Urban Edge Properties

Welcome to the Urban Edge Properties and Calls. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Eitan Bluman. Please go ahead.

Good morning and welcome to Urban Edge Properties 2023 First Quarter Earnings Conference Call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Jeff Mualem, Chief Operating Officer, Mark Langer, Chief Financial Officer, Rob Milton, General Counsel, Scott Oster, Executive 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.

Great. Thank you, Eitan, and good morning, everyone. I am pleased to announce that we finished the first quarter with strong results. FFO as adjusted was 32 cents per share for the first quarter, up 13% compared to last year. And same property NOI was up significantly at 6.3%. The increases are primarily attributed to new rent commencements and lower operating and G&A expenses. Before I get into the details of the quarter, I want to thank all of you that were able to attend our Investor Day a couple weeks ago. The New York Stock Exchange provided a great venue, and we were thrilled to have the opportunity to engage with so many analysts and investors. Our first quarter results demonstrate continued momentum and successful execution of the growth pillars we outlined during our Investor Day presentation. We opened our presentation with a quote from Willa Cather that reads, we come and go, but the land is always here. Our 1,400 acres of land in densely populated urban areas will constantly be a source of revenue growth as we continue to improve and densify our properties. A great example of this occurred last week when we received site plan approval from the Paramus Planning Board to develop 456 multifamily units on the east side of Burgantown Center. This project features an impressive architectural design, vast landscaping, and numerous amenities. We are currently evaluating offers for the sale or joint venture of this exceptional piece of land. Highlights for the quarter include our signed but not open pipeline, which has grown for the fourth consecutive quarter, increasing to $31 million, or 13% of NOI, up from $29 million in the fourth quarter of 2022. We have another 600,000 square feet of leases in our pipeline, representing $14 million or 6% of NOI. As highlighted in our investor deck, we expect to grow NOI by more than 20% over the next three years, 80% of which is coming from signed but not open leases and contractual rent bumps. Jeff Muellem will provide you with an update on our bed-bath exposure and the tremendous backfill opportunities we are discussing with a range of quality tenants at rents that are at least 30% higher than those in place. We currently have $218 million of active redevelopment projects underway that are expected to generate a healthy 12% unleveraged return of which 95% of the Total Project GLA has been pre-leased. We look forward to seeing new anchor stores open in 2023, including Sector 66 at Las Catalinas, Walgreens at Monte Hadra, Total Wine at Cherry Hill, Nemours Children's Health at Brewmall, and Aldi at Bruckner. Once we complete our redevelopments in progress, Nearly 70% of our portfolio value will have undergone a substantial repositioning and will require less capital in the future. These property upgrades have resulted in stronger, more stable cash flows as we have focused on tenant quality and improved co-tenancy as part of our releasing efforts. In fact, 65% of our assets are anchored by grocers, 10% by Home Depot or Lowe's, and 7% by industrial and self-storage uses, with the remaining 18% anchored by discounters such as TJ Maxx, Burlington, and Ross. We believe the strength of our tenancy provides great stability. Finally, we are proud of our balance sheet. especially after the seven-year $290 million, 6.3% fixed-rate Bergen refinancing announced in April. Only 15% of our debt matures through 2025. We believe the lowest percentage in the sector. In addition, our secure debt strategy sets us apart from our peers and protects our balance sheet in the best possible way as we have no corporate debt obligations. I would like to reiterate the key takeaways from our three-year growth plan that I mentioned during Investor Day. One, we own an irreplaceable $4 billion portfolio primarily situated in the DC to Boston corridor, the most densely populated and supply constrained region in the country. Our tenants generate high sales as evidenced by the more than $900 per square foot our grocers generate in these markets. Two, we are positioned to grow our net operating income by more than 20% over the next three years, nearly 80% of which is derived from executed leases and contractual rent bumps. Three, we are executing a high yielding, low risk anchor repositioning and redevelopment program with $218 million of active projects expected to generate a 12% return. Four, we have a strong balance sheet with substantial liquidity and very limited debt maturing over the next three years. Five, Our three-year FFO as adjusted target is $1.35 per share in 2025, a 16% increase compared to our updated 2023 guidance. And six, we believe that our stock is undervalued as measured by FFO multiple, implied cap rate, and land and building value. Our land is valued at a little over $2 million an acre. Our buildings are valued at approximately $185 per square foot, which is probably half of the replacement cost before any value attributed to our land. This is even more pronounced on a forward-looking basis given our projected growth through 2025 and the low-risk nature of our plan to achieve it. We are excited to see many of you at ICSE and at the upcoming NARIC conference. I will now turn it over to our Chief Operating Officer, Jeff Muellem.