense — — 2,045 — 8,774 — 10,819 Share-based awards retained for taxes ( 13,062 ) — ( 210 ) — — — ( 210 ) Balance, December 31, 2021 117,147,986 $ 1,170 $ 1,001,253 $ ( 7,091 ) $ 39,616 $ 12,946 $ 1,047,894 See notes to consolidated financial statements. 44 URBAN EDGE PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2021 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 107,815 $ 97,750 $ 116,197 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 94,135 97,751 96,641 Casualty and impairment loss, net 468 3,055 12,738 Gain on sale of real estate ( 18,648 ) ( 39,775 ) ( 68,632 ) Gain on sale of lease — — ( 1,849 ) Gain on extinguishment of debt — ( 34,908 ) — Amortization of below market leases, net ( 55,173 ) ( 10,624 ) ( 15,940 ) Noncash lease expense 6,802 7,522 8,205 Straight-lining of rent ( 878 ) 10,523 1,021 Share-based compensation expense 10,819 16,994 13,549 Change in operating assets and liabilities: Tenant and other receivables ( 139 ) 5,892 8,119 Deferred leasing costs ( 5,818 ) ( 1,218 ) ( 4,303 ) Prepaid and other assets 5,661 ( 41,982 ) ( 3,331 ) Lease liabilities ( 6,227 ) ( 6,680 ) ( 7,107 ) Accounts payable, accrued expenses and other liabilities ( 3,544 ) 8,522 1,092 Net cash provided by operating activities 135,273 112,822 156,400 CASH FLOWS FROM INVESTING ACTIVITIES Real estate development and capital improvements ( 95,377 ) ( 28,522 ) ( 91,301 ) Acquisitions of real estate ( 252,632 ) ( 124,340 ) ( 47,356 ) Proceeds from sale of operating properties 34,482 54,402 116,510 Proceeds from sale of operating lease 2,367 — 6,949 Insurance proceeds — — 12,677 Net cash used in investing activities ( 311,160 ) ( 98,460 ) ( 2,521 ) CASH FLOWS FROM FINANCING ACTIVITIES Debt repayments ( 18,192 ) ( 89,302 ) ( 5,587 ) Dividends paid to common shareholders ( 123,998 ) ( 26,647 ) ( 106,163 ) Distributions paid to redeemable noncontrolling interests ( 4,937 ) ( 1,314 ) ( 5,694 ) Taxes withheld for vested restricted shares ( 210 ) ( 1,465 ) ( 633 ) Debt issuance costs — ( 3,471 ) ( 2,649 ) Payment for redemption of units — — ( 5,978 ) Proceeds related to the issuance of common shares 366 398 439 Cash paid to repurchase shares — ( 54,141 ) — Contributions from noncontrolling interests 6,241 5,447 — Proceeds from borrowings 117,200 90,250 — Net cash used in financing activities ( 23,530 ) ( 80,245 ) ( 126,265 ) Net (decrease) increase in cash and cash equivalents and restricted cash ( 199,417 ) ( 65,883 ) 27,614 Cash and cash equivalents and restricted cash at beginning of year 419,253 485,136 457,522 Cash and cash equivalents and restricted cash at end of year $ 219,836 $ 419,253 $ 485,136 See notes to consolidated financial statements 45 Year Ended December 31, 2021 2020 2019 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash payments for interest net of amounts capitalized of $ 2,023 , $ 715 and $ 1,425 , respectively $ 58,621 $ 68,113 $ 64,751 Cash payments for income taxes 4,663 499 1,601 NON-CASH INVESTING AND FINANCING ACTIVITIES Accrued capital expenditures included in accounts payable and accrued expenses 18,702 5,808 5,056 Write-off of fully depreciated and impaired assets 10,706 21,447 56,199 Forgiveness of mortgage debt — 30,000 — Assumption of debt from the acquisition of real estate — 72,473 — Dividend/distribution declared and paid in subsequent period — 55,905 — RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at beginning of year $ 384,572 $ 432,954 $ 440,430 Restricted cash at beginning of year 34,681 52,182 17,092 Cash and cash equivalents and restricted cash at beginning of year $ 419,253 $ 485,136 $ 457,522 Cash and cash equivalents at end of year $ 164,478 $ 384,572 $ 432,954 Restricted cash at end of year 55,358 34,681 52,182 Cash and cash equivalents and restricted cash at end of year $ 219,836 $ 419,253 $ 485,136 See notes to consolidated financial statements. 46 URBAN EDGE PROPERTIES LP CONSOLIDATED BALANCE SHEETS (In thousands, except unit and per unit amounts) December 31, December 31, 2021 2020 ASSETS Real estate, at cost: Land $ 543,827 $ 568,662 Buildings and improvements 2,441,797 2,326,450 Construction in progress 212,296 44,689 Furniture, fixtures and equipment 7,530 7,016 Total 3,205,450 2,946,817 Accumulated depreciation and amortization ( 753,947 ) ( 730,366 ) Real estate, net 2,451,503 2,216,451 Operating lease right-of-use assets 69,361 80,997 Cash and cash equivalents 164,478 384,572 Restricted cash 55,358 34,681 Tenant and other receivables 15,812 15,673 Receivables arising from the straight-lining of rents 62,692 62,106 Identified intangible assets, net of accumulated amortization of $ 37,361 and $ 37,009 , respectively 71,107 56,184 Deferred leasing costs, net of accumulated amortization of $ 17,641 and $ 16,419 , respectively 20,694 18,585 Prepaid expenses and other assets 74,111 70,311 Total assets $ 2,985,116 $ 2,939,560 LIABILITIES AND EQUITY Liabilities: Mortgages payable, net $ 1,687,190 $ 1,587,532 Operating lease liabilities 64,578 74,972 Accounts payable, accrued expenses and other liabilities 84,829 132,980 Identified intangible liabilities, net of accumulated amortization of $ 35,029 and $ 71,375 , respectively 100,625 148,183 Total liabilities 1,937,222 1,943,667 Commitments and contingencies (Note 10) Equity: Partners’ capital: General partner: 117,147,986 and 117,014,317 units outstanding, respectively 1,002,423 991,032 Limited partners: 4,662,654 and 4,729,010 units outstanding, respectively 41,030 41,302 Accumulated deficit ( 8,505 ) ( 42,313 ) Total partners’ capital 1,034,948 990,021 Noncontrolling interest in consolidated subsidiaries 12,946 5,872 Total equity 1,047,894 995,893 Total liabilities and equity $ 2,985,116 $ 2,939,560 See notes to consolidated financial statements. 47 URBAN EDGE PROPERTIES LP CONSOLIDATED STATEMENTS OF INCOME (In thousands, except unit and per unit amounts) Year Ended December 31, 2021 2020 2019 REVENUE Rental revenue $ 422,467 $ 328,280 $ 384,405 Management and development fees 1,169 1,283 1,900 Other income 1,446 532 1,344 Total revenue 425,082 330,095 387,649 EXPENSES Depreciation and amortization 92,331 96,029 94,116 Real estate taxes 63,844 60,049 60,179 Property operating 68,531 56,126 64,062 General and administrative 39,152 48,682 38,220 Casualty and impairment loss, net (1) 468 3,055 12,738 Lease expense 12,872 13,667 14,466 Total expenses 277,198 277,608 283,781 Gain on sale of real estate 18,648 39,775 68,632 Gain on sale of lease — — 1,849 Interest income 360 2,599 9,774 Interest and debt expense ( 57,938 ) ( 71,015 ) ( 66,639 ) Gain on extinguishment of debt — 34,908 — Income before income taxes 108,954 58,754 117,484 Income tax (expense) benefit ( 1,139 ) 38,996 ( 1,287 ) Net income 107,815 97,750 116,197 Less: net (income) loss attributable to NCI in consolidated subsidiaries ( 833 ) ( 1 ) 25 Net income attributable to unitholders $ 106,982 $ 97,749 $ 116,222 Earnings per unit - Basic: $ 0.88 $ 0.80 $ 0.92 Earnings per unit - Diluted: $ 0.88 $ 0.80 $ 0.92 Weighted average units outstanding - Basic 120,966 121,957 126,333 Weighted average units outstanding - Diluted 122,107 122,811 126,478 (1) Refer to Note 2 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. See notes to consolidated financial statements. 48 URBAN EDGE PROPERTIES LP CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In thousands, except unit and per unit amounts) Total Shares General Partner Total Units Limited Partners (1) Accumulated Earnings (Deficit) NCI in Consolidated Subsidiaries Total Equity Balance, January 1, 2019 114,345,565 $ 957,563 12,736,633 $ 105,447 $ ( 57,482 ) $ 449 $ 1,005,977 Net income attributable to unitholders — — — — 116,222 — 116,222 Net loss attributable to noncontrolling interests — — — — — ( 25 ) ( 25 ) Impact of ASC 842 adoption — — — — ( 2,918 ) — ( 2,918 ) Common units issued as a result of common shares issued by Urban Edge 59,895 570 — — ( 131 ) — 439 Equity redemption of OP Units 6,995,941 55,857 ( 6,995,941 ) ( 4,279 ) — — 51,578 Equity redemption for cash — ( 3,422 ) ( 357,998 ) ( 2,556 ) — — ( 5,978 ) Limited partnership units issued, net — — 450,624 — — — — Reallocation of noncontrolling interests — 4,521 — ( 56,099 ) — — ( 51,578 ) Distributions to Partners ($ 0.88 per unit) — — — — ( 111,857 ) — ( 111,857 ) Share-based compensation expense — 5,906 — 7,643 — — 13,549 Share-based awards retained for taxes ( 31,276 ) ( 633 ) — — — — ( 633 ) Balance, December 31, 2019 121,370,125 1,020,362 5,833,318 50,156 ( 56,166 ) 424 1,014,776 Net income attributable to unitholders — — — — 97,749 — 97,749 Net income attributable to noncontrolling interests — — — — — 1 1 Common units issued as a result of common shares issued by Urban Edge 66,588 428 475,081 — ( 30 ) — 398 Equity redemption of OP Units 1,579,389 11,144 ( 1,579,389 ) — — — 11,144 Repurchase of common shares ( 5,873,923 ) ( 54,141 ) — — — — ( 54,141 ) Reallocation of noncontrolling interests — 8,833 — ( 19,977 ) — — ( 11,144 ) Distributions to Partners ($ 0.68 per unit) — — — — ( 83,866 ) — ( 83,866 ) Contributions from noncontrolling interests — — — — — 5,447 5,447 Share-based compensation expense — 5,871 — 11,123 — — 16,994 Share-based awards retained for taxes ( 127,862 ) ( 1,465 ) — — — — ( 1,465 ) Balance, December 31, 2020 117,014,317 $ 991,032 4,729,010 $ 41,302 $ ( 42,313 ) $ 5,872 $ 995,893 Net income attributable to unitholders — — — — 106,982 — 106,982 Net income attributable to noncontrolling interests — — — — — 833 833 Common units issued as a result of common shares issued by Urban Edge 46,731 510 33,644 — ( 144 ) — 366 Equity redemption of OP units 100,000 840 ( 100,000 ) ( 6,302 ) — — ( 5,462 ) Reallocation of noncontrolling interests — 8,206 — ( 2,744 ) — — 5,462 Distributions to Partners ($ 0.60 per unit) — — — — ( 73,030 ) — ( 73,030 ) Contributions from noncontrolling interests — — — — — 6,241 6,241 Share-based compensation expense — 2,045 — 8,774 — — 10,819 Share-based awards retained for taxes ( 13,062 ) ( 210 ) — — — — ( 210 ) Balance, December 31, 2021 117,147,986 $ 1,002,423 4,662,654 $ 41,030 $ ( 8,505 ) $ 12,946 $ 1,047,894 (1) Limited partners have a 3.8 % common limited partnership interest in the Operating Partnership as of December 31, 2021 in the form of units of interest in the Operating Partnership (“OP Units”) and Long-Term Incentive Plan (“LTIP”) units. See notes to consolidated financial statements. 49 URBAN EDGE PROPERTIES LP CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2021 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 107,815 $ 97,750 $ 116,197 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 94,135 97,751 96,641 Casualty and impairment loss, net 468 3,055 12,738 Gain on sale of real estate ( 18,648 ) ( 39,775 ) ( 68,632 ) Gain on sale of lease — — ( 1,849 ) Gain on extinguishment of debt — ( 34,908 ) — Amortization of below market leases, net ( 55,173 ) ( 10,624 ) ( 15,940 ) Noncash lease expense 6,802 7,522 8,205 Straight-lining of rent ( 878 ) 10,523 1,021 Share-based compensation expense 10,819 16,994 13,549 Change in operating assets and liabilities: Tenant and other receivables ( 139 ) 5,892 8,119 Deferred leasing costs ( 5,818 ) ( 1,218 ) ( 4,303 ) Prepaid and other assets 5,661 ( 41,982 ) ( 3,331 ) Lease liabilities ( 6,227 ) ( 6,680 ) ( 7,107 ) Accounts payable, accrued expenses and other liabilities ( 3,544 ) 8,522 1,092 Net cash provided by operating activities 135,273 112,822 156,400 CASH FLOWS FROM INVESTING ACTIVITIES Real estate development and capital improvements ( 95,377 ) ( 28,522 ) ( 91,301 ) Acquisitions of real estate ( 252,632 ) ( 124,340 ) ( 47,356 ) Proceeds from sale of operating properties 34,482 54,402 116,510 Proceeds from sale of operating lease 2,367 — 6,949 Insurance proceeds — — 12,677 Net cash used in investing activities ( 311,160 ) ( 98,460 ) ( 2,521 ) CASH FLOWS FROM FINANCING ACTIVITIES Debt repayments ( 18,192 ) ( 89,302 ) ( 5,587 ) Distributions paid to partners ( 128,935 ) ( 27,961 ) ( 111,857 ) Taxes withheld for vested restricted units ( 210 ) ( 1,465 ) ( 633 ) Debt issuance costs — ( 3,471 ) ( 2,649 ) Payment for redemption of units — — ( 5,978 ) Proceeds related to the issuance of common shares 366 398 439 Cash paid to repurchase shares — ( 54,141 ) — Contributions from noncontrolling interests 6,241 5,447 — Proceeds from borrowings 117,200 90,250 — Net cash used in financing activities ( 23,530 ) ( 80,245 ) ( 126,265 ) Net (decrease) increase in cash and cash equivalents and restricted cash ( 199,417 ) ( 65,883 ) 27,614 Cash and cash equivalents and restricted cash at beginning of year 419,253 485,136 457,522 Cash and cash equivalents and restricted cash at end of year $ 219,836 $ 419,253 $ 485,136 See notes to consolidated financial statements. 