Earnings call transcript Q3 2022

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Operator

Good morning and welcome to the Urban Edge Properties Third Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Etan Bluman. Please go ahead, sir.

Etan Bluman

Good morning and welcome to Urban Edge Properties third quarter earnings conference call.

General Jeff Financial and Executive of Officer; of Rob are Mark Executive Vice Leasing; today Senior Development; Chief Auster, Chief Langer, Danielle Milton, and me Andrea Olson, and Accounting Chief Chairman Officer; President Vice Drazin, Joining President Scott Officer. Head Counsel; De Vita,

does future numerous today's performance company which financial discussion statements undertake assumptions, Please which and and not contain note in about the subject to update. events forward-looking may company's risks uncertainties views of to are the

measures and Our results, Please our to available In information earnings future which results with in financial actual we our more disclosure our may section condition company. available supplemental GAAP refer also differ discussion refer non-GAAP today, financial these the will and materially. on are are filings release in for certain website. of the business our website to our to about the package Investors measures. of Reconciliations SEC

to and it is At Olson. Officer, our Chief introduce my this Jeff Executive time, pleasure Chairman

Jeff Olson

and is outside last primarily Woodward of in X% and Riverwood and of you, X% This with pleased Boston. Washington, quarter increase am NOI the growth year announce All D.C. of and Center year-to-date. the of attributed to a right. third increase I everyone. acquisitions strong good as to the quarter per Town over morning, share, another increase adjusted $X.XX shops an FFO Thank Etan at

from to City. industry especially center shopping from York benefit the continues demand New throughout set a around The retailers, strong broad suburbs of

NOI has representing to notable pandemic. NOI. pipeline a increased not the our from past to occupancy current of We growth growth approximately increased XX%, which signed from following in our open we but rate million, have the yet coming $XX XX% our Just year, had visible XX%

million X leases under have of square annualized representing NOI. an XX% additional feet of also negotiation, We

and our of to to energized prior getting our team XX% Our XX%. committed levels occupancy is to portfolio back

first-ring continue Leading core are the on corridor, populated expand to predominantly suburbs States. Boston within densely the situated our market the growing offerings Our retailers in and most to within markets. United properties are supply-constrained the omnichannel D.C. their focused in

thrilled in executed recently square Bruckner Bronx. Target the are a foot lease Commons at We that XXX,XXX

years, previously X era be Shoprite, anchored by and deeded a Kmart, past a will grocery Target, [ph] X a that the XXXXs have Marshalls Shopping we dominant transformed Burlington, Below. anchored Over local and store into Center, destination by Toys"R"Us

projects will important seating one We and outdoor attractive square redevelopment in areas, foot remaining shopping investment. have square from coming the active as solidify of more XX,XXX the former the have one and to most $XXX expect facades, underway Target Target unlevered property currently on position of generate to feet redesigned the walkways million and leasing centers have upside most a the XX% of the Toys space adjacent and the this We center's the Box. we Bronx return XX,XXX area. making of nodes in this retail

they Our preparing over new our been XX within years, coordination the open to is stores busiest portfolio. team tenant have in

risk. hold Grocery and reactivate Store Montehiedra. Huntington, projects great to at is schedule these XX Marshalls anchor forward look looks years. ahead of for new quarters associated leases, to tomorrow. Walgreens almost X XXX,XXX and of has other at speculative Las at Catalinas, and the to into and coming quarters, $XX We been with XX% including original X feet vacant Kohl's Nemours Shoprite the Sector of excited open seeing Kohl's As in center are that [indiscernible] store at square Children's stores space Health Ralph's grand project we town executed is relocate approximately as its Bergen minimal The opening will Notably, there million its are

impact potential keeping challenging. are and eye acquisitions the We a near-term pressures associated spending. of cost the close The make capital inflationary the prospect of macroeconomic environment will on and rising consumer on

the impact could our cognizant pressures also are these have We same of on retail tenants.

we or comes weighted that retailers. tenants the categories would overall traditionally towards in our tenancy recession-resilient also is of majority from well-capitalized and regional are However, our note rent that national

