Urban Edge Properties Q1 2025: Key Contradictions in Retail Demand, Debt Assumptions, and Acquisition Strategies
Earnings DecryptFriday, May 2, 2025 12:49 pm ET
2min read
Macro economic uncertainty and retailer demand, bad debt assumptions, tax deferral strategy, impact of macroeconomic uncertainty on retail demand, and acquisition strategy and cap rates are the key contradictions discussed in Urban Edge Properties' latest 2025Q1 earnings call
Strong Financial Performance:
- Urban Edge Properties reported FFO as adjusted of $0.35 per share, marking a 6% increase over the first quarter of the previous year and the highest quarterly earnings result in the company's 10-year history.
- Same-property NOI increased by 3.8% compared to the first quarter of the previous year, driven by rents commenced from the signed, but not open pipeline, improved recovery ratios, and better-than-expected collections.
Leasing Momentum and Occupancy:
- The company executed 42 leases in Q1, totaling 434,000 square feet, including 18 new leases amounting to 118,000 square feet with same-space cash leasing spreads of 34%.
- Shop occupancy reached a record high of 92.4%, reflecting the company's progress in attracting a desirable mix of shop tenants.
Capital Recycling and Acquisitions:
- Urban Edge Properties announced the sale of 8 acres of land at Bergen Town Center for $25 million, with plans to sell 2 more properties for $41 million, bringing their total dispositions to $66 million this year at a 5% weighted average cap rate.
- The company plans to reinvest this capital into accretive acquisitions, aiming to enhance its portfolio quality and growth rate.
Debt and Liquidity Management:
- The company's balance sheet remains strong, with approximately $800 million of total liquidity, including $98 million in cash.
- Urban Edge Properties has no corporate debt other than $50 million currently drawn on its line, with a net debt to annualized EBITDA ratio of 5.9x.
Outlook and Market Conditions:
- Despite a strong start to the year, the company is projecting a more conservative outlook for the back half of the year due to economic uncertainty, leading to a reiterated 2025 full-year guidance of achieving FFO as adjusted of $1.37 to $1.42 per share.
- Urban Edge Properties sees potential opportunities in the transaction market as volatility may allow for more attractive returns on acquisitions.
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Strong Financial Performance:
- Urban Edge Properties reported FFO as adjusted of $0.35 per share, marking a 6% increase over the first quarter of the previous year and the highest quarterly earnings result in the company's 10-year history.
- Same-property NOI increased by 3.8% compared to the first quarter of the previous year, driven by rents commenced from the signed, but not open pipeline, improved recovery ratios, and better-than-expected collections.
Leasing Momentum and Occupancy:
- The company executed 42 leases in Q1, totaling 434,000 square feet, including 18 new leases amounting to 118,000 square feet with same-space cash leasing spreads of 34%.
- Shop occupancy reached a record high of 92.4%, reflecting the company's progress in attracting a desirable mix of shop tenants.
Capital Recycling and Acquisitions:
- Urban Edge Properties announced the sale of 8 acres of land at Bergen Town Center for $25 million, with plans to sell 2 more properties for $41 million, bringing their total dispositions to $66 million this year at a 5% weighted average cap rate.
- The company plans to reinvest this capital into accretive acquisitions, aiming to enhance its portfolio quality and growth rate.
Debt and Liquidity Management:
- The company's balance sheet remains strong, with approximately $800 million of total liquidity, including $98 million in cash.
- Urban Edge Properties has no corporate debt other than $50 million currently drawn on its line, with a net debt to annualized EBITDA ratio of 5.9x.
Outlook and Market Conditions:
- Despite a strong start to the year, the company is projecting a more conservative outlook for the back half of the year due to economic uncertainty, leading to a reiterated 2025 full-year guidance of achieving FFO as adjusted of $1.37 to $1.42 per share.
- Urban Edge Properties sees potential opportunities in the transaction market as volatility may allow for more attractive returns on acquisitions.
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