NYSE:UE Urban Edge Properties Q4 2024 Earnings Report $18.49 +0.13 (+0.71%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$18.46 -0.03 (-0.16%) As of 04/25/2025 06:03 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Urban Edge Properties EPS ResultsActual EPS$0.34Consensus EPS $0.09Beat/MissBeat by +$0.25One Year Ago EPSN/AUrban Edge Properties Revenue ResultsActual RevenueN/AExpected Revenue$110.79 millionBeat/MissN/AYoY Revenue GrowthN/AUrban Edge Properties Announcement DetailsQuarterQ4 2024Date2/12/2025TimeBefore Market OpensConference Call DateWednesday, February 12, 2025Conference Call Time8:30AM ETUpcoming EarningsUrban Edge Properties' Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfilePowered by Urban Edge Properties Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 12, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Greetings. Welcome to Urban Edge Properties Fourth Quarter twenty twenty four Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:20It is now my pleasure to introduce Areeba Ahmed from Investor Relations. Thank you. You may begin. Areeba AhmedInvestor Relations & ESG Associate at Urban Edge Properties00:00:27Good morning, and welcome to Urban Edge Properties twenty twenty four year end earnings conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer Jeff Mualim, 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. Areeba AhmedInvestor Relations & ESG Associate at Urban Edge Properties00:01:13In 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. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:01:40Great. Thank you, Areeba, and good morning, everyone. 2024 was a year marked by significant accomplishments for Urban Edge. We continued to outperform expectations and delivered outstanding results, notably increasing FFO as adjusted by 8% for the year to $1.35 per share, allowing us to achieve our three year earnings target one year ahead of plan. The strong performance has been fueled by our accretive capital recycling, record leasing volumes and new rent commencements. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:02:22In 2024, we executed a record 79 new leases totaling 485,000 square feet with a same space cash rent spread of 26% and achieved a new record for shop occupancy at 91%. Same property portfolio occupancy grew to 96.6%. Our signed but not open pipeline is expected to generate $25,000,000 of future annual gross rent representing 9% of NOI. Our centers are benefiting from improved co tenancy as we add retailers like Trader Joe's, BJ's Wholesale Club, TJX, Burlington and Ross, which stimulate higher quality shop tenants and QSRs like First Watch, Chipotle, Dave's Hot Chicken, Starbucks and Tate Bakery and Cafe. These structural shifts in tenancy have lasting benefits in the form of higher rent growth, improved occupancy and notable value creation as cap rate compression occurs with new dominant anchors and the addition of high quality shop tenants. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:03:50We expect the same pattern to occur if we recapture some of the at risk names in the headlines today. Our development and construction team had a very productive year. We completed $30,000,000 of redevelopment projects expected to generate a 16% unlevered return and we ended the year with $163,000,000 of anchor repositioning and redevelopment projects expected to generate a 15% unlevered return. 2025 marks the ten year anniversary of the formation of Urban Edge. It has been rewarding to see us carry out our mission to improve shopping centers located in and on the edge of urban communities. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:04:46Over the past decade, we have built an exceptional team that has significantly improved our portfolio, adding top retailers who drive traffic and rents while replacing underperforming tenants. Our portfolio is now 80% grocery anchored with grocers generating average sales of $900 per square foot, which we believe is the highest in the sector. Since our spin, we have increased portfolio ABR by almost 30%, achieved record leasing volumes in the past three years, simplified our portfolio through capital recycling and expanded our concentration in the Boston and Washington DC metro markets. These accomplishments have significantly improved the strength and stability of our cash flows and we are optimistic about our growth plans in the next ten years to continue to add value through disciplined capital allocation and operational excellence. Now turning to our 2025 outlook. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:06:02Our goals for the year include achieving FFO as adjusted growth of 4% or better, while generating same property NOI growth of at least 3.5%. We expect to generate $8,000,000 of gross rents during 2025 from our $25,000,000 signed but not opened pipeline and increase our leased occupancy back to our historical high levels of 97% to 98%. As a result of our higher earnings and taxable income, we are increasing our dividend by 12%. While we do not include any acquisitions or dispositions in our guidance, we are on the hunt for opportunities. And we are hopeful that we will find deals that make sense for our company. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:07:00Our track record is strong. Over the last sixteen months, we have acquired over $550,000,000 in assets at a 7% cap rate funded in part through $427,000,000 of dispositions at a 5% cap rate. We are proud of our performance over the past decade and we look forward to continuing our success in 2025. I will now turn it over to our Chief Operating Officer, Jeff Muellam. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:07:35Thanks, Jeff, and good morning, everyone. Fourth quarter, like all of 2024, was a strong one for Urban Edge. We executed on our business plan by improving deal economics, increasing occupancy, recycling capital into better assets, and delivering projects at accretive returns. Let's get into the details of the quarter and the year and then we can talk more broadly about what we see for 2025 and our path to continued growth. We signed 29 deals in the fourth quarter for over 400,000 square feet, 16 new leases at a same space spread of forty four percent and thirteen renewals at a 12% spread. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:08:17That brought our total for the year up to 79 new leases totaling just under 500,000 square feet and 86 renewals for almost 2,000,000 square feet. The overall leasing volume for 2024 was on the high end of our budget and the spreads of 269% on new leases and renewals respectively were strong. Those rent spreads along with other critical deal points like providing less tenant allowance capital and generating higher average annual rent increases than in years past demonstrate our ability to identify and capitalize on the below market rents embedded throughout our portfolio when those leases come back to us. As Jeff mentioned, in the fourth quarter, those results included new deals with a national grocer, soft good retailers, QSRs and fitness users, as well as our first pickleball concept lease. Our portfolio same property leased rate now stands at 96.6, a 30 basis point increase over third quarter and an 80 basis point increase over year end 2023. