Urban Edge Properties (NYSE:UE) reported its Q3 2023 earnings, highlighting a 7% increase in Funds From Operations (FFO) as adjusted per share, strong leasing activity, and successful property transactions. The company also raised its 2023 FFO guidance and expressed confidence in achieving a targeted FFO of $1.35 by 2025.
Key takeaways from the call:
- Urban Edge reported an increase in FFO as adjusted of $0.32 per share, up 7% from the previous year.
- Same property occupancy increased by 130 basis points, with new leasing spreads of 26%.
- The company acquired two shopping centers in Boston for $309 million and sold its East Hanover Warehouse portfolio for $218 million.
- Urban Edge is in advanced negotiations for the sale of over $100 million of other non-core assets.
- The company increased its earnings guidance for 2023 FFO as adjusted by $0.06 per share at the midpoint.
- Urban Edge's CEO expressed confidence in achieving the targeted FFO of $1.35 in 2025.
During the call, Urban Edge (NYSE:UE) discussed its debt management strategy, recent mortgage financings, and capital recycling efforts. The company executed four new mortgage financings totaling $426 million at a weighted average rate of 6.3% and a weighted average duration of 7.2 years. This secured debt strategy, according to the company, provides flexibility and is expected to reduce its net debt to EBITDA ratio from 6.9 times to 6.6 times.
Despite the recent increase in interest rates since April, the company remains confident in reaching its FFO target of $1.35 by 2025. The representative, Jeff Olson, noted that the company is open to future recycling opportunities depending on market conditions. The raised FFO guidance was attributed to external growth transactions and improved performance in same-store sales. The company expects continued growth in the fourth quarter, anticipating benefits from fourth-quarter percentage rent and specialty lease income.
The earnings call concluded with management expressing appreciation for the interest and looking forward to future conversations. The company's strategic moves in property transactions, debt management, and capital recycling underscore its growth strategy for the coming years.
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