Q1 2026 Urban Edge Properties Earnings Call

April 29, 2026

Operator: Greetings, and welcome to the Urban Edge Properties Q1 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Areeba Ahmed, investor relations. Please go ahead.

Speaker #1: If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Areeba Ahmed, investor relations.

Speaker #1: Please go ahead. Good morning and welcome to Urban Edge Properties First Quarter 2026 earnings conference call. Joining me today are Jeff Olson, chairman and chief executive officer; Jeff Mooallem, chief operating officer; Mark Langer, chief financial officer; Heather Olberg, general counsel; Scott Oster, EVP and head of leasing; and Andrea Drazen, chief accounting officer.

Areeba Ahmed: Good morning. Welcome to Urban Edge Properties Q1 2026 Earnings Conference Call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Jeff Mooallem, Chief Operating Officer, Mark Langer, Chief Financial Officer, Heather Ohlberg, General Counsel, Scott Auster, EVP and Head of Leasing, and Andrea Drazin, Chief Accounting Officer. Please note, today's discussion may contain forward-looking statements about the company's views of future events and financial performance, which are subject to numerous assumptions, risks, and uncertainties, which the company does not undertake to update. Our actual results, financial condition, and business may differ. Please refer to our filings with the SEC, which are also available on our website for more information about the company. In our discussion today, we will refer to certain non-GAAP financial measures. Reconciliations of these measures to GAAP results are available in our earnings release and our supplemental disclosure package.

Speaker #1: Please note today's discussion may contain forward-looking statements about the company's views of future events and financial performance. Which are subject to numerous assumptions, risks, and uncertainties, and which the company does not undertake to update.

Speaker #1: Our actual results, financial condition, and business may differ. Please refer to our filings with the SEC, which are also available on our website, for more information about the company.

Speaker #1: In our discussion today, we will refer to certain non-GAAP financial measures. Reconciliations of these measures to GAAP results are available in our earnings release and our supplemental disclosure package.

Speaker #1: At this time, it is my pleasure to introduce our chairman and chief executive officer, Jeff Olson. Thank you, Areeba, and good morning. We had a great first quarter delivering results that exceeded our internal expectations.

Areeba Ahmed: At this time, it is my pleasure to introduce our Chairman and Chief Executive Officer, Jeff Olson.

Jeff Olson: Thank you, Areeba. Good morning. We had a great Q1 delivering results that exceeded our internal expectations. We generated FFO as adjusted of $0.36 per share, a 3% increase over the Q1 of last year. Same-Property Net Operating Income, including redevelopment, increased by 2.8%, primarily due to rent commencements from our signed but not open pipeline. Leasing fundamentals across our portfolio remain strong, reflecting continued demand from retailers seeking well-located, high-quality space. Our shopping centers, primarily anchored by grocers, discounters, off-price retailers, and home improvement stores, along with shops comprised of quick service restaurants, health, fitness, and service uses, continue to generate increased traffic. During the quarter, we executed leases totaling 419,000 square feet, including 84,000 square feet of new leases at a strong 52% cash spread.

Speaker #1: We generated FFO as adjusted of 36 cents per share. A 3% increase over the first quarter of last year. Same property net operating income including redevelopment increased by 2.8%.

Speaker #1: Primarily due to rent commencements from our signed but not open pipeline. Leasing fundamentals across our portfolio remain strong, reflecting continued demand from retailers seeking well-located, high-quality space.

Speaker #1: Our shopping centers primarily anchored by grocers, discounters, off-price retailers, and home improvement stores along with shops comprised of quick service restaurants, health, fitness, and service uses continue to generate increased traffic.

Speaker #1: During the quarter, we executed leases totaling $419,000 square feet including 84,000 square feet of new leases at a strong 52% cash spread. Our leasing pipeline remains robust.

Jeff Olson: Our leasing pipeline remains robust and should result in record leasing activity over the coming quarters, with leasing spreads expected to exceed 20%. Our signed, but not open pipeline remains a meaningful contributor to future growth, representing $22 million of annual gross rent or approximately 7% of current net operating income. This provides us with strong visibility into earnings through 2027. In March, we completed the acquisition of the Village at Bridgewater Commons, a 92,000-square-foot shopping center located in Bridgewater, New Jersey, for $54 million at a 7.7% cap rate. This property is situated in a highly trafficked corridor within an affluent market. It attracts 2.2 million visitors per year, among the highest for its size. Tenants include Summit Health, Chipotle, Shake Shack, Millburn Deli, CAVA, and Starbucks.

Speaker #1: And should result in record leasing activity over the coming quarters with leasing spreads expected to exceed 20%. Our signed but not open pipeline remains a meaningful contributor to future growth.

Speaker #1: Representing 22 million dollars of annual gross rent or approximately 7% of current net operating income. This provides us with strong visibility into earnings through 2027.

Speaker #1: In March, we completed the acquisition of the Village at Bridgewater Commons. A $92,000 square foot shopping center located in Bridgewater, New Jersey, for $54 million at a 7.7% cap rate.

Speaker #1: This property is situated in a highly trafficked corridor within an affluent market. It attracts 2.2 million visitors per year among the highest for its size.

Speaker #1: Tenants include Summit Health, Chipotle, Shake Shack, Milburn Deli, CAVA, and Starbucks. We structured the acquisition of Bridgewater in an accretive 1031 transaction with the expected sale of a Kohl's-anchored property in New Jersey.

Jeff Olson: We structured the acquisition of Bridgewater in an accretive 1031 transaction with the expected sale of a Kohl's anchored property in New Jersey. Looking ahead, based on the results we achieved in Q1, we increased our 2026 FFO as adjusted guidance by $0.01 per share on the low end to a new range of $1.48 to $1.52 per share, reflecting 5% growth over 2025 at the midpoint. Urban Edge is well-positioned to continue delivering steady growth, supported by strong fundamentals, our $22 million SNO pipeline, our $157 million redevelopment pipeline, and future acquisitions. I will now turn it over to our Chief Operating Officer, Jeff Mooallem.

Speaker #1: Looking ahead, based on the results we achieved in the first quarter, we increased our 2026 FFO as adjusted guidance by a penny per share on the low end to a new range of $1.48 to $1.52 per share.