50 Year Ended December 31, 2021 2020 2019 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash payments for interest net of amounts capitalized of $ 2,023 , $ 715 and $ 1,425 , respectively $ 58,621 $ 68,113 $ 64,751 Cash payments for income taxes 4,663 499 1,601 NON-CASH INVESTING AND FINANCING ACTIVITIES Accrued capital expenditures included in accounts payable and accrued expenses 18,702 5,808 5,056 Write-off of fully depreciated and impaired assets 10,706 21,447 56,199 Forgiveness of mortgage debt — 30,000 — Assumption of debt from the acquisition of real estate — 72,473 — Dividend/distribution declared and paid in subsequent period — 55,905 — RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents at beginning of year $ 384,572 $ 432,954 $ 440,430 Restricted cash at beginning of year 34,681 52,182 17,092 Cash and cash equivalents and restricted cash at beginning of year $ 419,253 $ 485,136 $ 457,522 Cash and cash equivalents at end of year $ 164,478 $ 384,572 $ 432,954 Restricted cash at end of year 55,358 34,681 52,182 Cash and cash equivalents and restricted cash at end of year $ 219,836 $ 419,253 $ 485,136 See notes to consolidated financial statements. 51 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 the Company’s real estate properties and other assets. Unless the context otherwise requires, references to “we”, “us” and “our” refer to Urban Edge Properties and UELP and their consolidated entities/subsidiaries. The Operating Partnership’s capital includes general and common limited partnership interests in the operating partnership (“OP Units”). As of December 31, 2021, Urban Edge owned approximately 96.2 % of the outstanding common OP Units with the remaining limited OP Units held by members of management, Urban Edge’s Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership. The third-party unitholders have limited rights over the Operating Partnership such that they do not have characteristics of a controlling financial interest. As such, the Operating Partnership is considered a variable interest entity (“VIE”), and the Company is the primary beneficiary which consolidates it. The Company’s only investment is the Operating Partnership. The VIE’s assets can be used for purposes other than the settlement of the VIE’s obligations and the Company’s partnership interest is considered a majority voting interest. As of December 31, 2021, our portfolio consisted of 68 shopping centers, five malls and two industrial parks totaling approximately 17.0 million sf, which is inclusive of a 95 % controlling interest in Walnut Creek, CA (Mt. Diablo), and an 82.5 % controlling interest in Sunrise Mall, in Massapequa, NY. 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, 2021, 2020 and 2019 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 the adoption of ASC 842 Leases (“ASU 2016-02”), the Company includes rental revenue deemed uncollectible as a reduction to rental revenue in the consolidated statements of income for the year ended December 31, 2019, as reflected beginning on Form 10-K for the year ended December 31, 2019 . The Company includes real estate impairment charges, and casualty losses (gains) resulting from natural disasters in Casualty and impairment loss, net on its consolidated statements of income for the years ended December 31, 2021, 2020 and 2019 as reflected in this Form 10-K. Refer to Note 9, Fair Value Measurements and Note 10, Commitments and Contingencies in Part II, Item 8 in this Annual Report on Form 10-K for information regarding real estate impairment charges and casualty losses (gains), respectively. Our primary business is the ownership, management, redevelopment, development and operation of retail shopping centers and malls. We do not distinguish our primary business or group our operations on a geographical basis for purposes of measuring performance. The Company’s chief operating decision maker reviews operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. None of our tenants accounted for more than 10% of our revenue or property operating income as of December 31, 2021 . 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 52 could differ from those estimates. 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 include revenue recognition and collectibility of receivables, acquisitions of real estate and valuation of real estate. For more information on these estimates and policies refer to Part II, Item 7 Critical Accounting Policies and Estimates of this Annual Report on Form 10-K. 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 under way and ends when the project is substantially complete. Depreciation is recognized on a straight-line basis over estimated useful lives which range from one to 40 years. Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and assumption of 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 evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Such events and changes include macroeconomic conditions, including those caused by global pandemics, like the recent COVID-19 pandemic, which resulted in property operational disruption and could indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis taking into account the appropriate capitalization rate in determining a future terminal value. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimated fair value may be based on discounted future cash flows utilizing appropriate discount and capitalization rates and, in addition to available market information, third-party appraisals, broker selling estimates or sale agreements under negotiation. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows change based on uncertain market conditions, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. 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 impairment charge is recorded to reflect the estimated fair value. The Company classifies properties as held for sale when executed contract contingencies have been satisfied, which signify that the sale is legally binding. 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, including money market accounts, 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, capital expenditures and cash held for potential Internal Revenue Code Section 1031 tax deferred exchange transactions. Tenant and Other Receivables and Changes in Collectibility Assessment — Tenant receivables include unpaid amounts billed to tenants, disputed enforceable charges and accrued revenues for future billings to tenants for property expenses. We evaluate the collectibility of amounts due from tenants and disputed enforceable charges on both a lease-by-lease and a portfolio-level, which result from the inability of tenants to make required payments under their operating lease agreements. We recognize changes in the collectibility assessment of these operating leases as adjustments to rental revenue in accordance with ASC 842 53 Leases . Management exercises judgment in assessing collectibility and considers payment history, current credit status and publicly available information about the financial condition of the tenant, among other factors. Tenant receivables, and receivables arising from the straight-lining of rents, are written-off directly when management deems the collectibility of substantially all future lease payments from a specific lease is not probable, at which point, the Company will begin recognizing revenue from such leases prospectively, based on actual amounts received. This write-off effectively reduces cumulative non-cash rental income recognized from the straight-lining of rents since lease commencement. If the Company subsequently determines that it is probable it will collect substantially all of the lessee’s remaining lease payments under the lease term, the Company will reinstate the receivables balance, including those arising from the straight-lining of rents. Deferred Leasing Costs — Deferred leasing costs include incremental costs of a lease that would have not been incurred if the lease had not been executed, including broker and sale commissions, and contingent legal fees. Such costs are capitalized and amortized on a straight-line basis over the term of the related leases as depreciation and amortization expense on the consolidated statements of income. Deferred leasing costs also includes lease incentives that can be used at the discretion of the tenant. Lease incentives are capitalized and amortized over the term of the related leases as a reduction to rental revenue on the consolidated statements of income. 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 were drawn or outstanding under the revolving credit agreement as of December 31, 2021. Deferred financing costs are included in prepaid expenses and other assets on the consolidated balance sheets. Revenue Recognition — We have the following revenue sources and revenue recognition policies: • Rental revenue: Rental revenue comprises revenue from fixed and variable lease payments, as designated within tenant operating leases in accordance with ASC 842 Leases, as described further in our Leases accounting policy in Note 3 to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. • Rental revenue deemed uncollectible: We evaluate the collectibility of amounts due from tenants and disputed enforceable charges on both a lease-by-lease and a portfolio-level, which result from the inability of tenants to make required payments under their operating lease agreements. We recognize changes in the collectibility assessment of these operating leases as adjustments to rental revenue in accordance with ASC 842. • 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 Revenue from Contracts with Customers . • 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. Leases — We have approximately 900 operating leases at our properties, which generate rental income from tenants and operating cash flows for the Company. Our tenant leases are dependent on the Company, as lessor, agreeing to provide our tenants with the right to control the use of our real estate assets, as lessees. Our real estate assets are comprised of retail shopping centers, malls and industrial parks. Tenants agree to use and control their agreed upon space for their business purposes. Thus, our tenants obtain substantially all of the economic benefits from the use of our shopping center space and have the right to direct how and for what purpose the real estate space is used throughout the period of use. Given these contractual terms, the Company has determined that all tenant contracts of this nature contain a lease. The Company assesses lease classification for each new and modified lease. All new and modified leases which commenced in the year ended December 31, 2021 have been assessed and classified as operating leases. Contractual rent increases of renewal options are often fixed at the time of the initial lease agreement which may result in tenants being able to exercise their renewal options at amounts that are less than the fair value of the rent at the date of renewal. In addition to fixed base rents, certain rental income derived from our tenant leases is variable and may be dependent on percentage rent or the Consumer Price Index ("CPI"). Variable lease payments from percentage rents are earned by the Company in the event the tenant's gross sales exceed certain amounts. Terms of percentage rent are agreed upon in the tenant's lease and will vary based on the tenant's sales. Variable lease payments dependent on the CPI, will change in accordance with the corresponding increase or decrease in CPI if negotiated and agreed upon in the tenant's lease. Variable lease payments dependent on percentage rent and the CPI were $ 9.8 million and $ 2.4 million for the years ended December 31, 2021 and 2020, respectively. Variable lease payments also arise from tenant expense reimbursements, which provide for the recovery of all or a portion of the operating expenses, common area maintenance expenses, real estate taxes, insurance and capital improvements of 54 the respective property and amounted to $ 101.3 million and $ 96.7 million for the years ended December 31, 2021 and 2020, respectively. The Company accounts for variable lease payments as Rental revenue on the consolidated statements of income in the period in which the changes in facts and circumstances on which the variable lease payments are based occur. The Company also has twenty properties in its portfolio either completely or partially on land or in a building that are owned by third parties. These properties are leased or subleased to us pursuant to ground leases, building leases or easements, with remaining terms ranging from one to 78 years and provide us the right to operate each such property. We also lease or sublease real estate for our three corporate offices with remaining terms of less than one year . Right-of-use ("ROU") assets are recorded for these leases, which represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from these leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The initial measurement of a ROU asset may differ from the initial measurement of the lease liability due to initial direct costs, prepaid lease payments and lease incentives. As of December 31, 2021, no other contracts have been identified as leases . Our leases often offer renewal options, which we assess against relevant economic factors to determine whether the Company is reasonably certain of exercising or not exercising the option. Lease payments associated with renewal periods, for which the Company has determined are reasonably certain of being exercised, are included in the measurement of the corresponding lease liability and ROU asset. For finance leases and operating leases, the discount rate applied to measure each ROU asset and lease liability is based on the incremental borrowing rate of the lease due to the rate implicit in the lease not being readily determinable. The Company initially considers the general economic environment and factors in various financing and asset specific secured borrowings so that the overall incremental borrowing rate is appropriate to the intended use of the lease. Certain expenses derived from these leases are variable and are not included in the measurement of the corresponding lease liability and ROU asset, but are recognized in the period in which the obligation for those payments is incurred. These variable lease payments consist of payments for real estate taxes and common area maintenance, which is dependent on projects and activities at each individual property under ground or building lease. 