Urban Edge Properties Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 30, 2024

There are 9 speakers on the call.

Operator

Ladies and gentlemen, good morning, and welcome to the Urban Edge Properties Third Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ariba Ahmed, Investor Relations Associate.

Operator

Please go ahead.

Speaker 1

Good morning, and welcome to Urban Edge Properties' 3rd quarter 2024 earnings conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer Jeff Mollum, Chief Operating Officer Mark Langer, Chief Financial Officer Rob Milton, General Counsel Scott Oster, EVP and Head of Leasing and Andrea Drazen, Chief Accounting Officer. Please note today's discussion may contain forward looking statements about the company's views of future events and financial performance, which are subject to numerous assumptions, risks and uncertainties and which the company does not undertake to update. Our actual results, financial condition and business may differ. Please refer to our filings with the SEC, which are also available on our website for more information about the company.

Speaker 1

In our discussion today, we will refer to certain non GAAP financial measures, including reference to our 2025 FFO as adjusted targets. Reconciliations of these measures to GAAP results are available in our earnings release, supplemental disclosure package and our April 2023 investor presentation in the Investors section of our website. At this time, it is my pleasure to introduce our Chairman and Chief Executive Officer, Jeff Olson.

Speaker 2

Great. Thank you, Areeba, and good morning, everyone. We had another great quarter generating 9% FFO per share growth as compared to the Q3 of last year and 7% growth year to date. Our growth was driven by a 5.1% increase in same property net operating income and accretion from our capital recycling activity. Over the past year, we have acquired $552,000,000 of high quality shopping centers at a 7% cap rate, mostly funded through $425,000,000 of dispositions of non core and single tenant assets at a 5% cap rate.

Speaker 2

Yesterday, we acquired The Village at Wachapel, a 382,000 square foot grocery anchored shopping center located in Anne Arundel County, Maryland for $126,000,000 at a cap rate of 6.6% in an off market transaction. The acquisition included the assumption of a $60,000,000 mortgage with a significantly below market rate of 3.76 percent with approximately 7 years of term remaining resulting in an expected 1st year leverage return of 9%. We expect NOI should grow by approximately 3% a year over the next 10 years. The property is anchored by Safeway, Marshalls, HomeGoods, TJ Maxx and a good mix of shop uses including Chick Fil A, Chipotle and Sephora. The center attracts 6,000,000 visitors a year ranking in the 96 percentile of all shopping centers in Maryland.

Speaker 2

The acquisition was funded in part with proceeds from selling a freestanding Home Depot in Union, New Jersey for $71,000,000 at a cap rate of 5.35 percent, which also closed yesterday. Home Depot's rent is flat for the next 14 years and contains another 50 years of term through options with minimal growth. We are underwriting several assets in the DC to Boston corridor that would likely be funded in part through the disposition of lower growth single tenant assets like the Home Depot property we just sold. Even though the acquisition market is more competitive, cap rates have also compressed on single tenant assets. So we still expect to make a meaningful spread through future capital recycling.

Speaker 2

Leasing activity remains strong. We matched last quarter's record volume with the execution of 23 new leases at a same space cash spread of 15%. Shop occupancy increased by 500 basis points compared to the Q3 of 2023 and by 60 basis points sequentially to 90.4%. Our signed but not open pipeline amounts to $24,000,000 or 9% of net operating income. Notably in the 3rd quarter, we commenced $6,000,000 of annualized gross rent, a leading indicator for same property NOI growth over the next several quarters.

Speaker 2

New rent commencements included Ralph's Supermarket at Monte Hedra, Bath and Body and Crumble Cookies at Bergentown Center, CityMD and Starbucks at Bruckner and Starbucks at Heritage Square. Based on our better than expected results, strong retail fundamentals and accretive capital recycling, we increased our 2024 FFO as adjusted guidance to $1.32 to $1.35 per share, up $0.03 per share at the midpoint, reflecting 7% expected FFO growth for the year. We continue to believe that we will reach the high end of our 2025 FFO target of $1.31 to $1.39 per share. Our achievements to date are truly a testament to the quality of our real estate and the dedication and commitment of the Urban Edge team. We are excited about the growth opportunities we see ahead.

Speaker 2

I will now turn it over to our Chief Operating Officer, Jeff Muellam.

