Urban Edge Properties ((UE)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Urban Edge Properties’ latest earnings call conveyed a generally positive sentiment, highlighting significant growth in key financial metrics such as Funds From Operations (FFO) and Net Operating Income (NOI). The company demonstrated effective capital recycling strategies and maintained a strong liquidity position. Despite these positive outcomes, there were minor setbacks in lease rates and challenges in the acquisition market.
Increased FFO and NOI Growth
Urban Edge Properties reported a notable increase in FFO as adjusted, which rose by 4% year-over-year, with a year-to-date growth of 7%. The same-property net operating income saw an increase of 4.7% for the quarter and 5.4% year-to-date, reflecting the company’s strong operational performance.
Successful Acquisition and Capital Recycling
The company successfully completed a $39 million acquisition of Brighton Mills, a grocery-anchored shopping center. This acquisition was funded through the sale of other properties and is expected to contribute significantly to NOI growth, showcasing Urban Edge’s strategic capital recycling efforts.
Strong Leasing Activity
Urban Edge executed 31 deals totaling 347,000 square feet, achieving a 61% rent spread on new leases and a 9% spread on renewals. The same-property lease rate stood at an impressive 96.6%, indicating robust leasing activity and demand for the company’s properties.
Raised FFO Guidance
The company raised its 2025 FFO as adjusted guidance by $0.01 per share, representing a 6% growth over 2024 at the midpoint. This adjustment reflects Urban Edge’s confidence in its continued financial growth and operational efficiency.
Healthy Liquidity and Debt Management
Urban Edge maintained a strong liquidity position with over $900 million available. The company also secured a new $123.6 million mortgage at a lower interest rate, demonstrating effective debt management practices.
Development and Redevelopment Progress
The company reported stabilized projects with a blended yield of 17% and activated new redevelopments with a projected yield of 15%. These developments are expected to contribute positively to Urban Edge’s future growth.
Decline in Lease Rates
Despite the overall positive leasing activity, the same-property lease rate declined by 20 basis points from the last quarter due to a lease rejection at Ledgewood Commons. This highlights a minor setback in the company’s leasing strategy.
Challenges in Acquisition Market
Urban Edge faced high competition in the acquisition market, losing three shopping centers in the last 90 days due to competitive bidding. This challenge underscores the competitive nature of the current acquisition environment.
Forward-Looking Guidance
Looking ahead, Urban Edge Properties aims to maintain a growth trajectory with a sustainable 3% plus same-property NOI growth. The company is supported by a robust signed-not-open pipeline and strategic capital recycling efforts, positioning it well for future success.
In summary, Urban Edge Properties’ earnings call reflected a positive outlook with substantial growth in financial metrics and strategic acquisitions. While there were minor challenges in lease rates and acquisitions, the company’s strong liquidity and effective capital recycling strategies provide a solid foundation for continued growth.