The Zacks REIT and Equity Trust - Retail industry benefits from everyday retail, with necessity-based, value-focused and routine discretionary tenants driving predictable demand. Limited new supply, cautious development, and repositioned assets support occupancy, rent stability and cash flow. Well-located stores gain value as physical locations integrate fulfillment, returns and engagement. Retail REITs such as Simon Property Group (SPG) , Regency Centers (REG) and Urban Edge Properties (UE) are well-positi ...

Core Insights - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1][2] - The investment group emphasizes high-yield, dividend growth investment ideas, targeting dividend yields up to 10% [2] Group 1: Investment Strategy - The service offers investment research on various asset classes including REITs, ETFs, closed-end funds, preferreds, and dividend champions [2] - The focus is on defensive stocks with a medium- to long-term investment horizon [2] Group 2: Market Appeal - High-quality real estate in desirable markets is attractive due to long-term value appreciation and cash flow potential [2] - The management of these assets is often seen as a drawback for many investors, highlighting the need for specialized investment services [2]

Group 1: Retail Expansion - Carolina Jewelry has opened its first physical location at Plaza Las Américas, marking a significant step after eight years of online and wholesale growth [2][4] - Sephora is set to launch a new store at the Shops at Caguas, which will be its third location in Puerto Rico, contributing to the ongoing merchandise upgrade in the area [4][5] Group 2: Business Strategy - The new cart-style space, named the Styling Booth, aims to enhance customer relationships, increase visibility, and strengthen the brand's omnichannel strategy by integrating online, wholesale, and direct retail [3] - The Styling Booth features a collection of hypoallergenic jewelry made from 925 silver, Brazilian-made gold-layered designs, and 316 stainless steel, tailored for fast, personalized shopping experiences [3] Group 3: Market Positioning - The opening of Carolina Jewelry's physical store is described as a "major milestone" and a model for future expansions in other malls [4] - The addition of Sephora is expected to significantly enhance the retail offering at the Shops at Caguas, meeting shopper expectations for a mix of global brands and high-quality local favorites [5]

Industry Overview - The Zacks REIT and Equity Trust - Retail industry is showing resilience as landlords adapt and reposition assets for long-term stability, focusing on necessity-based and experience-driven retailers [1][3] - The industry is experiencing a rebound driven by renewed consumer interest in in-store shopping, despite past challenges such as declining foot traffic and store closures [2] Key Drivers - Strategic re-tenanting and disciplined expansion are strengthening occupancy and cash flows, with limited new supply helping to preserve rent levels and investor confidence [1][4] - The lack of new construction activity has minimized competitive pressure on existing assets, allowing occupancy and rents to hold firm [4] Consumer Behavior - The outlook for retail REITs is closely linked to consumer behavior, with economic softness and rising costs making households more selective in their spending [5] - Wealthier consumers continue to support high-end demand, while middle-income shoppers are cutting back, leading to an uneven spending landscape [5] Industry Performance - The Zacks REIT and Equity Trust - Retail industry carries a Zacks Industry Rank 55, placing it in the top 23% of 243 Zacks industries, indicating robust near-term prospects [6][7] - The industry has underperformed the broader Zacks Finance sector and the S&P 500 over the past year, declining 5.6% compared to the S&P 500's rise of 22.3% [10] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-FFO of 14.98X, below the S&P 500's forward P/E of 23.77X and the Finance sector's forward P/E of 16.94X [12] - Over the last five years, the industry has traded as high as 18.89X and as low as 12.21X, with a median of 15.22X [15] Company Highlights - **Agree Realty Corporation (ADC)**: Specializes in retail net-lease properties with a portfolio of approximately 2,603 properties totaling around 53.7 million square feet. The company raised its full-year 2025 investment guidance to $1.50 billion-$1.65 billion, indicating confidence in its capital deployment strategy [16][17] - **Federal Realty Investment Trust (FRT)**: Focuses on high-quality retail properties in affluent markets, with a recent acquisition of Annapolis Town Center enhancing its portfolio. The Zacks Consensus Estimate for 2025 FFO per share has been revised upward to $7.22 [21][22][23] - **Urban Edge Properties (UE)**: Concentrates on retail properties in urban communities, with grocery tenants accounting for about 80% of its portfolio's value. The Zacks Consensus Estimate for its 2025 FFO per share has been raised to $1.42, indicating a 5.2% year-over-year increase [26][28][29]

