Urban Edge Properties (UE)·Q3 2025 Earnings Summary

Executive Summary

• Urban Edge delivered solid Q3 2025 results: total revenue of $120.13M and diluted EPS of $0.12; FFO as Adjusted was $0.36 per share. Results reflected rent commencements, higher net recoveries, and acquisitions; FFO also included non-cash revenue from lease intangible write-offs tied to bankrupt tenants .
• Against S&P Global consensus, revenue and GAAP EPS beat materially; FFO/AFFO was a slight beat. Management raised FY 2025 guidance: FFO to $1.43–$1.45 (from $1.37–$1.41) and FFO as Adjusted to $1.42–$1.44 (midpoint +$0.01) .
• Leasing momentum stayed robust: 31 deals (347k sf) with new leases at 61% cash spreads; shop occupancy held at 92.5% and same-property leased occupancy was 96.6%. Signed‑not‑open pipeline remained sizable at $21.5M annual gross rent (~7% of current NOI) .
• Strategic and balance sheet moves: $39M acquisition of Brighton Mills (grocery‑anchored, Boston), $123.6M mortgage at 5.12% with line paydown, and Puerto Rico Caguas mortgage modification to 6.15% (≈$0.4M annual interest savings). Liquidity was ~$913M; net debt to market cap 34% .

What Went Well and What Went Wrong

• What Went Well

  • Raised FY guidance (FFO +$0.06–$0.04; FFO as Adjusted midpoint +$0.01) on stronger operating results and lower G&A/interest assumptions . CEO: “We are again raising our outlook… increasing our FFO as Adjusted guidance by $0.01 per share at the mid-point” .
  • Strong leasing economics: 61% cash spreads on new leases; combined same‑space cash spread 20.6%; nine shop leases at 42% cash spread. COO: “Spaces… previously leased to now bankrupt companies… we are usually able to generate very strong rent spreads” .
  • Balance sheet/strategy: secured $123.6M mortgage at 5.12% and paid down $90M revolver; completed Brighton Mills acquisition via 1031; liquidity >$900M. CFO: “Our net debt to annualized EBITDA was 5.6x… flexibility to capitalize on future growth” .

• What Went Wrong

  • Occupancy slipped modestly: same‑property leased occupancy down 20 bps q/q to 96.6%; consolidated occupancy down 20 bps to 96.3% (At Home lease rejection noted) .
  • Non‑recurring inflators: CFO flagged ~$2M one‑time receivable collections and ~$1.5M CAM billings; caution for 2026 run‑rate normalization .
  • Bankruptcy/lease intangibles: FFO included $4.2M non‑cash revenue from below‑market lease intangible write‑offs (tenant bankruptcies), which lifted quarterly FFO vs core .

Financial Results

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO Jeff Olson: “We delivered a strong third quarter… raising our FFO as Adjusted guidance by $0.01 per share at the mid‑point, reflecting expected annual growth of 6% versus last year” .
• COO Jeff Mooallem: “We executed 31 deals aggregating 347,000 square feet… 11 new leases at an outsized 61% spread… when we get boxes back, we generate very strong rent spreads” .
• CFO Mark Langer: “FFO as adjusted was $0.36 per share… liquidity over $900 million… net debt to annualized EBITDA was 5.6x… raising FFO as adjusted guidance by a penny implies Q4 FFO of $0.36” .

Q&A Highlights

• Acquisition environment: Highly competitive with many bidders; UE lost several deals by ~25 bps; focus on pairing dispositions with accretive buys and staying disciplined .
• Leasing spreads skew: Q3’s 61% new‑lease spread driven by two anchor backfills (HomeGoods, Ross) replacing bankrupt tenants; expect double‑digit spreads going forward, not 60% every quarter .
• Commencement timing: Aim to open HomeGoods/Ross in 2026—one in H1 and one in H2—accelerating rent roll .
• One‑time items: ~$2M in old receivable collections and ~$1.5M CAM recoveries identified as non‑recurring in 2025 .
• Asset‑specific: Shoppers World financing secured; flexibility to work the separate Kohl’s parcel; studying accretive mixed‑use/re‑tenanting options .
• Tenant mix: Balancing strong restaurant demand to avoid over‑fooding; grocers remain in expansion mode; managing mix and economics across assets .
• Industry occupancy sustainability: Tailwinds from structurally lower new supply; pricing power supported by supply/demand dynamics .

Estimates Context

Values retrieved from S&P Global.*

Implications: Street likely lifts FY models to the new guidance ranges, with modest upward revisions to FFO/AFFO and same‑property NOI growth midpoints. Management implies Q4 FFO as Adjusted ≈ $0.36 per share .

Key Takeaways for Investors

• Guidance raise is the headline: FFO up 6–8c and FFO as Adjusted midpoint +1c; model revisions should reflect higher same‑property NOI growth (5.0–5.5%) and lower G&A/interest .
• Core leasing economics remain a driver: anchor backfills (HomeGoods, Ross) and shop leasing support double‑digit cash spreads; expect normalization below the outsized 61% seen this quarter .
• Watch non‑recurring items: ~$3.5M of 2025 benefit (old receivables, CAM) will not repeat; adjust 2026 run‑rate accordingly .
• Balance sheet optionality: >$900M liquidity, 100% fixed/hedged mortgage debt, net debt/EBITDA ~5.6x—capacity to pursue selective accretive acquisitions while maintaining discipline .
• S&O pipeline provides visibility: $21.5M (~7% of NOI) with Q3 commencements of $5.6M and additional ~$0.3M in Q4—embedded rent growth into 2026–2027 .
• Regional strategy: Brighton Mills highlights Boston expansion and covered land optionality; monitor lease expirations/timing to unlock higher‑and‑best‑use value .
• Near‑term trading: Revenue/GAAP EPS beats plus guidance raise are positive catalysts; acquisition competitiveness and minor occupancy dip (At Home impact) are watch items .

Additional Reference Data

• Financing updates: $123.6M mortgage (Shoppers World) at 5.12%; revolver repaid; Shops at Caguas mortgage modified to 6.15% (saves ~$0.4M annually) .
• Liquidity & leverage: Total liquidity ~$913M; mortgages payable $1.65B; net debt/market cap 34% .
• Dividend: Quarterly dividend of $0.19 per share declared, payable 12/31/25 (record 12/15/25) .