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 the 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 for which the equity owners as a group lack any one of the following characteristics: (i) the power, through voting rights or similar rights, to direct the activities of a legal entity that most significantly impact the entity’s economic performance, (ii) the obligation to absorb the expected losses of the legal entity, or (iii) the right to receive the expected residual returns of the legal entity, 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 financial statements reflect the consolidation of VIEs in which the Company is the primary beneficiary. Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling financial interest in, an entity in which we have a variable interest. Factors considered in determining whether we have the power to direct the activities that most significantly impact the entity’s economic performance include voting rights, involvement in day-to-day capital and operating decisions and the extent of our involvement in the entity. Excluding the Operating Partnership, the Company had two entities that met the criteria of a VIE in which we held variable interests as of December 31, 2021 and 2020. These entities are VIEs primarily because the noncontrolling interests do not have substantive kick-out or participating rights and we control the significant operating decisions and consequently have the power to direct the activities that most significantly impact the economic performance of these entities. As we also have the obligation to absorb the majority of the losses and/or the right to receive a majority of the benefits for these entities, they were consolidated in our financial statements as of December 31, 2021 and 2020. The majority of the operations of these VIEs are funded with cash flows generated by the properties and periodic cash contributions. As of December 31, 2021 and 2020, excluding the Operating Partnership, the two consolidated VIEs had total assets of $ 48.5 million and $ 43.6 million, respectively and total liabilities of $ 24.7 million and $ 31.5 million, respectively. 55 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. 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. 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 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 — The Company elected to be taxed as a REIT under sections 856-860 of 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 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 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, in particular income taxes arising from its operating activities in Puerto Rico, which 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 future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. The Company applies the FASB’s guidance relating to uncertainty in income taxes recognized in a Company’s financial statements. Under this guidance the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods. The Company records interest and penalties relating to unrecognized tax benefits, if any, as income tax expense 56 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, 2021. As of December 31, 2021, The TJX Companies, Inc. was our largest tenant with twenty-two stores which comprised an aggregate of 714,731 sf and accounted for approximately $ 20.6 million, or 4.8 % of our total revenue for the year ended December 31, 2021. Recently Issued Accounting Literature Effective for the fiscal period beginning January 1, 2019, we adopted ASC 842 Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). In connection with the adoption of ASU 2016-02, we also adopted (i) ASU 2019-01 Leases (ASC 842): Codification Improvements , (ii) ASU 2018-20 Leases (ASC 842): Narrow-Scope Improvements for Lessors , (iii) ASU 2018-11 Leases (ASC 842): Targeted Improvements , (iv) ASU 2018-10 Codification Improvements to ASC 842, Leases and (v) ASU 2018-01 Leases (ASC 842): Land Easement Practical Expedient for Transition to Topic 842. We initially applied the standard at the beginning of the period of adoption through the transition method issued by ASU 2018-11 and have presented comparative periods under ASC 840 Leases . Due to the effects of applying ASC 842, the Company recognized a $ 2.9 million cumulative-effect adjustment to its accumulated deficit in the year ended December 31, 2019 to adjust r eserves on receivables from straight-line rents . The new standard requires lessees to apply a two-model approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a ROU asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The Company has elected the short-term lease recognition exemption, and therefore, leases with a term of 12 months or less are not recognized on the balance sheet. The new standard requires lessors to account for leases using an approach that is substantially equivalent to guidance for sales-type leases, direct financing leases and operating leases under ASC 840. For purposes of transition, we did not elect the hindsight practical expedient but did elect the land easement practical expedient to not reassess whether existing land easements contain leases and the practical expedient package, which has been applied consistently to all of our leases. As a result of electing the practical expedient package, we did not (i) reassess whether any expired or existing contracts are or contain leases, (ii) reassess the lease classification for any expired or existing leases or (iii) reassess initial direct costs for any existing leases. From a lessee perspective, the initial adoption on January 1, 2019 resulted in the recognition of operating lease ROU assets and lease liabilities. Additionally, we reclassified certain amounts of acquired below-market lease intangibles and accrued rent and adjusted the carrying values of our ROU assets by the corresponding amounts. As of December 31, 2021, the Company had 24 operating leases and our operating lease ROU assets and lease liabilities were $ 69.4 million and $ 64.6 million, respectively, as presented on our consolidated balance sheet. As of December 31, 2021, our finance lease ROU asset and finance lease liabilities were $ 2.7 million and $ 3.0 million, respectively. The finance lease ROU asset is included within prepaid expenses and other assets on our consolidated balance sheets as of December 31, 2021 and 2020 and the finance lease liability is included within accounts payable, accrued expenses and other liabilities on our consolidated balance sheets as of December 31, 2021 and 2020. The Company recognizes interest expense on its finance lease liability. The standard's adoption has also impacted the presentation of our consolidated income statements due to accounting for the lease and non-lease components as a single lease component for all classes of underlying assets, presented as lease expense on the consolidated statements of income. Prior to the adoption of ASC 842, related lease and non-lease expense amounts were recognized within lease expense, real estate taxes, property operating expenses and general administrative expenses on the consolidated statements of income. From a lessor perspective, the adoption resulted in additional general and administrative expenses, attributable to internal leasing department costs not meeting the definition of initial direct costs under ASC 842. The standard's adoption has also impacted the presentation of our consolidated income statements due to accounting for lease and non-lease components as a single lease component, presented as rental revenue on the consolidated statements of income, however there has been no change in the timing of revenue recognition since adoption. Additionally, under the amendments issued in ASU 2018-20, the Company has accounted for common area maintenance expenses paid directly by tenants to third-parties as variable rental revenue and has reported the corresponding expense within property operating expenses. Real estate taxes and insurance expenses paid directly by tenants have not been recognized as rental revenue or as expenses on the consolidated statements of income. 57 In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We currently do not anticipate the need to modify our existing debt agreements as a result of reference rate reform in the current year, however if any modification is executed as a result of reference rate reform, the Company will elect the optional expedient available under ASU 2020-04, which allows entities to account for the modification as if the modification was not substantial. We will disclose the nature of and reason for electing the optional expedient in each interim and annual financial statement period if and when applicable through December 31, 2022. In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief, that lessors provide to mitigate the economic effects of COVID-19 on lessees, is a lease modification under ASC 842. Instead, when the cash flows resulting from the lease concession granted for COVID-19 rent relief are substantially the same or less than the cash flows of the original contract, an entity may elect to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). The FASB stated that there are multiple ways to account for rent concessions, none of which the FASB believes are more preferable than the others. Two of those methods are: (i) account for the concessions as if no changes to the lease contract were made; under that accounting, a lessor would continue to increase its lease receivable and continue to recognize income, referred to as the “receivable approach”; or (ii) account for the deferred payments or abatements as variable lease payments; under that accounting, a lessor would recognize the payment as income in profit or loss in the period in which the changes in facts and circumstances on which the variable lease payments are based occurred, referred to as the “variable approach”. The Company makes the election to account for rent concessions using the receivable approach or variable approach a on a disaggregated basis, with such election applied consistently to leases with similar characteristics and similar circumstances. As of December 31, 2021, the Company has granted rent deferrals accounted under both the receivable approach by electing the Lease Modification Q&A and as modifications due to term extensions of the leases. The Company has also granted abatements accounted for under both the variable approach and as modifications due to the executed agreements including other rental term modifications, such as term extensions and substantial changes in cash flows. Refer to Note 10 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. 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. 