Financial Data and Key Metrics Changes - FFO as adjusted increased by 4% year-over-year for Q3 2025, with year-to-date growth at 7% compared to the first nine months of the previous year [4] - Same property net operating income (NOI) rose by 4.7% for the quarter and 5.4% year-to-date [4] - The company raised its 2025 FFO as adjusted guidance to a new range of $1.42-$1.44 per share, representing 6% growth over 2024 at the midpoint [8][17] Business Line Data and Key Metrics Changes - Leasing activity totaled 31 deals aggregating 347,000 sq ft, including 20 renewals at a 9% spread and 11 new leases at a 61% spread [9] - Same property lease rate stands at 96.6%, a decline of 20 basis points from the previous quarter [10] - Shop occupancy rate remained flat at 92.5% [11] Market Data and Key Metrics Changes - The acquisition market remains competitive, driven by institutional capital and tighter spreads from traditional banks [7] - The company’s Boston portfolio now includes seven properties valued at nearly $500 million, representing about 10% of the company's total value [7] Company Strategy and Development Direction - The company is focused on capital recycling, having acquired nearly $600 million in high-quality shopping centers while disposing of approximately $500 million in non-core assets [7] - The active redevelopment pipeline totals $149 million with a projected yield of 15% [12] - The company aims to generate sustainable 3%+ growth in same property NOI [72] Management's Comments on Operating Environment and Future Outlook - Management expects shopping center fundamentals to remain strong due to favorable supply-demand dynamics and record low vacancy rates [8] - The company is optimistic about the leasing market, with national retailers in expansion mode and willing to pay necessary rents [14][56] - Management believes the supply-demand imbalance in retail will continue to favor their properties for the foreseeable future [68] Other Important Information - The company completed a $39 million acquisition of Brighton Mills, a grocery-anchored shopping center, funded by proceeds from the sale of other properties [4][5] - The company has a strong liquidity position of over $900 million, including $145 million in cash [16] Q&A Session Summary Question: Timeline for lease expirations at Brighton Mills - Management indicated that most leases at Brighton Mills expire in 22 years, with expected NOI growth exceeding 3% [22] Question: Breakdown of one-time items recognized in 2025 - Management highlighted about $2 million in one-time collections and $1.5 million related to CAM recovery billings as non-recurring items [24][25] Question: Opportunities at Shoppers World - Management discussed flexibility with the Kohl's parcel and potential mixed-use opportunities for redevelopment [32] Question: Rent spreads in the quarter - Management noted that the 60% rent spread was driven by unique anchor leases, with expectations for double-digit spreads going forward [34] Question: Creating more shop space in the portfolio - Management is actively studying opportunities to split anchor spaces into shop spaces, with high demand for shop tenants [40][41] Question: Acquisition environment and competition - Management acknowledged a competitive market with increased interest from institutional capital, but emphasized a disciplined approach to acquisitions [46][48] Question: Tenant demand and balance between restaurants and grocers - Management reported strong demand from both grocers and restaurants, with no significant push-pull tension between the two [56] Question: Institutional capital demand in the D.C. metro area - Management noted that while Boston and New York are more in demand, their D.C. centers are performing well [61] Question: Sustainability of high occupancy levels - Management attributed sustained high occupancy levels to a favorable supply-demand dynamic in the retail market [67]