Speaker #1: Reflecting 5% growth over 2025 at the midpoint. Urban Edge is well positioned to continue delivering steady growth. Supported by strong fundamentals, our 22 million dollar S&O pipeline, our 157 million dollar redevelopment pipeline, and future acquisitions.

Speaker #1: I will now turn it over to our chief operating officer, Jeff Mooallem. Thanks, Jeff, and good morning. From an operating standpoint, the first quarter reinforced what we have been consistently seeing across the portfolio.

Jeff Mooallem: Thanks, Jeff. Good morning. From an operating standpoint, Q1 reinforced what we have been consistently seeing across the portfolio. Demand for our space remains strong. Leasing momentum has not slowed. During Q1, we executed 45 leases comprising 13 new leases and 32 renewals for a total of 419,000 square feet. New leases were signed at a same-space cash rent spread of 52%. Every new lease signed this quarter, including two new anchor leases, have contractual annual rent increases of 3% or higher. We continue to push not only starting rents, but also contractual rent increases in all of our deals. We are seeing the results of that effort.

Speaker #1: Demand for our space remains strong and leasing momentum has not slowed. During the first quarter, we executed 45 leases comprising 13 new leases and 32 renewals.

Speaker #1: For a total of 419,000 square feet. New leases were signed at a same space cash rent spread of 52%. And every new lease signed this quarter including two new anchor leases have contractual annual rent increases of 3% or higher.

Speaker #1: We continue to push not only starting rents but also contractual rent increases in all of our deals and we are seeing the results of that effort.

Speaker #1: Same property lease occupancy at quarter end stood at 96.4%. A decrease of 30 basis points over the previous quarter and the first quarter of 2025.

Jeff Mooallem: Same-property lease occupancy at quarter end stood at 96.4%, a decrease of 30 basis points over the previous quarter and Q1 2025. The decline was expected and was primarily driven by the recapture of the Saks box at Hanover Commons, where we are evaluating multiple potential uses, ranging from grocer to apparel to creating additional shop space. Based on the activity in our pipeline, we continue to believe that occupancy levels of 97% to 98% are achievable by the end of the year. In addition to leasing our remaining vacancy, we also are working to proactively take back space that is under leased. At several of our properties, we've approached tenants with low rents and average performance in an attempt to convert those spaces to better uses at better rents.

Speaker #1: The decline was expected and was primarily driven by the recapture of the Saxbox at Hanover Commons, where we are evaluating multiple potential uses ranging from grocer to apparel to creating additional shop space.

Speaker #1: Based on the activity in our pipeline, we continue to believe that occupancy levels of 97 to 98 percent are achievable by the end of the year.

Speaker #1: In addition to leasing out remaining vacancy, we also are working to proactively take back space that is underleased. At several of our properties, we've approached tenants with low rents and average performance in an attempt to convert those spaces to better uses at better rents.

Speaker #1: This will become a bigger part of our growth in the coming years. As market rents have now increased to the point that landlords can accretively terminate leases to make way for a replacement tenant, something that was nearly impossible a few years ago.

Jeff Mooallem: This will become a bigger part of our growth in the coming years, as market rents have now increased to the point that landlords can accretively terminate leases to make way for a replacement tenant, something that was nearly impossible a few years ago. For example, in Framingham, Massachusetts, we negotiated an early recapture right on our Kohl's space and are in active negotiations with multiple users to lease the space at a significantly higher rent. On the redevelopment front, we stabilized four projects totaling $7 million during the quarter with the rent commencement of Trader Joe's and Ross at Plaza at Woodbridge, Beetle and Boot Barn at Totowa Commons, Texas Roadhouse at The Outlets at Montehiedra, and Big Blue at Plaza at Cherry Hill. These projects generate nearly a 50% yield, which speaks to the lower level of landlord contributions national retailers are now accepting.

Speaker #1: For example, in Framingham, Massachusetts, we negotiated an early recapture right on our Kohl's space and are in active negotiations with multiple users to lease the space at a significantly higher rent.

Speaker #1: On the redevelopment front, we stabilized four projects totaling $7 million during the quarter with the rent commencement of Trader Joe's and Ross at Plaza at Woodbridge, Lidl and Boot Barn at Totoah Commons, Texas Roadhouse at the outlets at Monahedra, and Big Blue at Plaza at Cherry Hill.

Speaker #1: These projects generate nearly a 50% yield, which speaks to the lower level of landlord contributions national retailers are now accepting. Our total active redevelopment pipeline is now 157 million dollars with an expected yield of 13%.

Jeff Mooallem: Our total active redevelopment pipeline is now $157 million with an expected yield of 13%. These projects are largely pre-leased, providing both visibility and attractive risk-adjusted returns. With that, I'll turn it over to our CFO, Mark Langer.

Speaker #1: These projects are largely pre-leased providing both visibility and attractive risk-adjusted returns. With that, I'll turn it over to our CFO, Mark Langer. Thank you, Jeff, and good morning, everyone.

Mark Langer: Thank you, Jeff. Good morning, everyone. Our Q1 performance further highlights the stability and earning strength of our portfolio, particularly in the current environment. FFO as adjusted for the quarter was $0.36 per share, reflecting 3% growth over prior year and was driven by the growth in same-property NOI, including redevelopment, which increased 2.8% compared to Q1 2025. NAREIT FFO this quarter benefited from an $8 million gain recorded in other income received from the state of New Jersey for environmental remediation costs incurred a number of years ago. On the financing front, in March, we obtained a $62.5 million 7-year non-recourse mortgage secured by the Plaza at Woodbridge at a swap fixed rate of 5%. The debt markets remain highly liquid and competitive, as evidenced from this recent transaction.

Speaker #1: Our first quarter performance further highlights the stability in earnings strength of our portfolio. Particularly in the current environment. FFO as adjusted for the quarter was 36 cents per share.

Speaker #1: Reflecting 3% growth over prior year. And was driven by the growth in same property NOI including redevelopment which increased 2.8% compared to the first quarter of 2025.

Speaker #1: NARED FFO this quarter benefited from an $8 million gain recorded in other income. Received from the state of New Jersey for environmental remediation costs incurred a number of years ago.

Speaker #1: On the financing front, in March, we obtained a $62.5 million seven-year non-recourse mortgage. Secured by the Plaza at Woodbridge at a swap fixed rate of 5%.