58 4. ACQUISITIONS AND DISPOSITIONS Acquisitions During the years ended December 31, 2021 and December 31, 2020, we closed on the following acquisitions: Date Purchased Property Name City State Square Feet Purchase Price (in thousands) August 10, 2021 601 Murray Road East Hanover NJ 88,000 $ 18,312 August 19, 2021 151 Ridgedale Avenue East Hanover NJ 187,000 37,759 December 23, 2021 Woodmore Towne Centre Glenarden MD 712,000 198,055 2021 Total $ 254,126 (1) February 12, 2020 Kingswood Center Brooklyn NY 130,000 $ 90,212 February 12, 2020 Kingswood Crossing Brooklyn NY 110,000 77,077 December 11, 2020 51 East Spring Valley Ave Maywood NJ 3,000 662 December 31, 2020 Sunrise Mall Massapequa NY 1,211,000 31,545 2020 Total $ 199,496 (1) (1) The total purchase price for the properties acquired in the years ended December 31, 2021 and December 31, 2020 include $ 5.2 million and $ 3.1 million, respectively, of transaction costs incurred in relation to the transactions. During the year ended December 31, 2021, the Company purchased three assets, at an aggregate purchase price of $ 254.1 million and 987,000 sf, comprising two assets located in East Hanover, NJ, and one asset located in Glenarden, MD. In December 2021, the Company closed on the acquisition of Woodmore Towne Centre, a 712,000 sf retail center located in Glenarden, MD, for a purchase price of $ 198.1 million, including transaction costs. The property is 97 % leased and sits on 83 acres and includes an additional 22 acres of land adjacent to the main parcel that may be developed for a complementary commercial use in the future. To partially fund the acquisition, the Company entered into a 10 -year, $ 117.2 million non-recourse first mortgage secured by the property. The mortgage has a fixed interest rate of 3.39 % and is interest-only for the entire loan term. The two industrial properties, acquired in August 2021, are adjacent to our existing 943,000 sf warehouse park in East Hanover, NJ. The acquisition of 151 Ridgedale Avenue was partially funded via a 1031 exchange using cash proceeds from previous dispositions. The Company purchased four assets with a total consideration of $ 199.5 million during the year ended December 31, 2020. two of the assets are located in Brooklyn, NY, one asset is located in Massapequa, NY and one asset is located in Maywood, NJ and is adjacent to our existing property, Bergen Town Center. The Company acquired Sunrise Mall in Massapequa, NY for $ 31.5 million, including transaction costs on December 31, 2020. The Company’s acquired ownership interest of the asset is 82.5 % with the remaining 17.5 % held by strategic partners. The Company acquired Kingswood Center and Kingswood Crossing for $ 167.3 million, including transaction costs on February 12, 2020. The properties are located along Kings Highway in the Midwood neighborhood of Brooklyn, NY and were funded via 1031 exchanges using cash proceeds from dispositions. Additionally, as part of the acquisition of Kingswood Center, the Company assumed a $ 65.5 million mortgage, which matures in 2028. A portion of the acquisition of Kingswood Crossing was completed as a reverse Section 1031 exchange. We entered into a reverse Section 1031 exchange agreement with third-party intermediaries, which, for a maximum of 180 days, allowed us to defer for tax purposes, gains on the sale of other properties identified and sold within the period. Until the earlier of the termination of the exchange agreements or 180 days after the respective acquisition dates, the third-party intermediaries are the legal owner of the properties; however, we controlled the activities that most significantly impact each property and retained all of the economic benefits and risks associated with each property. Therefore, at the date of acquisition, we determined that we were the primary beneficiary of these variable interest entities and consolidated the properties and their operations as of the acquisition date. 59 The aggregate purchase price of the above property acquisitions has been allocated as follows: Property Name Land Buildings and improvements Identified intangible assets (1) Identified intangible liabilities (1) Debt Premium ROU assets net of lease liabilities Other assets, net Total Purchase Price (in thousands) 601 Murray Road $ 2,075 $ 14,733 $ 1,722 $ ( 218 ) $ — — — 18,312 151 Ridgedale Avenue 2,990 35,509 — ( 740 ) — — — 37,759 Woodmore Towne Centre (3) 28,398 144,834 23,128 ( 8,035 ) — — $ 9,730 198,055 2021 Total $ 33,463 $ 195,076 $ 24,850 $ ( 8,993 ) $ — $ — $ 9,730 $ 254,126 Kingswood Center $ 15,690 $ 76,766 $ 9,263 $ ( 4,534 ) $ ( 6,973 ) $ — $ — $ 90,212 Kingswood Crossing 8,150 64,159 4,768 — — — — 77,077 51 East Spring Valley Ave 662 — — — — — — 662 Sunrise Mall (2) 44,035 3,084 5,495 ( 26,495 ) — 5,012 414 31,545 2020 Total $ 68,537 $ 144,009 $ 19,526 $ ( 31,029 ) $ ( 6,973 ) $ 5,012 $ 414 $ 199,496 (1) As of December 31, 2021, the remaining weighted average amortization periods of the identified intangible assets and identified intangible liabilities acquired in 2021 were 8.7 years and 14.7 years, respectively and the remaining weighted average amortization periods of the identified intangible assets and identified intangible liabilities acquired in 2020 were 10.3 years and 27.2 years, respectively. (2) In connection with this acquisition, the Company acquired the lessee positions of ground leases and recognized operating lease ROU assets and operating lease liabilities. Refer to Note 8 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information. (3) The amount allocated to Other assets, net relates to future reimbursements from the county for development work performed by the previous owner and is included in Prepaid expenses and other assets on our consolidated balance sheets. Dispositions During the year ended December 31, 2021, we disposed of three properties and one property parcel and received proceeds of $ 34.9 million, net of selling costs, resulting in an $ 18.6 million net gain on sale of real estate. Of these dispositions completed during the year ended December 31, 2021, two were completed as a 1031 exchange with the acquisition of 151 Ridgedale Avenue, allowing for the deferral of capital gains from the sale for income tax purposes. During the year ended December 31, 2021 , the Company also sold its lessee position in its ground lease at Vallejo, CA and received proceeds of $ 2.4 million , net of selling costs, and derecognized the ROU asset and corresponding lease liability related to the lease. During the year ended December 31, 2020, we disposed of three properties and received proceeds of $ 58.1 million, net of selling costs, resulting in a $ 39.8 million net gain on sale of real estate. The sale of all three dispositions were completed as 1031 exchanges with Kingswood Crossing as a result of the sales occurring within 180 days of the Company’s acquisition. Real Estate Held for Sale As of December 31, 2020, a parcel of one property in Lodi, NJ was classified as held for sale based on an executed contract of sale with a third-party buyer. The aggregate amount of this parcel was $ 7.1 million and was included in prepaid expenses and other assets in our consolidated balance sheets as of December 31, 2020. The parcel was sold in January 2021. There was no real estate held for sale as of December 31, 2021. 60 5. IDENTIFIED INTANGIBLE ASSETS AND LIABILITIES The following table summarizes our identified intangible assets and liabilities: (Amounts in thousands) December 31, 2021 December 31, 2020 In-place leases $ 96,648 $ 82,303 Accumulated amortization ( 33,057 ) ( 32,515 ) Above-market leases 10,185 9,255 Accumulated amortization ( 3,147 ) ( 3,570 ) Other intangible assets 1,635 1,635 Accumulated amortization ( 1,157 ) ( 924 ) Identified intangible assets, net of accumulated amortization 71,107 56,184 Below-market leases 135,654 219,558 Accumulated amortization ( 35,029 ) ( 71,375 ) Identified intangible liabilities, net of accumulated amortization $ 100,625 $ 148,183 Amortization of acquired below-market leases, net of acquired above-market leases resulted in rental income of $ 55.2 million , $ 10.6 million , and $ 15.9 million for the years ended December 31, 2021, 2020 and 2019, respectively. On September 29, 2021, the Company entered into agreements to terminate our three remaining Kmart and Sears leases effective October 15, 2021. The modification of these leases resulted in accelerated amortization of the below-market intangible lease liabilities of $ 45.9 million which is included in rental revenue for the year ended December 31, 2021. The intangibles related to these leases were fully amortized and subsequently written-off in 2021. Amortization of acquired in-place leases and customer relationships resulted in depreciation and amortization expense of $ 8.6 million , $ 10.2 million , and $ 8.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. During 2021, we recognized $ 0.4 million of accelerated amortization of the in-place lease intangibles related to the Kmart and Sears lease terminations noted above. The following table sets forth the estimated annual amortization (expense) and income related to intangible assets and liabilities for the five succeeding years commencing January 1, 2022: (Amounts in thousands) Below-Market Above-Market In-Place Lease Year Operating Lease Amortization Operating Lease Amortization Amortization 2022 $ 7,817 $ ( 1,154 ) $ ( 10,103 ) 2023 7,771 ( 1,092 ) ( 8,355 ) 2024 7,536 ( 996 ) ( 7,127 ) 2025 7,354 ( 803 ) ( 6,082 ) 2026 6,976 ( 683 ) ( 5,469 ) 61 6. MORTGAGES PAYABLE The following is a summary of mortgages payable as of December 31, 2021 and December 31, 2020. Interest Rate at December 31, December 31, (Amounts in thousands) Maturity December 31, 2021 2021 2020 First mortgages secured by: Variable rate Cherry Hill (Plaza at Cherry Hill) (1) 5/24/2022 1.70 % $ 28,244 $ 28,930 Woodbridge (Plaza at Woodbridge) (1) 5/25/2022 1.70 % 54,029 55,340 Jersey City (Hudson Commons) (2) 11/15/2024 2.00 % 28,034 28,586 Watchung (2) 11/15/2024 2.00 % 26,097 26,613 Bronx (1750-1780 Gun Hill Road) (2) 12/1/2024 2.00 % 24,680 25,172 Westfield (One Lincoln Plaza) (3) — — % — 4,730 Total variable rate debt 161,084 169,371 Fixed rate Paramus (Bergen Town Center - West) 4/8/2023 3.56 % 300,000 300,000 Bronx (Shops at Bruckner) 5/1/2023 3.90 % 9,698 10,351 Jersey City (Hudson Mall) 12/1/2023 5.07 % 22,154 22,904 Yonkers Gateway Center 4/6/2024 4.16 % 26,774 28,482 Brick 12/10/2024 3.87 % 49,554 50,000 North Plainfield 12/10/2025 3.99 % 25,100 25,100 Las Catalinas 2/1/2026 4.43 % 123,977 127,669 Middletown 12/1/2026 3.78 % 31,400 31,400 Rockaway 12/1/2026 3.78 % 27,800 27,800 East Hanover (200 - 240 Route 10 West) 12/10/2026 4.03 % 63,000 63,000 North Bergen (Tonnelle Ave) 4/1/2027 4.18 % 100,000 100,000 Manchester 6/1/2027 4.32 % 12,500 12,500 Millburn 6/1/2027 3.97 % 22,944 23,381 Totowa 12/1/2027 4.33 % 50,800 50,800 Woodbridge (Woodbridge Commons) 12/1/2027 4.36 % 22,100 22,100 East Brunswick 12/6/2027 4.38 % 63,000 63,000 East Rutherford 1/6/2028 4.49 % 23,000 23,000 Brooklyn (Kingswood Center) 2/6/2028 5.07 % 70,815 71,696 Hackensack 3/1/2028 4.36 % 66,400 66,400 Marlton 12/1/2028 3.86 % 37,400 37,400 East Hanover Warehouses 12/1/2028 4.09 % 40,700 40,700 Union (2445 Springfield Ave) 12/10/2028 4.01 % 45,600 45,600 Freeport (Freeport Commons) 12/10/2029 4.07 % 43,100 43,100 Montehiedra 6/1/2030 5.00 % 79,381 81,141 Montclair 8/15/2030 3.15 % 7,250 7,250 Garfield 12/1/2030 4.14 % 40,300 40,300 Woodmore Towne Centre 1/6/2032 3.39 % 117,200 — Mt Kisco 11/15/2034 6.40 % 12,377 12,952 Total fixed rate debt 1,534,324 1,428,026 Total mortgages payable 1,695,408 1,597,397 Unamortized debt issuance costs ( 8,218 ) ( 9,865 ) Total mortgages payable, net of unamortized debt issuance costs $ 1,687,190 $ 1,587,532 (1) Bears interest at one month LIBOR plus 160 bps. (2) Bears interest at one month LIBOR plus 190 bps. (3) Loan repaid in July 2021 in connection with the disposition of the property. 62 The net carrying amount of real estate collateralizing the above indebtedness amounted to approximately $ 1.4 billion as of December 31, 2021. 