Financial Data and Key Metrics Changes - FFO as adjusted increased by 4% year-over-year for Q3 2025, with year-to-date growth at 7% compared to the first nine months of the previous year [4] - Same property net operating income (NOI) rose by 4.7% for the quarter and 5.4% year-to-date [4] - The company raised its 2025 FFO as adjusted guidance to a new range of $1.42 to $1.44 per share, representing 6% growth over 2024 at the midpoint [8][17] Business Line Data and Key Metrics Changes - Leasing activity totaled 31 deals aggregating 347,000 square feet, including 20 renewals at a 9% spread and 11 new leases at a 61% spread [9] - Same property lease rate stands at 96.6%, with a 20 basis point decline from the previous quarter [10] - Shop occupancy rate remained flat at 92.5%, while the overall same property NOI growth, including redevelopment guidance, was increased to a new midpoint of 5.25% [11][17] Market Data and Key Metrics Changes - The acquisition market remains competitive, driven by institutional capital and tighter spreads from traditional banks [7] - The company’s Boston portfolio now includes seven properties valued at approximately $5,500 million, representing about 10% of the company's total value [7] - The overall leasing market shows strong demand, with year-to-date leasing spreads averaging 40% on new leases and nearly 10% on renewals [8] Company Strategy and Development Direction - The company is focused on capital recycling, having acquired nearly $600 million of high-quality shopping centers at an average 7% cap rate while disposing of approximately $500 million of non-core assets at a 5% cap rate [7] - The active redevelopment pipeline totals $149 million with a projected yield of 15% [12] - The company aims to generate sustainable 3% plus growth through strategic acquisitions and dispositions [72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of shopping center fundamentals, driven by favorable supply-demand dynamics and record low vacancy rates [8] - The company anticipates continued strong demand for retail space, particularly in the Northeast Corridor market [14] - Management highlighted the importance of maintaining a balance between restaurant and grocery tenants to ensure overall tenant success [56] Other Important Information - The company completed the acquisition of Brighton Mills, a grocery-anchored shopping center, for $39 million, expecting annual NOI growth to exceed 3% [4][5] - The company has a strong liquidity position of over $900 million, including $145 million in cash [16] Q&A Session Summary Question: Timeline for monetizing opportunities at Brighton Mills - Management indicated that most leases at Brighton Mills have terms extending over the next 10 to 22 years, with confidence in achieving over 3% NOI growth [22] Question: Breakdown of one-time items recognized in 2025 - Management highlighted approximately $2 million in one-time collections related to old receivables and about $1.5 million from CAM recovery billings as non-recurring items [24][25] Question: Opportunities at Shoppers World - Management discussed the flexibility to work with the Kohl's parcel separately and the potential for redevelopment or retenanting to enhance value [32] Question: Rent spreads in the quarter - Management noted that the 60% rent spread was driven by unique anchor leases with HomeGoods and Ross, and while double-digit spreads are expected, 60% is not sustainable every quarter [34][35] Question: Creating more shop space in the portfolio - Management is actively studying opportunities to split anchor spaces into shop spaces, with demand for shop space remaining strong [40][41] Question: Acquisition environment and funding - Management acknowledged a competitive acquisition market with increased interest from institutional capital, while maintaining a disciplined approach to bidding [46][48] Question: Institutional competition for nontraditional assets - Management noted that while there is interest in nontraditional shopping center assets, their platform allows them to differentiate and find value-add opportunities [52][53] Question: Balancing demand between restaurants and grocers - Management indicated that both sectors are in expansion mode, with no significant push-pull tension observed [56] Question: Shift in demand in the D.C. metro area - Management reported strong performance and demand in their D.C. centers, with no significant shifts in institutional capital interest noted [61] Question: Sustaining high occupancy levels - Management emphasized that supply-demand metrics favor sustained high occupancy levels due to limited new retail construction [67]