Speaker #1: The debt markets remain highly liquid and competitive, as evidenced from this recent transaction. We ended the quarter with total liquidity of nearly $1 billion.

Mark Langer: We ended the quarter with total liquidity of nearly $1 billion, with $30 million drawn on our credit facility and no amounts drawn on either of the 5-year or 7-year delayed draw term loans. Our balance sheet is in excellent shape, which provides significant flexibility to pursue attractive growth opportunities that may arise. Looking ahead to the remainder of 2026, we have increased our guidance for FFO as adjusted by $0.01 per share at the low end to a range of $1.48 to $1.52 per share, primarily due to the 25 basis point increase on the low end of our same-property NOI guidance, which now reflects a new range of 3% to 3.75%.

Speaker #1: With $30 million drawn on our credit facility and no amounts drawn on either of the five-year or seven-year delayed draw term loans. Our balance sheet is in excellent shape, which provides significant flexibility to pursue attractive growth opportunities that may arise.

Speaker #1: Looking ahead to the remainder of 2026, we have increased our guidance for FFO as adjusted by a penny per share at the low end to a range of $1.48 to $1.52 per share.

Speaker #1: Primarily due to the 25 basis point increase on the low end of our same property NOI guidance, which now reflects a new range of 3 to 3.75%.

Speaker #1: In terms of some of the puts and takes driving NOI growth, let me start with the first quarter and then touch on future expectations.

Mark Langer: In terms of some of the puts and takes driving NOI growth, let me start with Q1 and then touch on future expectations. Same-Property NOI growth of 2.8% in Q1 benefited from new rent commencements and better-than-expected recoveries, including $500,000 of out-of-period tax refunds related to appeals that got settled for multiple prior year periods. The better recoveries in tax refunds more than offset higher-than-expected bad debt this quarter. The elevated bad debt pertained to isolated cases of tenants we were negotiating payment plans with that got moved to a cash basis. Going forward, we believe uncollected rent levels should trend near 75 basis points of gross rents for the remainder of the year.

Speaker #1: Same property NOI growth of 2.8% in the first quarter benefited from new rent commencements and better than expected recoveries. Including $500,000 of out-of-period tax refunds related to appeals that got settled for multiple prior-year periods.

Speaker #1: The better recoveries in tax refunds more than offset higher-than-expected bad debt this quarter. The elevated bad debt pertained to isolated cases of tenants we were negotiating payment plans with.

Speaker #1: With that got moved to a cash basis. Going forward, we believe uncollected rent levels should trend near 75 basis points of gross rents for the remainder of the year.

Speaker #1: In terms of NOI growth going forward, I will note the point that I made last quarter when we gave initial guidance in regards to our SNO pipeline.

Mark Langer: In terms of NOI growth going forward, I will note the point that I made last quarter when we gave initial guidance in regards to our SNO pipeline. We expect to recognize another $3.3 million of gross rents from our SNO pipeline in the remainder of the year. 90% of this amount is expected to be generated in Q3 and Q4. In addition, recall that Q2 of last year benefited from $1 million of one-time tenant CAM true-up billings. Therefore, same-property growth is expected to accelerate in the back half of the year as SNO rents commence. Our guidance now incorporates $60 million of disposition activity that Jeff mentioned. In closing, we are encouraged by the continued momentum in fundamentals, the depth of our leasing pipeline, and our ability to generate sector-leading FFO and cash flow growth.

Speaker #1: We expect to recognize another 3.3 million dollars of gross rents from our SNO pipeline in the remainder of the year. 90% of this amount is expected to be generated in Q3 and Q4.

Speaker #1: In addition, recall that Q2 of last year benefited from $1 million of one-time tenant Cam Truett billings. Therefore, same-property growth is expected to accelerate in the back half of the year as SNO rents commenced.

Speaker #1: Our guidance now incorporates $60 million of disposition activity that Jeff mentioned. In closing, we are encouraged by the continued momentum and fundamentals the depth of our leasing pipeline and our ability to generate sector-leading FFO and cash flow growth.

Speaker #1: With that, I'll turn the call over to the operator for questions and answers. Thank you. We will now be conducting a question and answer session.

Mark Langer: With that, I'll turn the call over to the operator for questions and answers.

Operator: First question comes from Michael Goldsmith with UBS. Please go ahead.

Speaker #1: If you would like to ask a question, please press star one on your telephone keypad. A confirmation phone will indicate your line is in the question queue.

Speaker #1: You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the star key.

Speaker #1: First question comes from Michael Goldsmith with UBS. Please go ahead.

Operator: First question comes from Michael Goldsmith with UBS. Please go ahead.

Speaker #2: Good morning. Thanks a lot for taking my question. Mark, you mentioned a couple of isolated instances of bad debt in the quarter. Can you walk us through what you're seeing if you're able to identify the tenants or at least the types of categories where maybe there's been a little bit more pressure than anticipated?

Michael Goldsmith: Good morning. Thanks a lot for taking my question. Mark, you mentioned a couple of isolated instances of bad debt in the quarter. Can you walk us through what you're seeing, if you're able to identify the tenants and or at least, like, the types of categories where maybe there's been a little bit more pressure than anticipated? Thanks.

Speaker #2: Thanks.

Speaker #3: Sure. Good morning, Michael. What I would say is the most significant increase that I refer to in the quarter pertained to a franchise operator that has six different QSR locations in our Puerto Rico portfolio.

Mark Langer: Sure. Good morning, Michael. What I would say is the most significant increase that I referred to in the quarter pertained to a franchise operator that has 6 different QSR locations in our Puerto Rico portfolio. The tenant was moved to a cash basis, both the back rents and current rents were reserved for. I can tell you that since we've closed the quarter, we've executed a payment plan with this operator, and the operator has fully paid April rent and started making payments on the arrears. This is why we think it is more isolated. It's not systemic of any other patterns. We did go through a deep dive of all of our other, you know, Puerto Rico tenants, receivables were normal.

Speaker #3: The tenant was moved to a cash basis. So both the back rents and current rents were reserved for. I can tell you that since we've closed the quarter, we've executed a payment plan with this operator.

Speaker #3: And the operator has fully paid April rent and started making payments on the arrears. So this is why we think it is more isolated.

Speaker #3: It's not systemic of any other patterns we did go through a deep dive of all of our other Puerto Rico tenants and receivables were normal.

