Urban Edge Properties(US:UE)2026-02-11 14:32Financial Data and Key Metrics Changes - The company generated FFO as adjusted of $1.43 per share in 2025, representing a 6% growth compared to 2024, driven by a 5% same-property NOI growth [4][17] - Same-property NOI, including redevelopment, increased by 2.9% in Q4 and 5% for the full year [17] - The company ended 2025 with a net debt to annualized EBITDA ratio of 5.8x, below the target of 6.5x, indicating a strong balance sheet [18] Business Line Data and Key Metrics Changes - The company executed 58 new leases at a record same-space cash rent spread of 32% and achieved a record shop occupancy of 92.6% [4][10] - The signed but not open pipeline is expected to generate an additional $22 million of annual gross rent, representing 8% of current NOI [5] - The company completed 14 projects totaling $55 million, generating unlevered yields of 19% [6] Market Data and Key Metrics Changes - Nationally, shopping center vacancy remains near historic lows, with supply constraints particularly pronounced in the Northeast [11] - The company noted that finding land and securing entitlements is extremely difficult in its markets, which supports expectations for healthy rent growth [12] Company Strategy and Development Direction - The company aims for FFO as adjusted growth of at least 4.5% in 2026 and same-property NOI growth above 3% [8] - The growth outlook is highly visible, with over 80% of same-property NOI growth expected from executed leases and contractual rent increases [9] - The company is focused on redevelopment and anchor repositioning projects, with significant investments planned for the future [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued demand for high-quality retail spaces and expects new lease spreads to remain above 20% in 2026 [4][5] - The company anticipates challenges in the acquisition market due to increased competition and lower cap rates, but remains optimistic about capital recycling opportunities [28][60] Other Important Information - The board approved an 11% increase in the annualized dividend to $0.84 per share, reflecting an FFO payout ratio of about 56% [21] - The company has $166 million of active redevelopment projects, with plans to spend about $70 million-$80 million during 2026 [21] Q&A Session Summary Question: Expectations for shop occupancy growth - Management expects to reach a steady state of 94%-96% occupancy, with potential for strategic leasing improvements [25][26] Question: Insights on capital recycling and acquisition pipeline - The acquisition market is competitive, with cap rates decreasing, but the company is optimistic about capital recycling opportunities [28][60] Question: Same-property NOI growth path - The deceleration in 2026 is attributed to tenant fallout and one-time benefits in 2025, while growth visibility from the signed but not open pipeline supports a rebound in 2027 [34][35] Question: Impact of snow removal costs on guidance - Guidance for 2026 accounts for snow removal costs incurred in January, with appropriate provisions made [43] Question: Opportunities in redevelopment projects - The company is focused on both small-scale and larger redevelopment projects, with significant potential for growth from completed projects [46][47]