Urban Edge Properties(UE)2025-02-12 18:33Financial Data and Key Metrics Changes - FFO as adjusted increased by 8% for the year to $1.35 per share, achieving three-year earnings target one year ahead of plan [7] - Same-property portfolio occupancy grew to 96.6%, with a signed but not open pipeline expected to generate $25 million of future annual gross rent, representing 9% of NOI [8][12] - FFO as adjusted for Q4 was reported at $0.34 per share, contributing to the full year figure of $1.35 per share [26] Business Line Data and Key Metrics Changes - In 2024, the company executed a record 79 new leases totaling 485,000 square feet, with a same-space cash rent spread of 26% [7][17] - The overall leasing volume for 2024 was strong, with new leases and renewals achieving spreads of 26% and 9% respectively [18] - The company completed $30 million of redevelopment projects expected to generate a 16% unlevered return [10] Market Data and Key Metrics Changes - Foot traffic increased by 3% over the previous year at grocery-anchored centers, with retail occupancy in the Northeast at a 10-year high of 95% [20] - New shopping center construction is at a near-record low, only 0.2% of total supply [20] - The company noted that tenant bankruptcies present more opportunities than risks, with identified replacement tenants at spreads up to 90% [21] Company Strategy and Development Direction - The company aims for FFO as adjusted growth of 4% or better in 2025, with same-property NOI growth of at least 3.5% [13] - The company is focused on capital recycling, acquiring higher-growth assets while disposing of lower-growth ones [42] - The company plans to continue enhancing portfolio quality through disciplined capital allocation and operational excellence [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth plans for the next decade, emphasizing the importance of improving shopping centers in urban communities [12] - The company anticipates gradual growth in NOI and FFO throughout 2025 as new rents commence [30] - Management highlighted the strong balance sheet with over $800 million in total liquidity and a favorable debt maturity profile [27] Other Important Information - The company announced a 12% increase in its dividend to an annualized rate of $0.76 per share [34] - The company has a strong in-place pipeline of $163 million at a 15% return, nearly all tied to executed leases [22] Q&A Session Summary Question: Visibility on same-store NOI and bad debt - Management provided details on the bad debt provision, indicating 70 basis points related to bankrupt tenants and 40 basis points as a general reserve [38] Question: Commentary on acquisition pipeline - Management noted an increase in available products but highlighted challenges in making deals pencil due to competitive cap rates [40][42] Question: Demand for specific assets and cap rates - Management indicated that cap rates for single-tenant assets are expected to be in the 5% range, while larger stable power centers may be around 6% [48] Question: Status of redevelopment projects - Management expressed excitement about progress at Sunrise Mall and the potential for various uses beyond retail [52][66] Question: G&A cost management - Management discussed efforts to streamline processes and reduce costs through headcount allocation and third-party spending [61][63]