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, 2021, we were in compliance with all debt covenants. As of December 31, 2021, the principal repayments for the next five years and thereafter are as follows: (Amounts in thousands) Year Ending December 31, 2022 $ 98,915 2023 349,814 2024 163,721 2025 40,946 2026 230,694 Thereafter 811,318 Revolving Credit Agreement On January 15, 2015, we entered into a $ 500 million Revolving Credit Agreement (the “Agreement”) with certain financial institutions. On March 7, 2017, we amended and extended the Agreement. The amendment increased the credit facility size by $ 100 million to $ 600 million and extended the maturity date to March 7, 2021 with two six-month extension options. On July 29, 2019, we entered into a second amendment to the Agreement to extend the maturity date to January 29, 2024 with two six-month extension options. On June 3, 2020, we entered into a third amendment to the Agreement, which among other things, modifies certain definitions and the measurement period for certain financial covenants to a trailing four-quarter period instead of the most recent quarter period annualized. Company borrowings under the Agreement are subject to interest at LIBOR plus 1.05 % to 1.50 % and an annual facility fee of 15 to 30 basis points. Both the spread over LIBOR and the facility fee are based on our current leverage ratio and are subject to change. The Agreement contains customary financial covenants including a maximum leverage ratio of 60 % and a minimum fixed charge coverage ratio of 1.5 x. No amounts were drawn or outstanding under the Agreement as of December 31, 2021 and 2020. Financing costs associated with executing the Agreement of $ 2.2 million and $ 3.3 million as of December 31, 2021 and 2020, respectively, are included in the prepaid expenses and other assets line item of the consolidated balance sheets, as deferred financing costs, net. Mortgage on Las Catalinas Mall In April 2020, we notified the servicer of the $ 129 million non-recourse mortgage loan on Las Catalinas Mall in Puerto Rico that cash flow would be insufficient to service the debt and that we were unwilling to fund the shortfalls. In December 2020, the non-recourse mortgage loan on Las Catalinas Mall was modified to convert the mortgage from an amortizing 4.43 % loan to interest only payments, starting at 3.00 % in 2021 and increasing 50 basis points annually until returning to 4.43 % in 2024 and thereafter, and enables the Company, at its option, to repay the loan at a discounted value of $ 72.5 million, beginning in August 2023 through the extended maturity date of February 2026. While it is possible we will be able to repay the loan at the discounted value in the future, it is contingent upon certain factors including the future operating performance of the property as well as the ability to meet all required payments on the loan. Therefore, in accordance with ASC 470-60 Troubled Debt Restructurings , the Company did not recognize a gain at the time of the restructuring, as the future cash payments, including contingent payments, are greater than the carrying value of the mortgage payable. We have accrued interest of $ 5.4 million related to this mortgage, which is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets as of December 31, 2021. We incurred $ 1.2 million of lender fees in connection with the loan modification which are treated as a reduction of the mortgage payable balance and amortized over the term of the loan in accordance with the provisions under ASC 470-60. Mortgage on Woodmore Towne Centre On December 23, 2021, the Company entered into a 10 -year, $ 117.2 million non-recourse first mortgage to partially fund the acquisition of its property in Glenarden, MD. The mortgage is secured by the property with a fixed interest rate of 3.39 % and is interest-only for the entire loan term. 63 Mortgage on The Outlets at Montehiedra In connection with the refinancing of the loan secured by The Outlets at Montehiedra (“Montehiedra”) in the second quarter of 2020, the Company provided a $ 12.5 million limited corporate guarantee. The guarantee is reduced commensurate with the loan amortization schedule and will reduce to zero in approximately five years. As of December 31, 2021, the remaining exposure under the guarantee is $ 9.9 million. There was no separate liability recorded related to this guarantee. 7. INCOME TAXES The Company elected to be taxed as a REIT under sections 856-860 of 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 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 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, in particular income taxes arising from its operating activities in Puerto Rico, which are included in income tax expense in the consolidated statements of income. The Company satisfied its REIT distribution requiremen t by distributing $ 0.60 per common share in 2021, which comprised a regular quarterly cash dividend of $ 0.15 per common share declared for each quarter of 2021. During the year ended December 31, 2020, the Company declared a regular cash dividend of $ 0.22 per common share for the first quarter of 2020 and a special cash dividend of $ 0.46 per common share in December 2020. During the year ended December 31, 2019, the Company declared cash distributions on our common shares of $ 0.88 per share. The taxability of such dividends for the years ended December 31, 2021, 2020 and 2019 are as follows: Year Ended December 31, 2021 2020 2019 Dividend paid per share (1) $ 0.60 $ 0.68 $ 0.88 Ordinary income 100 % 100 % 83 % Return of capital — % — % — % Capital gains — % — % 17 % (1) The special cash dividend of $ 0.46 per common share declared in December 2020, and paid in January 2021, was fully allocable to the 2020 tax year. For U.S. federal income tax purposes, the REIT and other minority members are partners in the Operating Partnership. As such, the partners are required to report their share of taxable income on their respective tax returns. However, the Company maintains certain non-real estate operating activities that could not be performed by the REIT, and occur through the Company’s TRS, which is subject to federal, state and local income taxes. These income taxes are included in the income tax expense in the consolidated statements of income. During the year ended December 31, 2021, the REIT was subject to Puerto Rico corporate income taxes on its allocable share of the Company’s Puerto Rico operating activities. The Puerto Rico corporate income tax consists of a flat 18.5 % tax rate plus a graduated income surcharge tax for a maximum corporate income tax rate of 37.5 %. In addition, the REIT is subject to a 10 % branch profits tax on the earnings and profits generated from its allocable share of the Company’s Puerto Rico operating activities and such tax is included in income tax expense in the consolidated statements of income. During the year ended December 31, 2020 the Company also had activities occurring in special partnerships subject to a Puerto Rico 29 % non-resident withholding tax on the net income from operating activities allocated to the Operating Partnership. On June 1, 2020, the Company completed a mortgage refinancing of its mall in Puerto Rico, The Outlets at Montehiedra. The debt forgiven as a part of this refinancing resulted in a write-down to our Puerto Rico tax basis in the mall equal to such amount of debt forgiven and the recognition of a deferred tax liability on the Company’s consolidated balance sheet, which amounted to $ 10.3 million. On June 5, 2020 and December 11, 2020, the Company completed a legal entity restructuring of Montehiedra and Las Catalinas Mall, respectively. The legal entity restructurings resulted in a step up in our Puerto Rico tax basis in each mall and the recognition of a deferred tax asset on the Company’s consolidated balance sheet, which amounted to $ 23.7 million for Montehiedra and $ 29.5 million for Las Catalinas Mall. 64 Together, the refinancing and legal entity restructuring transactions resulted in a net deferred tax asset of $ 42.9 million, which is included in prepaid expenses and other assets on the consolidated balance sheets as of December 31, 2020, and the Company recognized an accompanying Puerto Rico income tax benefit on the consolidated statements of income during the year ended December 31, 2020. As a result of the Montehiedra refinancing and the Las Catalinas Mall troubled debt restructuring, the Company recognized a gain on extinguishment of debt for U.S. federal income tax purposes and implemented various tax planning strategies to limit its impact on the Company’s overall U.S. federal taxable income. The strategies implemented resulted in the recognition of a state and local income tax liability and corresponding deferred tax asset for the REIT of $ 4.5 million during the year ended December 31, 2020. During the year ended December 31, 2021, based on the filing of the 2020 state and local income tax returns, this amount was reduced by $ 1.2 million due to the final taxable amount being lower than what was originally estimated. Refer to Note 6 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information on the Montehiedra refinancing and the Las Catalinas Mall troubled debt restructuring. A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the evidence available, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. Management’s determination of the ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the underlying temporary differences become deductible. As of December 31, 2021, no valuation allowance has been recorded against the deferred tax assets that resulted from the legal entity restructurings of the Puerto Rico malls. In assessing the realizability of deferred tax assets, management determined it is more likely than not that these deferred tax assets will be realized. During the year ended December 31, 2020, the Company recorded a $ 4.5 million valuation allowance against the REIT’s state and local deferred tax asset described above because management determined that it is not more likely than not that these deferred tax assets will be realized. As of December 31, 2021, the Company’s total deferred tax asset and valuation allowance attributable to the REIT’s state and local income tax liability decreased by $ 1.5 million to $ 3.0 million. The $ 1.5 million decrease is attributed to the $ 1.2 million reduction based on the final taxable amount being lower than what was originally estimated as discussed above and the current year movement in the temporary difference. We account for 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 . Income before income taxes from the Company’s operating activities in Puerto Rico during the years ended December 31, 2021 and 2020 was $ 8.5 million and $ 26.4 million, respectively. For the year ended December 31, 2021, the Puerto Rico income tax expense was $ 2.4 million and the REIT’s state and local income tax benefit was $ 1.2 million as compared to a Puerto Rico income tax benefit of $ 43.5 million and a REIT state and local income tax expense of $ 4.5 million for the year ended December 31, 2020. Puerto Rico income tax expense of $ 1.2 million was recorded for the year ended December 31, 2019. Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for the tax effect of temporary differences between the financial reporting basis and the tax basis of taxable assets and liabilities and for the tax effect of carried forward tax attributes such as net operating losses and tax credits. 65 Income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019 consists of the following: Year Ended December 31, (Amounts in thousands) 2021 2020 2019 Income tax expense (benefit): Current: U.S. state and local income tax ( 1,228 ) 4,525 66 Puerto Rico income tax 110 1,293 851 Total current ( 1,118 ) 5,818 917 Deferred: U.S. federal income tax 5 ( 6 ) — Puerto Rico income tax (1) 2,252 ( 44,808 ) 370 Total deferred 2,257 ( 44,814 ) 370 Total income tax expense (benefit) $ 1,139 $ ( 38,996 ) $ 1,287 (1) Due to the effects of applying ASC 842 on January 1, 2019, a deferred tax benefit of $ 0.8 million was recognized within a cumulative-effect adjustment to accumulated deficit to adjust r eserves on receivables from straight-line rents during the year ended December 31, 2019. Refer to Note 3 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information. Provision for income taxes differs from the amounts computed by applying the statutory federal income tax rate to consolidated net income before income taxes as follows: Year Ended December 31, (Amounts in thousands) 2021 2020 2019 Federal provision at statutory tax rate (1) $ 22,880 $ 12,338 $ 24,672 REIT income before income taxes not subject to federal tax provision ( 22,875 ) ( 12,339 ) ( 24,677 ) State and local income tax provision, net of federal benefit 225 11 66 Puerto Rico income tax provision 2,362 ( 43,515 ) 1,221 Change in valuation allowance ( 1,453 ) 4,509 5 Total income tax expense (benefit) $ 1,139 $ ( 38,996 ) $ 1,287 (1) Federal statutory tax rate of 21% for the years ended December 31, 2021, 2020 and 2019. Below is a table summarizing the Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020: Balance at (Amounts in thousands) December 31, 2021 December 31, 2020 Deferred tax assets: Depreciation $ 40,793 $ 41,942 Amortization of deferred financing costs 860 1,105 Rental revenue deemed uncollectible 735 2,109 Charitable contribution 7 7 Net operating loss 1,425 107 Valuation allowance ( 3,061 ) ( 4,514 ) Total deferred tax assets 40,759 40,756 Deferred tax liabilities: Mortgage liability ( 1,394 ) — Straight line rent ( 961 ) ( 738 ) Amortization of acquired leases ( 205 ) ( 228 ) Accrued interest expense ( 779 ) ( 113 ) Total deferred tax liabilities ( 3,339 ) ( 1,079 ) Net deferred tax assets $ 37,420 $ 39,677 66 8. LEASES Leases as lessor We have approximately 900 operating leases at our retail shopping