Urban Edge Properties (UE)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered a record FFO as Adjusted per share of $0.36 and 7.4% same‑property NOI growth including redevelopment, driven by rent commencements and higher net recoveries .
• EPS beat consensus materially (actual $0.46 vs $0.04*) while revenue was a slight miss (actual $114.08M vs $115.99M*)—FFO as Adjusted outperformance reflected operating momentum and lower recurring G&A .
• Guidance raised: FY25 net income per diluted share to $0.70–$0.74 (from $0.40–$0.45), FFO as Adjusted to $1.40–$1.44 (from $1.37–$1.42), and same‑property NOI growth to 4.25%–5.0% (from 3.0%–4.0%)—recurring G&A reduced to $34.5–$35.5M .
• Stock reaction catalysts: guidance raise, sector‑leading occupancy and shop leasing at 92.5%, capital recycling at attractive cap rates, and post‑quarter financing that boosted liquidity (Shoppers World $123.6M mortgage; line of credit repaid) .

What Went Well and What Went Wrong

• What Went Well

  • “We delivered great second quarter results, increasing FFO as adjusted by 12% over last year … same property NOI increased by 7.4%” .
  • Leasing execution: 42 deals, 482K sf, double‑digit spreads (renewals +12%, new +19%); shop leased occupancy reached a record 92.5% .
  • Capital recycling and balance sheet: YTD $66M dispositions at 4.9% cap; net debt/Adjusted EBITDAre at 5.5x; Adjusted EBITDAre/interest 3.7x .

• What Went Wrong

  • Revenue slightly missed consensus (actual $114.08M vs $115.99M*) despite strong rent commencements and recoveries; estimates likely did not include some timing effects .
  • G&A elevated in the quarter from $2M severance and ~$1M non‑recurring transaction costs, though recurring G&A trend was lowered for the year .
  • Tenant bankruptcies (Big Lots, Party City, At Home) drove churn; management is proactively re‑tenanting at higher credit, but near‑term recaptures add execution needs .

Financial Results

Q2 2025 Actual vs Consensus

• EPS: significant beat; Revenue: slight miss; EBITDA: beat vs consensus.
• Values marked with * are retrieved from S&P Global.

KPIs and Operating Metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered great second quarter results, increasing FFO as adjusted by 12% over last year… same property NOI increased by 7.4%” .
• “Our same property occupancy increased to 96.7%… shop occupancy rate increased to a record high of 92.5%” .
• “We anticipate a substantial decrease in future capital expenditures” .
• “We increased our 2025 FFO as adjusted guidance by $0.02 per share to a new range of $1.40 to $1.44” .
• “Active redevelopment now totals $142 million and maintains a strong expected return of 15%” .
• “Adjusted EBITDA to interest expense has increased to 3.7x… net debt to annualized EBITDA was 5.5x” .
• On market/financing: “A bank loan … spread is 135 bps over treasuries, a record low for us (non‑recourse)” .

Q&A Highlights

• Pricing power: High occupancy enables stronger lease economics (higher increases, “as‑is” delivery reducing time/cost), and improved terms on exclusives/options/co‑tenancy .
• Capital recycling and cap rates: High‑quality retail assets trading at 5.5%–6.0% caps; company testing market for more dispositions to redeploy into higher‑growth assets .
• Tenant risk: At Home bankruptcy exposure limited; Kohl’s four‑wall profitable in most stores; re‑tenanting opportunities, not an imminent 2025–2026 risk .
• Mortgage payoff rationale: Prepayment‑penalty‑free loan; line of credit cheaper by ~100 bps, so payoff made economic sense .
• CapEx trajectory: Sharp decline expected given re‑tenanted portfolio, better tenant credits/terms, and 70% of portfolio redeveloped/repositioned by 2027 .

Estimates Context

• EPS beat: Actual diluted EPS $0.46 vs $0.04* consensus—driven by operating strength and lower recurring G&A; note GAAP results also reflect a $49.5M gain on dispositions that impacts net income and EPS .
• Revenue miss: Actual $114.08M vs $115.99M* consensus—timing effects and mix notwithstanding, company highlighted rent commencements and net recoveries .
• EBITDA beat: Company reported Adjusted EBITDAre $67.59M vs S&P Global EBITDA consensus $64.31M* .

Estimates marked with * are retrieved from S&P Global.

Key Takeaways for Investors

• Q2 print showed durable operating momentum: record FFO as Adjusted, 7.4% same‑property NOI growth, and record shop occupancy—supports sustained cash flow growth .
• Guidance raise across net income, FFO as Adjusted, and same‑property NOI growth, alongside lowered recurring G&A, is a clear positive catalyst into 2H25 .
• Leasing environment remains landlord‑friendly; double‑digit spreads and “as‑is” deliveries shorten timelines and improve returns—expect continued uplift from S&O conversions in Q4 .
• Capital recycling into higher‑growth assets at attractive spreads and supportive bank financing (non‑recourse, low spreads) can further drive NAV accretion .
• Balance sheet flexibility: mortgage payoff, strong liquidity (~$800M), and August financing that retired the line of credit strengthens funding for growth and reduces interest burden .
• Watch risks: tenant bankruptcies (At Home) and retail macro; management sees churn as re‑tenanting opportunities with stronger credits—monitor announced re‑tenants in Q3 .
• Near‑term trading setup: guidance raise, high occupancy, elevated commencements slated for Q4, and dividend continuity ($0.19/share) create multiple potential upside catalysts .

Additional Q2-related press releases:

• Declared $0.19 quarterly dividend (Aug 7, 2025) .
• $123.6M Shoppers World financing; LOC repaid (Aug 5, 2025) .