Speaker 3

Thanks, Jeff, and good morning, everyone. It was another strong quarter at Urban Edge as we continued to execute on all three growth drivers of our business leasing, redevelopment and acquisitions. We signed 45 deals in the Q3 for a total of 683,000 square feet including 23 new leases at a same space spread of 15% and 22 renewals at an 8% spread. Our same property leased occupancy of 96.3% increased 200 basis points compared to the prior year and is down 10 basis points compared to the prior quarter. The slight decrease was due to an expected lease termination at Hudson Mall where we received a termination fee from a national tenant on a space that we are now in negotiations to backfill.

Speaker 3

Anchor tenant occupancy is holding steady at a robust 97.4%. While we're constantly monitoring current or future potential bankruptcies such as Big Lots, as we've said in the past, often we don't even have an opportunity to get those leases back as our markets are highly coveted by other retailers in an auction process. To the extent we do get anchor spaces back, we believe any short term exposure to a reduced occupancy is offset by longer term opportunities to improve both rent and tenant mix. Our small shop lease occupancy now stands at 90.4%, up 60 basis points from the prior quarter and our highest shop occupancy percentage ever. Around this time last year with small shop occupancy sitting at 85.4%, we started calling 2024 our small shop leasing year and we set a goal to be at 91% by the end of this year.

Speaker 3

Based on new leases we're currently negotiating, we remain on track to hit 91% and the quality is matching the quantity with retailers such as Sweetgreen, Sephora, Kava and Mathnasium on that roster. Generating this kind of improvement in shop occupancy in a relatively short period of time just 1 year is a credit to our entire team from the leasing team sourcing and negotiating the deals to the attorneys preparing them to the construction and development departments getting tenants open. It's also further testament to the shift in fundamentals we've been seeing for the past couple of years, namely that retailer demand has remained resilient and that our assets are among the most sought after shopping centers in our markets. Like leasing, our low risk redevelopment program remains a strong driver for our 2024 growth. This quarter we stabilized projects at Kingswood Crossing and Birdside Commons both in Metro New York City and both with regional anchors on long term leases.

Speaker 3

We have a $159,000,000 redevelopment pipeline that is expected to generate a 14% unlevered yield on cost. I want to close by spending some time discussing the acquisition market and how it has evolved this year for Urban Edge and for others. There is no doubt that in our core markets and for retail assets overall, there's been a notable increase in activity and a notable decrease in cap rates. The volume of retail property sales nationwide is up from $6,000,000,000 in 2023 to $10,000,000,000 year to date in 2024. Debt markets have also come back in a big way with both CMBS originations and traditional lending well ahead of last year's pace.

Speaker 3

What is driving this we believe is the recognition by institutional capital on both the private and the public side that retail's combination of stability and growth is outperforming many other asset classes. Rising occupancy rates, increasing market rents, stronger retailer balance sheets and the lack of any new meaningful supply gives us very good confidence that this trend will only continue. The increased demand for retail properties of course has a dual effect of making our existing assets more valuable and making the acquisition of targeted properties more challenging. We were fortunate to get to the party early, buying over $550,000,000 in the past year before prices rose, a significant 80% of that $550,000,000 was in off market deals sourced through our principal to principal relationships and our local market expertise. We continue to use those avenues to find deals and we are underwriting several assets that we believe have the right balance of stability through credit tenants with strong sales on long term leases and growth through vacancy or below market leases with near term roll.

Speaker 3

Our recent acquisition of The Village at Watch Apple in Gabriels, Maryland, a highly educated and affluent trade area situated between Washington D. C, Baltimore and Annapolis is a perfect example. We love the small shop exposure and the low anchor and outparcel rents at this asset and we expect it to be an accretive contributor to FFO growth for a long time to come. In sum, while the acquisition market is getting more competitive, we think our advantages as a highly credible and well capitalized buyer will allow us to find and announce more opportunities like this one soon. I will now turn it over to our Chief Financial Officer, Mark Langer.

Speaker 4

Thanks, Jeff. Good morning. As you just heard, we had another excellent quarter and have good momentum as we move into the home stretch of 2024. We reported FFO as adjusted of $0.35 per share in the Q3. Same property NOI growth including redevelopment was up 5.1% compared to the Q3 of 2023.

Speaker 4

The increase in FFO was primarily due to accretive capital recycling, new rent commencements and contractual rent bumps. We exceeded our internal forecast in part due to the benefit of lease termination income and the acceleration of non cash revenue related to below market amortization, which added $0.02 per share in the quarter. NOI growth continues to benefit from the conversion of tenant leases that were previously executed that are now rent paying. Our 5.1 percent NOI growth this quarter was driven by a 5% increase in minimum rent year over year. As a reminder, we do not include lease termination income in NOI.

