Urban Edge Properties

Ladies and gentlemen, good morning and welcome to the Urban Edge Properties Third Quarter 2024 Earnings Call. 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 and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Areeba Ahmed, Investor Relations Associate. Please go ahead.

Good morning and welcome to Urban Edge Properties' third quarter 2024 earnings conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Jeff Mualim, Chief Operating Officer, Mark Langer, Chief Financial Officer, Rob Milton, General Counsel, Scott Oster, EVP 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 results, financial condition, and business may differ. 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, including reference to our 2025 FFO as adjusted targets. Reconciliations of these measures to GAAP results are available in our earnings release, supplemental disclosure package, and our April 2023 investor presentation 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, Areeba, and good morning, everyone. We had another great quarter, generating 9% FFO per share growth as compared to the third quarter of last year and 7% growth year to date. Our growth was driven by a 5.1% increase in same property net operating income and accretion from our capital recycling activity. Over the past year, we have acquired $552 million of high-quality shopping centers at a 7% cap rate, mostly funded through $425 million of dispositions of non-core and single-tenant assets at a 5% cap rate. Yesterday, we acquired The Village at Waugh Chapel, a 382,000 square foot grocery anchored shopping center located in Anne Arundel County, Maryland for $126 million at a cap rate of 6.6% in an off-market transaction. The acquisition included the assumption of a $60 million mortgage with a significantly below market rate of 3.76% with approximately seven years of term remaining, resulting in an expected first-year leverage return of 9%. We expect NOI should grow by approximately 3% a year over the next 10 years. The property is anchored by Safeway, Marshalls, HomeGoods, TJ Maxx, and a good mix of shop uses, including Chick-fil-A, Chipotle, and Sephora. The center attracts 6 million visitors a year, ranking in the 96th percentile of all shopping centers in Maryland. The acquisition was funded in part with proceeds from selling a freestanding Home Depot in Union, New Jersey for $71 million at a cap rate of 5.35%, which also closed yesterday. Home Depot's rent is flat for the next 14 years and contains another 50 years of term through options with minimal growth. We are underwriting several assets in the DC to Boston corridor that would likely be funded in part through the disposition of lower growth single tenant assets like the Home Depot property we just sold. Even though the acquisition market is more competitive, cap rates have also compressed on single tenant assets So we still expect to make a meaningful spread through future capital recycling. Leasing activity remains strong. We matched last quarter's record volume with the execution of 23 new leases at a same space cash spread of 15%. Shop occupancy increased by 500 basis points compared to the third quarter of 2023 and by 60 basis points sequentially to 90.4%. Our signed but not open pipeline amounts to $24 million, or 9% of net operating income. Notably, in the third quarter, we commenced $6 million of annualized gross rent, a leading indicator for same property NOI growth over the next several quarters. New rent commencements included Ralph's Supermarket at Montehedra, Bath and Body and Crumble Cookies at Burgantown Center, CityMD and Starbucks at Bruckner, and Starbucks at Heritage Square. Based on our better than expected results, strong retail fundamentals, and accretive capital recycling, we increased our 2024 FFO as adjusted guidance to $1.32 to $1.35 per share, up $0.03 per share at the midpoint, reflecting 7% expected FFO growth for the year. We continue to believe that we will reach the high end of our 2025 FFO target of $1.31 to $1.39 per share. Our achievements to date are truly a testament to the quality of our real estate and the dedication and commitment of the Urban Edge team. We are excited about the growth opportunities we see ahead. I will now turn it over to our Chief Operating Officer, Jeff Muellem.