Urban Edge Properties

Good morning and welcome to the Urban Edge Properties third quarter 2022 funding school. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the call, please press star then zero to signal an operator. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host.

Good morning, and welcome to Urban Edge Properties' third quarter earnings conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Mark Langer, Chief Financial Officer, Danielle DeVita, Executive Vice President of Development, Rob Milton, General Counsel, Scott Oster, Senior Vice President and Head of Leasing, and Andrea Drazen, Chief Accounting Officer. 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 investors section of our website. At this time, it is my pleasure to introduce our Chairman and Chief Executive Officer, Jeff Olson.

Jeff Olson Thank you, Eitan, and good morning, everyone. I am pleased to announce another strong quarter with FFO is adjusted of $0.30 per share, an 8% increase over the third quarter of last year, and a 7% increase year-to-date. This increase is primarily attributed to NOI growth and the acquisitions of Woodward Town Center outside of Washington, D.C., and the shops at Riverwood in Boston. The shopping center industry continues to benefit from strong demand from a broad set of retailers, especially throughout the suburbs around New York City. Just in the past year, we have increased our occupancy from 93% to 95%, a notable growth rate following the pandemic. We have visible NOI growth coming from our signed but not yet open pipeline which has increased to $28 million, representing approximately 12% of our current NOI. We also have 1 million square feet of leases under negotiation, representing an additional 10% of annualized NOI. Our team is energized and committed to getting our portfolio back to our prior occupancy levels of 97% to 98%. Our properties are predominantly situated in the first ring suburbs within the DC to Boston corridor, the most densely populated supply constrained market in the United States. Leading retailers continue to expand and are focused on growing their omni-channel offerings within our core markets. We are thrilled that Target recently executed a 139,000 square foot lease at Bruckner Commons in the Bronx. Over the past five years, we have transformed a dated 1970s era shopping center previously anchored by Kmart, Toys R Us, and a local grocery store into a dominant destination that will be anchored by Target, ShopRite, Burlington, Marshalls, and five below. We have redesigned the facades, walkways, and outdoor seating areas, making this property one of the most attractive shopping centers in the area. Target will solidify the center's position as one of the most important retail nodes in the Bronx, and we have more upside coming from leasing the remaining 41,000 square feet of space adjacent to Target and the 43,000 square foot former toys box. We currently have $261 million of active redevelopment projects underway and expect to generate a 10% unlevered return on this investment. Our tenant coordination team is the busiest they have been in years, preparing to open over 50 new stores within our portfolio. As approximately 90% of these projects are associated with executed leases, there is minimal speculative risk. Notably, the $26 million project to relocate Kohl's into Bergentown Center is two quarters ahead of its original schedule, as Kohl's will hold its grand opening tomorrow. The store looks great, and we are excited to reactivate 134,000 square feet of space that has been vacant for almost two years. We look forward to seeing other new anchor stores open in the coming quarters, including ShopRite and Marshalls at Huntington, Sector 66 at Las Catalinas, Nemours Children's Health at Broomall, and Ralph's Grocery Store and Walgreens at Monte Hedra. We are keeping a close eye on inflationary pressures and the potential impact on consumer spending. The macroeconomic environment and the associated rising cost of capital will make the prospect of near-term acquisitions challenging. We are also cognizant of the impact these same pressures could have on our retail tenants. However, we would also note that the majority of our rent comes from tenants that are traditionally in recession resilient categories, and our overall tenancy is weighted towards well-capitalized national or regional retailers. Given current market conditions and considering the economic challenges that may arise in 2023, our plan is to protect our balance sheet and carefully scrutinize future capital and redevelopment spending to ensure appropriate yield hurdles are met. Additionally, we will be performing an intensive review of G&A as we finalize our 2023 budget to ensure we are taking measures to run the business as efficiently as possible. We are excited to welcome Jeff Muellem as our next Chief Operating Officer. Jeff, Mark, and I worked together for many years at Equity One, and he has a unique skill set covering a range of disciplines, including acquisitions, leasing, construction, legal, and development. He's a great leader and values our culture of transparency, community, and growth. We look forward to having Jeff meet with the investment community in the new year after he starts, and we will certainly have him with us during our Investor Day we plan to hold this spring. On the governance side, we continue to refresh our board with outstanding talent. I am pleased to welcome Mary Baglivo and Kathy Sandstrom to our board of trustees. Mary was previously the CEO of the Americas for Saatchi & Saatchi, and Kathy was a senior managing director at Heitman, one of the largest real estate investors in the United States, both on the private and public side. I will now turn it over to our Chief Financial Officer, Mark Langer.