Urban Edge Properties ((UE)) has held its Q1 earnings call. Read on for the main highlights of the call.
Urban Edge Properties recently held its earnings call, revealing a strong performance in the first quarter with record earnings and leasing achievements. Despite these positive results, the company expressed concerns over economic volatility and a slowdown in the investment sales market, which could impact future growth.
Record FFO and Highest Quarterly Earnings
Urban Edge Properties reported a Funds From Operations (FFO) as adjusted of $0.35 per share, marking a 6% increase over the first quarter of last year. This achievement represents the highest quarterly earnings result in the company’s 10-year history, showcasing its robust financial health.
Strong Leasing Performance
The company executed 42 leases totaling 434,000 square feet, achieving a same-space cash leasing spread of 34%. Tenant retention remains impressively high at 95%, reflecting Urban Edge’s effective leasing strategies and strong tenant relationships.
New Record Shop Occupancy
Shop occupancy reached a new record of 92.4%, supported by a strong leasing pipeline. This milestone indicates the company’s successful efforts in maintaining high occupancy rates and attracting new tenants.
Successful $25 Million Land Sale
Urban Edge successfully sold 8 acres of land at Bergen Town Center for $25 million, which is approved for 460 residential units. Additionally, the company is under contract to sell two more properties for $41 million, further enhancing its financial position.
Redevelopment Projects Completion
The company completed redevelopment projects at four locations, with an aggregate cost of $22 million. These projects are expected to contribute positively to Urban Edge’s future revenue streams.
Healthy Balance Sheet and Liquidity
Urban Edge maintains approximately $800 million in total liquidity, supported by a conservative balance sheet that isolates market risk to individual assets. This financial stability positions the company well to navigate economic uncertainties.
Investment Sales Market Slowdown
The company noted early signs of a slowdown in the investment sales market, with limited CMBS issuance since April. This trend could pose challenges for future investment activities.
Occupancy Decrease
There was a slight decrease in the same-property lease rate by 50 basis points over the previous quarter, attributed to recapturing anchor spaces from bankrupt tenants. This decrease highlights the challenges posed by tenant bankruptcies.
Economic Volatility Impact
Economic volatility in April hindered a potential increase in guidance, reflecting the broader market challenges that Urban Edge faces. The company remains cautious about future economic conditions.
Forward-Looking Guidance
Urban Edge Properties reaffirmed its 2025 FFO guidance of $1.37 to $1.42 per share, despite economic uncertainties. The company highlighted its strategic advantages, including a dense market presence in the D.C. to Boston corridor and a significant redevelopment pipeline expected to yield a 14% return. With $800 million in liquidity and minimal debt maturities through 2026, Urban Edge is well-positioned for future growth.
In summary, Urban Edge Properties has demonstrated strong financial performance and strategic growth initiatives in its latest earnings call. While economic volatility presents challenges, the company’s robust leasing achievements, strategic land sales, and solid balance sheet provide a strong foundation for future success.