Speaker #3: So as I said in my prepared remarks, I believe what you should expect for the rest of the year is closer to 75 basis points rather than what was incurred in Q1.

Mark Langer: As I said in my prepared remarks, I believe what you should expect for the rest of the year is closer to 75 basis points rather than what was incurred in Q1.

Speaker #2: Got it. Thanks for that. And then you mentioned two new anchor leases with escalators of 3%. Can you talk about just the demand on the anchor side?

Michael Goldsmith: Got it. Thanks for that. You mentioned two new anchor leases with escalators of 3%. Can you talk about, you know, just the demand on the anchor side? Obviously, you're backfilling the Saks box as well. Just trying to get a sense of overall demand and then your ability to get, you know, strong lease terms, right, like with escalators of 3%. Is that kind of the norm for your portfolio, or is that kind of like an exceptional outcome? Thanks.

Speaker #2: Obviously, you're backfilling the sacks box as well. So just trying to get a sense of overall demand and then your ability to get strong lease terms, right, with escalators of 3%.

Speaker #2: Is that kind of the norm for your portfolio or does that kind of make an exceptional outcome? Thanks.

Speaker #3: Hey, good morning, Michael. It's Jeff Mooallem. I wouldn't say it's the norm that we're going to be getting 3% or better annual increases from anchor tenants going forward.

Jeff Mooallem: Hey, good morning, Michael. It's Jeff Mooallem. You know, I wouldn't say it's the norm that we're gonna be getting 3% or better annual increases from anchor tenants going forward. You know, there are certain tenants out there like, you know, Trader Joe's or TJ Maxx who fight really hard on things like increases. We happen to have an outlier quarter where we did a couple of anchor deals where we were able to extract that. I think the point is that the trend line on things like anchor leasing is continues to go up. Whether it's, you know, less options, fair market value options, annual increases in options, we're able to have conversations with anchor tenants today that we were not simply able to have a few years ago.

Speaker #3: There are certain tenants out there like Trader Joe's or TJ Maxx who fight really hard on things like increases. We happen to have an outlier quarter where we did a couple of anchor deals where we were able to extract that.

Speaker #3: But I think the point is that the trend line on things like anchor leasing is continues to go up. And whether it's less options, fair market value options, annual increases in options, we're able to have conversations with anchor tenants today that we were not simply able to have a few years ago.

Speaker #3: And we're pushing on not just starting rent and less capital, but pushing on increases as well. So while I wouldn't say that we expect to be able to do annual increases on every anchor deal we do, unfortunately, they're still not quite there yet.

Jeff Mooallem: We're pushing on not just starting rent and less capital, but pushing on increases as well. You know, while I wouldn't say that, you know, we expect to be able to do annual increases on every anchor deal we do, unfortunately, they're still not quite there yet, as an industry. Certainly the ability to extract better increases and better terms throughout the lease. I would tell you that I think this is the strongest anchor leasing market we've seen in a really, really long time, simply because of the imbalance between supply and demand.

Speaker #3: As an industry, certainly the ability to extract better increases and better terms throughout the lease is there. And I would tell you that I think this is the strongest anchor leasing market we've seen in a really, really long time, simply because of the imbalance between supply and demand.

Jeff Mooallem: I would tell you that I think this is the strongest anchor leasing market we've seen in a really, really long time, simply because of the imbalance between supply and demand.

Michael Goldsmith: Still encouraging. Thanks for the time. Good luck in the Q2.

Speaker #2: I'm encouraging. Thanks for the time. Good luck in the second quarter.

Speaker #3: Thanks, Michael.

Jeff Mooallem: Thanks, Michael.

Speaker #1: Next question. Michael Griffin with Evercore ISI. Please go ahead.

Operator: Next question, Michael Griffin with Evercore ISI, please go ahead.

Speaker #4: Great. Thanks. Jeff, maybe just on the leasing front, do you have a sense are tenants starting to come to you earlier to renew given the dearth of available space out there?

Michael Griffin: Great. Thanks. Jeff, maybe just on the leasing front, do you have a sense, are tenants starting to come to you earlier to renew given the dearth of available space out there? Do you think that gives you more leverage in the renegotiation process?

Speaker #4: And do you think that gives you more leverage in the renegotiation process?

Speaker #3: Yeah, absolutely. We're seeing we're having conversations with tenants earlier in the process. And a lot of times now, what our leasing team is doing rather than going to a tenant who has a year or two left on their lease and saying, "Hey, do you want to renew?" They're starting by going to the market and really figuring out what we can do with that space so that the initial conversation with that existing tenant is more, "Hey, we have another option here for your space.

Jeff Mooallem: Yeah, absolutely. We're having conversations with tenants earlier in the process. A lot of times now, what our leasing team is doing, rather than going to a tenant who has a year or two left on their lease and saying, "Hey, do you wanna renew?" They're starting by going to the market and really figuring out what we can do with that space so that the initial conversation with that existing tenant is more, "Hey, we have another option here for your space. You need to pay X to stay." We can switch the leverage over a little bit. There's certainly a lot of desire on the part of the national tenants to lock their space up for longer.

Speaker #3: You need to pay X to stay." And we can switch the leverage over a little bit. There's certainly a lot of desire on the part of the national tenants to lock their space up for longer.

Speaker #3: Sometimes we'll go to a national tenant with a request for a waiver on something or something we're doing in the parking. And they're saying, "Well, yeah, we're happy to work with you guys on that.

Jeff Mooallem: Sometimes we'll go to a national tenant with a request for a waiver on something or something we're doing in the parking, and they're saying, Well, you know, yeah, we're happy to work with you guys on that. Can you give us another 5-year option? The anchors, the national tenants are very motivated to keep as much term and control as they can, and the landlords are savoring getting the opportunity to take space back. If you think about the vintage of a lot of the leases in our portfolio, they were signed maybe 20-year leases that were signed, you know, 2008, 2009, 2010, 2011, that time, not a great time in the anchor leasing world. We're excited to get some of those rents back, over these next several years.

Speaker #3: Can you give us another five-year option?" So the anchors, the national tenants are very motivated to keep as much term and control as they can.

Speaker #3: And the landlords are savoring getting the opportunity to take space back. If you think about the vintage of a lot of the leases in our portfolio, they were maybe 20-year leases that were signed in '08, '09, '10, '11.