centers, malls and industrial properties which generate rental income from tenants and operating cash flows for the Company. Our tenant base comprises a diverse group of merchants including department stores, supermarkets, discounters, entertainment offerings, health clubs, DIY stores, in-line specialty shops, restaurants and other food and beverage vendors and service providers. Tenant leases under 10,000 sf generally have lease terms of 5 years or less. Tenant leases 10,000 sf or more are considered anchor leases and generally have lease terms of 10 to 25 years, with one or more renewal options available upon expiration of the initial lease term. Contractual rent increases for the renewal options are often fixed at the time of the initial lease agreement which may result in tenants being able to exercise their renewal options at amounts that are less than the fair value of the rent at the date of renewal. The components of rental revenue for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, (Amounts in thousands) 2021 2020 Rental Revenue Fixed lease revenue $ 318,585 $ 235,488 Variable lease revenue 103,882 92,792 Total rental revenue $ 422,467 $ 328,280 Property, plant and equipment under operating leases as lessor As of December 31, 2021 and 2020 , substantially all of the Company’s real estate assets are subject to operating leases. Maturity analysis of lease payments as lessor The Company’s operating leases, including those with revenue recognized on a cash basis, are disclosed in the aggregate due to their consistent nature as real estate leases. As of December 31, 2021 , the undiscounted cash flows to be received from lease payments of our operating leases on an annual basis for the next five years and thereafter are as follows: (Amounts in thousands) Year Ending December 31, 2022 $ 258,992 2023 247,248 2024 216,275 2025 192,115 2026 171,170 Thereafter 748,432 Total undiscounted cash flows $ 1,834,232 Leases as lessee As of December 31, 2021, the Company had twenty properties in its portfolio either completely or partially on land or in a building owned by third parties. These properties are leased or subleased to us pursuant to ground leases, building leases or easements, with remaining terms ranging from one to 78 years and provide us the right to operate the property. We also lease or sublease real estate for our three corporate offices with remaining terms of less than one year . On December 31, 2020, the Company recognized $ 5.7 million of operating lease ROU assets and $ 0.7 million of corresponding operating lease liabilities in connection with the Company’s acquisition of Sunrise Mall, which included the acquisition of the lessee positions of ground leases. 67 The components of lease expense for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, (Amounts in thousands) 2021 2020 Lease expense Operating lease cost (1) $ 10,162 $ 10,875 Variable lease cost 2,710 2,792 Total lease expense $ 12,872 $ 13,667 (1) During the years ended December 31, 2021 and 2020, the Company recognized sublease income of $ 19.1 million and $ 17.7 million, respectively, included in rental revenue on the consolidated statements of income in relation to certain ground and building lease arrangements. Operating lease cost includes amortization of below-market ground lease intangibles and straight-line lease expense. Supplemental balance sheet information related to leases as of December 31, 2021 and December 31, 2020 was as follows: December 31, 2021 December 31, 2020 Supplemental noncash information Operating leases Finance lease Operating leases Finance lease Weighted-average remaining lease term 14.8 years 34.2 years 15.7 years 35.2 years Weighted-average discount rates 3.98 % 4.01 % 3.99 % 4.01 % Supplemental cash information related to leases for the years ended December 31, 2021 and 2020 was as follows: (Amounts in thousands) Year Ended December 31, Cash paid for amounts included in the measurement of lease liabilities: 2021 2020 Operating cash flows from operating leases $ 9,584 $ 10,033 Operating cash flows from finance lease 120 120 Financing cash flows from finance lease 11 11 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 772 $ 1,740 Maturity analysis of lease payments as lessee The undiscounted cash flows to be paid on an annual basis for the next five years and thereafter are presented in the table below. The total amount of lease payments, on an undiscounted basis, are reconciled to the lease liability on the consolidated balance sheet by considering the present value discount. (Amounts in thousands) Operating Finance Year Ending December 31, leases lease 2022 $ 9,089 $ 109 2023 8,212 109 2024 8,225 109 2025 6,324 109 2026 6,092 124 Thereafter 51,409 6,299 Total undiscounted cash flows 89,351 6,859 Present value discount ( 24,773 ) ( 3,855 ) Discounted cash flows $ 64,578 $ 3,004 68 9. FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 - observable prices based on inputs not quoted in active markets, but corroborated by market data; and Level 3 - unobservable 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, 2021 and December 31, 2020. 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, which is provided by a third-party specialist. The fair value of cash and cash equivalents are 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, 2021 and December 31, 2020. As of December 31, 2021 As of As of December 31, 2020 (Amounts in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Liabilities: Mortgages payable (1) $ 1,695,408 $ 1,692,674 $ 1,597,397 $ 1,611,868 (1) Carrying amounts exclude unamortized debt issuance costs of $ 8.2 million and $ 9.9 million as of December 31, 2021 and December 31, 2020, respectively. Nonfinancial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis We assess the carrying value of our properties for impairment, when events or changes in circumstances indicate that the carrying value may not be recoverable. Such events and changes include macroeconomic conditions, including those caused by global pandemics, such as COVID-19, which may result in property operational disruption and indicate that the carrying amount may not be recoverable. During the year ended December 31, 2021, the Company recognized impairment charges on two retail properties that the Company was actively marketing. The Company recognized an impairment charge of $ 0.4 million on its property in Westfield, NJ which was sold on July 22, 2021. Additionally, the Company recognized an impairment charge of $ 0.1 million on its ground lease in Vallejo, CA which was sold on December 21, 2021. Prior to these dispositions, the carrying value of these assets exceeded the estimated fair value less costs to sell. The aggregated fair values of $ 7.9 million were based on sale agreements under negotiation with third-party buyers. During the year ended December 31, 2020, the Company recognized an impairment charge of $ 3.1 million on a parcel of our property in Lodi, NJ, which was sold on January 8, 2021 . Prior to the sale of the parcel, the carrying value of this property exceeded its estimated fair value less costs to sell of $ 7.2 million . The fair value of the parcel was based on a sale agreement under negotiation with a third-party buyer. During the year ended December 31, 2019, the Company recognized impairment charges of $ 26.3 million on four retail properties that the Company was actively marketing. The impairment loss was calculated as the difference between the assets’ individual carrying values and the estimated aggregated fair values of $ 38.5 million, less estimated selling costs. The valuation of these properties were based on capitalization rates, discounted future cash flows, third-party appraisals, broker selling estimates and sale agreements under negotiations. The capitalization rates (ranging from 9.9 % to 12.1 %) and discounts rates (ranging from 9.3 % to 10.8 %) utilized in the analyses were based upon unobservable rates that the Company believes to be in a reasonable range of current market rates. 69 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. Aggregate impairment charges of $ 0.5 million, $ 3.1 million and $ 26.3 million, respectively, are included as an expense within casualty and impairment loss, net on our consolidated statements of income for the years ended December 31, 2021, 2020 and 2019. 10. COMMITMENTS AND CONTINGENCIES Legal Matters 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 and Anchor Repositioning The Company has 21 active development, redevelopment or anchor repositioning projects with total estimated costs of $ 218.7 million, of which $ 72.1 million has been incurred and $ 146.6 million remains to be funded as of December 31, 2021. We continue to monitor the stabilization dates of these projects as a result of the impact of the COVID-19 pandemic on our tenants, vendors and supply chains. We have identified future projects in our development pipeline, but we are under no obligation to execute and fund any of these projects and each of these projects is being further evaluated based on market conditions. Insurance The Company maintains numerous insurance policies including for general liability, property, pollution, acts of terrorism, trustees’ and officers’, cyber, workers’ compensation and automobile-related liabilities. However, all such policies are subject to terms, conditions, exclusions, deductibles and sub-limits, amount other limiting factors. For example, the Company’s terrorism insurance excludes coverage for nuclear, biological, chemical or radiological terrorism events as defined by the Terrorism Risk Insurance Program Reauthorization Act. The Company’s primary and excess insurance policies providing coverage for pollution related losses have an aggregate limit of $ 75 million and provide remediation and business interruption coverage for pollution incidents, which pursuant to our policies expressly include the presence and dispersal of viruses. On December 23, 2020, the Company initiated litigation in New Jersey state court, Bergen County, under these policies to recover uncollected rents and other amounts resulting from the COVID-19 virus. Insurance premiums are typically charged directly to each of the properties but not all of the cost of such premiums are recovered. The Company is responsible for deductibles, losses in excess of insurance coverage, and the portion of premiums not reimbursable by tenants at our properties, which could be material. We continue to monitor the state of the insurance market and the scope and costs of available coverage. We cannot anticipate what coverage will be available on commercially reasonable terms in the future and expect premiums across most coverage lines to increase in light of recent events. The incurrence of uninsured losses, costs or uncovered premiums could materially and adversely affect our business, results of operations and financial condition. Certain of our loans and other agreements contain customary covenants requiring the maintenance of insurance coverage. Although we believe that we currently have adequate insurance coverage for purposes of these agreements, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future. If lenders or other counterparties insist on greater coverage than we are able to obtain, such requirement could materially and adversely affect our ability to finance our properties and expand our portfolio. Tornado-Related Charges On June 13, 2018, a tornado hit our shopping center in Wilkes-Barre, PA, damaging approximately 13 % of the property’s gross leasable area. During the year ended December 31, 2019, the Company settled the related insurance claim with its carrier for $ 5.5 million. Of this amount, the Company recognized $ 4.8 million as a casualty gain during the year ended December 31, 2019 included in casualty and impairment loss, net on the accompanying consolidated statements of income. As part of the settlement, the Company recognized $ 0.3 million as business interruption proceeds within rental revenue during the year ended December 31, 2019. 70 Hurricane-Related Charges In June 2019, the Company finalized its insurance recovery related to Hurricane Maria with its carrier in the amount of $ 14.3 million, of which $ 3.3 million was previously received, subject to deductibles of $ 2.3 million. We recognized an $ 8.7 million casualty gain during the year ended December 31, 2019 as a result of the remaining insurance proceeds from the settlement agreement for our two malls in Puerto Rico. 