Urban Edge Properties · NYSE:UE
Urban Edge Properties — Investor Presentation (June 2024)
50 slides from Urban Edge Properties's investor presentation, Jun 3, 2024
Slide 1: Investor Presentation June 2024
INVESTOR PRESENTATION JUNE 2024
Slide 2: Improving Communities
INVESTOR PRESENTATION | JUNE 2024 IMPROVING COMMUNITIES Urban Edge Properties is a NYSE listed real estate investment trust that acquires, owns, redevelops, and manages shopping centers in some of the most densely populated, supply-constrained markets in the country, primarily in the Washington, D.C
Slide 3: Mission Statement
INVESTOR PRESENTATION | JUNE 2024 MISSION STATEMENT Own and improve retail real estate, primarily in the Washington, D.C. to Boston corridor, generating attractive risk-adjusted returns while enhancing communities through strategic leasing, redevelopment and acquisitions. 3
Slide 4: UE Overview
INVESTOR PRESENTATION | JUNE 2024 4 UE OVERVIEW 2015 UE formed via spin-off from VNO 76 Properties 17.4M sf GLA 96.2% SP Leased Occupancy 75% of portfolio value grocery anchored $20.29 Retail ABR PSF Total Liquidity >$700M; only 11% of total debt maturing thru 2026 $2B Market Cap $4B Enterprise Valu
Slide 5: Data as of March 31, 2024, except where noted. With a $2 billion equity
INVESTOR PRESENTATION | JUNE 2024 Data as of March 31, 2024, except where noted. With a $2 billion equity market cap, we have greater opportunity for meaningful internal and external growth Portfolio is concentrated in the D.C. to Boston corridor We own nearly all anchors and outparcels in our shopp
Slide 6: Portfolio Concentrated in D.C. to Boston Corridor
INVESTOR PRESENTATION | JUNE 2024 PORTFOLIO CONCENTRATED IN D.C. TO BOSTON CORRIDOR Most heavily urbanized region in the U.S. 6 90% portfolio NOI generated from properties situated in the D.C. to Boston corridor 2x peer average for 3- mile population density for total portfolio 10x higher population
Slide 7: First-Ring Suburbs of NY Metro
INVESTOR PRESENTATION | JUNE 2024 FIRST-RING SUBURBS OF NY METRO 41 Properties; ~70% of total value 7 Supply Constraints and Population Density drive demand from retailers seeking to expand their physical presence incorporating omnichannel initiatives Population in first-ring NYC suburbs is stable a
Slide 8: Portfolio Situated in Dense, Affluent U.S. Submarkets
INVESTOR PRESENTATION | JUNE 2024 PORTFOLIO SITUATED IN DENSE, AFFLUENT U.S. SUBMARKETS 8 BRX FRT KIM KRG PECO REGROIC SITC UE $70 $75 $80 $85 $90 $95 $100 $105 $110 60 110 160 210 3 -M ile M e d ia n H o u se h o ld In c o m e ( 0 0 0 s) 3-Mile Population (000s)
Slide 9: Portfolio Has Significant Density with Limited Retail Supply
INVESTOR PRESENTATION | JUNE 2024 UEFRT REGKIM KRG SITC ROIC BRX PECO 30 35 40 45 50 55 60 65 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 R e ta il G LA p e r H o u se h o ld ( S u p p ly ) Households per Square Mile (Demand) Source: Bank of America Global Research May 2023 PORTFOLIO HAS SIG
Slide 10: Necessity-Based Tenancy Results in Stable Cash Flows
INVESTOR PRESENTATION | JUNE 2024 NECESSITY-BASED TENANCY RESULTS IN STABLE CASH FLOWS Other Assets 20% (Value-Oriented Anchors) Heritage Square Note: Percentages shown reflect portfolio value by asset type Grocery Anchored Assets 75% Woodmore Towne Centre Home Improvement Anchored 5% West Branch Co
Slide 11: Top 15 Tenants – Dominant Operators with Financial Strength
INVESTOR PRESENTATION | JUNE 2024 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 1.5%1.6%1.7%1.9%2.2%2.2%2.3%2.7%2.8%2.9%3.0%3.1%3.1%4.2%5.6%% of Total ABR 5414455125106996626# of Stores BBBBBB+BBBB+NRAANRABB+BBB+BBB+BBAAAAS&P Credit Rating TOP 15 TENANTS – DOMINANT OPERATORS WITH FINANCIAL STRENGTH By Annualiz