Speaker #3: That time, not a great time in the anchor leasing world. So we're excited to get some of those rents back over these next several years.

Speaker #4: Thanks. That's some helpful context. And maybe just following up on the Bridgewater acquisition, just wanted to clarify, is that 77 cap rate that you quote, that's a stabilized in-place cap rate.

Michael Griffin: Thanks. That's some helpful context. Maybe just following up on the Bridgewater acquisition, just wanted to clarify, is that 7.7% cap rate that you quote, that's a stabilized in-place cap rate? If so, would you say that's indicative of the assets that you're targeting for acquisitions or there was something maybe about this that just stood out from a, you know, cap rate perspective as maybe more attractive for you to acquire?

Speaker #4: And if so, would you say that's indicative of the assets that you're targeting for acquisitions or there was something maybe about this that just stood out from a cap rate perspective as maybe more attractive for you to acquire?

Speaker #3: Yeah, I think we got lucky with this one, Michael. It's Jeff Olson. And I mean, it traded at a higher cap rate in part because the anchor was not a grocery store.

Jeff Olson: Yeah. I think we got lucky with this one, Michael. It's Jeff Olson. I mean, it traded at a higher cap rate in part because the anchor was not a grocery store. The anchor was a medical user called Summit Health, which you may be familiar with, but a very high credit healthcare tenant. They have a long-term lease. I believe they have 11 years left of term. In addition to getting it at that 7.7, I mean, our revised numbers expect to generate 2.75% NOI growth, so very good growth. More than half of that growth is coming from contractual rent increases and option exercises. Yeah, we think it was a great opportunity. I wish we had a pipeline to 10 more like it.

Speaker #3: The anchor was a medical user called Summit Health, which you may be familiar with. But a very high credit healthcare tenant. They have a long-term lease.

Speaker #3: I believe they have 11 years left of term. And in addition to getting it at that 77, I mean, our revised numbers expect to generate 2.75% NOI growth.

Speaker #3: So, very good growth. And more than half of that growth is coming from contractual rent increases and option exercises. So, yeah, we think it was a great opportunity.

Speaker #3: I wish we had a pipeline to 10 more like it. We don't at the moment, but we're on the hunt for more.

Jeff Olson: We don't at the moment, but we're on the hunt for more.

Speaker #4: Great. That's it for me. Thanks for the time.

Michael Griffin: Great. That's it for me. Thanks for the time.

Speaker #3: Thank you.

Speaker #1: Next question. Michael Gorman with BTIG. Please go ahead.

Jeff Olson: Thank you.

Operator: Next question, Michael Gorman with BTIG. Please go ahead.

Speaker #4: Yeah. Thanks. Good morning. Jeff, if we could just stick with Bridgewater for a second, I'm curious as you underwrote it, how much of a role did the Bridgewater Commons adjacency play?

Michael Gorman: Thanks. Good morning. Jeff, if we could just stick with Bridgewater for a second. I'm curious, as you underwrote it, how much of a role did the Bridgewater Commons adjacency play? How much does the performance of the mall play into the $2.2 million in annual visitors that you cited to the village component there?

Speaker #4: How much does the performance of the mall play into the 2.2 million in annual visitors that you cited to the village component there?

Speaker #3: I don't think it's a huge component. Most of our customers are not using the mall as a co-tenant. It is fairly far away, so I don't think it's a major component.

Jeff Olson: I don't think it's a huge component. Most of our customers are not using the mall as a co-tenant. It is, you know, fairly far away, so I don't think it's a major component. Jeff, do you want to add anything to that?

Speaker #3: Jeff, do you want to add anything to that?

Speaker #4: Yeah, I mean, Michael, the Village was actually built as a sort of a lifestyle center, adjacent to the mall. But what's happened over time is it's become its own ecosystem, mostly of daytime population for lunch.

Jeff Mooallem: Yeah. I mean, Michael, you know, the village was actually built as a sort of a lifestyle center adjacent to the mall. What's happened over time is it's become its kind of own ecosystem, mostly of daytime population for lunch. If you look at the roster of the QSR tenants there and the demand from some of the best names in food that wanna come into it if we get vacancy, we've been turning space over there. Really what you're seeing at that property is there are some mall visitors who will go there for lunch, but mostly it's the daytime population in and around Bridgewater. There's a very strong suburban office market population in that area, and a lot of weekend visitors as well.

Speaker #4: So if you look at the roster of the QSR tenants there and the demand from some of the best names in food that want to come into it, if we get vacancy, we've been turning space over there and really what you're seeing at that property is there are some mall visitors who will go there for lunch, but mostly it's the daytime population in and around Bridgewater.

Speaker #4: There's a very strong suburban office market population in that area. And a lot of weekend visitors as well. A lot of tourism in that area for various conventions and hotels and weddings and bar mitzvah kind of traffic.

Jeff Mooallem: A lot of tourism in that area for various conventions and hotels and, you know, weddings and bar mitzvah kind of traffic. We were very happy when we really dug into this to see that the traffic is coming from a lot of places.

Speaker #4: So we were very happy when we really dug into this to see that the traffic is coming from a lot of places.

Speaker #5: Great. That's helpful. And then maybe back to the same store, obviously, solid result in the quarter. I noticed when you kind of dig into the revenue and expense side of things, the property operating was up, I think, 25%.

Michael Gorman: Great. That's helpful. Then maybe back to the same store, obviously solid result in the quarter. I noticed when you kind of dig into the revenue and expense side of things, you know, the property operating was up, I think, 25%. Was there anything atypical in that or one time was that seasonal? I would expect that would normalize over the course of the year. Is that a fair assumption?

Speaker #5: Was there anything atypical in that or one time was that seasonal? I would expect that would normalize over the course of the year. Is that a fair assumption?

Speaker #3: Yeah, Michael. It's Mark. Absolutely. That was really driven by snow and snow-related costs in the quarter, which were up over, to put in perspective, about three and a half million just for his prior year.

Mark Langer: Michael, it's Mark. Absolutely. That was really driven by snow and snow related costs in the quarter, which were up over, to put in perspective, about $3.5 million just versus prior year. That, you know, mostly accounts for the driver. You're right, it will level off and revert to more normalized levels for Q2 to Q4.