Speaker 4

While uncollectible rental revenue was almost twice as high as the unusually low level we recorded in the Q3 of last year, it was 25 basis points lower than we had expected when measured as a percentage of rental revenues. On the financing front, we closed on a new 5 year $31,000,000 mortgage secured by Greenbrook Commons at a fixed rate of 6% and a new 10 year $30,000,000 mortgage secured by Briarcliff Commons at a fixed rate of 5.5%. Both mortgages were executed at a spread of 180 basis points. We continue to see debt capital widely available from all primary sources, including life companies, CMBS and select regional and national banks. We are currently under contract to refinance our maturing loan at Brick Commons in the Q4 with a new 7 year $50,000,000 mortgage at a fixed rate of 5.2 percent locked at a spread of 155 basis points.

Speaker 4

That spread reflects the very high quality of BRIC Commons with a grocer that is doing over $1300 in sales per square foot. After the BRIC mortgage financing is completed, we have no other debt maturities until December 2025, where we only have $124,000,000 mortgage that is maturing, which is easily refinanceable. Given our recent acquisition activity, we issued about 4,400,000 shares of common stock under our ATM, raising approximately $84,000,000 of net proceeds during the quarter. We had $150,000,000 drawn on our line of credit at the end of the second quarter, bearing interest at about 6.5% and fully repaid the balance in the 3rd quarter using proceeds from the ATM along with those from the aforementioned mortgage financings. We continue to make progress reducing our overall leverage levels with net debt to EBITDA of 5.8 times using 3rd quarter annualized income excluding lease termination income.

Speaker 4

This level will fluctuate with new acquisitions and mortgage activity, but should remain in the low 6 times range, which is below the 6.5 times target we outlined at our April 2023 Investor Day. Turning to our outlook for 2024. We increased our FFO as adjusted guidance by $0.03 per share, implying a 4th quarter FFO rate of $0.33 per share at the midpoint. This guidance increase is related to the $0.02 of benefit from lease termination and lease amortization income I previously described and $0.01 is due to favorable trends on the bad debt side and other expense improvements including G and A. Our updated guidance incorporates the acquisition and disposition activity we have announced today, but does not assume any other transactional activity in 2024.

Speaker 4

Same property NOI growth including redevelopment guidance has been increased to reflect our better than expected performance year to date, resulting in a new midpoint of 5.4 percent, up from the prior midpoint of 5.25%, implying 8.6% growth in the 4th quarter. As Jeff mentioned, dollars 6,000,000 of annualized gross rents commenced in the 3rd quarter from leases previously executed, which will help drive our NOI growth over the next several quarters. In terms of the S and O pipeline for 2025, we have disclosed in our supplement that we expect about $10,000,000 of additional gross revenue to come online. We expect 1 third of that will be realized in the first half of the year with 2 thirds coming in the second half of the year. In closing, we are very pleased to see the execution our team has achieved the growth drivers we outlined at our Investor Day last year.

Speaker 4

Fundamentals in our business remain favorable as there's limited space available, strong demand from our current core tenant base, a lack of new supply, strong mark to market rent spreads and favorable levels of attractively priced capital. We are seeing the benefits of our simplified portfolio, while focusing on prudent capital allocation, both from accretive acquisitions and from the sale of high value low growth assets. The strength of our cash flow has been enhanced by the anchor repositioning efforts we have completed and we expect further improvement as new tenants open and shop leasing follows. Our balance sheet is in excellent shape with limited maturities, abundant liquidity and growing free cash flow. We look forward to continuing our track record of generating strong earnings growth.

Speaker 4

I will now turn the call over to the operator for questions.

Operator

Thank you. Ladies and gentlemen, we will now be conducting a question and answer The first question comes from the line of florist Van Dykem from Compass Point. Please go ahead.

Speaker 5

Hey, good morning guys. Thanks for taking my question. Encouraging results, maybe if you could particularly I'm encouraged and Jeff maybe if you can touch on the shop occupancy and everybody in the sector appears to be setting new records in terms of occupancy levels. Where do you see that popping out? Or do you think I mean, is it some of your peers are getting 95% shop occupancy.

Speaker 5

Is that feasible in your portfolio in your view? Hey, good morning, Floris.

