Urban Edge Properties(UE)2022-08-05 21:17Financial Data and Key Metrics Changes - The company reported FFO as adjusted of $0.30 per share, up 7% compared to the prior year and also up 7% year-to-date [7] - Same-property NOI growth was 1.2%, or 0% when including development properties, tempered by year-over-year changes in reversals of uncollectible receivables [28] - Overall collection trends remained strong, with 99% of second-quarter rents collected [29] Business Line Data and Key Metrics Changes - The company executed approximately 290,000 square feet of new leases with a blended spread of 7%, bringing future rents from signed but not opened tenants to $23 million, representing 10% of annualized NOI [10] - Same-property leased occupancy increased to 94.9%, up nearly 300 basis points compared to the prior year [11] - The leasing volume included 37 new leases, renewals, and options totaling over 700,000 square feet at an average cash rent spread of 10% [17] Market Data and Key Metrics Changes - Total visits to the company's centers increased by 7% during Q2 2022 compared to Q2 2019, with grocery store sales up 13% compared to 2019 [8] - The company noted that demand for new sites from retailers remains strong despite rising inflation and pressures on consumer spending [22] - In Puerto Rico, comp store sales were up 25% at Las Catalinas and 15% at Montehiedra compared to 2019 [24] Company Strategy and Development Direction - The company aims to reach an occupancy goal of 96% by year-end, with a strong leasing pipeline of approximately 1 million square feet under negotiation [12] - Active redevelopment projects totaling $206 million are expected to generate a 10% unleveraged yield [12] - The company is exploring potential refinancing sources for its debt to enhance liquidity and flexibility [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continuing to drive occupancy and rents, with expectations for traffic and sales trends to grow [10] - The company anticipates challenges in finding acquisitions that meet current return thresholds due to higher debt and equity costs [14] - Management highlighted that local tenant exposure is only 13% of total annualized base rents, indicating lower risk compared to peers [31] Other Important Information - The company was recognized as one of the best places to work in New Jersey by NJBIZ Magazine [15] - The cash position at the end of the quarter was $170 million, expected to be used for redevelopment projects and opportunistic acquisitions [35] - The company published its annual ESG report, highlighting significant reductions in carbon emissions [36] Q&A Session Summary Question: Changes in leasing negotiations - Management noted that while rent spreads are higher, negotiations are taking longer due to supply chain issues and tenant requests for pandemic-related protections [40][42] Question: Transaction market and cap rates - Management indicated that asset pricing has decreased by about 10% to 20% since the beginning of the year, with higher quality assets still trading [46][47] Question: Tenant risk assessment - Management acknowledged that local tenants may pose higher risks during economic downturns compared to anchor tenants, but overall tenant credit quality has improved [72][74] Question: Future NOI growth expectations - Management did not provide specific guidance but expressed hope for stronger same-property NOI growth next year compared to this year [76] Question: Balance sheet leverage outlook - Management expects to trend back to leverage levels below 7% as new income from the signed but not opened pipeline comes online [83][84]