Urban Edge Properties (UE) Q3 Earnings call transcript Oct 30, 2024
In Urban Edge Properties' recent earnings call, the company highlighted a robust performance for the third quarter of 2024, with a 9% increase in FFO per share compared to the same period last year. The growth was driven by a combination of strong leasing activity and strategic acquisitions, positioning the company well for future growth.
Strong Leasing and Occupancy
Leasing activity remained a significant driver for Urban Edge, with 23 new leases signed at a same-space cash spread of 15% and a record volume of 683,000 square feet. The company's shop occupancy increased to 90.4%, marking a significant improvement from the prior quarter. The strong leasing activity and occupancy growth underscore the resilience of retailer demand and the attractiveness of Urban Edge's shopping centers.
Capital Recycling and Strategic Acquisitions
The earnings call highlighted several strategic acquisitions, including the off-market purchase of The Village at Waugh Chapel for $126 million at a cap rate of 6.6%. The acquisition included the assumption of a below-market mortgage, resulting in an expected first-year leverage return of 9%. Urban Edge's ability to acquire high-quality shopping centers while generating meaningful spreads through capital recycling is a testament to the company's strategic approach to growth.
Future Outlook
Urban Edge's outlook for the future remains positive, with the company increasing its 2024 FFO as adjusted guidance to $1.32 to $1.35 per share, reflecting a 7% expected growth for the year. The company's strategic focus on leasing, redevelopment, and acquisitions, combined with a strong leasing pipeline and attractive shopping center portfolio, positions Urban Edge well for continued growth.
Market Conditions and Challenges
Despite the competitive acquisition market and compressed cap rates, Urban Edge remains optimistic about its ability to generate meaningful spreads through capital recycling. The company is underwriting several assets in the D.C. to Boston corridor, with plans to fund them in part through the disposal of lower-growth single-tenant assets. This strategic approach to capital deployment underscores Urban Edge's ability to navigate market challenges and capitalize on growth opportunities.
In conclusion, Urban Edge Properties' strong performance and strategic acquisitions are a testament to the company's ability to navigate market challenges and capitalize on growth opportunities. The company's focus on leasing, redevelopment, and acquisitions, combined with a strong leasing pipeline and attractive shopping center portfolio, positions Urban Edge well for continued growth in the future.
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