Urban Edge Properties Q1 Earnings Call Highlights

Key Points

• Urban Edge reported FFO as adjusted of $0.36 per share in Q1, up 3% year-over-year, and raised 2026 FFO guidance to $1.48–$1.52 while boosting same-property NOI guidance to 3%–3.75% after Q1 same-property NOI rose 2.8%.
• Leasing momentum remained strong with 45 leases (13 new, 32 renewals) totaling 419,000 sq ft; new deals showed a 52% same-space cash rent spread and contractual escalators of 3%+, while occupancy finished at 96.4% with a year-end target of 97%–98%.
• Growth and balance-sheet highlights include a $22 million SNO pipeline (~7% of NOI) with an additional $3.3 million expected in 2026, an active redevelopment pipeline of $157 million targeting a 13% yield (stabilized projects showing ~50% yield), a $54 million acquisition at a 7.7% cap rate, and nearly $1 billion of liquidity.

Urban Edge Properties NYSE: UE reported what Chairman and CEO Jeff Olson described as a “great first quarter,” with results that exceeded internal expectations as leasing activity and rent commencements drove growth across the portfolio.

First-quarter performance and guidance raise

For the first quarter of 2026, Urban Edge generated FFO as adjusted of $0.36 per share, up 3% from the year-ago period, according to Olson and CFO Mark Langer. Same-property net operating income (NOI), including redevelopment, increased 2.8%, which management attributed primarily to rent commencements from the company’s signed-but-not-open (SNO) pipeline.

Based on first-quarter performance, the company raised its 2026 FFO as adjusted guidance by $0.01 per share on the low end to $1.48 to $1.52 per share. Langer said the change was driven “primarily due to the 25 basis point increase on the low end of our same property NOI guidance,” which now stands at 3% to 3.75%.

Leasing activity, occupancy, and rent trends

Chief Operating Officer Jeffrey Mooallem said demand for Urban Edge’s space “remains strong and leasing momentum has not slowed.” During the quarter, the company executed 45 leases—13 new leases and 32 renewals—totaling 419,000 square feet. New leases were signed at a 52% same-space cash rent spread. Mooallem also highlighted lease structuring, noting that every new lease signed in the quarter, including two new anchor leases, contained contractual annual rent increases of 3% or higher.

However, Mooallem told analysts that level of escalator is not necessarily a new standard for anchors. He characterized the quarter as an “outlier,” adding that some anchor tenants “fight really hard” on increases, but said Urban Edge is increasingly able to secure better terms due to limited supply and strong demand. He described the current conditions as “the strongest anchor leasing market we’ve seen in a really long time, simply because of the imbalance between supply and demand.”

Same-property lease occupancy ended the quarter at 96.4%, down 30 basis points versus the prior quarter and the year-ago quarter. Mooallem said the decline was expected and was “primarily driven by the recapture of the Saks box at Hanover Commons,” where the company is evaluating alternative uses, including a grocer, apparel, or reconfiguring for additional shop space. Management reiterated a goal of 97% to 98% occupancy by year-end, citing pipeline activity.

In the Q&A, Mooallem said tenants are increasingly engaging earlier on renewals. He explained that the leasing team is often assessing market alternatives for a space before approaching the incumbent tenant, allowing the company to negotiate from a stronger position: “We have another option here for your space. You need to pay X to stay.”

Signed-but-not-open pipeline and redevelopment progress

Olson said the company’s SNO pipeline remains a “meaningful contributor” to growth, representing $22 million of annual gross rent, or approximately 7% of current NOI, providing visibility into earnings through 2027. Langer added that Urban Edge expects to recognize another $3.3 million of gross rents from the SNO pipeline over the remainder of 2026, with 90% expected in the third and fourth quarters.

On redevelopment, Mooallem said the company stabilized four projects totaling $7 million during the quarter. These included rent commencements for:

• Trader Joe’s and Ross at Plaza at Woodbridge
• Lidl and Boot Barn at Totowa Commons
• Texas Roadhouse at The Outlets at Montehiedra
• Big Blue at Plaza at Cherry Hill

Mooallem said the stabilized projects generate “nearly a 50% yield,” which he attributed to lower levels of landlord contributions that national retailers are now accepting. He said the active redevelopment pipeline totals $157 million with an expected yield of 13% and is “largely pre-leased.”