Financial Data and Key Metrics Changes - FFO as adjusted increased by 4% year-over-year for Q3 2025, with year-to-date growth reaching 7% compared to the first nine months of the previous year [3] - Same property net operating income (NOI) rose by 4.7% for the quarter and 5.4% year-to-date [3] - The company raised its 2025 FFO as adjusted guidance to a new range of $1.42 to $1.44 per share, reflecting a 6% growth over 2024 at the midpoint [6][14] Business Line Data and Key Metrics Changes - Leasing activity totaled 31 deals aggregating 347,000 square feet, including 20 renewals at a 9% spread and 11 new leases at a 61% spread [7] - The overall same property lease rate is at 96.6%, a decline of 20 basis points from the previous quarter [8] - Shop occupancy rate remained flat at 92.5%, while the company continues to explore creating new shop space [9] Market Data and Key Metrics Changes - The Boston portfolio now includes seven properties valued at approximately $5,500 million, representing about 10% of the company's total value [5] - The acquisition market remains competitive, driven by institutional capital and tighter spreads from traditional banks [5] Company Strategy and Development Direction - The company is focused on capital recycling, having acquired nearly $600 million in high-quality shopping centers at an average 7% cap rate while disposing of approximately $500 million in non-core assets at a 5% cap rate [5] - The active redevelopment pipeline totals $149 million with a projected yield of 15% [10] - The company aims to generate sustainable same property NOI growth of 3% or more [92] Management's Comments on Operating Environment and Future Outlook - Management expects shopping center fundamentals to remain strong, driven by favorable supply-demand dynamics and record low vacancy rates [6] - The company is optimistic about the leasing market, with national retailers in expansion mode and willing to pay necessary rents [11] - Management highlighted the importance of balancing the addition of restaurant spaces with grocery stores to avoid oversaturation [77] Other Important Information - The company secured a new $123.6 million four-year non-recourse mortgage at a fixed rate of 5.1% [12] - The liquidity position remains strong at over $900 million, including $145 million in cash [14] Q&A Session Summary Question: Can you provide a breakdown of one-time items recognized in 2025? - Management noted about $2 million in one-time collections related to old receivables and approximately $1.5 million from CAM recovery billings [29][30] Question: What is the opportunity set within Shoppers World? - Management expressed confidence in redeveloping the Kohl's parcel and exploring mixed-use opportunities [41][42] Question: How do you balance demand from restaurants and grocers? - Management indicated that both sectors are expanding, with no significant push-pull tension between them [77] Question: Is there a shift in demand in the D.C. metro area? - Management reported strong performance in D.C. centers, with continued demand for retail space [79] Question: What is the outlook for same property NOI growth? - Management aims for sustainable same property NOI growth of 3% or more, supported by the signed-not-open pipeline [92]

Financial Performance - Net income for the three months ended September 30, 2025, was $15.5 million, a 64.8% increase from $9.5 million in the same period of 2024[160] - Total revenue for the nine months ended September 30, 2025, increased by $23.8 million to $352.4 million compared to $328.6 million for the same period in 2024[162] - Funds From Operations (FFO) applicable to diluted common shareholders for the three months ended September 30, 2025, was $51.9 million, up from $43.9 million in the same period of 2024[159] - Same-property Net Operating Income (NOI) for the three months ended September 30, 2025, was $62.6 million, compared to $60.2 million for the same period in 2024, reflecting a 4.0% increase[159] - Same-property NOI increased by $2.5 million, or 4.1%, for the three months ended September 30, 2025, compared to the same period in 2024, and increased by $8.0 million, or 4.6%, for the nine months ended September 30, 2025[174] - FFO applicable to diluted common shareholders was $52.0 million for the three months ended September 30, 2025, compared to $43.9 million for the same period in 2024[176] - Same-property NOI including properties in redevelopment increased by $3.1 million, or 4.7%, for the three months ended September 30, 2025, compared to the same period in 2024[174] Expenses and Costs - General and administrative expenses decreased by $0.4 million to $9.0 million in the third quarter of 2025 from $9.4 million in the third quarter of 2024, primarily due to lower employment expenses[161] - Interest and debt expense decreased by $0.2 million to $19.4 million in the third quarter of 2025 from $19.5 million in the third quarter of 2024[161] - Real estate tax expense decreased by $0.9 million to $16.8 million in the third quarter of 2025 from $17.7 million in the third quarter of 2024[160] - Depreciation and amortization decreased by $6.3 million to $106.6 million for the nine months ended September 