Slide 12: Strong and Resilient Tenant Mix
INVESTOR PRESENTATION | JUNE 2024 PORTFOLIO ABR COMPOSITION BY TENANT CATEGORY(1) 12 STRONG AND RESILIENT TENANT MIX Strong anchor mix of grocers, home improvement and value-oriented retailers Shops consist of vibrant restaurants, apparel, and other necessity goods and services ~90% of ABR made up o
Slide 13: Urban Edge Team
INVESTOR PRESENTATION | JUNE 2024 URBAN EDGE TEAM 13 CECILIA LI SVP, Chief Information Officer JOHN VILLAPIANO SVP, Development SCOTT AUSTER EVP, Head of Leasing Chief Accounting Officer JEFFREY OLSON Chairman and Chief Executive Officer MARK LANGER EVP, Chief Financial Officer ROB MILTON EVP & Gene
Slide 14: Board of Trustees
INVESTOR PRESENTATION | JUNE 2024 BOARD OF TRUSTEES 14 KATHERINE M. SANDSTROM KEVIN P. O’SHEA MARY L. BAGLIVO STEVEN H. GRAPSTEINNORMAN K. JENKINS Lead Trustee JEFFREY S. OLSON Chairman and CEO DOUGLAS W. SESLERCATHERINE D. RICE Diversified board with deep expertise Lead Trustee
Slide 15: Business Update
Business Update _|
Slide 16: Recent Results
INVESTOR PRESENTATION | JUNE 2024 RECENT RESULTS 16 1. Reported FFO as Adjusted of $0.33/sh in 1Q24, up 4.4% compared to 1Q23 and 7.0% compared to 4Q23 2. Same-property NOI including redevelopment increased 3.7% compared to 1Q23 3. Same-property leased occupancy was 96.2%, up 140 bps compared to 1Q2
Slide 17: Demand for Open-Air Centers Is Strong
INVESTOR PRESENTATION | JUNE 2024 DEMAND FOR OPEN-AIR CENTERS IS STRONG 17 Demand is strong, with new store openings outpacing store closures Vacancy at the lowest level in 15 years Grocer, value-oriented retail, QSRs and health and beauty concepts are actively seeking new locations Projected openin
Slide 18: Physical Stores Are Critical to Online Sales
INVESTOR PRESENTATION | JUNE 2024 PHYSICAL STORES ARE CRITICAL TO ONLINE SALES 18 Nearly 42% of e-commerce orders last year involved stores, up from about 27% in 2015 Retailers have found it too expensive and difficult to attract and retain customers without physical stores Using stores as pickup an
Slide 19: Declining U.S. Retail Supply Has Helped Drive Higher Occupancy and Rent Growth
INVESTOR PRESENTATION | JUNE 2024 DECLINING U.S. RETAIL SUPPLY HAS HELPED DRIVE HIGHER OCCUPANCY AND RENT GROWTH 19 Note: Data pertains to non-mall multi-tenant retail. (Excl: single-tenant/net lease, malls) Source: Source: JLL Research, CoStar (Neighborhood center, power center, and strip center) 1
Slide 20: New Retail Construction in the Northeast Is Virtually Non-Existent
INVESTOR PRESENTATION | JUNE 2024 NEW RETAIL CONSTRUCTION IN THE NORTHEAST IS VIRTUALLY NON-EXISTENT 20 Note: Data pertains to data from CT, DC, MA, MD,ME, NH, NJ, NY, PA, RI, VA, and VT Source: JLL Research, CoStar (Neighborhood center, power center, and strip center) 92% 93% 93% 94% 94% 95% 95% 96
Slide 21: Leasing Activity
INVESTOR PRESENTATION | JUNE 2024 LEASING ACTIVITY Record leasing, strong cash spreads, and new vibrant tenants have strengthened our cash flows New leases executed with leading retailers 21 1Q24202320222021 44174159161# of Leases Signed 0.1M0.5M1M0.7MNew Leases SF Executed 0.8M2.0M2.1M1.9M Total Le
Slide 22: Leasing Update
INVESTOR PRESENTATION | JUNE 2024 LEASING UPDATE 22 Leasing activity and rents remain strong due to resilient demand and lack of supply Same-property leased occupancy of 96.2% at the end of 1Q24, up 30 bps from the prior quarter Anchor leased occupancy is ~98%; we are in active negotiation with nati
Slide 23: Leases Signed Not Yet Open Driving NOI Growth
INVESTOR PRESENTATION | JUNE 2024 $27 million of future annual gross rent (10% of NOI) from the SNO pipeline will provide significant earnings and cash flow growth We expect to recognize ~$4 million of these future gross rents in the remainder of 2024 (90% is weighted to the 2nd half of 2024) Nation
