Urban Edge Properties Q2 2025: Contradictions in Cap Rates, Acquisition Strategy, and Recession Resilience

Cap Rate and Acquisition Market, Recession Resilience, CapEx Allocation and Strategy, Occupancy Targets and Strategies, Acquisition Market and Strategy are the key contradictions discussed in Urban Edge Properties' latest 2025Q2 earnings call.



Strong Financial Performance and Occupancy Growth:
- Urban Edge Properties reported a 12% increase in FFO as adjusted over last year and 8% year-to-date.
- Same-property net operating income increased by 7.4% for the quarter and 5.6% year-to-date.
- The growth was driven by strong demand for space in shopping centers, high occupancy rates at 96.7%, and a record shop occupancy rate of 92.5%.

Capital Recycling and Asset Sales:
- The company has sold $66 million worth of assets at a blended cap rate of 4.9% year-to-date.
- These sales included the sale of 2 high-value, lower-growth properties for $41 million and the sale of a 44,000 square foot building for $25 million.
- The strategy of capital recycling and strategic asset sales contributes to improved financial performance and reinvestment in high-growth assets.

Leasing and Development Momentum:
- The company executed 42 deals totaling 482,000 square feet in the second quarter.
- This included 27 renewals totaling 394,000 square feet at a 12% spread and 15 new leases totaling 88,000 square feet at a 19% spread.
- The leasing momentum was driven by strong demand and favorable lease terms, supported by a robust S&O pipeline and redevelopment projects.

Investment Sales Market and Portfolio Strength:
- The investment sales market for retail assets is thriving, with both public and private buyers.
- The company's strategy focuses on a portfolio concentrated in the densely populated D.C. to Boston corridor, with high-quality shopping centers.
- The strength of the portfolio and the favorable market conditions support continued growth and a resilient balance sheet.