30, 2025, compared to $112.9 million for the same period in 2024[163] - General and administrative expenses increased by $2.4 million to $30.2 million for the nine months ended September 30, 2025, from $27.8 million in the same period of 2024, primarily due to severance expenses[166] - Interest and debt expense decreased by $3.3 million to $58.7 million for the nine months ended September 30, 2025, from $62.0 million in the same period of 2024[168] Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2025 was $131.7 million, up $31.0 million from $100.7 million for the same period in 2024[187] - Net cash used in investing activities decreased to $11.1 million for the nine months ended September 30, 2025, down $135.2 million from $146.3 million in the same period of 2024[188] - Net cash used in financing activities increased to $66.4 million for the nine months ended September 30, 2025, up $27.4 million from $39.0 million in the same period of 2024[191] - As of September 30, 2025, the company had cash and cash equivalents of $144.8 million, an increase of $54.2 million from $90.6 million at December 31, 2024[185] Debt and Financing - The estimated fair value of the company's consolidated debt was $1.6 billion as of September 30, 2025[199] - The company has an $800 million revolving credit agreement with $767.8 million available as of September 30, 2025, with no outstanding balance[181] - The company has approximately $23.3 million of debt maturing within the next 12 months related to a mortgage loan[183] - The company recognized a $0.5 million gain on extinguishment of debt for the nine months ended September 30, 2025, related to the return of escrow funds[168] Real Estate Transactions - A gain on the sale of real estate was recognized at $49.7 million during the nine months ended September 30, 2025, compared to $15.3 million for the same period in 2024[167] - Interest expense decreased by $2.8 million due to mortgage debt forgiven in connection with the foreclosure of Kingswood Center[172] - Capitalized interest expense increased by $1.0 million due to the commencement of development and redevelopment projects[164] - The company had 22 active development projects with total estimated costs of $149.1 million, of which $76.6 million had been incurred as of September 30, 2025[188] Market Conditions - The Federal Reserve cut its benchmark interest rate by 25 basis points in September 2025, influenced by moderated economic growth and increased unemployment levels[158] - The company continues to monitor inflation impacts, with inflation levels remaining elevated compared to the Federal Reserve's target of 2%[158] Dividends - The company declared a quarterly dividend of $0.19 per common share for the first three quarters of 2025, resulting in an annual rate of $0.76[179]

Financial Performance - Urban Edge Properties reported a net income attributable to common shareholders of $14.935 million for Q3 2025, up from $9.080 million in Q3 2024, representing a 64.5% increase[9]. - Funds from Operations (FFO) for Q3 2025 was $51.951 million, compared to $43.935 million in Q3 2024, reflecting an increase of 18.5%[9]. - Net income for Q3 2025 was $15,541,000, a 64.5% increase from $9,467,000 in Q3 2024[40]. - FFO applicable to diluted common shareholders for Q3 2025 was $51,951,000, up 18.5% from $43,935,000 in Q3 2024[40]. - Same-property NOI for Q3 2025 was $62,637,000, representing a 4.1% increase from $60,179,000 in Q3 2024[42]. - Adjusted EBITDAre for Q3 2025 was $67,640,000, compared to $64,919,000 in Q3 2024, reflecting a 4.2% increase[44]. - Total revenue for the three months ended September 30, 2025, was $120,126,000, representing an increase from $112,427,000 in the same period of 2024, a growth of approximately 6.2%[52]. - Net income attributable to common shareholders for the nine months ended September 30, 2025, was $81,111,000, compared to $42,442,000 for the same period in 2024, reflecting a significant increase of 91.3%[54]. - Funds from operations (FFO) for the nine months ended September 30, 2025, totaled $141,188,000, compared to $128,000,000 in the same period of 2024, marking an increase of 10.3%[52]. Guidance and Projections - The company raised its full-year 2025 FFO as Adjusted guidance by $0.01 per share, now estimating a mid-point of $1.43 per diluted share, which indicates a 6% expected annual growth[8][21]. - Net income attributable to common shareholders is projected to be between $91.8 million and $94.3 million for 2025, translating to a per diluted share of $0.70 to $0.72[28]. - Same-property NOI growth is expected to be between 5.0% and 5.5%, an increase from the previous estimate of 4.25% to 5.0%[29]. - FFO applicable to diluted common