Speaker #3: So that almost fully accounts for the driver. And you're right. It will level off and revert to more normalized levels for Q2 to Q4.

Speaker #5: Great. And maybe just one more for me, Mark. On the mortgage that you put in place in the quarter, can you just remind us on the strategy there?

Michael Gorman: Great. Maybe just one more for me, Mark. On the mortgage that you put in place in the quarter, can you just remind us on the strategy there? Obviously, you stabilized a big chunk of redevelopment at that property, which I would imagine is a help. You still have a couple of phases there. Do those phases get carved out? Are they small enough that it doesn't factor into when you go for a mortgage on a property like that? Maybe just some context there would be helpful.

Speaker #5: Obviously, you stabilized a big chunk of redevelopment at that property, which I would imagine was a help. You still have a couple of phases there.

Speaker #5: So do those phases get carved out? Are they small enough that it doesn't factor into when you go for a mortgage on a property like that?

Speaker #5: Maybe just some context there would be helpful.

Speaker #3: Yeah. I'm glad you asked, Michael. It's actually a great story. The Woodridge Center actually had a mortgage on it that we paid off last year.

Mark Langer: Yeah. glad you asked, Michael. It's actually a great story. It the Woodbridge Center actually had a mortgage on it that we paid off last year. It was about a $50 million mortgage.

Mark Langer: Yeah. glad you asked, Michael. It's actually a great story. It the Woodbridge Center actually had a mortgage on it that we paid off last year. It was about a $50 million mortgage. We paid it off knowing we had visibility with the releasing of space we had. This center had a Bed Bath & Beyond and a buybuy BABY that was paying $17 in rent. Fast forward, gets re-tenanted with Trader Joe's and Ross that are paying a blended around $25 a foot. A karate studio that was paying $28 of rent more than doubles with Chopt.

Speaker #3: It was about a $50 million mortgage. And we paid it off knowing we had visibility with the releasing of space we had. This center had a bed bath and a buy-by baby.

Mark Langer: We paid it off knowing we had visibility with the releasing of space we had. This center had a Bed Bath & Beyond and a buybuy BABY that was paying $17 in rent. Fast forward, gets re-tenanted with Trader Joe's and Ross that are paying a blended around $25 a foot. A karate studio that was paying $28 of rent more than doubles with Chopt. We had line of sight for all of that upside in NOI. Fast-forward, as you saw, we extracted $12 million more in this new mortgage. Really the phases you're talking about in terms of any other out parcel work, we still have the ability to add even more income from that. It isn't that it's carved out, you know, there's some potential more lift that we could get upon refinancing it again.

Speaker #3: That was paying $17 in rent fast forward, gets re-tenanted with Trader Joe's and Ross that are paying a blend at around 25 a foot, a karate studio.

Speaker #3: That was paying $28 of rent, more than doubles with salad. So we had line of sight for all of that upside in NOI. And fast forward, as you saw, we extracted 12 million more dollars in this new mortgage and so really the phases you're talking about in terms of any other out-parcel work, we still have the ability to add even more income from that.

Mark Langer: We had line of sight for all of that upside in NOI. Fast-forward, as you saw, we extracted $12 million more in this new mortgage. Really the phases you're talking about in terms of any other out parcel work, we still have the ability to add even more income from that. It isn't that it's carved out, you know, there's some potential more lift that we could get upon refinancing it again. That puts into context, I think, the story, the asset management strategy, and we were really delighted with that execution to lock that in with more proceeds at 5%.

Speaker #3: It isn't that it's carved out, but there's some potential more lift that we could get upon refinancing it again. But that puts into context, I think, the story, the asset management strategy and we were really delighted with that execution to lock that in with more proceeds at 5%.

Mark Langer: That puts into context, I think, the story, the asset management strategy, and we were really delighted with that execution to lock that in with more proceeds at 5%.

Michael Gorman: Very helpful. Thanks, guys.

Speaker #5: Very helpful. Thanks, guys.

Speaker #1: Next question for Sandika with Lattenberg. Please go ahead.

Operator: Next question, Floris van Dijkum with Ladenburg. Please go ahead.

Speaker #6: Good morning, guys. Like the acquisition, I know you mentioned something about a coal sale. Is that presumably that's a pending coal anchored sale that you have in the pipeline?

Floris van Dijkum: Morning, guys. like the acquisition, I know you mentioned something about a Kohl's sale. Presumably, that's a pending Kohl's anchored sale that you have in the pipeline.

Speaker #3: Yeah, Florence. We're in diligence with the buyer right now. So we're hoping to complete that deal soon.

Jeff Olson: Yeah, Floris. We're in diligence, with the buyer right now, so we're hoping to complete that deal soon.

Speaker #6: And presumably, that would be at a lower cap rate than where you're acquiring it at as well besides the fact that you also obviously improving your credit profile?

Floris van Dijkum: Presumably, that would be at a, you know, a lower cap rate than where you're acquiring it at as well, besides the fact that.

Jeff Olson: Yeah

Floris van Dijkum: You're also obviously improving your credit profile.

Speaker #3: You got it. That is the game at the moment.

Jeff Olson: You got it. That is the game at the moment.

Floris van Dijkum: Great. The Kohl's at Shoppers World in Framingham, talk a little bit about the upside potentially that you could see there. I know it's a little bit early, but, you know, maybe if you give people on the line a little bit of a flavor of what kind of demand you have for that space.

Speaker #6: Great. And then the coals at Shoppers World in Framingham, talk a little bit about the upside potentially that you could see there. I know it's a little bit early, but maybe if you give a people on the line a little bit of a flavor of what kind of demand you have for that space.

Speaker #3: Hey, Florence. Good morning. It's Jeff Mooallem. Yeah. I mean, we're super excited about this one. We were able to negotiate an option to get that space back from coals about a year ago, and that option will be coming up in the first or second quarter of 2027.

Jeff Mooallem: Hey, Floris. Good morning. It's Jeff Mooallem. I mean, we're super excited about this one. We were able to negotiate an option to get that space back from Kohl's about a year ago, and that option will be coming up in Q1 or Q2 of 2027. We've been sort of out testing the market, and the demand has exceeded our expectations. We have several national retailers that have submitted LOIs on it. We've looked at cutting up the space, adding shops, doing a full-fledged demolition and redevelopment. Ultimately, what I think you're gonna see us do is retenant the box at a very healthy spread, 75% to 150%, I would say, over the existing rent, with a much better user, much better credit.

