Urban Edge UE Q4 2025 Earnings Call Transcript

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DATE

Wednesday, Feb. 11, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Jeffrey Olson
• Chief Operating Officer — Jeffrey Mooallem
• Chief Financial Officer — Mark Langer

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TAKEAWAYS

• FFO as Adjusted — $1.43 per share for the year, a 6% increase, exceeding the $1.35 per share target set at the 2023 Investor Day.
• Same Property NOI Growth — 5% for the year and 2.9% for the quarter, supported by commencement of rents from the signed but not open pipeline and higher net recovery income.
• Leasing Metrics — 58 new leases signed for over 360,000 square feet at a 32% same-space cash rent spread, with new lease spreads above 20% for four consecutive years.
• Shop Occupancy — Record high of 92.6%, representing a 170-basis-point increase; anchor occupancy ended at 97.5%, a 50-basis-point decrease attributed to a specific space taken back.
• Signed but Not Open Pipeline — $22 million expected in additional annual gross rent, equal to 8% of current NOI.
• Redevelopment Project Investment — 14 projects completed totaling $55 million generated a 19% unlevered yield; $166 million in redevelopment underway, projected to yield 14% unlevered.
• Acquisitions and Dispositions — Nearly $600 million of properties acquired at a 7% average cap rate and approximately $500 million of non-core assets sold at a 5% cap rate (totals do not net to zero due to portfolio activity timing).
• 2026 Guidance — FFO as adjusted per share range of $1.47-$1.52 (midpoint 4.5% growth); same property NOI growth guidance between 2.75%-3.75%, factoring in fallout from SACS and at home tenants and credit losses of 50-75 basis points.
• Liquidity and Balance Sheet — $849 million in total liquidity; net debt to annualized EBITDA at 5.8 times; new $700 million credit facility and two $125 million delayed-draw term loans executed, with no significant debt maturities until December 2026.
• Dividend Increase — Board approved an 11% rise to an annualized rate of $0.84 per share, which equates to an approximate 56% FFO payout ratio.
• 2027 Forecast — Management projects FFO growth of at least 4% annually, with 80% of projected same property NOI growth through 2027 coming from executed leases, LOIs, and contractual rent escalations.
• Capital Spending Plan — $70 million-$80 million targeted for redevelopment in 2026 with $20 million budgeted for maintenance CapEx; $86 million remains to be funded on active projects.
• New Acquisition Expected — $54 million shopping center in New Jersey under contract, 95% leased, closing targeted by end of first quarter and anticipated to be accretive from day one.
• Shop Occupancy Target — Management expects to sustain shop occupancy in the 93%-94% range in 2026 due to natural vacancy and strategic tenant rotation.
• Redevelopment Yield Performance — Fourth-quarter completions totaling $12 million yielded 26%.
• Sunrise Mall Progress — Dick’s Sporting Goods lease terminated, clearing the way for an Amazon distribution center application; active engagement with other potential users for remaining land.
• Capital Recycling Approach — Spread between acquisition and disposition cap rates has compressed to 50 basis points, but anticipated growth differentials may provide an annual 2%-3% uplift from recycled capital.
• Bruckner Redevelopment Impact — Projected NOI increase of $8 million to $15 million by 2028 from $7 million, as stated by Olson.

SUMMARY

Urban Edge Properties (UE +2.00%) reported 2025 FFO as adjusted of $1.43 per share, reflecting a compound annual growth rate above peers and surpassing prior guidance. Management outlined a visible path for continued earnings growth driven by a substantial signed but not open rent pipeline, disciplined redevelopment capital allocation, and strategic dispositions. Guidance for 2026 anticipates NOI growth weighted toward the back half due to revenue recognition timing from new rent commencements. New yield-generating redevelopment projects and strong liquidity position the company to pursue targeted acquisitions and support an increased dividend. Contracted acquisitions, re-tenanting initiatives, and ongoing anchor repositioning projects are expected to sustain above-average cash flow expansion through 2027.

• Management expects 80% of NOI growth through 2027 will derive from actions already executed or contractually set, including leases and LOIs, indicating a high level of forecast visibility.
• Portfolio decisions are supported by compressed cap rate spreads but offset with potential higher growth from acquisition targets versus disposition assets.
• Operational improvements are reflected in recurring G&A expense reductions of 4% during 2025, with only a modest increase planned for 2026.
• Developments at flagship assets, including Bruckner, have been highlighted by Olson as primary contributors to the next phase of earnings growth, with very specific NOI uplift targets.
• Exposure to specific tenant risks such as SACS OFF 5th and at home were quantified in guidance, with lower credit loss assumptions compared to prior years, as explained by Langer.

INDUSTRY GLOSSARY

• FFO as Adjusted: Funds From Operations modified for non-recurring items, widely used by REITs to present core earnings power.
• Same Property NOI: Net operating income from properties owned and operated for the full comparison period, a key REIT operating metric.
• Cap Rate: Capitalization rate; the annual net operating income divided by purchase price, used to measure investment yield in real estate.
• LOI: Letter of Intent; a non-binding agreement outlining key deal points prior to executing a definitive lease or contract.
• Signed but Not Open Pipeline: Aggregate expected rent from executed leases for spaces not yet occupied or rent-commencing.
• Anchor Repositioning: Redevelopment strategy focused on replacing or upgrading major tenants to improve asset performance.