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:09:23We ended 2024 with anchor leased occupancy of 98% and small shop occupancy of 90.9%. After gaining three twenty basis points in shop occupancy in 2024, we had a clear path in 2025 to an additional 200 basis points to two fifty basis points. Bring shop occupancy between 9394% for the year and overall occupancy between 9798% by year end. Demand continues to well outpace supply in our markets and foot traffic continues to increase, up 3% over last year at our grocery anchored centers. In the Northeast, retail occupancy is at a ten year high of 95% and new shopping center construction is at a near record low, only 0.2% of total supply. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:10:16Tenant bankruptcies are a reality of our business and will remain so, but increasingly they are more opportunity than risk. In the locations where we have Party City and Big Lots for example, we have replacement tenants identified at spreads up to 90%. If we're able to get all those spaces back, some replacement tenants will generate strong incremental returns, while some because of the capital and time will be a modest return, But all of them will enhance portfolio quality and adjacent leasing as we cycle out older concepts and bring in better operators. We balance all these factors economic return, quality of operator, tenant mix, cross shopping appeal, when we look at how a tenant bankruptcy will impact our properties. More often than not getting space back early is a net positive. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:11:05On the development side, we ended 2024 with a strong in place pipeline of $163,000,000 at a 15% return, nearly all of it tied to executed leases. Our development plans at Sunrise Mall in Massapequa, New York gained some traction this quarter as well with the announcement from Macy's that they would be closing their store there, leaving only one tenant remaining at the mall. Finally, while we did not acquire or dispose of any assets in the fourth quarter other than the previously announced Village at Watch Apple deal in October, we remain very active on both fronts. Cap rates for acquisitions have compressed with higher quality assets now trading below 6%, driven in part by institutional investors aggressively entering the retail space and solving for IRRs that are lower than retail historically commanded. On the disposition side, we are under contract to sell a freestanding building and parking field at Bergen Town Center in Paramus to a multifamily developer for a price of $25,000,000 representing an approximate 4% cap rate on the current in place NOI. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:12:11I will now turn it over to our Chief Financial Officer, Mark Langer. Mark LangerExecutive VP & CFO at Urban Edge Properties00:12:15Thanks, Jeff. Good morning. As you just heard, we had another excellent quarter, marking a strong end to the year. We reported FFO as adjusted of $0.34 per share for the fourth quarter and $1.35 per share for the full year, representing 8% growth, likely among the highest rate in our peer group. As expected, our same property NOI growth including redevelopment was very strong, up 7.4% compared to the fourth quarter of twenty twenty three due to rent commencements from several new tenants within our S and O pipeline. Mark LangerExecutive VP & CFO at Urban Edge Properties00:12:54The increase in FFO and NOI this year was also due to accretive capital recycling, contractual rent bumps and a 180 basis point increase in same property physical occupancy during the year. Our balance sheet remains strong with over $800,000,000 of total liquidity, including $91,000,000 of cash. Our debt maturity profile is in great shape as only 9% of outstanding debt matures through 2026 with only $24,000,000 maturing in December of this year and $116,000,000 maturing in December of twenty twenty six. As a result, our earnings have a lot less volatility attributable to interest rates. Additionally, we have made great progress reducing our leverage. Mark LangerExecutive VP & CFO at Urban Edge Properties00:13:46Our net debt to annualized adjusted EBITDA is six times, below the 6.5 times target we outlined at our April 2023 Investor Day. Turning to our outlook for 2025. Our initial 2025 FFO as adjusted per share guidance is $1.37 to $1.42 Key assumptions include our expectation that NOI including properties and redevelopment will increase 3.5% at the midpoint of our range. In terms of the NOI guidance, we assume total credit losses of 75 to 100 basis points of gross rents, which incorporates expected rent loss from tenants who have already filed for bankruptcy, including Party City, Big Lots and Blink Fitness. Our NOI growth assumes $8,000,000 of gross rent is recognized in 2025 from our S and O pipeline. Mark LangerExecutive VP & CFO at Urban Edge Properties00:14:46I will point out that almost 75% of this revenue is expected to come online in the second half of the year. Year over year NOI growth is also impacted by the outsized collections of more than $1,000,000 we obtained in the first quarter of last year that will not be a recurring item this year. Considering these factors, NOI and FFO growth is expected to gradually build during the year as new rents commence. In terms of capital spending, Page 29 of our supplement identifies our active redevelopment and re anchoring projects, which stabilize over the next two years. We have $90,000,000 remaining to fund on these projects and we expect to spend about $75,000,000 during 2025. Mark LangerExecutive VP & CFO at Urban Edge Properties00:15:34In terms of maintenance capital, we incurred about $27,000,000 in 2024. As I have messaged on prior calls, we expect this level to decline as our anchor repositioning projects come online and we have budgeted 15,000,000 to $20,000,000 of spend for $2,025,000,000 dollars related to that capital. We continue to carefully manage our internal operating costs. We assume recurring G and A will be $36,000,000 in 2025, flat compared to prior year and down 4% compared to 2022. We are pleased with the progress we have made streamlining processes and seeking efficiencies and will continue to evaluate ways to lower costs. Mark LangerExecutive VP & CFO at Urban Edge Properties00:16:23In terms of factors influencing our guidance range, the biggest variables are likely to be actual bad debt and tenant fallout levels, shop leasing activity and delivering the S and O pipeline to achieve our targeted rent commencement dates. We have not included any lease termination fees or any material non cash adjustments related to straight line rents in guidance. As announced in our press release, our board recently approved a 12% increase in our dividend to an annualized rate of $0.76 a share. We have previously stated that we expect the dividend to grow as earnings and taxable income grow, while we focus on preserving free cash flow to fund our active redevelopment pipeline that is generating healthy returns. This new dividend reflects the projected growth in our taxable income in 2025. Mark LangerExecutive VP & CFO at Urban Edge Properties00:17:19To conclude, we are pleased with the outstanding results we achieved during 2024 and have turned our focus to our leasing pipeline and assessing ways we can achieve our goal to generate earnings and cash flow growth that is distinguished among our peer group. I will now turn the call over to the operator for questions. Operator00:17:41Thank Our first question is from Ronald Kamden with Morgan Stanley. Please proceed. Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:18:08Hey, congrats on a great year. Just starting with, I think a little bit on the same store NOI, I think you talked about the 75 to 100 basis points sort of bad debt that sort of baked into that. Just wondering how much visibility you have into that? Have you already sort of seen some of the bad debt come through? And how that assumption came about? Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:18:30Thanks. Mark LangerExecutive VP & CFO at Urban Edge Properties00:18:32Sure, Rob. This is Mark. We're certainly watching it live. As you know, some of those names are bankruptcies where auctions are happening. So we considered all of that data. Mark LangerExecutive VP & CFO at Urban Edge Properties00:18:44And if I break down the components for you to answer your question about 70 basis points of that provision relates to bankrupt tenants, 40 basis points of the provision is kind of the general reserve. And then partially offsetting that is we assume $150,000 to $200,000 each quarter for some collections on some old receivable. So that nets out and gets you right to our guidance range. Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:19:09Great. Helpful color. And then my second one is just to love a little bit more commentary on the acquisition pipeline. You guys have had sort of a great twelve to eighteen months. I think you talked about the cap rates are getting pretty competitive, but just wondering what you guys are looking at and what could be done this year? Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:19:26Thanks. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:19:27Yes. Hi, Ron, it's Jeff. So, yes, I mean, we are seeing more product than we saw last year and we do expect that there will be more trades that will occur across the country. But it is challenging to make the deals pencil just given the expected cap rates relative to financing costs. We think the best way to leverage this environment at least for us is through capital recycling. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:19:54So when we compare an acquisition with a disposition at a spread and sell some of our lower growth assets exchange those for higher growth assets, we think those are the types of trades that make the most sense. And again, if you sort of look back over the last sixteen months, we've done about $550,000,000 of acquisitions at an average cap of 7.2%. That CAGR is about 2.5% over the next five years principally funded with dispositions. So that's $427,000,000 of dispositions over the last sixteen months at a cap rate of 5.2%, which had a CAGR of about 1%. So those types of deals make a lot of sense and we are hoping that we're going to find some of those in 2025. Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:20:46Great. That's it for me. Thank you. Operator00:20:52Our next question is from Florys VanDyke with Compass Point. Please proceed. Floris van DijkumManaging Director at Compass Point Research & Trading00:20:59Thanks. Good morning, guys. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:21:01Hi, Lars. Floris van DijkumManaging Director at Compass Point Research & Trading00:21:02Capital recycling, it's accretive capital recycling is obviously very attractive. Maybe if you could talk a little bit about some of the other I think you still have six Lowe's boxes. Floris van DijkumManaging Director at Compass Point Research & Trading00:21:19You've got a Coles, I think, single tenant asset maybe. Talk about what the demand is for that. And obviously, cap rates have compressed a little bit based on your commentary. What do you think the spread would be today if you were to sell some of those drier assets and recycle, is that going to be as attractive as what you achieved over the last, call it, twenty four months? Jeffrey OlsonChairman & CEO at Urban Edge Properties00:21:49Yes. I mean, it was so attractive. It was almost 200 basis points in the last twenty four months. I do think it will be more difficult to get that 200 basis points, but we are exploring several deals right now on the disposition front, mostly single tenant assets that we think will get a cap rate somewhere around, call it, in the 5% s. And there may be some larger stable power centers that we own that have great credit but lower growth and maybe we'll be in the six ish percent cap rate on those. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:22:21So the decision really will be is it $200,000,000 I hope so. Floris van DijkumManaging Director at Compass Point Research & Trading00:22:40Fair enough. Fair enough. Let me ask you another question on your redevelopment. I noticed obviously you announced the Macy's termination at Sunrise. I don't know if you can make any comments on where that project stands today. Floris van DijkumManaging Director at Compass Point Research & Trading00:22:57And then also talk maybe a little bit about the Bergen Town Center apartments or the sale to an apartment developer and how you're thinking about mixed use in your portfolio? Jeffrey OlsonChairman & CEO at Urban Edge Properties00:23:11Yes. So on Sunrise, I mean, we're very excited about our progress. We can't get into more details just because of the confidential nature of our discussions that ultimately will allow us to redevelop in idling that land for about four fifty residential units and we felt that the best way to monetize that value was to sell it to a local developer and we will redeploy that capital in a ten thirty one on an acquisition that we've already made. Floris van DijkumManaging Director at Compass Point Research & Trading00:23:54Great. And maybe the last question that I have, as you guys are still continuing to spend on, in particular Bruckner, as the market strengthens, what happens to your expected returns as the vacancy continues to drop and space gets tighter? Are you seeing more attractive returns or is it are the returns being offset by rising costs in construction as well? Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:24:28Hey, good morning, Floris. It's Jeff Mualim. Yes and yes. We are definitely seeing some better returns. You cited Bruckner as an example. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:24:38We're out there marketing some still available space and we're getting very good interest at very good prices better than we underwrote. But definitely capital costs erode into some of that return. I would say we feel very good about the 15% unlevered yield that we're targeting in our development pipeline right now. If anything, we're hoping that comes in a little higher. And when we look further out past 2025, we we don't see a reason why that would come down materially. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:25:05But we're always watching costs. And right now, we're in an interesting time and place with costs. There's a lot of concern about where those are going to go with various government policies. And I'd say we feel good that we're going to do better than what we budgeted, but costs are definitely hitting the numbers a bit. Floris van DijkumManaging Director at Compass Point Research & Trading00:25:24Thanks Jeff. That's it for me. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:25:27Thank you, Flavors. Operator00:25:35Our next question is from Sameer Kanal with Evercore ISI. Please proceed. Samir KhanalEquity Research Analyst at Evercore ISI00:25:42Yes, good morning. Mark, on G and A, I mean, you've done a good job bringing that down over the last several years. I think the midpoint when you look at that in 2025, it's also down versus last year. And I think in your opening remarks, you talked about streamlining processes. Maybe expand on that a little bit as we kind of think about G and A not only for 2025 and maybe even years beyond? Samir KhanalEquity Research Analyst at Evercore ISI00:26:06Thanks. Mark LangerExecutive VP & CFO at Urban Edge Properties00:26:08Yes. So there's three prongs that we obviously looked at Sameer over the last couple of years. One is just the headcount we allocate to different functions. Secondly is what we spend on third parties. We did a deep dive on all consultancy, third party outsourcing vendors, everything you can imagine, which amounts to big dollars and that really tied into the last element is where can we streamline process. Mark LangerExecutive VP & CFO at Urban Edge Properties00:26:33So what I would tell you is it isn't any one thing, Sameer, that drove kind of this decline or the stabilization. It was a bunch of some kind of little things, moderate things where we rebid, aggressively rebid all of those larger three party third party contracts. That helped. And in terms of streamlining, we are like many companies exploring ways and using AI and other RPA type tools where we're trying to automate things that we were spending twenty, thirty, forty hours of manpower on and we're seeing some very good results. I'm very encouraged what we're seeing and that's why I said in my prepared remarks, we're not we're continuing to evaluate it. Mark LangerExecutive VP & CFO at Urban Edge Properties00:27:15But there are at this point going to be smaller gradual changes and not any one big outsized event. Samir KhanalEquity Research Analyst at Evercore ISI00:27:23Okay, got it. Thank you for that. And then I guess on, Jeff, on Sunrise, I mean with Macy's terminating their lease, is that I mean I know it's still early, but will that continue to be sort of retail or are you considering various uses, alternatives? Just any I don't know any initial comments would be great. Thanks. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:27:46Hey, good morning, Sameer. It's Jeff Moalim. I'll take it. Look, I think what we've said before and what's still consistent is the 78 acre parcel of land. So it's important that we all think about it as potentially more than one category of use. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:28:02We're exploring a lot of different things right now. We're very encouraged as Jeff has said by the progress we've made. Macy's closing their store there is a big step forward in our development plans and we're excited for what's to come. Nothing more that we can really say beyond that at this point, but we are hoping that we'll be able to announce something here definitely in 2025. Samir KhanalEquity Research Analyst at Evercore ISI00:28:25Thank Operator00:28:28you. Our next question is from Paulina Rojas with Green Street Advisors. Please proceed. Paulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLC00:28:37Good morning. You mentioned in your prepared remarks that high quality centers in the markets are trading below a 6% cap rate. Can you characterize a little more what type of assets can trade at a sub six in terms of size, number of boxes, whether it has or not a grocer, a little more color around that? Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:29:06Hey, good morning, Paulina. Yes, I think having a grocer is an important component of what we would call maybe a core plus type asset. Certainly, all the investors today and we're no different are looking for growth. So when you combine a good grocer doing good sales and with a reasonable amount of lease term left, call it at least seven to ten years of lease term and growth opportunities through shop space, maybe adding pads, things like that. Those are the assets that are really most desirable right now in the market. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:29:39There's not a lot of them that get circulated and when they do, there's quite a frenzy over them. So we're hearing guidance from brokers and we're seeing deals ourselves that are being quoted between a 5.5% and a 6% cap rate range. And there is capital out there now that's solving for high single digit or low double digit levered IRRs that can afford to pay those prices. It's definitely gotten compressed on the buy side. We did not see those at all a year ago. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:30:06And to Jeff's point earlier about the 7.2% return on the deals we've been able to buy, we bought really, really well. We bought some assets that that today would trade, we're very sure, 50 to 100 basis points lower than the cap rates at which we purchased them. So the buying has gotten tougher and there are some assets now that are definitely going to be in the fives. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:30:27And Paulina, maybe one of the best examples is a company that's based out your way, which was $4,000,000,000 of a comp. So I think that certainly had an impact on the market. Paulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLC00:30:41Yes, yes, of course. And then more big picture, how are you seeing your cost of equity today? And is an idea issuing equity, would you consider that as a source of funding for certain acquisitions? Jeffrey OlsonChairman & CEO at Urban Edge Properties00:31:04I think modestly, I think that clearly the best funding source is selling low cap rate, low growth assets and also some of our non core assets that could include excess land. That is what we're focused on. But is there room for a modest amount of equity? Maybe depending upon the deal. Paulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLC00:31:27Okay. Thank you. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:31:29Thank you. Operator00:31:32With no further questions in the queue, I would like to turn the call back over to management for closing remarks. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:31:38Great. Well, thank you for your interest in Urban Edge. We look forward to seeing many of you in Florida at the Citi Conference next month. Thank you very much. Operator00:31:47Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.Read moreParticipantsExecutivesAreeba AhmedInvestor Relations & ESG AssociateJeffrey OlsonChairman & CEOJeffrey MooallemExecutive VP & COOMark LangerExecutive VP & CFOAnalystsRonald KamdenManaging Director, Head of US REITs and CRE Research at Morgan StanleyFloris van DijkumManaging Director at Compass Point Research & TradingSamir KhanalEquity Research Analyst at Evercore ISIPaulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLCPowered by Conference Call Audio Live Call not available Earnings Conference CallUrban Edge Properties Q4 202400:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsPress Release(8-K)Annual report(10-K) Urban Edge Properties Earnings HeadlinesUrban Edge Properties (UE) Receives a Hold from Morgan StanleyApril 24 at 5:43 PM | markets.businessinsider.comUrban Edge management to meet with Compass PointMarch 19, 2025 | markets.businessinsider.comTrump purposefully forcing markets to crash…Whether you agree with the plan or not doesn’t matter. It’s happening. The only question is – are you ready for it?April 26, 2025 | Porter & Company (Ad)Urban Edge Properties Invites You to Join Its First Quarter 2025 Earnings Conference CallMarch 13, 2025 | gurufocus.comUrban Edge Properties Invites You to Join Its First Quarter 2025 Earnings Conference CallMarch 13, 2025 | investing.comUrban Edge Properties Invites You to Join Its First Quarter 2025 Earnings Conference CallMarch 13, 2025 | businesswire.comSee More Urban Edge Properties Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Urban Edge Properties? