Urban Edge Properties

Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jennifer Holmes. Please go ahead.

Good morning and welcome to Urban Edge Properties' first quarter earnings conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Mark Langer, Chief Financial Officer, Chris Walminster, Chief Operating Officer, Danielle DeVita, EVP of Development, Herb Eilberg, Chief Investment Officer, and Rob Milton, General Counsel. Please note that Today's discussion may contain forward-looking statements about the company's views of future events and financial performance, which are subject to numerous assumptions, risks, and uncertainties, and which the company does not undertake to update. Our actual future results, financial condition, and business may differ materially. Please refer to our filings with the SEC, which are also available on our website, for more information about the company. In our discussion today, we will refer to certain non-GAAP financial measures. Reconciliations of these measures to GAAP results are available in our earnings release and supplemental disclosure package in the investor section of our website. At this time, it is my pleasure to introduce our chairman and chief executive officer, Jeff Olson.

Great. Thank you, Jen, and good morning, everyone. We are pleased to report a strong start to the year, with FFO as adjusted of 28 cents per share for the first quarter, up 8% compared to prior year, driven by a 5.5% increase in same property NOI and external growth through approximately $250 million of acquisitions completed over the past year. We ended the quarter with same property leased occupancy of 93.9%, up 280 basis points year over year. Including three anchor leases we executed since the end of the first quarter, our occupancy is now 94.5% up 40 basis points compared to December 31st, 2021. The gap between our leased versus physical occupancy in our same property pool is now 380 basis points. Opening these tenants continues to be a top priority and will be a significant contributor to NOI. In total, we have $22 million of future gross revenue coming from executed leases, not yet rent commenced, representing approximately 10% of our current NOI, which may be the highest percentage among our peers. The open-air shopping center sector is performing exceptionally well. Simply look at the share performance of our 40 largest tenants who are publicly traded and comprise 52% of our total rents. Since February 2020, right before COVID shut the world down, the stock prices of these 40 companies are up 33% on a weighted average basis led by our top five tenants, Home Depot, TJX, Lowe's, Best Buy, and Walmart. Leasing momentum is strong as we head to ICSE with over a million square feet of leases under negotiation at spreads that exceed 20%. Our strategic plan is focused on improving retail real estate and first-ring suburban markets primarily throughout the D.C. to Boston corridor. There are four pillars to our plan. The first pillar is upgrading our properties through adding new anchor tenants that not only provide a good return on current capital, but also provide further upside from leasing surrounding vacant space, securing higher rents from adjacent tenants, and from achieving cap rate compression. We have 207 million of active projects underway expected to generate an 8% unleveraged yield. In addition, we expect to activate another $100 million of projects within the next year. The second pillar is growing our occupancy rate from our current rate of 94.5% to at least 96%. On this point, our progress is encouraging as demand is strong across a number of sectors. In many cases, we have multiple tenants competing for the same space. The third pillar is monetizing non-income producing land. This is a unique aspect of our portfolio as our properties are concentrated in the most densely populated market in the country namely the New York metropolitan area. We have identified opportunities where the highest and best use for the land could be for residential, industrial, or medical office. The greatest opportunities include the 77 acres of land at Sunrise Mall in Massapequa, New York that is zoned for industrial use and eight acres of land adjacent to Bergentown Center that could accommodate 450 to 500 multifamily units. Our fourth pillar pertains to value we can capture from refinancing Las Catalinas Mall in Puerto Rico. Our mortgage provides us with a discounted payoff option starting in August 2023 at about $50 million less than the current carrying value of the debt. Based on the anticipated opening of Sector 66 next year and the leasing momentum we are seeing at the property, we expect to exercise this option once replacement financing is secured. In addition to the growth we can achieve within our existing portfolio, further upside can be achieved through external growth. We currently have a $33 million grocery-anchored center under agreement to acquire and we'll provide additional details after we close on the property. I am proud to see our team executing our plan with such a spirit of teamwork and collaboration. We are making great progress on our four strategic pillars of delivering value-add anchor repositioning projects, increasing occupancy to exceed 96%, monetizing non-income producing land, and extracting value from a debt refinancing. I will now turn it over to our Chief Operating Officer, Chris Weilminster.