Speaker #3: So we've been sort of out-testing the market and the demand as exceeded our expectations. We have several national retailers that have submitted LOIs on it.

Speaker #3: We've looked at cutting up the space, adding shops, doing a full-fledged demolition and redevelopment, but ultimately what I think you're going to see us do is re-tenant the box at a very healthy percent, I would say, over the existing rent.

Speaker #3: With a much better user, much better credit. This will enhance the overall Shoppers World profile and experience and really make that parcel within Shoppers World kind of its own little really strong asset.

Jeff Mooallem: This will enhance the overall Shoppers World profile and experience, and really make that parcel within Shoppers World kind of its own little really strong asset. We're very excited for what that's gonna turn into in the next 12 months here or so.

Speaker #3: So we're very excited for what that's going to turn into in the next 12 months here or so.

Speaker #5: Thanks, Jeff. Maybe last question. Can you guys give us a little bit of an update on what's happening in Puerto Rico? I know it's not that big part of your portfolio, but I believe that you're seeing some really strong demand.

Floris van Dijkum: Thanks, Jeff. Maybe last question. Can you guys give us a little bit of an update on what's happening in Puerto Rico? I know it's not that big part of your portfolio, but I believe that you're seeing some really strong demand. Can you talk us through some of the retailer demand and what kind of upside in NOI you see for that portion of your portfolio?

Speaker #5: Can you talk us through some of the retailer demand and what kind of upside in NOI you see for that portion of your portfolio?

Speaker #3: Yeah, Puerto Rico continues to grow. We've done a lot of re-tenanting work there, as you know, over the last couple of years. And we're now adding names like Sephora, which will open, I think, this week or next week at Caguas.

Jeff Mooallem: Puerto Rico continues to grow. We've done a lot of retenanting work there, as you know, over the last couple of years. We're now adding names like Sephora, which will open, I think, this week or next week, at Caguas, Coach, Bath & Body Works, you know, national names coming over from the mainland to the property. We opened a TJ Maxx last year that opened extremely strong. We're very happy with the way the two Puerto Rico assets are performing. I think the next step for us in Puerto Rico is to really dig in more on some of the ancillary income opportunity that we're able to generate in other places like signage, carts, and kiosks. We're looking to grow on all those areas as well.

Speaker #3: Coach, Bath & Body Works—national names coming over from the mainland to the property. We opened a TJ Maxx last year that opened extremely strong.

Speaker #3: So we're very happy with the way the two Puerto Rico assets are performing. I think the next step for us in Puerto Rico is to really dig in more on some of the ancillary income opportunity that we're able to generate in other places like signage, carts and kiosks.

Speaker #3: We're looking to grow in all those areas as well. But if you look at our model and our forecast, Puerto Rico should continue to grow at comparable growth rates to the rest of the portfolio.

Jeff Mooallem: If you look at our model and our forecast, Puerto Rico should continue to grow at, you know, comparable growth rates to the rest of the portfolio. We've done a lot of the heavy lifting, so I don't think it's gonna be a 10% annual growth story going forward over the next few years, but it's certainly gonna be positive growth.

Speaker #3: We've done a lot of the heavy lifting. So I don't think it's going to be a 10% annual growth story going forward in the next few years, but it's certainly going to be positive growth.

Speaker #5: Yeah, it should be in that three-and-a-half to four percent range.

Jeff Olson: It should be in that 3.5% to 4% range for us.

Speaker #3: Right.

Speaker #5: Great, guys. Thanks. Appreciate it.

Jeff Mooallem: Right.

Floris van Dijkum: Great, guys. Thanks. Appreciate it.

Speaker #3: Great. Thank you.

Jeff Mooallem: Great. Thank you.

Speaker #1: Next question, Ronald Camden with Morgan Stanley. Please proceed.

Operator: Next question, Ronald Kamdem with Morgan Stanley. Please proceed.

Speaker #7: Great. Maybe I'll start on sort of any update on sort of the Sunrise Mall and what sort of the development prospects. I know you were contemplating different things just any update there.

Ronald Kamdem: Great. Maybe I'll start on sort of any update on sort of Sunrise Mall and what sort of the development prospects. I know you were contemplating different things. Just any update there.

Speaker #3: Look, the entitlement process is advancing on schedule. We had disclosed previously that Amazon's going to occupy about a third of the property, Ron. And we're finalizing our plans to develop the remaining land for retail and other uses.

Jeff Olson: Look, the entitlement process is advancing on schedule. We had disclosed previously that Amazon's gonna occupy about a third of the property, Ron, and we're finalizing our plans to develop the remaining land for retail and other uses. We're super excited about our progress, and we really look forward to delivering a great result for the town of Massapequa and also for our investors.

Speaker #3: So we're super excited about our progress. And we really look forward to delivering a great result for the town of Massapequa and also for our investors.

Speaker #6: The only other update, Ron, is that our last tenant at the mall, which was Dick Sporting Goods, will be giving the keys back to us tomorrow, actually.

Jeff Mooallem: The only other update, Ronald, is that our last tenant at the mall, which was Dick's Sporting Goods, will be giving the keys back to us tomorrow, actually. We are now fully unencumbered the mall from tenancy. That will allow us to advance our plans rapidly into later this year.

Speaker #6: So we are now fully unencumbered the mall from tenancy and that will allow us to advance our plans rapidly into later this year.

Speaker #7: Great. And then on the going back to the '97 to '98 percent, I think you mentioned sort of occupancy target. For the portfolio, as you sort of sit through, I mean, I think what are some of the sort of tactics that you guys are using to sort of drive that number?

Ronald Kamdem: Great. Going back to the 97% to 98%, I think you mentioned sort of occupancy target for the portfolio, as you sort of sit through. I mean, I think what are some of the sort of tactics that you guys are using to sort of drive that number? What has been sort of the biggest, you know, sort of sticking points or barriers to sort of getting there historically? Thanks.

Speaker #7: And what has been sort of the biggest sort of sticking point or barriers to sort of getting there historically? Thanks.

Speaker #3: Okay. I think the biggest tactic is simply that retailers are seeking high-quality space and they're coming to us proactively. So, for the first time in a very long time, we have multiple tenants going after the same vacancy.