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 $ 1.8 million on our consolidated balance sheets as of December 31, 2021 and December 31, 2020, 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, 2019, the Company recognized $ 1.4 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 rental revenue is supported by long-term leases, leases may be rejected in a bankruptcy proceeding and the related tenant stores may permanently vacate prior to lease expiration. In the event a tenant with a significant number of leases or square footage in our shopping centers files for bankruptcy and rejects its leases with us, we could experience a reduction in our revenues. We monitor the operating performance and rent collections of all tenants in our shopping centers, especially those tenants in arrears or operating retail formats that are experiencing significant changes in competition, business practice, or store closings in other locations. Given the economic environment brought upon by COVID-19, certain tenants experienced liquidity or financial hardships and filed for Chapter 11 bankruptcy protection since the pandemic was declared. Although some of these tenants intend to exit the Chapter 11 bankruptcy process and resume operations, the outcomes of such proceedings are unknown and the Company is currently exploring leasing alternatives for these spaces. 11. PREPAID EXPENSES AND OTHER ASSETS The following is a summary of the composition of the prepaid expenses and other assets in the consolidated balance sheets: Balance at (Amounts in thousands) December 31, 2021 December 31, 2020 Other assets $ 19,712 $ 5,953 Deferred tax asset, net 37,420 39,677 Real estate held for sale — 7,056 Finance lease right-of-use asset 2,724 2,724 Deferred financing costs, net of accumulated amortization of $ 5,932 and $ 4,819 , respectively 2,234 3,347 Prepaid expenses: Real estate taxes 9,982 8,093 Insurance 1,088 1,583 Rent, licenses/fees 951 1,878 Total Prepaid expenses and other assets $ 74,111 $ 70,311 71 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: Balance at (Amounts in thousands) December 31, 2021 December 31, 2020 Dividend payable $ — $ 55,905 Deferred tenant revenue 28,898 26,594 Accrued capital expenditures and leasing costs 19,164 7,797 Finance lease liability 3,004 2,993 Accrued interest payable 9,879 11,095 Security deposits 6,693 5,884 Accrued payroll expenses 9,134 5,797 Other liabilities and accrued expenses 8,057 16,915 Total accounts payable, accrued expenses and other liabilities $ 84,829 $ 132,980 13. INTEREST AND DEBT EXPENSE The following table sets forth the details of interest and debt expense: Year Ended December 31, (Amounts in thousands) 2021 2020 2019 Interest expense $ 54,946 $ 68,184 $ 63,783 Amortization of deferred financing costs 2,992 2,831 2,856 Total Interest and debt expense $ 57,938 $ 71,015 $ 66,639 14. EQUITY AND NONCONTROLLING INTEREST At-The-Market Program On May 5, 2021 the Company established an at-the-market equity program (the “ATM Program”), pursuant to which the Company may offer and sell common shares, par value $ 0.01 per share, with an aggregate gross sales price of up to $ 250 million. Sales under the ATM Program may be made from time to time, as needed, by means of ordinary brokers’ transactions or other transactions that are deemed to be “at the market” offerings, in privately negotiated transactions, which may include block trades, or as otherwise agreed with the sales agents. As of December 31, 2021, the Company has not issued any common shares under the ATM Program. 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. The Company has no obligation to sell any shares under the ATM Program. Share Repurchase Program In March 2020, the Company’s Board of Trustees authorized a share repurchase program for up to $ 200 million of the Company’s common shares. Under the program, the Company may repurchase its shares from time to time in the open market or in privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18. The amount and timing of the purchases will depend on a number of factors including the price and availability of the Company’s shares, trading volume and general market conditions. The share repurchase program does not obligate the Company to acquire any particular amount of common shares and may be suspended or discontinued at any time at the Company’s discretion. During the year ended December 31, 2021, no shares were repurchased by the Company. During the year ended December 31, 2020, the Company repurchased 5.9 million shares at a weighted average share price of $ 9.22 amounting to $ 54.1 million. 72 Units of the Operating Partnership The Operating Partnership’s capital includes general and common limited partnership interests in the operating partnership (“OP Units”). As of December 31, 2021, Urban Edge owned approximately 96.2 % of the outstanding common OP Units with the remaining limited OP Units held by members of management, Urban Edge’s Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership. The third-party unitholders have limited rights over the Operating Partnership such that they do not have characteristics of a controlling financial interest. As such, the Operating Partnership is considered a 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 year ended December 31, 2021 the Company declared distributions on our common shares and OP units of $ 0.60 per share/unit which comprised a regular quarterly dividend of $ 0.15 per common share and OP unit declared for each quarter of 2021. During the year ended December 31, 2020 the Company declared distributions on our common shares and OP units of $ 0.68 per share/unit in the aggregate, which comprised a regular quarterly dividend of $ 0.22 per common share and OP unit declared for the first quarter of 2020 and a special cash dividend of $ 0.46 per common share and OP unit declared in December 2020 and paid on January 19, 2021. As a result of COVID-19 and the uncertainties it generated, the Company temporarily suspended quarterly dividend distributions for the second and third quarters of 2020. During the year ended December 31, 2019, the Company declared distributions on our common shares and OP units 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, 2021, 2020 and 2019, 4,442 , 3,445 and 6,920 shares were issued under the DRIP, respectively. Noncontrolling Interests in Operating Partnership Noncontrolling interests in the Operating Partnership reflected on the consolidated balance sheets of the Company are comprised of OP units and limited partnership interests in the Operating Partnership in the form of LTIP unit awards. LTIP unit awards were granted to certain executives pursuant to our 2015 Omnibus Share Plan (the “Omnibus Share Plan”) and our 2018 Inducement Equity Plan (the “Inducement Plan”). OP units were issued to contributors in exchange for their property interests in connection with the Company’s property acquisitions in 2017. The total of the OP units and LTIP units represent a 4.1 % weighted-average interest in the Operating Partnership for the year ended December 31, 2021. 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 redeem their units for cash or the Company’s common shares on a one -for-one basis, solely at our election. On August 5, 2019, the Company received requests from certain holders of OP units to redeem 357,998 units. The Company elected to satisfy the redemption requests by repurchasing the units at a price of $ 16.70 per unit, for total cash consideration of $ 6.0 million. During the years ended December 31, 2021, 2020 and 2019, 100,000 , 1,355,836 and 6,995,941 units, respectively, were redeemed for an equivalent amount of common shares of the Company. In connection with the separation from Vornado Realty L.P. (“VRLP”), the Company issued 5.7 million OP units, which represented a 5.4 % interest in the Operating Partnership, to VRLP in exchange for interests in VRLP properties contributed by VRLP. On February 28, 2019, the Company issued 5.7 million common shares to VRLP, in exchange for an equal number of OP units after receiving a notice of redemption from VRLP. The issuance is exempt from registration in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended, on the basis that no public offering was made. Noncontrolling Interests in Consolidated Subsidiaries The Company’s noncontrolling interests relate to the 5 % interest held by others in our property in Walnut Creek, CA (Mount Diablo) and 17.5 % held by others in our property in Massapequa, NY. T he net income attributable to noncontrolling interests is presented separately in our consolidated statements of income. 73 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 and Long-Term Incentive 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 over the three-year period beginning on the date the respective plan was approved. 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 (the “Performance Period”), and/or (ii) achieve a TSR equal to or above, that of the 50 th percentile of a retail REIT peer group (“Peer Group”) comprised of our peer companies, over a three-year Performance 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. On February 22, 2018, the Compensation Committee of the Board of Trustees 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. The fair values of the 2015 OPP, the 2017 OPP and the 2018 LTI Plan on the dates of grant were $ 3.9 million, $ 4.1 million and $ 3.6 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 the 2018 LTI Plan, assumptions include historical volatility, risk-free interest rates, and historical daily return as compared to our Peer Group. For the 2015 OPP and 2017 OPP, and the performance-based portion of the 2018 LTI Plan plans, such amounts are being amortized into share-based compensation expense over a five-year period from the dates of grant, using graded vesting attribution models. The 2015 OPP was fully vested as of November 5, 2020 and there is no compensation cost remaining as of December 31, 2021. In the years ending December 31, 2021, 2020, and 2019 we recognized $ 0.7 million, $ 1.6 million and $ 2.3 million of compensation expense related to the 2015 OPP, 2017 OPP and 2018 LTI Plan, respectively. As of December 31, 2021, there was $ 0.2 million of total unrecognized compensation cost related to the 2017 OPP and 2018 LTI Plan, which will be recognized over a weighted-average period of less than one year. 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. The Company has 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. 74 2019 Long-Term Incentive Plan On April 4, 2019, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2019 Long-Term Incentive Plan (“2019 LTI Plan”). The Plan is a multi-year, equity compensation program under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units that vest based on the passage of time (one-third of the program) and performance goals tied to our relative and absolute TSR during the three-year performance period following their grant (two-thirds of the program). Performance-based awards For the performance-based awards under the 2019 LTI Plan, participants have the opportunity to earn awards in the form of LTIP Units if, and only if, Urban Edge’s absolute and/or relative TSR meets certain criteria over the three-year Performance Period beginning on February 27, 2019 and ending on February 26, 2022. The Company issued 489,319 LTIP Units under the 2019 LTI Plan. Under the Absolute TSR component, 40 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 18 %, 100 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 27 %, and 165 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to or greater than 36 %. The Relative TSR component is based on the Company’s performance compared to a peer group comprised of 12 companies. Under the Relative TSR Component, 40 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to the 35 th 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 55 th 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 75 th percentile of the peer group, with earning determined using linear interpolation if between such relative and absolute TSR thresholds. The fair value of the performance-based award portion of the 2019 LTI Plan on the date of grant was $ 4.3 million using a Monte Carlo simulation to estimate the fair value through a risk-neutral premise. Time-based awards The time-based awards under the 2019 LTI Plan, also granted in the form of LTIP Units, vest ratably over three years except in the case of our Chairman and Chief Executive Officer, where the vesting is ratably over four years . The Company granted time-based awards under the 2019 LTI Plan that represent 112,910 LTIP units with a grant date fair value of $ 2.0 million. During the years ended December 31, 2021, 2020 and 2019, respectively, we recognized $ 1.4 million, $ 1.9 million and $ 1.4 million of compensation expense related to the 2019 LTI Plan. 2020 Long-Term Incentive Plan On February 20, 2020, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2020 Long-Term Incentive Plan (“2020 LTI Plan”). The Plan is a multi-year, equity compensation program