Urban Edge Properties(US:UE)2024-02-14 15:24Financial Data and Key Metrics Changes - The company reported FFO as adjusted at $0.31 per share for Q4 and $1.25 per share for the full year, achieving the high end of guidance [64] - Same-property NOI growth, including redevelopment, was down 1.3% for Q4 compared to the previous year but up 2.5% for the full year [64] - Excluding out-of-period collections, same-property NOI growth was up 0.6% in Q4 and up 4.3% for the year, aligning with prior guidance [65][66] Business Line Data and Key Metrics Changes - The company executed 51 leasing deals in Q4, totaling 650,000 square feet, with same-space deals generating an average cash rent spread of 18% [44] - For the full year, approximately 2 million square feet of leasing transactions were completed, with a new lease spread of almost 25% [46] - The company aims to increase shop occupancy back to above 91%, with a potential 300-basis-point increase [29] Market Data and Key Metrics Changes - The company operates in a densely populated, supply-constrained market from D.C. to Boston, which limits new supply and enhances land values [33] - Retail rent growth in 2023 was over 4%, with the lowest retail vacancy since 2007 and record low retail construction [52] Company Strategy and Development Direction - The company plans to achieve same-property NOI growth of at least 4% in 2024 and aims to increase lease occupancy to historical highs of 97% to 98% [34] - The company is focused on capital recycling, leasing, and development to drive strong results [38] - The acquisition of Heritage Square for $34 million is part of the strategy to enhance the portfolio with high-quality assets [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing a strong pipeline and competitive advantages as a well-capitalized cash buyer [14][51] - The company anticipates a gradual build in NOI and FFO due to the timing of lease commencements and seasonal operational expenses [86][87] - Management expects to maintain a strong balance sheet with minimal debt maturities through 2026 [68] Other Important Information - The company increased its annual dividend by 6%, reflecting confidence in earnings and cash flow growth [35] - The company has a well-laddered debt maturity profile, with only 13% of debt maturing through 2026 [61] Q&A Session Summary Question: What will drive the incremental upside in shop occupancy? - Management indicated that anchor repositioning and converting temporary tenants to permanent ones will contribute to shop occupancy gains [77][78] Question: What is the conversation with anchor tenants regarding rent? - Management noted that a 98% leased anchor portfolio allows for more aggressive negotiations on rent and other terms [82][100] Question: What factors will influence same-store NOI growth? - Management highlighted the pace of incoming leases and the impact of seasonal operational expenses as key factors [101][106] Question: Are there plans for larger acquisitions? - Management stated that while modest acquisitions are preferred, they would consider larger opportunities if they align with their growth strategy [111][132] Question: What is the outlook for the acquisition market? - Management noted that finding suitable assets is challenging, with only a small percentage meeting their criteria, but they remain active in pursuing opportunities [129]