Acquisition, dispositions, and financing

In March, Urban Edge acquired The Village at Bridgewater Commons, a 92,000-square-foot shopping center in Bridgewater, New Jersey, for $54 million at a 7.7% cap rate. Olson said the property is in a “highly trafficked corridor within an affluent market” and draws 2.2 million visitors per year, which he called among the highest for its size. Tenants include Summit Health, Chipotle, Shake Shack, Millburn Deli, CAVA, and Starbucks.

Olson said the company “got lucky” on pricing, explaining that the center traded at a higher cap rate partly because the anchor is not a grocery store but instead Summit Health, which he described as “a very high credit healthcare tenant” with 11 years of remaining term. Olson added that the company’s revised numbers for the asset expect to generate 2.75% NOI growth, with more than half coming from contractual rent increases and option exercises.

Management said the acquisition was structured as an accretive 1031 exchange tied to an expected sale of a Kohl’s-anchored property in New Jersey. In the Q&A, Olson said the company is “in diligence with the buyer right now,” and hopes to close soon, confirming the strategy is to sell at a lower cap rate while improving the portfolio’s credit profile.

On the balance sheet, Langer said Urban Edge secured a $62.5 million, seven-year non-recourse mortgage on The Plaza at Woodbridge at a swap fixed rate of 5%. He also said the company ended the quarter with nearly $1 billion of total liquidity, with $30 million drawn on its credit facility and no amounts drawn on its delayed-draw term loans.

Discussing Woodbridge, Langer described an asset management strategy in which the company paid off a prior roughly $50 million mortgage last year after seeing “line of sight” on re-leasing upside. He cited replacing Bed Bath & Beyond and buybuy BABY space paying $17 per foot with tenants including Trader Joe’s and Ross at a blended “around $25 a foot,” and other rent increases, resulting in the company “extract[ing] $12 million more in this new mortgage.”

Puerto Rico, bad debt, and Sunrise Mall update

Langer said first-quarter results included better-than-expected recoveries, including $500,000 of out-of-period tax refunds related to settled appeals for multiple prior years. He noted higher-than-expected bad debt offset some of the benefit and said it related to “isolated cases” moved to cash basis. In response to an analyst question, Langer specified the largest issue involved “a franchise operator that has six different QSR locations” in the company’s Puerto Rico portfolio. He said that since quarter end, Urban Edge executed a payment plan, the tenant “has fully paid April rent,” and began paying arrears. Langer said the company expects uncollected rent to trend near 75 basis points of gross rents for the rest of the year.

Mooallem said Puerto Rico continues to see tenant interest, with brands including Sephora (expected to open soon at Caguas), Coach, and Bath & Body Works, and noted that a TJ Maxx that opened last year has performed “extremely strong.” He added that the company is looking to grow ancillary income opportunities such as “signage, carts and kiosks.” Olson said Puerto Rico growth “should be in that 3.5%–4% range.”

On Sunrise Mall, Olson said the entitlement process is “advancing on schedule” and reiterated prior disclosure that Amazon will occupy about a third of the property. Mooallem added that the last mall tenant, Dick’s Sporting Goods, was set to return the keys the next day, leaving Urban Edge “fully unencumbered” and able to advance plans later in the year.

About Urban Edge Properties NYSE: UE

Urban Edge Properties is a publicly traded real estate investment trust (REIT) that specializes in owning, operating and developing grocery-anchored shopping centers. The company was formed in January 2017 as a spin-off from Regency Centers Corporation, establishing an independent platform focused on urban and densely populated markets. As a fully integrated REIT, Urban Edge oversees the acquisition, financing, leasing, redevelopment and management of its retail properties.

The company's portfolio comprises predominantly open-air shopping centers anchored by national and regional supermarket operators.

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