Urban Edge Properties Q1 FY2025 earnings call

Jeff Olson - Chairman and CEO

• Highlighted strong first quarter results with FFO and same-property NOI growth, strong leasing momentum, record shop occupancy, and a strong leasing pipeline. Mentioned investment sales market showing early signs of slowing, debt and equity market notes, and plan to reinvest disposition capital into accretive acquisitions.

Jeff Mooallem - Chief Operating Officer

• Discussed excellent leasing first quarter with 42 deals over 430,000 square feet, renewals and new leases with spreads, same-property lease rate, improved shop occupancy, and completed and underway redevelopment projects. Noted transaction market dislocation but opportunity to transact at attractive returns.

Mark Langer - Chief Financial Officer

• Highlighted strong quarter with FFO and same-property NOI, balance sheet strength, reiteration of 2025 guidance, impact of SNO pipeline on NOI growth, reduction in recurring G&A expense, and team focus on executing the business plan.

FFO as adjusted was $0.35 per share, a 6% increase over the first quarter of last year and the highest quarterly earnings result in UE’s 10-year history. Same-property NOI increased 3.8% compared to the first quarter of last year, benefiting from rents from signed but not open pipeline, improved recovery ratios, and better collections. In leasing, 42 leases totaling 434,000 square feet were executed in the first quarter, including 18 new leases amounting to 118,000 square feet with 34% same-space cash leasing spreads. Tenant retention ratio was high at 95%, and shop occupancy grew to a new record of 92.4%. Dispositions included a successful $25 million sale of 8 acres of land at Bergen Town Center, with plans to sell 2 more properties for $41 million, totaling $66 million this year at a 5% weighted average cap rate.

2025 Full Year Guidance

• Reiterated FFO as adjusted of $1.37 to $1.42 per share, reflecting 4% midpoint growth. Economic volatility in April led to a more conservative outlook for the back half of the year. Same-property NOI growth including properties and redevelopment is projected to be 3% to 4%. The $25 million SNO pipeline is a significant driver of NOI growth, with $4.4 million of annualized gross rent commenced in the first quarter. Recurring G&A expense for 2025 is reduced by $500,000 to a new midpoint of $35.8 million.

• Investment sales market showing early signs of slowing down. - Debt side: limited CMBS issuance since April, with spreads increased 10 to 30 basis points. - Equity side: many REITs and foreign investors pausing, while transactions with private buyers remain active. - Economic uncertainty potentially impacting rent collections, tenant fallout, and other income.

Q: Michael Griffin on macro uncertainty and leasing timeframe, Jeff Olson responds no slowdown seen from retailers.

A: Jeff Olson states no slowdown from retailers across portfolio and when speaking to retail landlords, with no material change in lease negotiations.

Q: Michael Griffin on dispositions, Mark Langer talks about capital recycling over 18 months, 5% cap rate on dispositions.

A: Mark Langer mentions over $500 million of capital recycling over 18 months, with $66 million of dispositions announced at a 5% cap rate, and on the hunt for acquisitions on the other side.

Q: Floris Van Dijkum on market volatility and guidance conservatism, Jeff Olson and Mark Langer discuss conservatism and 1031 exchanges impact on taxable income and dividend.

A: Jeff Olson says being more conservative with contingency, Mark Langer explains 1031 exchanges defer gain and don't pressure dividend.

Q: Paulina Rojas on brand growth, market perception of traditional small format vs larger properties, Jeff Mooallem responds on portfolio performance in recession.

A: Jeff Mooallem says portfolio is more bulletproof with well-balanced anchored spaces compared to some peers.

Q: Ronald Kamdem on acquisition opportunities post tariff, Jeff Olson on bid-ask spread, and on bad debt and Kohl's, Jeff Olson and Mark Langer comment.

A: Jeff Olson says bid-ask spread wide, patient, Mark Langer mentions bad debt assumption of 75 to 100 basis points of gross rent and no near-term bankruptcy risk for Kohl's.