Urban Edge Properties(US:UE)2025-04-30 12:30Financial Data and Key Metrics Changes - The company reported FFO as adjusted of $0.35 per share, a 6% increase over the first quarter of last year, marking the highest quarterly earnings result in the company's ten-year history [4] - Same property NOI increased by 3.8% compared to the first quarter of last year, benefiting from improved recovery ratios and better-than-expected collections [4][16] - The company reiterated its 2025 full-year guidance of achieving FFO as adjusted of $1.37 to $1.42 per share, reflecting growth of 4% at the midpoint [7][19] Business Line Data and Key Metrics Changes - The company executed 42 leases totaling 434,000 square feet, including 18 new leases amounting to 118,000 square feet with same space cash leasing spreads of 34% [4][12] - The tenant retention ratio remains high at 95%, and SHOP occupancy grew to a new record of 92.4% [5][13] - The same property lease rate now stands at 96.6%, a 50 basis point decrease over the previous quarter [12] Market Data and Key Metrics Changes - The investment sales market is showing early signs of slowing down, with limited CMBS issuance since April [6] - The company has successfully sold eight acres of land for $25 million and is under contract to sell two more properties for $41 million, bringing total dispositions to $66 million this year at a 5% weighted average cap rate [7] Company Strategy and Development Direction - The company plans to reinvest capital from dispositions into accretive acquisitions to enhance portfolio quality and growth rate [7] - The company has a large redevelopment pipeline totaling $156 million of projects expected to generate a 14% return [9][14] - The company emphasizes its properties' concentration in densely populated regions, which is expected to drive growth [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed a more conservative outlook for the back half of the year due to economic volatility, despite a stronger start to the year [8][20] - The company is focused on executing its business plan to drive leasing and occupancy while carefully managing costs [20] - Management noted that the overall health of retailer balance sheets is strong, and they do not foresee significant bankruptcy risks among major tenants [46] Other Important Information - The company has approximately $800 million of total liquidity, including $98 million in cash, and a manageable debt maturity profile [17] - The net debt to annualized EBITDA stands at 5.9 times, indicating a strong balance sheet position [18] Q&A Session Summary Question: How does macro uncertainty affect leasing decisions? - Management noted that there has been no slowdown in retailer demand, with ongoing negotiations for numerous leases without material changes [25] Question: Can you provide more details on the dispositions and cap rates? - Management confirmed that the recent dispositions were at a 5% cap rate, which is attractive compared to previous acquisitions [26][28] Question: What specific factors led to a more cautious outlook? - Management indicated that they added to the contingency in their guidance due to overall economic uncertainty, rather than specific tenant issues [34] Question: How do 1031 exchanges impact taxable income and dividends? - Management clarified that 1031 exchanges defer gains and do not pressure dividends, allowing for more strategic capital deployment [38] Question: What is the outlook for rent growth and bankruptcy risks? - Management reported a 5% to 10% increase in market rents and does not view recent bankruptcies as indicative of broader market issues [44][46] Question: How does the company view its portfolio in a recessionary environment? - Management expressed confidence in the portfolio's resilience, highlighting strong tenant quality and balance sheet strength [50]