Speaker 3

Yes, it's certainly feasible. Let's talk a little bit about we've gone now up about 500 basis points in this quarter with a goal of getting another 60 to 70 basis points by the end of the year to finish 2024 with 91% shop occupancy. We certainly would like to be in that 92% 93% range next year. But at this point with where we are, we start really looking not just at vacant spaces and the ability to pop that occupancy up a little bit, But we start to look at under leased spaces and opportunities where we might have to if not change out the occupancy, change out the tenant for a better quality and a better rent. So one of the things I'm talking to the leasing team about all the time is, don't just lease the space that's vacant now, lease the space that we think might be coming up vacant one day or where we think we can get it back for a higher rent.

Speaker 3

In some cases, we're even combining some shop spaces for really better tenants and larger anchor spaces. And that requires us to maybe get out of a couple of leases and combine them with a couple of vacancies. So you wouldn't see a lot of shop occupancy pickup, but we're enhancing the asset. I think 92% to 93% is realistic, 94% would be nice, but we're trying not to manage to the number. If we get to 93% with the quality we've been getting, I'll be very happy.

Speaker 5

Thanks. And maybe another question, this maybe is more in Mark's wheelhouse. You issued some equity during the quarter. As you look at the market, you talked about the fact that cap rates are probably heading lower in your markets. Are you seeing in the investment side greater assets on the market today, maybe portfolios on the market today?

Speaker 5

And how would they be partially funded? It sounds like that you would consider partially funding some of these things with equity as well, obviously, as incremental asset sales as you've been doing over the last couple of years. Maybe if you can touch on your funding sources and how you look at your equity today relative to asset sales?

Speaker 4

Yes. Floris, I'll take the capital side and let Jeff comment on your question on what any other portfolios that we might be seeing. But I think you hit it and answered it really and that is we look at a blend. We have very good quality assets that you saw again today with the Home Depot. So asset sales, especially at the cap rates that we're commanding is definitely one of the primary targeted sources.

Speaker 4

And the debt spreads, I've given you the price of debt, which is probably 5.5% to 6%. And so then when we think about equity, it would really be earmarked towards growth initiatives like acquisitions where we can look at what our implied cap rate is relative to what we're buying and the growth of those assets. So it's really a blend of all of that. But I'll let Jeff comment on what we might be seeing on the portfolio side.

Speaker 2

I mean we're definitely on the hunt for more acquisitions, Floris. And there are a number of assets that we're underwriting in the D. C. To Boston corridor. I think one of our main competitive advantages is that we are the local sharpshooter.

Speaker 2

And so we actually know which centers within the D. C. To Boston quarter we want to own. We also mostly know those owners and have principal to principal relationships with them. Jeff had mentioned during his comments that 80% of the over $500,000,000 that we've acquired have been off market transactions and our pipeline contains a blend of off market deals and then some marketed deals.

Speaker 2

Generally, we'd rather go with the off market deal. But because we've been one of the largest buyers in this area for a long time, but in particular over the last year, deals beget more deals. So sellers want to come to us. They have great comfort that we're going to end up closing and that we're relatively easy to work with. And then the last point on our competitive advantage in terms of being a local sharpshooter is we move very quickly.

Speaker 2

It's very easy for us just to jump in the car and see a potential acquisition and then actually come home and sleep in our bed that same night. So we're constantly looking at deals and our deal team and there are 9 of us around this conference room right now. I think every one of us saw this acquisition early on and saw and department head saw it early on to make sure that there weren't any surprises later throughout due diligence. So I love the fact that we have this local sharpshooter mentality. I do believe that allows us to source deals more effectively.

Speaker 6

Thanks, guys.

Speaker 4

Thank you.

Operator

Thank you. The next question comes from the line of Sameer Khanal from Evercore ISI. Please go ahead.

Speaker 7

Good morning, everyone. Jeff or Mark, can you provide a bit more color on the space you got back? I think you said from a national tenant. Just trying to I'm sure over time you'll be able to re tenant that space at a much higher rent. But just how should we think about maybe the drag it can create or maybe even into revenues earnings over the next 12 to 18 months?

Speaker 7

Just want to make sure I get that right. Thanks.

Speaker 3

Yes. Hey Sameer, good morning. It's Jeff Mualim. Yes, I mean we've got some confidentiality provisions in that termination agreement with that tenant. So I can't give you a whole lot of information about who it was.