Slide 24: The UE Portfolio – Value Drivers
INVESTOR PRESENTATION | JUNE 2024 Ancillary Benefits Improved assets better leasing / renewals / traffic greater ROI THE UE PORTFOLIO – VALUE DRIVERS 24 Accretive Investments Delivered $59M of completed redevelopments at a 10% unleveraged yield during 2023 Current pipeline includes $166M of investme
Slide 25: Active Redevelopment Pipeline
INVESTOR PRESENTATION | JUNE 2024 ACTIVE REDEVELOPMENT PIPELINE 25 » $166M of active projects, with $100M remaining to be funded » Upgrading large vacant spaces with grocers, discounters, and medical uses » New anchor tenants stimulating shop demand and higher quality co-tenancy Status Target Stabil
Slide 26: Huntington Commons | Huntington, NY
INVESTOR PRESENTATION | JUNE 2024 HUNTINGTON COMMONS | HUNTINGTON, NY 26 ‘19-’23 NOI CAGR 25% ‘19 vs ‘23 Visits +50% Investment $42.5M Repositioned asset with new ShopRite, Burlington, and Marshalls, increasing occupancy from 44% to 97% from 2019 to 2023 New anchors and renovation drove the addition
Slide 27: Briarcliff Commons | Morris Plains, NJ
INVESTOR PRESENTATION | JUNE 2024 BRIARCLIFF COMMONS | MORRIS PLAINS, NJ 27 ‘19-’23 NOI CAGR 9% ‘23 vs ‘19 Visits +63% Investment $13.5M The addition of Uncle Giuseppe’s grocery store drove occupancy from 70% to 95% from 2019 to 2023 From 2019 to 2023, shop occupancy increased from 78% to 85% with t
Slide 28: Acquisitions & Dispositions
Acquisitions & Dispositions
Slide 29: Accretive Acquisitions
INVESTOR PRESENTATION | JUNE 2024 Since October 2023, we acquired four properties for $426 million at a weighted average cap rate of 7.2%. We continue to prioritize these efforts, focusing on additional accretive transactions. ACCRETIVE ACQUISITIONS 29 R O X B U R Y T O W N S H IP , N J W A T C H U
Slide 30: Recent Acquisition: Ledgewood Commons, Roxbury Township, NJ
INVESTOR PRESENTATION | JUNE 2024 $83 million acquisition in April 2024 at a ~7.9% cap rate Recently redeveloped grocery anchored shopping center spanning 448K sf on 52 acres located along NJ State Route 10 highway in Roxbury Township, NJ Strong and diverse tenant mix anchored by Walmart Supercenter
Slide 31: Recent Acquisition: Ledgewood Commons, Roxbury Township, NJ
INVESTOR PRESENTATION | JUNE 2024 RECENT ACQUISITION: LEDGEWOOD COMMONS, ROXBURY TOWNSHIP, NJ 31
Slide 32: Recent Acquisition: Heritage Square, Watchung, NJ
INVESTOR PRESENTATION | JUNE 2024 $34 million acquisition in February 2024 at a ~7.8% cap rate Community center retail destination spanning 12 acres / 87,000 sf 100% leased shopping center with high-quality national credit tenants Dominant tenant line up anchored by two TJX concepts, Homesense and S
Slide 33: Recent Acquisition: Heritage Square, Watchung, NJ
INVESTOR PRESENTATION | JUNE 2024 RECENT ACQUISITION: HERITAGE SQUARE, WATCHUNG, NJ National QSR Under Construction 33
Slide 34: Recent Acquisition: Shoppers World, Framingham, MA
INVESTOR PRESENTATION | JUNE 2024 $241 million acquisition in October 2023 at a blended 7% cap rate (with Gateway Center) Large prominent retail destination spanning 92 acres/752K sf Dominant tenant line up anchored by TJ Maxx, Marshalls, Homesense, Sierra Trading Post, Best Buy, Nordstrom Rack, Pub
Slide 35: Recent Acquisition: Shoppers World, Framingham, MA
INVESTOR PRESENTATION | JUNE 2024 RECENT ACQUISITION: SHOPPERS WORLD, FRAMINGHAM, MA 35 Future grocer
Slide 36: Recent Acquisition: Gateway Center, Everett, MA
INVESTOR PRESENTATION | JUNE 2024 $68 million acquisition in October 2023 at a blended 7% cap rate (with Shoppers World) Grocery and home improvement anchored shopping center that sits on an 89-acre site/640K sf Dominant tenant line up anchored by Target, Costco, Home Depot, Total Wine, Ulta and Fiv