Given is current spending and yield market protect conditions scrutinize XXXX, the challenges balance our and hurdles that ensure may in sheet future arise considering appropriate met. capital our carefully economic are plan redevelopment to and to

to intensive ensure efficiently as to be the review we taking Additionally, measures XXXX our will of performing G&A possible. run an business we we as as finalize are budget

values community spring. Day, together One look and of hold Mark are development. set we We our the many of Jeff, to [indiscernible] We we he he to welcome a leasing, Investor He's plan Equity I Jeff covering years a certainly during Chief forward worked for Officer. community acquisitions, meet legal transparency, starts having Operating skill great range has this a disciplines, the and and and excited and to construction, leader with at new after next including as us and have him our culture growth. with our in year investment will unique

Kathy we to and the refresh [ph] Sandstrom to Kathy the Board both Mary I and the with in our side. the of Board on welcome public of and CEO Saatchi side, our was Heitman, real talent. the the Trustees. private for a Americas investors at Baglivo largest and On Senior was continue one Director estate governance States, previously of United Saatchi outstanding to am Mary pleased Managing

newly liquidity. for now comments balance on Financial over Officer, sheet morning. to announced key Mark our and of our I third-quarter drivers Good Chief and will discuss Thanks, Langer. guidance with within outline XXXX close I it Jeff. results, our we'll will turn assumptions our

our X.X% million quarter year. million received $X.XX of including quarter quarter from deemed the adjusted last of this good $X.X we uncollectible benefited per the of periods NOI when FFO we redevelopment. third versus achieving recovery third last X.X% NOI results, growth or and prior a very with growth terms as properties quarter quarter of property amounts of compared in in in third had the $X.X of First, same share, to year of

highest one fundamentals. rates sector. Turning to in growth increased the Same-property the year-over-year, XXX basis the leased strip points occupancy of likely

As compared to leased of already at in predominantly expiration XX property backfill square property New discussions to anticipated basis Having is anchor anticipated in down the our same XXX,XXX well-located the Jersey. second the vacancy, lease with are Totea, due occupancy to foot users the space. points, multiple quarter, we this rate

with occupancy Dunkin', our occupancy. Shack, note basis quarter, same the Tech including total as on among to portfolio One Shake points XX During deals First tenants, side executed Watch, shop and property we Golf others. XX.X% quality many increased

currently pool but the same the occupancy consolidated will taking property not target in the asset redevelopment lease by the XX Given place points. Bruckner at Commons, is increase basis

of this a and anchor Overall The terms assets X.X%. leasing we were at the control we of tenant. by exchange locations renewal obtained spreads with quarter where driven our for of agreed was our in accept at other rights spread strong some negative to a rent negative one lower renewal this

the paying is As portfolio quarter, are we volatile. paying new have more the spreads Kmart twice past, in spreads was given on makes lease slightly Target To Target above third executed end on including point, our our smaller XXX%, of leases this size since space. have the mentioned comparable what the we

$XX to from from $X.X up rents million Bruckner, and we million $X.X during Jeff million increase signed including reported $X.X million. gross resulting new of yet expect rents commenced. leases, recently a This reflects of not quarter in Target but million while rents period, leases we rent of of noted realize from executed the last $XX at commenced net is the

$XXX,XXX the XX in timing year related highlighting disclosure to have $XX.X supplement. not can coming of our an next of We Page QX year. Details updated our this pipeline, open signed expect but on of we with found about additional the be million that

recast our credit liquidity, cash sheet has maturity a $XXX amounts million our quarter with recently we of on In XXXX. and balance expanded have of and million line of terms February new the drawn of which date $XXX no ended total and

Bergen which total of maturing in maturities We continue our the all of coming million options due refinancing is related to mortgage explore April XXXX. bulk in $XXX million $XXX our to

combination including new of of obtaining secured a financing mortgage, range our evaluating a with on currently using term unencumbered unsecured along are a options, using of other We credit, loan assets. are a line debt,

aggregating X% floating $XXX $XXX X% unhedged. million million total debt is or rate is of of which currently our About

and respectively. maturities million, and have in We very $XXX to manageable XXXX $XX minimal million and XXXX, amounting

at in mentioned the expect and issued outset, Jeff we future. the guidance As guidance for XXXX annual have continue issuing to

share. commencing to to and higher This from range variable from open For interest periods. from full amounts rents signed but expect in from year prior per $X.XX FFO not as recoveries XXXX, rate debt uncollectible considers per we $X.XX adjusted range our pipeline, our expense share