shareholders is projected to be between $186.2 million and $188.8 million for 2025, equating to a per diluted share of $1.43 to $1.45[28]. - Recurring G&A expenses are expected to range from $34.5 million to $35.0 million, reflecting a decrease from the previous high estimate[29]. - Interest and debt expense is projected to be between $78.5 million and $79.5 million, also showing a decrease from prior estimates[29]. - The company anticipates 2025 FFO per diluted share to be between $1.43 and $1.45, with adjustments for items impacting comparability[30]. Leasing and Occupancy - Urban Edge executed over 340,000 square feet of leasing transactions in Q3 2025, achieving cash spreads of 21%[8]. - The consolidated portfolio leased occupancy was 96.3% as of September 30, 2025, flat compared to the previous year[19]. - Same-property NOI growth for the three months ended September 30, 2025, was 4.1%, while including redevelopment properties, it was 4.7%[52]. - The company owns 73 properties totaling 17.2 million square feet of gross leasable area[47]. - The company has signed leases not yet commenced that are expected to generate an incremental $21.5 million in future annual gross rent, approximately 7% of annualized NOI as of September 30, 2025[64]. - The same-property gross rent expected to be recognized in 2026 is projected at $7.6 million, increasing to $12.4 million in 2027 and $13.5 million in 2028[67]. - The retail portfolio has a total of 15,795,000 square feet, with 2.8% vacant space[68]. - The average base rent per square foot for anchor tenants (SF>=10,000) is $17.68, while for shop tenants (SF<10,000) it is $39.72[68]. - The number of new leases executed in the nine months ended September 30, 2025, was 115, covering 1,262,323 square feet[63]. - The rent per square foot for new leases increased from $31.34 in the year ended December 31, 2024, to $32.02 in the three months ended September 30, 2025[63]. - The rent spread for renewals and options executed in the three months ended September 30, 2025, was 9.7%[63]. - As of September 30, 2025, Urban Edge Properties has a total retail portfolio of 15,795,000 square feet, with 97.2% leased[69]. Acquisitions and Dispositions - The company acquired Brighton Mills Shopping Center for $39 million, a 91,000 square foot grocery-anchored center, expanding its footprint in the Boston area, which now represents over 10% of its asset value[8][12]. - The company completed acquisitions totaling $39 million and dispositions of $66 million year-to-date[29]. - The company disposed of properties including Bergen Town Center East for $25,000 and Kennedy Commons for $23,200, totaling 106,000 square feet[75]. Debt and Liquidity - Total liquidity as of September 30, 2025, was approximately $913 million, including $145 million in cash and $768 million available under the revolving credit agreement[20]. - The company has $149.1 million of active redevelopment projects underway, expected to generate an approximate 15% yield[18]. - The total consolidated debt as of September 30, 2025, was $1,646,464,000, with a net debt of $1,501,670,000[58]. - The equity market capitalization as of September 30, 2025, was $2,713,967,000[58]. - Cash and cash equivalents increased to $77,796,000 as of September 30, 2025, up from $41,373,000 at the end of 2024, showing improved liquidity[53]. - The company has an unsecured $800 million line of credit with no outstanding borrowings as of September 30, 2025[79]. - The weighted average interest rate on secured mortgage debt is 5.03% as of September 30, 2025[78]. - The debt maturity schedule indicates that 21.9% of the total debt is maturing in 2029, amounting to $360,219,000[81]. Tenant Information - The top twenty-five tenants accounted for 50.4% of total square feet leased, with an annualized base rent (ABR) of $156,757,807, which is 47.8% of total ABR[62]. - The TJX Companies is the largest tenant, occupying 5.1% of total square feet and contributing $18,663,686 to annualized base rent[62]. - Major tenants include Walmart, Best Buy, and Aldi, with properties like Ledgewood Commons and Tonnelle Commons having significant occupancy rates of 80.0% and 100.0% respectively[71]. Development and Redevelopment - The company has a total of $1,646,464 in mortgage debt across its properties[72]. - The estimated unleveraged yield for total active projects is 15% based on total estimated project costs and incremental NOI[76]. - Completed projects have a total estimated gross cost of $48,600,000, with incurred costs of $46,900,000[77]. - The estimated unleveraged yield for completed projects is 17% based on total estimated project costs and incremental NOI[77].

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