Slide 37: Recent Acquisition: Gateway Center, Everett, MA
INVESTOR PRESENTATION | JUNE 2024 RECENT ACQUISITION: GATEWAY CENTER, EVERETT, MA 37
Slide 38: Recent Dispositions
INVESTOR PRESENTATION | JUNE 2024 GLA: 1.2M sf Gross proceeds: $218M Cap rate: 4.9% Sold October 2023 GLA: 173K sf Gross proceeds: $79M Cap rate: 5.9% Sold December 2023 GLA: 75K sf Gross proceeds: $22M Cap rate: 5.5% Sold December 2023 Since October 2023, we disposed of non-core and industrial asse
Slide 39: Balance Sheet & Outlook
Balance Sheet & Outlook _|
Slide 40: Balance Sheet and Financing Update
INVESTOR PRESENTATION | JUNE 2024 BALANCE SHEET AND FINANCING UPDATE 40 $47 $23 $111 $307 $229 $194 $391 $117 $78 $153 $0 $100 $200 $300 $400 2024 2025 2026 2027 2028 2029 2030 2031 2032 Thereafter 4.0% 4.3% 4.0% 4.4% 5.3% 6.0% 5.9% 6.5% 3.5% 6.5% Line of Credit Current Debt Total liquidity of ~$712
Slide 41: 2024 Outlook
INVESTOR PRESENTATION | JUNE 2024 2024 OUTLOOK Increased FFO as Adjusted guidance in 1Q 2024 by $0.03 per share at the midpoint based on our better-than-expected 1Q 2024 results and our accretive acquisition and disposition activities: Excludes items that impact FFO comparability, including gains an
Slide 42: Positioned for Growth
INVESTOR PRESENTATION | JUNE 2024 POSITIONED FOR GROWTH $1.09 $1.21 $1.25 $1.30 $1.31 - $1.39 90.3% 91.0% 92.8% 94%-95% 84% 86% 88% 90% 92% 94% 96% 98% 100% $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 2021 2022 2023 2024 Guidance Midpoint 2025 Target 5-6% S P P h y si c al O c c u p an c y F F O
Slide 43: Corporate Responsibility
Corporate Responsibility _|
Slide 44: Corporate Responsibility Strategy
INVESTOR PRESENTATION | JUNE 2024 CORPORATE RESPONSIBILITY STRATEGY 44 Set goal to reduce Scope 1 and Scope 2 GHG emissions by 30% before 2025 and by 50% before 2030 from a 2015 base year Investing in health and wellness programs, new diversity, equity and inclusion policies and professional and per
Slide 45: Forward-Looking Statements
INVESTOR PRESENTATION | JUNE 2024 FORWARD-LOOKING STATEMENTS Certain statements contained herein constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
Slide 46: Non-GAAP Financial Measures
INVESTOR PRESENTATION | JUNE 2024 NON-GAAP FINANCIAL MEASURES The Company uses certain non-GAAP performance measures, in addition to the primary GAAP presentations, as we believe these measures improve the understanding of the Company's operational results. We continually evaluate the usefulness, re
Slide 47: Non-GAAP Financial Measures
INVESTOR PRESENTATION | JUNE 2024 NON-GAAP FINANCIAL MEASURES Same-property NOI: The Company provides disclosure of NOI on a same-property basis, which includes the results of properties that were owned and operated for the entirety of the reporting periods being compared, which total 66 properties
Slide 48: Non-GAAP Financial Measures
INVESTOR PRESENTATION | JUNE 2024 NON-GAAP FINANCIAL MEASURES Operating Metrics The Company presents certain operating metrics related to our properties, including occupancy, leasing activity and rental rates. Operating metrics are used by the Company and are useful to investors in facilitating an u
Slide 49: 2024 Guidance Net Income to FFO Reconciliation
INVESTOR PRESENTATION | JUNE 2024 Per Diluted Share(1)Guidance 2024E HighLowHighLow(in thousands, except per share amounts) $0.17$0.12$20,700$14,700Net income Less net (income) loss attributable to noncontrolling interests in: (0.01)(0.01)(1,400)(1,400)Operating partnership 0.010.01700700Consolidate
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