in related to assumptions We earnings have outlined our our release. our guidance FFO key

we report when provide We results for early full plan XXXX XXXX. in to guidance our year

unhedged on be Bergen few debt, considered. $XX this increase items SOFR will note ultimate of mortgages Curve. next for financing time, largely I'll expense and to million at Based our should on The the interest the million the variable increase year, we portion maturing next debt on expect current in-place However, considering $XX Town rate a that year obtained will Center. depend

accounts we were receivables, year. expecting the $X deemed now minimal which of this quarter in to uncollectible our during the another we million collections of XXXX we realized, we on as estimating $X been at believe collections previously expect million that Looking only bulk including have are fourth

given us have bankruptcy In has in the top is gross tenants, the business. we uncertainty their Regal where rent. location Regal the proactively accepted are we space, for annual filing approximately yet or list rejected X site given of terms of their but generating this marketing Theaters, $X million at-risk of not

gross Bath will at too new & learned good to with to will early renewed market $X actively approximate Regarding property. Bed exploration tenant but feel and replacements. this the we an be that It we location is replace talking million in Bed are able Beyond, be rent we X Bath have we names in potential mention to XXXX the not early that we generated

quarter In closing, investors for in look San again the execution meeting Conference to by weeks we we many provided are team UE with dedication this and X NAREIT at forward grateful and Francisco. the in the

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

Operator

[Operator have Ronald from is Morgan Kamdem The Instructions] question first from we Stanley.

Ronald Kamdem

quick Just a couple of ones.

pipeline, Just what to to is the into is leasing conviction more. that that dig occupancy. like there? maybe the team XX% differently that, I'd going in doing the back confidence activity? little a XX% What are you the it get to gives just with And on you the to to have bit comments

Jeff Olson

we have range. historically averaged mean, that I in

been before. is averaging a gets square of that's and we've have feet there is about that the about what before XX%. and leases I spreads leases really feel now those X many stabilized do point there. good and note million right that we you So are under we negotiation on we under where square million should feet of rent on have there Point X executing And negotiation are the

Ronald Kamdem

just then And and that? Could guidance bit Great. providing assumptions should what debt about appreciate just bad think how we on obviously sort that the store the is same in for talk of NOI, earnings little about you that.

Mark Langer

Sure, Yes. Ron.

has said wildcard will $X offset receiving and or that million there'll prior So in biggest prepared my of kind $X you've seen. think about been the in the that level the we as normalized that million amounts estimates I remarks, uncollectible we're be expense on that,

on assumption the will that $X $X million guidance key due. that's is past million collect implied So in to about

Ronald Kamdem

if last Okay, the I And then one it. could. got

Can just So re-looking $XX.X more I changes. know million been on the million $XX.X guidance for just this that? at year, I G&A, about little G&A. you see just and to the provide there's a management the some bit color so talked you on

are can trying Just you you are take what what dig thinking, guys you to just out? into like

Jeff Olson

terms million be there's in When management just we more couple provide specific. dollars XXXX, we'll of savings changes a right were guidance of of that G&A for But made, the there. probably

Operator

Spahn The from is question next have Instructions] we Brian from ISI. [Operator Evercore

Brian Spahn

wondering was any head they're Just here? having sense there's provide recession viewing plans is we a if your you what into of color on with can real conversations I Jeff, expansion potential how as you're retailers, estate

Jeff Olson

pace. rapid Yes. still conversations that to they're us have led expanding our at I a mean, believe

Our notable feet expansion indication the have far, of down But their are signed. to When that this million are names Lidl, our of buybuy square so at Burlington, under million negotiation get others. leases the Maxx, Not most -- square Sephora, TJ among you BABY. under include negotiation, buybuy goal is given us they that not to plans. of a planning pipeline are look that Ross, some would tenants any slow feet

than have Scott I the you're Auster, am. you Scott, So this of can our who Leasing. is we on comment it maybe Head on more weeds And in because

Scott Auster

restaurant to And add lost the is meeting agents, whether the economy. Jeff. now. earlier And pretty And headwinds? just operator top expansive I capital because lost we've thing the that they and our Tuesday. pipeline meeting, any we little bit full X partner only a they leasing their in about the we that Thanks, getting lost at The deal did the only we were would macroeconomic deal Yes. asked that's of right week a was because robust that a team and place across a worried this have have particular of on have where

franchisees, So that there. also tenants. category across And national really it it's the anchors, back it's that demand and retailers I'd pulled classification. that at the It's the and suggests say demand shops, still haven't all is mom-and-pops, is all it's different

environment leasing from right vantage soft there's discernible now. the in point, So my no spot