Full Conference Call Transcript

Jeffrey Olson: Great. Thank you, Areeba, and good morning. 2025 was another strong year for Urban Edge Properties. We generated FFO as adjusted of $1.43 per share, representing 6% growth, driven by the continued execution on our signed but not open pipeline and 5% same property NOI growth. During the year, we continued to set new leasing records. We executed 58 new leases at a record same space cash rent spread of 32% and achieved record shop occupancy of 92.6%. New lease spreads have now exceeded 20% for four consecutive years, reflecting strong demand and limited availability of high-quality retail spaces throughout our market. Given these dynamics, we expect new lease spreads will remain above 20% in 2026.

Leverage has clearly shifted to owners of high-quality shopping centers. Our infill densely populated portfolio continues to attract leading retailers, especially for anchor space. Nearly all our national retailers are telling us how difficult it is to expand in our markets due to limited supply, supporting our expectation for healthy rent growth in the coming years. Our signed but not open pipeline continues to be a key driver of growth. In 2025, we commenced over $16 million of new annualized gross rent, including openings from Trader Joe’s, Burlington, Ross, Nordstrom Rack, Atlantic Health, Tesla, and many high-performing shop tenants like Cava, Shake Shack, First Watch, Starbucks, and Club Pilates.

A remaining signed but not open pipeline is expected to generate an additional $22 million of annual gross rent, representing 8% of current NOI. Our development and construction teams continue to be key drivers of value creation. During the year, we completed 14 projects totaling $55 million, generating unlevered yields of 19%. We currently have $166 million of redevelopment projects underway, expected to generate a 14% unlevered return. Over the past three years, FFO as adjusted has grown at an average annual rate of 6% to $1.43 per share in 2025. This exceeds our 2023 Investor Day target of $1.35 per share and ranks among the highest growth rates in our peer group.

This outperformance is a testament to several factors, including our best-in-class team, favorable shopping center fundamentals, and accretive capital recycling. During this period, we acquired nearly $600 million of high-quality shopping centers at an average 7% cap rate while disposing of approximately $500 million of non-core lower growth assets at a 5% cap rate. Looking ahead to 2026, our goals include achieving FFO as adjusted growth of at least 4.5%, same property NOI growth above 3%, and returning leased occupancy toward our historical high of approximately 98%. Our acquisition guidance includes a $54 million shopping center under contract.

While we have not included additional acquisitions or dispositions in our guidance, we remain on the hunt for growth opportunities and have several deals in early stages of underwriting. Looking to 2027 and beyond, we expect to increase FFO by at least 4% annually. Our growth outlook is highly visible, with a significant portion coming from six anchor repositioning projects, including Bruckner, Bergen, Cherry Hill, Hudson, Plaza At Woodbridge, and Yonkers. These projects will include new retailers, including BJ’s, Trader Joe’s, Burlington, HomeGoods, and Ross, and high-quality shop tenants such as Chipotle, Chick-fil-A, T-Mobile, and Cava. Through 2027, more than 80% of our same property NOI growth is expected to come from executed leases, LOIs, and contractual rent increases.

Based on the expected timing of rent commencements, we believe 2027 NOI growth will be approximately 5%. We are proud of our sector-leading performance over the past three years and remain well-positioned to build on this momentum in 2026. I will now turn it over to our Chief Operating Officer, Jeffrey Mooallem.

Jeffrey Mooallem: Thanks, Jeff, and good morning. Our fourth quarter results capped an exceptional three-year run at Urban Edge Properties, characterized by continued leasing momentum, disciplined redevelopment, accretive capital recycling, and ongoing enhancements to our tenant roster. Let’s get into some of the details as well as the reasons why we are so bullish that this run will continue. During the fourth quarter, we signed 47 new leases totaling more than 200,000 square feet, including 14 new leases at an 11% same space spread, and 33 renewals at a 17% spread.

That brought our total for the year to 58 new leases for over 360,000 square feet, at a same space spread of 32% and 104 renewals for over 1,000,000 square feet at a spread of 11%. On a portfolio our size, any given quarter can have an outlier or two. But a 32% spread on new leases across the entire year is direct evidence of the competitive tenant demand and increased pricing power that we’ve seen across our portfolio. Year-end same property lease occupancy was 96.7%, Anchor occupancy ended the year at 97.5%, down 50 basis points from last year, while small shop occupancy rose to a record 92.6%, up 170 basis points from last year.

The decline in anchor occupancy is a result of taking back one space, at home at Ledgewood Commons, which we expect to re-tenant soon at a strong overall spread. Nationally, shopping center vacancy remains near historic lows. Supply constraints are especially pronounced in the Northeast, where new construction represents only 0.2% of total supply. Finding land and securing entitlements is extremely difficult in our markets. And even if you do, current market rents do not support today’s ground-up development costs. We believe the current supply imbalance will continue, allowing us to negotiate even better lease terms, both economic and non-economic. As it relates to our SACS exposure, we had two SACS OFF 5th locations at the end of 2025.

Our location in East Hanover, New Jersey, was paying about $800,000 a year of gross rent and closed in January. The space has excellent visibility in a strong submarket, so we expect to re-tenant it accretively in short order. Our location at Bergen Town Center is one of only 12 OFF 5th stores that will remain open at full rent. That list includes some of the best retail assets in the entire country, such as Woodbury Commons in New York, Buckhead Station in Atlanta, the Gallery at Westbury Plaza on Long Island, and Sawgrass Mills in Florida, just to name a few. Further testament to how special an asset Bergen Town Center is.

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