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Urban Edge Properties and other key companies, straight to your email. Email Address About Urban Edge PropertiesUrban Edge Properties (NYSE:UE) is a NYSE listed real estate investment trust focused on owning, managing, acquiring, developing, and redeveloping retail real estate in urban communities, primarily in the Washington, D.C. to Boston corridor. 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PresentationSkip to Participants Operator00:00:00Greetings. Welcome to Urban Edge Properties Fourth Quarter twenty twenty four Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Operator00:00:20It is now my pleasure to introduce Areeba Ahmed from Investor Relations. Thank you. You may begin. Areeba AhmedInvestor Relations & ESG Associate at Urban Edge Properties00:00:27Good morning, and welcome to Urban Edge Properties twenty twenty four year end earnings conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer Jeff Mualim, 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. Areeba AhmedInvestor Relations & ESG Associate at Urban Edge Properties00:01:13In 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. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:01:40Great. Thank you, Areeba, and good morning, everyone. 2024 was a year marked by significant accomplishments for Urban Edge. We continued to outperform expectations and delivered outstanding results, notably increasing FFO as adjusted by 8% for the year to $1.35 per share, allowing us to achieve our three year earnings target one year ahead of plan. The strong performance has been fueled by our accretive capital recycling, record leasing volumes and new rent commencements. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:02:22In 2024, we executed a record 79 new leases totaling 485,000 square feet with a same space cash rent spread of 26% and achieved a new record for shop occupancy at 91%. Same property portfolio occupancy grew to 96.6%. Our signed but not open pipeline is expected to generate $25,000,000 of future annual gross rent representing 9% of NOI. Our centers are benefiting from improved co tenancy as we add retailers like Trader Joe's, BJ's Wholesale Club, TJX, Burlington and Ross, which stimulate higher quality shop tenants and QSRs like First Watch, Chipotle, Dave's Hot Chicken, Starbucks and Tate Bakery and Cafe. These structural shifts in tenancy have lasting benefits in the form of higher rent growth, improved occupancy and notable value creation as cap rate compression occurs with new dominant anchors and the addition of high quality shop tenants. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:03:50We expect the same pattern to occur if we recapture some of the at risk names in the headlines today. Our development and construction team had a very productive year. We completed $30,000,000 of redevelopment projects expected to generate a 16% unlevered return and we ended the year with $163,000,000 of anchor repositioning and redevelopment projects expected to generate a 15% unlevered return. 2025 marks the ten year anniversary of the formation of Urban Edge. It has been rewarding to see us carry out our mission to improve shopping centers located in and on the edge of urban communities. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:04:46Over the past decade, we have built an exceptional team that has significantly improved our portfolio, adding top retailers who drive traffic and rents while replacing underperforming tenants. Our portfolio is now 80% grocery anchored with grocers generating average sales of $900 per square foot, which we believe is the highest in the sector. Since our spin, we have increased portfolio ABR by almost 30%, achieved record leasing volumes in the past three years, simplified our portfolio through capital recycling and expanded our concentration in the Boston and Washington DC metro markets. These accomplishments have significantly improved the strength and stability of our cash flows and we are optimistic about our growth plans in the next ten years to continue to add value through disciplined capital allocation and operational excellence. Now turning to our 2025 outlook. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:06:02Our goals for the year include achieving FFO as adjusted growth of 4% or better, while generating same property NOI growth of at least 3.5%. We expect to generate $8,000,000 of gross rents during 2025 from our $25,000,000 signed but not opened pipeline and increase our leased occupancy back to our historical high levels of 97% to 98%. As a result of our higher earnings and taxable income, we are increasing our dividend by 12%. While we do not include any acquisitions or dispositions in our guidance, we are on the hunt for opportunities. And we are hopeful that we will find deals that make sense for our company. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:07:00Our track record is strong. Over the last sixteen months, we have acquired over $550,000,000 in assets at a 7% cap rate funded in part through $427,000,000 of dispositions at a 5% cap rate. We are proud of our performance over the past decade and we look forward to continuing our success in 2025. I will now turn it over to our Chief Operating Officer, Jeff Muellam. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:07:35Thanks, Jeff, and good morning, everyone. Fourth quarter, like all of 2024, was a strong one for Urban Edge. We executed on our business plan by improving deal economics, increasing occupancy, recycling capital into better assets, and delivering projects at accretive returns. Let's get into the details of the quarter and the year and then we can talk more broadly about what we see for 2025 and our path to continued growth. We signed 29 deals in the fourth quarter for over 400,000 square feet, 16 new leases at a same space spread of forty four percent and thirteen renewals at a 12% spread. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:08:17That brought our total for the year up to 79 new leases totaling just under 500,000 square feet and 86 renewals for almost 2,000,000 square feet. The overall leasing volume for 2024 was on the high end of our budget and the spreads of 269% on new leases and renewals respectively were strong. Those rent spreads along with other critical deal points like providing less tenant allowance capital and generating higher average annual rent increases than in years past demonstrate our ability to identify and capitalize on the below market rents embedded throughout our portfolio when those leases come back to us. As Jeff mentioned, in the fourth quarter, those results included new deals with a national grocer, soft good retailers, QSRs and fitness users, as well as our first pickleball concept lease. Our portfolio same property leased rate now stands at 96.6, a 30 basis point increase over third quarter and an 80 basis point increase over year end 2023. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:09:23We ended 2024 with anchor leased occupancy of 98% and small shop occupancy of 90.9%. After gaining three twenty basis points in shop occupancy in 2024, we had a clear path in 2025 to an additional 200 basis points to two fifty basis points. Bring shop occupancy between 9394% for the year and overall occupancy between 9798% by year end. Demand continues to well outpace supply in our markets and foot traffic continues to increase, up 3% over last year at our grocery anchored centers. In the Northeast, retail occupancy is at a ten year high of 95% and new shopping center construction is at a near record low, only 0.2% of total supply. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:10:16Tenant bankruptcies are a reality of our business and will remain so, but increasingly they are more opportunity than risk. In the locations where we have Party City and Big Lots for example, we have replacement tenants identified at spreads up to 90%. If we're able to get all those spaces back, some replacement tenants will generate strong incremental returns, while some because of the capital and time will be a modest return, But all of them will enhance portfolio quality and adjacent leasing as we cycle out older concepts and bring in better operators. We balance all these factors economic return, quality of operator, tenant mix, cross shopping appeal, when we look at how a tenant bankruptcy will impact our properties. More often than not getting space back early is a net positive. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:11:05On the development side, we ended 2024 with a strong in place pipeline of $163,000,000 at a 15% return, nearly all of it tied to executed leases. Our development plans at Sunrise Mall in Massapequa, New York gained some traction this quarter as well with the announcement from Macy's that they would be closing their store there, leaving only one tenant remaining at the mall. Finally, while we did not acquire or dispose of any assets in the fourth quarter other than the previously announced Village at Watch Apple deal in October, we remain very active on both fronts. Cap rates for acquisitions have compressed with higher quality assets now trading below 6%, driven in part by institutional investors aggressively entering the retail space and solving for IRRs that are lower than retail historically commanded. On the disposition side, we are under contract to sell a freestanding building and parking field at Bergen Town Center in Paramus to a multifamily developer for a price of $25,000,000 representing an approximate 4% cap rate on the current in place NOI. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:12:11I will now turn it over to our Chief Financial Officer, Mark Langer. Mark LangerExecutive VP & CFO at Urban Edge Properties00:12:15Thanks, Jeff. Good morning. As you just heard, we had another excellent quarter, marking a strong end to the year. We reported FFO as adjusted of $0.34 per share for the fourth quarter and $1.35 per share for the full year, representing 8% growth, likely among the highest rate in our peer group. As expected, our same property NOI growth including redevelopment was very strong, up 7.4% compared to the fourth quarter of twenty twenty three due to rent commencements from several new tenants within our S and O pipeline. Mark LangerExecutive VP & CFO at Urban Edge Properties00:12:54The increase in FFO and NOI this year was also due to accretive capital recycling, contractual rent bumps and a 180 basis point increase in same property physical occupancy during the year. Our balance sheet remains strong with over $800,000,000 of total liquidity, including $91,000,000 of cash. Our debt maturity profile is in great shape as only 9% of outstanding debt matures through 2026 with only $24,000,000 maturing in December of this year and $116,000,000 maturing in December of twenty twenty six. As a result, our earnings have a lot less volatility attributable to interest rates. Additionally, we have made great progress reducing our leverage. Mark LangerExecutive VP & CFO at Urban Edge Properties00:13:46Our net debt to annualized adjusted EBITDA is six times, below the 6.5 times target we outlined at our April 2023 Investor Day. Turning to our outlook for 2025. Our initial 2025 FFO as adjusted per share guidance is $1.37 to $1.42 Key assumptions include our expectation that NOI including properties and redevelopment will increase 3.5% at the midpoint of our range. In terms of the NOI guidance, we assume total credit losses of 75 to 100 basis points of gross rents, which incorporates expected rent loss from tenants who have already filed for bankruptcy, including Party City, Big Lots and Blink Fitness. Our NOI growth assumes $8,000,000 of gross rent is recognized in 2025 from our S and O pipeline. Mark LangerExecutive VP & CFO at Urban Edge Properties00:14:46I will point out that almost 75% of this revenue is expected to come online in the second half of the year. Year over year NOI growth is also impacted by the outsized collections of more than $1,000,000 we obtained in the first quarter of last year that will not be a recurring item this year. Considering these factors, NOI and FFO growth is expected to gradually build during the year as new rents commence. In terms of capital spending, Page 29 of our supplement identifies our active redevelopment and re anchoring projects, which stabilize over the next two years. We have $90,000,000 remaining to fund on these projects and we expect to spend about $75,000,000 during 2025. Mark LangerExecutive VP & CFO at Urban Edge Properties00:15:34In terms of maintenance capital, we incurred about $27,000,000 in 2024. As I have messaged on prior calls, we expect this level to decline as our anchor repositioning projects come online and we have budgeted 15,000,000 to $20,000,000 of spend for $2,025,000,000 dollars related to that capital. We continue to carefully manage our internal operating costs. We assume recurring G and A will be $36,000,000 in 2025, flat compared to prior year and down 4% compared to 2022. We are pleased with the progress we have made streamlining processes and seeking efficiencies and will continue to evaluate ways to lower costs. Mark LangerExecutive VP & CFO at Urban Edge Properties00:16:23In terms of factors influencing our guidance range, the biggest variables are likely to be actual bad debt and tenant fallout levels, shop leasing activity and delivering the S and O pipeline to achieve our targeted rent commencement dates. We have not included any lease termination fees or any material non cash adjustments related to straight line rents in guidance. As announced in our press release, our board recently approved a 12% increase in our dividend to an annualized rate of $0.76 a share. We have previously stated that we expect the dividend to grow as earnings and taxable income grow, while we focus on preserving free cash flow to fund our active redevelopment pipeline that is generating healthy returns. This new dividend reflects the projected growth in our taxable income in 2025. Mark LangerExecutive VP & CFO at Urban Edge Properties00:17:19To conclude, we are pleased with the outstanding results we achieved during 2024 and have turned our focus to our leasing pipeline and assessing ways we can achieve our goal to generate earnings and cash flow growth that is distinguished among our peer group. I will now turn the call over to the operator for questions. Operator00:17:41Thank Our first question is from Ronald Kamden with Morgan Stanley. Please proceed. Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:18:08Hey, congrats on a great year. Just starting with, I think a little bit on the same store NOI, I think you talked about the 75 to 100 basis points sort of bad debt that sort of baked into that. Just wondering how much visibility you have into that? Have you already sort of seen some of the bad debt come through? And how that assumption came about? Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:18:30Thanks. Mark LangerExecutive VP & CFO at Urban Edge Properties00:18:32Sure, Rob. This is Mark. We're certainly watching it live. As you know, some of those names are bankruptcies where auctions are happening. So we considered all of that data. Mark LangerExecutive VP & CFO at Urban Edge Properties00:18:44And if I break down the components for you to answer your question about 70 basis points of that provision relates to bankrupt tenants, 40 basis points of the provision is kind of the general reserve. And then partially offsetting that is we assume $150,000 to $200,000 each quarter for some collections on some old receivable. So that nets out and gets you right to our guidance range. Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:19:09Great. Helpful color. And then my second one is just to love a little bit more commentary on the acquisition pipeline. You guys have had sort of a great twelve to eighteen months. I think you talked about the cap rates are getting pretty competitive, but just wondering what you guys are looking at and what could be done this year? Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:19:26Thanks. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:19:27Yes. Hi, Ron, it's Jeff. So, yes, I mean, we are seeing more product than we saw last year and we do expect that there will be more trades that will occur across the country. But it is challenging to make the deals pencil just given the expected cap rates relative to financing costs. We think the best way to leverage this environment at least for us is through capital recycling. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:19:54So when we compare an acquisition with a disposition at a spread and sell some of our lower growth assets exchange those for higher growth assets, we think those are the types of trades that make the most sense. And again, if you sort of look back over the last sixteen months, we've done about $550,000,000 of acquisitions at an average cap of 7.2%. That CAGR is about 2.5% over the next five years principally funded with dispositions. So that's $427,000,000 of dispositions over the last sixteen months at a cap rate of 5.2%, which had a CAGR of about 1%. So those types of deals make a lot of sense and we are hoping that we're going to find some of those in 2025. Ronald KamdenManaging Director, Head of US REITs and CRE Research at Morgan Stanley00:20:46Great. That's it for me. Thank you. Operator00:20:52Our next question is from Florys VanDyke with Compass Point. Please proceed. Floris van DijkumManaging Director at Compass Point Research & Trading00:20:59Thanks. Good morning, guys. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:21:01Hi, Lars. Floris van DijkumManaging Director at Compass Point Research & Trading00:21:02Capital recycling, it's accretive capital recycling is obviously very attractive. Maybe if you could talk a little bit about some of the other I think you still have six Lowe's boxes. Floris van DijkumManaging Director at Compass Point Research & Trading00:21:19You've got a Coles, I think, single tenant asset maybe. Talk about what the demand is for that. And obviously, cap rates have compressed a little bit based on your commentary. What do you think the spread would be today if you were to sell some of those drier assets and recycle, is that going to be as attractive as what you achieved over the last, call it, twenty four months? Jeffrey OlsonChairman & CEO at Urban Edge Properties00:21:49Yes. I mean, it was so attractive. It was almost 200 basis points in the last twenty four months. I do think it will be more difficult to get that 200 basis points, but we are exploring several deals right now on the disposition front, mostly single tenant assets that we think will get a cap rate somewhere around, call it, in the 5% s. And there may be some larger stable power centers that we own that have great credit but lower growth and maybe we'll be in the six ish percent cap rate on those. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:22:21So the decision really will be is it $200,000,000 I hope so. Floris van DijkumManaging Director at Compass Point Research & Trading00:22:40Fair enough. Fair enough. Let me ask you another question on your redevelopment. I noticed obviously you announced the Macy's termination at Sunrise. I don't know if you can make any comments on where that project stands today. Floris van DijkumManaging Director at Compass Point Research & Trading00:22:57And then also talk maybe a little bit about the Bergen Town Center apartments or the sale to an apartment developer and how you're thinking about mixed use in your portfolio? Jeffrey OlsonChairman & CEO at Urban Edge Properties00:23:11Yes. So on Sunrise, I mean, we're very excited about our progress. We can't get into more details just because of the confidential nature of our discussions that ultimately will allow us to redevelop in idling that land for about four fifty residential units and we felt that the best way to monetize that value was to sell it to a local developer and we will redeploy that capital in a ten thirty one on an acquisition that we've already made. Floris van DijkumManaging Director at Compass Point Research & Trading00:23:54Great. And maybe the last question that I have, as you guys are still continuing to spend on, in particular Bruckner, as the market strengthens, what happens to your expected returns as the vacancy continues to drop and space gets tighter? Are you seeing more attractive returns or is it are the returns being offset by rising costs in construction as well? Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:24:28Hey, good morning, Floris. It's Jeff Mualim. Yes and yes. We are definitely seeing some better returns. You cited Bruckner as an example. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:24:38We're out there marketing some still available space and we're getting very good interest at very good prices better than we underwrote. But definitely capital costs erode into some of that return. I would say we feel very good about the 15% unlevered yield that we're targeting in our development pipeline right now. If anything, we're hoping that comes in a little higher. And when we look further out past 2025, we we don't see a reason why that would come down materially. