Urban Edge Properties Q1 2026 Earnings Call Summary

Strategic Performance Drivers

• Performance exceeded internal expectations driven by strong rent commencements from the signed-but-not-open (SNO) pipeline and robust leasing fundamentals.

• Management is shifting strategy toward proactive space recapture, targeting under-leased tenants with low rents to convert spaces to higher-value uses at market rates.

• The acquisition of the Village at Bridgewater Commons for $54 million at a 7.7% cap rate was structured as an accretive 1031 exchange to improve credit profile and growth.

• Leasing demand remains exceptionally strong for high-quality space, allowing the company to extract 3% or higher annual rent escalators even from national anchor tenants.

• Portfolio strength is concentrated in the D.C. to Boston corridor, where high population density and limited supply are driving rent growth above inflationary levels.

• Operational execution is focused on optimizing merchandise mix while balancing capital contributions, which have decreased as retailers accept lower landlord incentives.

Outlook and Strategic Guidance

• FFO guidance was raised to $1.48–$1.52 per share, reflecting a 5% growth target for 2026 at the midpoint.

• The $22 million SNO pipeline provides high visibility into earnings through 2027, with 90% of remaining 2026 SNO revenue expected in the second half of the year.

• Management expects portfolio occupancy to reach 97% to 98% by year-end 2026, supported by a robust pipeline of new leases with expected spreads exceeding 20%.

• The $157 million active redevelopment pipeline is largely pre-leased and expected to deliver an attractive 13% yield.

• Bad debt is projected to normalize at approximately 75 basis points of gross rents for the remainder of the year following isolated Q1 issues.

Operational Context and Risks

• A temporary 30 basis point dip in occupancy was attributed to the strategic recapture of a Saks box at Hanover Commons for future redevelopment.

• Q1 property operating expenses were impacted by $3.5 million in incremental snow-related costs compared to the prior year.

• The company recorded an $8 million gain in other income related to a state reimbursement for historical environmental remediation costs.

• The Sunrise Mall redevelopment is advancing, with the site expected to be fully unencumbered tomorrow following the return of keys from the final tenant, Dick’s Sporting Goods.

Q&A Session Summary

Nature and persistence of Q1 bad debt expenses

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