Urban Edge Properties Reports Second Quarter 2022 Results

NEW YORK–(BUSINESS WIRE)–Urban Edge Properties (NYSE: UE) today announced its results for the quarter ended June 30, 2022.

“We achieved record levels of leasing activity in the quarter with the highest volume in over six years,” said Jeff Olson, Chairman and CEO. “We are building on our leasing momentum by attracting high-quality tenants that best meet the needs of the surrounding communities.”

Financial Results(1)(2)

  • Generated net income attributable to common shareholders of $11.6 million, or $0.10 per diluted share, for the second quarter of 2022 compared to $12.5 million, or $0.11 per diluted share, for the second quarter of 2021 and $21.1 million, or $0.18 per diluted share, for the six months ended June 30, 2022 compared to $32.5 million, or $0.28 per diluted share, for the six months ended June 30, 2021.
  • Generated Funds from Operations (“FFO”) applicable to diluted common shareholders of $36.2 million, or $0.30 per share, for the quarter compared to $35.4 million, or $0.29 per share, for the second quarter of 2021 and $70.4 million, or $0.58 per share, for the six months ended June 30, 2022 compared to $67.2 million, or $0.55 per share, for the six months ended June 30, 2021.
  • Generated FFO as Adjusted of $36.8 million, or $0.30 per share, for the quarter compared to $34.5 million, or $0.28 per share, for the second quarter of 2021 and $71.4 million, or $0.58 per share, for the six months ended June 30, 2022 compared to $66.8 million, or $0.55 per share for the six months ended June 30, 2021.

Operating Results(1)(3)

  • Increased same-property Net Operating Income (“NOI”) by 1.2% compared to the second quarter of 2021. The second quarter of 2021 benefited from elevated receipts related to amounts previously deemed uncollectible. Excluding these amounts in both periods, same-property NOI growth would have been 6.0%.
  • Same-property NOI, including properties in redevelopment, was flat compared to the second quarter of 2021. The second quarter of 2021 benefited from elevated receipts related to amounts previously deemed uncollectible. Excluding these amounts in both periods, same-property NOI growth, including properties in redevelopment, would have been 4.2%.
  • Reported same-property portfolio leased occupancy of 94.9%, an increase of 100 basis points compared to March 31, 2022 and an increase of 270 basis points compared to June 30, 2021.
  • Executed record leasing, including 37 new leases, renewals and options totaling 716,000 square feet (“sf”) during the quarter, which generated average rent spreads of 9.6% on a cash basis and 19.0% on a straight-line basis.
  • Issued our 2021 Environmental, Social and Governance report, highlighting significant progress advancing LED lighting, waste recycling, diversity, equity and inclusion, and charitable programs among other goals.

Balance Sheet and Liquidity(1)(4)

Balance sheet highlights as of June 30, 2022 include:

  • Total liquidity of approximately $771 million, comprised of $171 million of cash on hand and $600 million available under our revolving credit agreement.
  • Mortgages payable of $1.7 billion with a weighted average term to maturity of 4.6 years.
  • Total market capitalization of approximately $3.6 billion, comprised of 122.6 million fully-diluted common shares valued at $1.9 billion and $1.7 billion of debt.
  • Net debt to total market capitalization of 43%.

Leasing, Development and Redevelopment

The Company executed 290,000 sf of new leases during the second quarter. New anchor leases include a 63,000 sf Ralph’s Food Warehouse and Urology Hub, an 18,000 sf medical office, to open in a portion of the prior Kmart space at The Outlets at Montehiedra, Nemours Children’s Health at Broomall, and a 62,000 sf kosher grocer, Bingo Wholesale, at Burnside Commons.

The Company commenced $20.7 million of redevelopment projects during the quarter, including the previously mentioned anchor leases, resulting in a total of $205.8 million of active redevelopment projects under way, with estimated remaining costs to complete of $134.9 million. The active redevelopment projects are expected to generate an approximate 10% unleveraged yield.

During the quarter, the Company completed three redevelopment projects aggregating $22.9 million upon rent commencement of AAA Wholesale Group, the industrial conversion of our property in Lodi, NJ, Amazon Fresh in Broomall, PA, and Five Below and Skechers at Tonnelle Commons in North Bergen, NJ.

The Company has signed leases that have not yet rent commenced that are expected to generate $22.9 million of future annual gross rent, representing approximately 10% of current annualized NOI. Approximately $1.4 million of this amount is expected to be recognized during the remainder of 2022.

Acquisition Activity

On June 8, 2022, the Company closed on the acquisition of The Shops at Riverwood, a 78,000 sf grocery-anchored shopping center for a purchase price of $32.9 million. The center, which is located in the greater Boston area, is fully occupied and has an attractive and diverse mix of tenants. The initial in-place unleveraged yield on this transaction is approximately 6% and was partially funded with a 7-year, $21.5 million non-recourse mortgage with a fixed interest rate of 4.25%. This acquisition supports our overall strategy of acquiring high-quality, infill real estate with future growth potential.

Financing Activity

During June 2022, the Company refinanced the mortgage secured by its property Plaza at Woodbridge, located in Woodbridge, NJ, with a new $52.9 million, 5-year mortgage at a rate of 2.26% plus one-month Secured Overnight Financing Rate (“SOFR”). The Company also refinanced the mortgage secured by its property Plaza at Cherry Hill, located in Cherry Hill, NJ, with a new $29 million, 3-year mortgage that bears interest at the Prime Rate plus 50 basis points.

Operating Metrics

The Company presents certain operating metrics related to our properties, including occupancy, leasing activity and rental rates. Operating metrics are used by the Company and are useful to investors in facilitating an understanding of the operational performance for our properties.

Occupancy metrics represent the percentage of occupied gross leasable area based on executed leases (including properties in development and redevelopment) and include leases signed, but for which rent has not yet commenced. Same-property portfolio leased occupancy includes properties that have been owned and operated for the entirety of the reporting periods being compared, which total 69 and 68 properties for the three and six months ended June 30, 2022 and 2021, respectively. Occupancy metrics presented for the Company’s same-property portfolio excludes properties under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired within the past 12 months or properties sold during the periods being compared.

Executed new leases, renewals and exercised options are presented on a same-space basis. Same-space leases represent those leases signed on spaces for which there was a previous lease.

ABOUT URBAN EDGE

Urban Edge Properties is a NYSE listed real estate investment trust focused on managing, acquiring, developing, and redeveloping retail real estate in urban communities, primarily in the Washington, D.C. to Boston corridor. Urban Edge owns 76 properties totaling 17.2 million square feet of gross leasable area.