Urban Edge Properties

Greetings and welcome to the Urban Edge Property second quarter 2022 earnings conference call. At this time, all participants are in a 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 zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Ms. Jen Holmes, Chief Accounting Officer. Thank you, ma'am. You may begin your presentation at this time.

Good morning, and welcome to Urban Edge Property's second quarter earnings conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Mark Langer, Chief Financial Officer, Chris Wellminster, Chief Operating Officer, Danielle DeVita, EVP of Development, Herb Eilberg, Chief Investment Officer, and Rob Milton, General Counsel. Please note, 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 had a great second quarter with FFO as adjusted of 30 cents per share, up 7% compared to prior year, and also up 7% year to date. Our results were driven by positive same property NOI growth and approximately 285 million of acquisitions completed over the past year. Our NOI performance is notable considering we are comping off a 25% increase in the second quarter of last year. Our properties are predominantly situated throughout the densely populated first ring suburbs of the DC to Boston corridor and benefit from the continued work from home trend. In fact, total visits to our centers increased 7% during the second quarter of 2022 as compared to the second quarter of 2019. Our grocery store sales are up 13% compared to 2019 and average approximately $900 a foot, the highest reported number in the REIT sector. Approximately 65% of our asset value is anchored by a grocer. We expect traffic and sales trends will continue to grow as we realize the benefits from upgrading our centers with better tenants through our redevelopment program. We had our most productive leasing quarter in over six years. with approximately 290,000 square feet of new leases executed at a blended spread of 7%. This brought future rents from signed but not open tenants to $23 million, representing 10% of our annualized NOI, one of the best indicators of future NOI growth. We believe it is the highest percentage amongst our peers. Our same property leased occupancy increased to 94.9%, up nearly 300 basis points compared to prior year, and up 100 basis points compared to prior quarter. Think about that. Growing occupancy by almost 300 basis points over 12 months is an incredible accomplishment and is a testament to the quality of our real estate and our entire team. We remain optimistic that we can continue to drive occupancy and rents. Our leasing pipeline remains strong with approximately 1 million square feet of leases under negotiation with spreads exceeding 20%. We remain on track to reach our occupancy goal of 96% by year end. Recall our occupancy rate averaged 98% in 2017 and 2018. We have $206 million of active redevelopment projects underway, expected to generate a 10% unleveraged yield. Over 90% of this redevelopment pipeline has executed leases, and most of the costs are locked in through fixed construction contracts. Turning to acquisitions. We completed the $33 million purchase of the shops at Riverwood, a 78,000 square foot grocery anchored shopping center in Boston. This asset is located in a dense infill area with 181,000 people within three miles with average household incomes of $113,000. We financed the asset with a seven-year, $21.5 million non-recourse mortgage with fixed interest at 4.25%, providing an attractive 9% in-place cash-on-cash return. This was a great opportunity to expand our footprint in the Boston MSA. It will likely be more challenging to find acquisitions that meet our current return thresholds considering higher debt and equity costs. We expect cap rates will increase modestly, but there is limited deal activity to validate pricing. History tells us that market cycles create opportunities and we will be ready to act at the appropriate time if we can source deals at attractive returns. We are hosting an Investor Day on November 9th and look forward to seeing many of you there. Finally, we are honored to have been awarded one of the best places to work in New Jersey by NJBiz Magazine. We have worked tirelessly over the years to build a culture that invests in our people, and I applaud our management team and all of our employees for this well-deserved recognition. I will now turn it over to our Chief Operating Officer, Chris Wildminster.