Jeff Olson

preparing will as the from of a placing high the expanded sheet leases is that And said, And of to anyway." a I'll that's as but negotiation I balance we, We're mean, getting expand. renewed week "Americans be today. outside, let they company, here. prioritizing waves on We're our a for me banker surf mention seeing are not state strong, as a the retailers I line heard out and we're last clear, very emphasis are consumer this slowdown. forecast long recently economic think we And headed the a consumer our Look, credit executed. are and to strong sunny it's these I under great as the And consumer surfing. the quote still watching continue for today. he remains thunderstorm

Brian Spahn

get just are composition? trying taking there guess quarter. X I'm the the there? that's last the deals changes noticeable negotiations think the Yes. square pipeline, pipeline I to in any Are anything, I any on with to Just number the guess million foot at from to longer consistent what understand, changes done? I

Jeff Olson

are now. I Not and national the operators. tenants of regional right XX% mean the in pipeline

-- say of mean, some the some there I does are as outs. So are into and I pipeline The would executed SNO. ins moved quarter. I mean change each pipeline and we leases

variety but And as some of across removed pipeline are gets to categories. delivered a of material and it's leases no changes SNO the retail tenants

Brian Spahn

Got it.

IRR the transaction guess, think I deals Okay. Last but you one, are do today, I on from market. limited deals an mean I just are bidders where unlevered realize perspective? underwriting

Jeff Olson

Yes.

probably to little digits, returns some take XX% taking double underwriting implying cap close points. XXX XX are recognize some capital to point, think the to a cost has change. down think new I to I up unlevered to which there's activity or is call to that in it which capital we're basis are your rates X% But that such rates and cost there's higher interest going place of that time for either goes it's because a people of environment

Operator

is [Operator Instructions] have from Street. from next the question Green we Rojas Paulina

Paulina Rojas

this negative anchor spreads one quarter driven re-leasing and were how blended explained by So it renewal. was you

volatile. your very of What quarter longer interim, in the do you let's a or blended portfolio? taking see XX about the of perspective, for where next -- we this the think get a that average I spreads expect the just releasing is not mark-to-market next so But months? necessarily XX more to maybe next should And little

Jeff Olson

again, But all et including X% spread Yes. I blend XX%. negotiation the of at probably and which range, are somewhere there active the feet to the the option exercises, that it together, square is point under XX% I cetera. mean you the million you're re-leasing to moment most are X I in ones when leases mean, would

Paulina Rojas

doesn't portfolio not spread little I the physical the physical climbed, often points was Okay. think, wide basis a increases. to the And starting leased know why about only me. that given rent in quarter your see difficult do open But surprising you're sense which it how correlate is change necessarily is, how cadence but think going forward? occupancy I occupancy, in base so XX with of you

Mark Langer

Jeff the to in Kohl's, forward, because question Huntington of our the at We some of good a a quarter. actually in exactly as of It's point opening that this -- fourth opening going your portfolio. we Kohl's, also Shoprite about have Yes. mentioned we out given nuances I'll look terms question

to purchased So is the points occupancy that pool vacant see basis But enter there's lease to fourth those. have we warehouse actually increase nuance we think intentionally you're going property to a vacant in XXX from same going physical we in the that's the quarter.

lease. hard will in But gets even that lease at we're So it executing executed, a working just about on in no with physical come work QX. occupancy if

even real XX basis the is basis, you'll to XXX a anchors. So XX there's net-net about on the coming X uplift Paulina points physical though points see from basis a maybe tailwind of

Operator

to [Operator for there now no Instructions] closing turn seem At over floor comments. Olson like I would be this back Jeff to to stage further the questions.

Jeff Olson

appreciate and seeing you you in your to Thank very Great. interest San much. UE in We look forward Francisco. many of

Operator

Ladies and Thank concludes gentlemen, conference. you then for joining us. that today's

You may your now lines. disconnect

Urban Edge Properties (UE) 3 Nov 222022 Q3 Earnings call transcript