Urban Edge Properties(UE) - 2025 Q1 - Earnings Call Transcript

Financial 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 [5] - 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 [5][17] - 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 [8][19] Business Line Data and Key Metrics Changes - The company executed 42 leases totaling 434,000 square feet in the first quarter, including 18 new leases amounting to 118,000 square feet with same-space cash leasing spreads of 34% [5][13] - The tenant retention ratio remained high at 95%, and SHOP occupancy grew to a record 92.4%, a 150 basis point increase since the last quarter [6][14] Market Data and Key Metrics Changes - The investment sales market is showing early signs of slowing down, with limited CMBS issuance since April [7] - The company 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 [8] Company Strategy and Development Direction - The company plans to reinvest capital from dispositions into accretive acquisitions to enhance portfolio quality and growth rate [8] - The company has a large redevelopment pipeline totaling $156 million of projects expected to generate a 14% return [10][15] - The company is focused on capital recycling, having acquired over $550 million in assets at a 7.2% cap rate while selling approximately $450 million at a 5.2% cap rate [11] 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 than expected [9][19] - The company remains confident in its ability to navigate economic cycles and drive sector-leading growth [21] Other Important Information - The company has approximately $800 million of total liquidity, including $98 million in cash, and a manageable debt maturity profile with only 8% of outstanding debt maturing through 2026 [18] - The company has built in conservative assumptions for the remainder of the year, incorporating contingencies for potential volatility in rent collections and tenant fallout [20] Q&A Session Summary Question: How does macro uncertainty affect leasing timelines? - Management noted that there has been no observed slowdown in retailer demand, with ongoing negotiations for numerous leases [25][26] Question: Can you provide more details on the dispositions and cap rates? - Management indicated that the recent dispositions were at attractive cap rates, and they are actively seeking acquisitions [27][28] Question: What specific factors led to a more cautious outlook? - Management stated that the decision to maintain conservative guidance was prudent, without specific tenant concerns driving the change [34][35] Question: How does the company view its portfolio in a recessionary environment? - Management expressed confidence in the portfolio's resilience, highlighting strong tenant balance sheets and a focus on well-capitalized anchors [50][52] Question: What are the bad debt assumptions for the year? - Management reiterated guidance for bad debt to be 75 to 100 basis points of gross rents, with a slight contingency built in for the second half of the year [59]