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:25:05But we're always watching costs. And right now, we're in an interesting time and place with costs. There's a lot of concern about where those are going to go with various government policies. And I'd say we feel good that we're going to do better than what we budgeted, but costs are definitely hitting the numbers a bit. Floris van DijkumManaging Director at Compass Point Research & Trading00:25:24Thanks Jeff. That's it for me. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:25:27Thank you, Flavors. Operator00:25:35Our next question is from Sameer Kanal with Evercore ISI. Please proceed. Samir KhanalEquity Research Analyst at Evercore ISI00:25:42Yes, good morning. Mark, on G and A, I mean, you've done a good job bringing that down over the last several years. I think the midpoint when you look at that in 2025, it's also down versus last year. And I think in your opening remarks, you talked about streamlining processes. Maybe expand on that a little bit as we kind of think about G and A not only for 2025 and maybe even years beyond? Samir KhanalEquity Research Analyst at Evercore ISI00:26:06Thanks. Mark LangerExecutive VP & CFO at Urban Edge Properties00:26:08Yes. So there's three prongs that we obviously looked at Sameer over the last couple of years. One is just the headcount we allocate to different functions. Secondly is what we spend on third parties. We did a deep dive on all consultancy, third party outsourcing vendors, everything you can imagine, which amounts to big dollars and that really tied into the last element is where can we streamline process. Mark LangerExecutive VP & CFO at Urban Edge Properties00:26:33So what I would tell you is it isn't any one thing, Sameer, that drove kind of this decline or the stabilization. It was a bunch of some kind of little things, moderate things where we rebid, aggressively rebid all of those larger three party third party contracts. That helped. And in terms of streamlining, we are like many companies exploring ways and using AI and other RPA type tools where we're trying to automate things that we were spending twenty, thirty, forty hours of manpower on and we're seeing some very good results. I'm very encouraged what we're seeing and that's why I said in my prepared remarks, we're not we're continuing to evaluate it. Mark LangerExecutive VP & CFO at Urban Edge Properties00:27:15But there are at this point going to be smaller gradual changes and not any one big outsized event. Samir KhanalEquity Research Analyst at Evercore ISI00:27:23Okay, got it. Thank you for that. And then I guess on, Jeff, on Sunrise, I mean with Macy's terminating their lease, is that I mean I know it's still early, but will that continue to be sort of retail or are you considering various uses, alternatives? Just any I don't know any initial comments would be great. Thanks. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:27:46Hey, good morning, Sameer. It's Jeff Moalim. I'll take it. Look, I think what we've said before and what's still consistent is the 78 acre parcel of land. So it's important that we all think about it as potentially more than one category of use. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:28:02We're exploring a lot of different things right now. We're very encouraged as Jeff has said by the progress we've made. Macy's closing their store there is a big step forward in our development plans and we're excited for what's to come. Nothing more that we can really say beyond that at this point, but we are hoping that we'll be able to announce something here definitely in 2025. Samir KhanalEquity Research Analyst at Evercore ISI00:28:25Thank Operator00:28:28you. Our next question is from Paulina Rojas with Green Street Advisors. Please proceed. Paulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLC00:28:37Good morning. You mentioned in your prepared remarks that high quality centers in the markets are trading below a 6% cap rate. Can you characterize a little more what type of assets can trade at a sub six in terms of size, number of boxes, whether it has or not a grocer, a little more color around that? Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:29:06Hey, good morning, Paulina. Yes, I think having a grocer is an important component of what we would call maybe a core plus type asset. Certainly, all the investors today and we're no different are looking for growth. So when you combine a good grocer doing good sales and with a reasonable amount of lease term left, call it at least seven to ten years of lease term and growth opportunities through shop space, maybe adding pads, things like that. Those are the assets that are really most desirable right now in the market. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:29:39There's not a lot of them that get circulated and when they do, there's quite a frenzy over them. So we're hearing guidance from brokers and we're seeing deals ourselves that are being quoted between a 5.5% and a 6% cap rate range. And there is capital out there now that's solving for high single digit or low double digit levered IRRs that can afford to pay those prices. It's definitely gotten compressed on the buy side. We did not see those at all a year ago. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:30:06And to Jeff's point earlier about the 7.2% return on the deals we've been able to buy, we bought really, really well. We bought some assets that that today would trade, we're very sure, 50 to 100 basis points lower than the cap rates at which we purchased them. So the buying has gotten tougher and there are some assets now that are definitely going to be in the fives. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:30:27And Paulina, maybe one of the best examples is a company that's based out your way, which was $4,000,000,000 of a comp. So I think that certainly had an impact on the market. Paulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLC00:30:41Yes, yes, of course. And then more big picture, how are you seeing your cost of equity today? And is an idea issuing equity, would you consider that as a source of funding for certain acquisitions? Jeffrey OlsonChairman & CEO at Urban Edge Properties00:31:04I think modestly, I think that clearly the best funding source is selling low cap rate, low growth assets and also some of our non core assets that could include excess land. That is what we're focused on. But is there room for a modest amount of equity? Maybe depending upon the deal. Paulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLC00:31:27Okay. Thank you. Jeffrey MooallemExecutive VP & COO at Urban Edge Properties00:31:29Thank you. Operator00:31:32With no further questions in the queue, I would like to turn the call back over to management for closing remarks. Jeffrey OlsonChairman & CEO at Urban Edge Properties00:31:38Great. Well, thank you for your interest in Urban Edge. We look forward to seeing many of you in Florida at the Citi Conference next month. Thank you very much. Operator00:31:47Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.Read moreParticipantsExecutivesAreeba AhmedInvestor Relations & ESG AssociateJeffrey OlsonChairman & CEOJeffrey MooallemExecutive VP & COOMark LangerExecutive VP & CFOAnalystsRonald KamdenManaging Director, Head of US REITs and CRE Research at Morgan StanleyFloris van DijkumManaging Director at Compass Point Research & TradingSamir KhanalEquity Research Analyst at Evercore ISIPaulina Rojas SchmidtSenior Analyst at Green Street Advisors, LLCPowered by