Jeff Olson: Okay. I think the biggest tactic is simply that retailers are seeking high quality space, and they're coming to us proactively. For the first time in a very long time, we have multiple tenants going after the same vacancy. It's more a function of the market than it is a specific tactic that we have. Our tactic obviously is to create, you know, the best merchandise mix that we can at our shopping centers balanced with, you know, receiving good rent terms, good lease terms, et cetera. We feel very good about the fact that, you know, the majority of our vacancy will be leased up. And that's what gives us the confidence of being in that 97% to 98% range.

Speaker #3: And so it's more a function of the market than it is a specific tactic that we have. Our tactic, obviously, is to create the best merchandise mix that we can at our shopping centers balanced with receiving good rent terms, good lease terms, etc.

Speaker #3: So we feel very good about the fact that the majority of our vacancy will be leased up. And that's what gives us the confidence of being in that '97 to '98 percent range.

Speaker #7: Great. That's it for me. Thanks.

Ronald Kamdem: Great. That's it for me. Thanks.

Speaker #3: Great. Thank you, Ron.

Jeff Olson: Great. Thank you, Ron.

Speaker #1: Once again, if you would like to ask a question, please press star one on your telephone keypad. Next question comes from Paulina Rojas with Green Street.

Operator: Next question comes from Paulina Rojas with Green Street. Please proceed.

Operator: Once again if you would like to ask a question, please press star one on your telephone keypad. Next question comes from Paulina Rojas with Green Street. Please proceed.

Speaker #1: Please proceed.

Speaker #8: Good morning. Given that your portfolio is concentrated in the northeast corridor and recognizing that local trade area dynamics can vary meaningfully in retail, I'm curious how you think about market differentiation within the region.

Paulina Rojas Schmidt: Good morning. Given that your portfolio is concentrated in the Northeast Corridor, and recognizing that local trade area dynamics can vary meaningfully in retail, I am curious how you think about market differentiation within the region. Are you seeing any meaningful and consistent differentiation, for example, in terms of cap rates, rent growth, or even tenant demand between, let's say, New Jersey, Boston or DC? Or are even smaller pockets within the corridor where you are seeing something that stands out?

Speaker #8: Are you seeing any meaningful and consistent differentiation, for example, in terms of cap rates, rent growth, or even tenant demand between let's say New Jersey and Boston or DC?

Speaker #8: Or are there even smaller pockets within the corridor where you're seeing something that stands out?

Speaker #3: Yeah. I mean, it is very sub-market driven. I think in general, we're most pleased with what we're seeing in Boston at the moment, Paulina.

Jeff Olson: Yeah. I mean, it is very sub-market driven. I think in general, you know, we're most pleased with what we're seeing in Boston at the moment, Paulina. And that may be a function of simply, you know, having new ownership on some of the properties in addition to a very strong and tight market. Our assets in Northern New Jersey are doing very well. There's very little vacancy in Northern New Jersey. I guess if there's one market that sort of, you know, has been an average market over the years in the Northeast for us, it'd be Philadelphia. DC is a strong market for us. We don't own that much there. Overall, we're very pleased with our markets.

Speaker #3: And that may be a function of simply having new ownership on some of the properties in addition to a very strong and tight market.

Speaker #3: But our assets in northern New Jersey are doing very well. There's very little vacancy in northern New Jersey. I guess if there's one market that's sort of has been an average market over the years in the northeast for us, it'd be Philadelphia.

Speaker #3: DC is a strong market for us. We don't own that much there. But overall, we're very pleased with our markets. The underlying theme behind virtually everything that we own in the DC to Boston corridor is just having a massive population base around our centers.

Jeff Olson: The underlying theme behind, you know, virtually everything that we own in the DC to Boston corridor is just having a massive population base around our centers. That doesn't change, you know, sub-market to sub-market to sub-market. We have a couple hundred thousand people on average around our properties within 3 miles, and those customers need areas to shop.

Speaker #3: And that doesn't change sub-market to sub-market to sub-market. We have a couple hundred thousand people on average around our properties within three miles. And those customers need areas to shop.

Paulina Rojas Schmidt: Thank you. You have characterized the demand and supply backdrop in your markets as supportive of sustained long-term growth. I would like to push a little bit on what that means in practice. When you use that language, are you thinking about, for example, rent growth that is in line with inflation above or even substantially above inflation?

Speaker #8: Thank you. And then you have characterized demand and supply backdrop in your markets as supportive of sustained long-term growth. So I would like to push a little bit on what that means in practice.

Speaker #8: When you use that language are you thinking about, for example, rent growth that is in line with inflation, above, or even substantially above inflation?

Speaker #3: I mean, I would.

Jeff Olson: I mean.

Speaker #8: I'm trying to frame it a little even in broad terms.

Paulina Rojas Schmidt: I'm trying to frame it a little, even in broad terms.

Speaker #3: I mean, given the tightness of the market, I would expect rent growth would be above inflation. And it's really being driven by these larger anchors that are looking for space that are losing out on opportunities to their competitors.

Jeff Olson: I mean, I, given the tightness of the market, I would expect rent growth would be above inflation. It's really being driven by these, you know, larger anchors that are looking for space that are losing out on opportunities to their competitors. As they lose more deals, they're realizing that they have to pay more. You know, I would expect, you know, more than inflationary type growth, particularly for boxes that are 10,000 square feet and greater.

Speaker #3: And as they lose more deals, they're realizing that they have to pay more. So I would expect more than inflationary-type growth, particularly for boxes that are 10,000 square feet and greater.

Speaker #8: Thanks.

Paulina Rojas Schmidt: Thanks.

Speaker #1: Thank you. I would like to turn the floor over to Jeff Olson for closing remarks.

Operator: Thank you. I would like to turn the floor over to Jeff Olson for closing remarks.

Speaker #3: Great. We look forward to seeing many of you at the upcoming Neighborhood Conference. And we will see you then. Please call if you have any questions.

Jeff Olson: Great. We look forward to seeing many of you at the upcoming Nareit conference, and we will see you then. Please call if you have any questions. Thank you.

Speaker #3: Thank you.

Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

Q1 2026 Urban Edge Properties Earnings Call

Request DemoDemo

Urban Edge Properties

Earnings