Urban Edge Properties Q4 FY2024 earnings call

• 2024 was marked by significant accomplishments: FFO as adjusted increased 8%, record leasing volumes (79 new leases, 485k sq ft), same-space cash rent spread 26%, shop occupancy 91%, same-property portfolio occupancy 96.6%.
• Fourth quarter 2024: Signed 29 deals for over 400k sq ft, 16 new leases with 44% same-space spread, 13 renewals with 12% spread. Portfolio same-property lease rate at 96.6%, anchor leased occupancy 98%, small shop occupancy 90.9%.
• Development and construction: Completed $30M of redevelopment projects with 16% unlevered return, ended 2024 with $163M of anchor repositioning and redevelopment projects expected to generate 15% unlevered return.
• Balance sheet strength: Over $800M total liquidity, net debt to annualized adjusted EBITDA six times, debt maturity profile strong with only 9% of debt maturing through 2026.

In 2024, Urban Edge delivered outstanding results with FFO as adjusted increasing 8% to $1.35 per share. They executed a record 79 new leases totaling 485,000 square feet with a same-space cash rent spread of 26% and achieved a shop occupancy of 91% and same-property portfolio occupancy of 96.6%. For the fourth quarter, same-property NOI grew 7.4% compared to Q4 2023. Revenue contribution details weren't explicitly broken down by specific product segments beyond overall portfolio performance.

• 2025 FFO as adjusted guidance: $1.37 to $1.42 per share.
• NOI growth target: At least 3.5% midpoint, with $8M of gross rents from $25M signed but not open pipeline in 2025.
• Occupancy goal: Increase leased occupancy back to 97% to 98% by year-end.
• Dividend: Increased by 12% to an annualized rate of $0.76 per share.
• Focus: On leasing pipeline and achieving earnings/cash flow growth distinguished among peers, actively seeking acquisition/disposition opportunities.

• Tenant bankruptcies: Seen as more opportunity than risk, but bad debt and tenant fallout levels are variables influencing guidance. For example, 75 to 100 basis points of bad debt is baked into NOI assumptions, with 70 basis points relating to bankrupt tenants, 40 basis points general reserve, and offsetting collections on old receivables.
• Shop leasing activity: Impact on occupancy and NOI growth.
• SNO pipeline execution: Delivering the pipeline to achieve targeted rent commencement dates.

Q: About same-store NOI, how much visibility into 75-100 basis points bad debt assumption?

A: Mark Langer said they're watching it live, with 70 basis points relating to bankrupt tenants, 40 basis points general reserve, and partial offset from collections on old receivables.

Q: Commentary on acquisition pipeline?

A: Jeff Olson said they're seeing more product, but deals need to pencil given cap rates vs financing costs; best way is capital recycling via acquiring higher-growth assets and disposing lower-growth ones.

Q: On same-store NOI bad debt, acquisition pipeline, redevelopment at Sunrise, Bergen Town Center sale, mixed use, Bruckner returns?

A: Mark Langer discussed bad debt components, Jeff Olson talked about acquisition pipeline challenges and capital recycling, Jeff Olson and Jeff Mooallem provided details on Sunrise redevelopment progress, Bergen Town Center residential sale monetization, and Bruckner returns with better interest but capital costs affecting returns.

Q: On G&A, streamlining processes?

A: Mark Langer said it was from rebidding third-party contracts, exploring AI/RPA tools to automate tasks, with gradual changes.

Q: On Sunrise redevelopment and cost of equity?

A: Jeff Mooallem said they're exploring different uses for Sunrise, and Jeff Olson mentioned modest consideration of equity for acquisitions depending on the deal, but focus is on selling low-cap rate assets.