Speaker 3

What we can tell you is they had not RCD yet. So there was no existing revenue coming from that box at the time we did the termination. And it is a national tenant that had been looking to get out of several leases in several locations around the country. This was not a unique outlier situation. When we first started talking to them about a possible termination, our leasing team felt very comfortable that we would have good demand on the space.

Speaker 3

And we reached out to a few people and had conviction that we could do something accretive there. And the conversations progressed and we ended up agreeing to a termination. So we did receive a fee there that we were very happy with and we expect to have that re tenanted probably the next couple of quarters and announced. But it was not an tenant. They had not started paying rent or open for business yet.

Speaker 3

So it's a little bit easy to take off the list.

Speaker 7

Okay. Got it. And I guess, Mark, on the same store guide here, I mean, mean, it's late into the year now and the range is still pretty wide, that 475 to 6. I know you took it up a little bit, but help us kind of understand kind of what's driving that kind of achieve the low end or the high end of that range?

Speaker 4

Yes, Sameer, happy to. It really is a function kind of the size of our portfolio relative to what risks the downside is really tied to the potential on any tenant fallout and elevated bad debt in light of the filings from Big Lots, Blink, Buy Buy and some of the lumber liquidators that you've seen. All those headlines noise for us, if all of them were to stop paying and go out, then you can hit the high end because those tenants alone are about $3,000,000 of gross rent. And the high end is really the opposite that if we don't have that, we get a little bit lucky on some of the RCDs and we don't have the bad debt that we've contemplated, you get to the high end. So those are really the big drivers.

Speaker 4

At this point, new leasing isn't really that as you said, that's going to hit next year. So it's really more a function of what the tenant risk list hits.

Speaker 7

Okay, got it. And one last one for me on Mark, you reduced G and A guidance. Help us think through, I mean, you've kind of reduced G and A in the past as well. And as we think about 2025, how much more is there you can do from a modeling perspective as we think about that? Thanks.

Speaker 4

Yes. We'll give formal guidance on that when we do our year end reporting. But I can say, I would not want to set the expectation as you point out over the last 2 years, we have really chipped away examined, I mean, every element, every line item that we could. So I don't think that there's going to be declines. We'll have cost of living and inflationary increases on the one end for sure.

Speaker 4

So I would not set an expectation that this would continue to decline.

Speaker 7

Okay. Thank you, guys.

Operator

Thank you. The next question is from the line of Ronald Kamdem from Morgan Stanley. Please go ahead.

Speaker 6

Hey, two quick ones for me. Just on the acquisition and disposition front, just focusing on the disposition side, as you sort of look at the portfolio, how much more opportunities is there to sort of sell out of these lower cap rate assets in these tenthirty one fashions? Just are we through that pool? Is there more to come and so forth?

Speaker 2

Yes. Look, Ron, good morning. My guess is that in any given year, we're going to be selling $100,000,000 to $200,000,000 of assets just across the board. We're definitely focused now on these single tenant properties. If you look at our supplement, you'll see that we own 21 Home Depot, Lowe's, Walmart and Targets.

Speaker 2

Those tenants generate about $33,000,000 a year in total rent. Not all of them are separately subdivided, but that's the pool that we're focused on to generate some of the lower cap rate sales. But I'm hoping that you'll see over the next 4 to 5 years $100,000,000 to $200,000,000 of dispositions pretty consistently and hopefully we'll earn a decent spread on that as we redeploy that capital into higher quality shopping centers.

Speaker 6

Got it. That's helpful. And then my second question was just, obviously you reiterated the 2025 target at the high end. So kudos to the team to getting there. But how does what's the assumptions what's the same store NOI assumption that's baked into that that was assumed into that?

Speaker 6

And how does that compare to the 5% you did this quarter?

Speaker 4

Yes. Ron, the NOI growth, each of the assumptions that's embedded in that, we're going to break down and guide and share the assumptions just like we did this year. But you can kind of take our S and O pipeline, roll it in. Obviously, on a year over year basis, as you get through the year, there's less growth. But I think healthy numbers that we outlined in our investor deck of 5% type numbers are certainly achievable.

Speaker 6

Got it. Okay. That's it for me. Thank you. Okay.

Speaker 6

Thank you.

Operator

Thank you. The next question comes from the line of Paulina Rojas from Green Street. Please go ahead.

Speaker 8

Good morning. You mentioned in your prepared remarks that the market has become more competitive, but you have seen fabrics compressed. Can you talk about the magnitude of this compression you have observed? What time period you have in mind when you say they have compressed? And whether you have seen this across format?