under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units that vest based on (i) the passage of time (one-third of the fair value of the program) and (ii) performance goals tied to our relative and absolute TSR during the three-year performance period following their grant (two-thirds of the fair value of the program). The total grant date fair value under the 2020 LTI Plan was $ 8.8 million comprising performance-based and time-based awards as described further below: Performance-based awards For the performance-based awards under the 2020 LTI Plan, participants, have the opportunity to earn awards in the form of LTIP Units if Urban Edge’s absolute and/or relative TSR meets certain criteria over the three-year Performance Period beginning on February 20, 2020 and ending on February 19, 2023. The Company granted performance-based awards under the 2020 LTI Plan that represent 630,774 LTIP Units. The fair value of the performance-based award portion of the 2020 LTI Plan on the date of grant was $ 5.9 million using a Monte Carlo simulation to estimate the fair value through a risk-neutral premise. Under the Absolute TSR component, 40 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 18 %, 100 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 27 %, and 165 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to or greater than 36 %. The Relative TSR component is based on the Company’s performance compared to a peer group comprised of 12 companies. Under the Relative TSR Component, 40 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to the 35 th 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 55 th 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 75 th percentile of the peer group, with earning determined using linear interpolation if in between such relative and absolute TSR thresholds. During the years ended December 31, 2021 75 and 2020 we recognized $ 1.3 million and $ 1.1 million, respectively, of compensation expense related to the performance-based awards under the 2020 LTI Plan. Time-based awards The time-based awards granted under the 2020 LTI Plan, also granted in the form of LTIP Units, vest ratably over three years except in the case of our Chairman and Chief Executive Officer, where the vesting is ratably over four years . The Company granted time-based awards under the 2020 LTI Plan that represent 169,004 LTIP units with a grant date fair value of $ 2.9 million. During the years ended December 31, 2021 and 2020 we recognized $ 0.7 million and $ 1.1 million, respectively, of compensation expense related to the time-based awards under the 2020 LTI Plan. 2021 Long-Term Incentive Plan On February 10, 2021, the Compensation Committee of the Board of Trustees of the Company approved the Company’s 2021 Long-Term Incentive Plan (“2021 LTI Plan”). The Plan is a multi-year, equity compensation program under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units that vest based on the passage of time (one-half of the program) and performance goals tied to our relative and absolute TSR during the three-year Performance Period following their grant (one-half of the program). The total grant date fair value under the 2021 LTI Plan was $ 7.8 million, comprising both performance-based and time-based awards. Performance-based awards For the performance-based awards under the 2021 LTI Plan, participants have the opportunity to earn awards in the form of LTIP Units if Urban Edge’s absolute and/or relative TSR meets certain criteria over the three-year Performance Period beginning on February 10, 2021 and ending on February 9, 2024. The Company granted performance-based awards under the 2021 LTI Plan that represent 398,977 LTIP Units. The fair value of the performance-based award portion of the 2021 LTI Plan on the date of grant was $ 3.9 million using a Monte Carlo simulation to estimate the fair value through a risk-neutral premise. Under the Absolute TSR component, 40 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 18 %, 100 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to 27 %, and 165 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to or greater than 36 %. The Relative TSR component is based on the Company’s performance compared to a peer group comprised of 15 companies. Under the Relative TSR Component, 40 % of the LTIP Units will be earned if the Company’s TSR over the Performance Period is equal to the 35 th 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 55 th 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 75 th percentile of the peer group, with earning determined using linear interpolation if in between such relative and absolute TSR thresholds. During the year ended December 31, 2021, we recognized $ 1.0 million of compensation expense related to the performance-based awards under the 2021 LTI Plan. Time-based awards The time-based awards granted under the 2021 LTI Plan, also granted in the form of LTIP Units, vest ratably over three years except in the case of our Chairman and Chief Executive Officer, where the vesting is ratably over four years. As of December 31, 2021, the Company granted time-based awards under the 2021 LTI Plan that represent 273,615 LTIP units with a grant date fair value of $ 3.9 million. During the year ended December 31, 2021, we recognized $ 1.0 million of compensation expense related to the time-based awards under the 2021 LTI Plan. Units and Deferred Share Units Granted to Trustees On May 6, 2020, certain trustees elected to receive a portion of their compensation in deferred share units and an aggregate of 12,121 shares were granted to those trustees based on the weighted average grant date fair value of $ 8.25 . In addition, certain trustees elected to receive a portion of their compensation in LTIP units and an aggregate of 87,117 LTIP units, were granted to those trustees based on the weighted average grant date fair value of $ 8.03 . On May 5, 2021, a certain trustee elected to receive a portion of their compensation in deferred share units and an aggregate of 6,476 shares were granted to this trustee based on the weighted average grant date fair value of $ 15.44 . In addition, certain trustees elected to receive a portion of their compensation in LTIP units and an aggregate of 39,756 LTIP units were granted to those trustees based on the weighted average grant date fair value of $ 15.09 . On July 1, 2021 a certain trustee elected to receive a portion of their compensation in LTIP units and an aggregate of 12,254 LTIP units were granted to this trustee based on the weighted average grant date fair value of $ 15.02 . 76 On November 22, 2021, a certain trustee elected to receive a portion of their compensation in LTIP units and an aggregate of 10,208 LTIP units were granted to this trustee based on the weighted average grant date fair value of $ 14.17 . 2022 Long-Term Incentive Plan On February 11, 2022, the Compensation Committee of the Board of Trustees of the Company (the “Compensation Committee”) approved the Company’s 2022 Long-Term Incentive Plan (“2022 LTI Plan”). The Plan is a multi-year, equity compensation program under which participants, including our Chairman and Chief Executive Officer, have the opportunity to earn awards in the form of LTIP units that vest based on (i) the passage of time (one-half of the program) and (ii) performance goals tied to our relative total shareholder return (“TSR”), absolute TSR and FFO as Adjusted growth over a three year performance period (one-half of the program). The total grant date fair value under the 2022 LTI Plan was $8.6 million, comprising both performance-based and time-based awards. Shares Under Option All stock options granted have ten-year contractual lives, containing vesting terms of three to five years . The following table presents stock option activity for the year ended December 31, 2021: Shares Under Options Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (in years) Outstanding at January 1, 2021 4,930,762 $ 22.89 — Granted — — — Exercised — — — Forfeited or expired ( 1,000,000 ) 21.72 — Outstanding at December 31, 2021 3,930,762 $ 23.19 3.56 Exercisable at December 31, 2021 3,156,449 $ 23.61 — No options were granted or exercised during the year ended December 31, 2021. As of December 31, 2021, there was no intrinsic value for the outstanding and exercisable shares under option. Restricted Shares The following table presents information regarding restricted share activity during the years ended December 31, 2021, 2020, and 2019: Shares Weighted Average Grant Date Fair Value per Share Unvested at January 1, 2021 72,393 19.03 Granted 17,933 15.58 Vested ( 35,674 ) 20.06 Forfeited ( 5,305 ) 18.03 Unvested at December 31, 2021 49,347 $ 17.23 During the year ended December 31, 2021, we granted 17,933 restricted shares that are subject to forfeiture and vest over periods ranging from one to three years. The total grant date value of the 35,674 restricted shares vested during the year ended December 31, 2021 was $ 0.7 million. Restricted Units During the years ended December 31, 2021, 2020 and 2019, respectively, there were 335,833 , 297,195 and 276,482 additional LTIP units issued. During the years ended December 31, 2021, 2020 and 2019, 271,635 , 433,016 , and 131,884 units vested, respectively. There were no restricted units converted to common shares during the year ended December 31, 2021. During the year ended December 31, 2020, 223,553 restricted units were converted to common shares. As of December 31, 2021 the remaining 629,931 units vest over a weighted average period of approximately two years . 77 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: Year Ended December 31, (Amounts in thousands) 2021 2020 2019 Share-based compensation expense components: Restricted share expense $ 461 $ 832 $ 1,697 Stock option expense 1,435 4,991 4,055 LTIP expense (1) 4,909 7,331 4,477 Performance-based LTI expense (2) 3,865 3,792 3,164 DSU expense 149 48 156 Total Share-based compensation expense $ 10,819 $ 16,994 $ 13,549 (1) LTIP expense includes the time-based portion of the 2021, 2020, 2019 and 2018 LTI Plans. (2) Performance-based LTI expense includes the 2017 OPP plan and the performance-based portion of the 2021, 2020, 2019 and 2018 LTI Plans. As of December 31, 2021, we had a total of $ 13.2 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 two years . 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 years ended December 31, 2021, 2020 and 2019 there were options outstanding for 3,930,762 shares that potentially could be exercised for common shares. During the years ended December 31, 2021, 2020 and 2019, 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, 2021 there were 49,347 unvested restricted shares outstanding that potentially could become unrestricted common shares. The computation of diluted EPS for the years ended December 31, 2021, 2020 and 2019 included the 54,988 , 77,289 , and 100,406 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. 78 The following table sets forth the computation of our basic and diluted earnings per share: Year Ended December 31, (Amounts in thousands, except per share amounts) 2021 2020 2019 Numerator: Net income attributable to common shareholders $ 102,686 $ 93,589 $ 109,523 Less: Earnings allocated to unvested participating securities ( 47 ) ( 62 ) ( 92 ) Net income available for common shareholders - basic $ 102,639 $ 93,527 $ 109,431 Impact of assumed conversions: OP and LTIP units 3,675 81 5 Net income available for common shareholders - dilutive $ 106,314 $ 93,608 $ 109,436 Denominator: Weighted average common shares outstanding - basic 117,029 117,722 119,751 Effect of dilutive securities: Restricted share awards 55 77 100 Assumed conversion of OP and LTIP units 4,363 103 45 Weighted average common shares outstanding - diluted 121,447 117,902 119,896 Earnings per share available to common shareholders: Earnings per common share - Basic $ 0.88 $ 0.79 $ 0.91 Earnings per common share - Diluted $ 0.88 $ 0.79 $ 0.91 Operating Partnership Earnings per Unit The following table sets forth the computation of basic and diluted earnings per unit: Year Ended December 31, (Amounts in thousands, except per unit amounts) 2021 2020 2019 Numerator: Net income attributable to unitholders $ 106,982 $ 97,749 $ 116,222 Less: net income attributable to participating securities ( 47 ) ( 62 ) ( 92 ) Net income available for unitholders $ 106,935 $ 97,687 $ 116,130 Denominator: Weighted average units outstanding - basic 120,966 121,957 126,333 Effect of dilutive securities issued by Urban Edge 55 77 100 Unvested LTIP units 1,086 777 45 Weighted average units outstanding - diluted 122,107 122,811 126,478 Earnings per unit available to unitholders: Earnings per unit - Basic $ 0.88 $ 0.80 $ 0.92 Earnings per unit - Diluted $ 0.88 $ 0.80 $ 0.92 79 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.