Speaker 2

The last part, have we the format? My guess Pauline is cap rates are down 50 to 75 basis points over the last 6 to 9 months. And in terms of format, I mean, we're definitely seeing more demand from some of the larger centers than we have in the past. But there is still a spread between buying a center that might have a grocery store and a couple boxes, then simply buying a neighborhood center that's only the grocery store. There's still a decent spread there.

Speaker 2

And those are the types of assets that we're focused on acquiring because we think we can get them at a decent spread relative to our cost of capital and also relative to some of the disposition activity that's taking place.

Speaker 3

And Paul, this is Jeff. I would just add, a year ago or so for $100,000,000 North assets there was not a very extensive buyer pool. And I think to what our earlier comments were, some of the institutional capital has really aggregated around retail. It's not just that interest rates have caused cap rates to compress. It's also that there's more buyer demand for larger type assets because people are more comfortable now with the risk profile of retail and certainly the growth profile has gotten a lot better.

Speaker 3

So we're seeing the competition not just from our REIT competitors and peers, but also from institutional capital that in some cases is new to the product type.

Speaker 8

Thank you. And then a follow-up the your intention to potentially sell some single stores. You mentioned Home Depot. So it sounded like for you would be willing to sell basically any of these stores. And I wonder if it is a consideration at all the impact that it could have not controlling the entire center in some situations.

Speaker 2

So Yes. Let me let me correct you. I mean, we would not sell one of these anchors in the middle of a shopping center. The centers that I mean, the one we just sold, it was a freestanding Home Depot. We do own some separately subdivided freestanding anchor tenants.

Speaker 2

Like for example, we own a Lowe's across the street from Bergentown Center that would be a prime example of another disposition candidate. So but no, we would not break up a shopping center.

Speaker 8

Okay.

Speaker 2

But would we sell a shopping center that has both a Home Depot and a Costco and maybe a couple of shops at a low cap rate? Absolutely.

Speaker 8

Okay. Okay. So probably the ideal candidate is a Home Depot that doesn't have a lot of cross shopping with the rest of the center and that it's physically a little more isolated. And is that a good way to

Speaker 2

Yes. I think Not necessary.

Speaker 3

Yes. Paul, you should think of it as 2 separate categories. 1 is the single tenant asset like the one we just sold yesterday, where it's really just that one single big box credit tenant. And then we have several shopping centers, which effectively trade like a big box credit tenant would because it is 1 or 2 or in some cases 3 big box tenants on long term leases with very good sales and low rents. So whether we were to sell those shopping centers or we were to sell the single tenant assets, we think they both are sub 6 cap kind of stuff that would allow us to accretively trade into some of the shopping centers we're now targeting.

Speaker 8

Okay. Perfect. Understood. And if I may, the last one. I know that shopping center construction has been very, very numerous, but we have seen landlords pursue some outparcel development.

Speaker 8

So like the typical single store would drive through to capitalize on the great demand that we're seeing. So is this something that you can do more aggressively in your portfolio? And it's something that would interest you given the economics behind?

Speaker 3

Absolutely. And we are doing it. I mean we've got several of those kinds of deals in the pipeline right now, some that are in development right now. We don't talk about them as much because the single tenant drive through or bank or facility doesn't move the needle a whole lot on the numbers. But I can think of off the top of my head at least 5 of those that we have in some of our better shopping centers whether they're ground leases or built to suit for single tenants or in a couple of cases even small strips and that they are accretive.

Speaker 3

I think when we talk about construction and development being hard to add meaningful supply in the future, we're talking about the 100000 to 300000 square foot shopping centers where you're building around an anchor tenant and the math just doesn't seem to work with what those in line type tenants are paying. But to the extent we can get at outparcel opportunities whether it's ground lease or built to suit, we're all over those and we have a lot of them in the queue.

Speaker 8

Thank you.

Operator

Thank you.

Speaker 2

That redevelopment pipeline is really generating that 14% return.

Operator

Thank you. As there are no further questions, I now hand the conference over to Jeff Olson for his closing comments. Jeff?

Speaker 2

Thank you. We look forward to seeing many of you at the upcoming NAREIT conference in Las Vegas, and we'll speak to you soon. Please call if you have any questions.

Operator

Thank you. The conference of Urban Edge Properties has now concluded. Thank you for your participation. You may now disconnect your lines.

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Earnings Conference Call
Urban Edge Properties Q3 2024
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