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    Earnings call· Jun 2026(Q2 FY26)

    Urban Edge Properties Q2 FY26 earnings call UE

    Aug 6, 2026 Source

    Executive summary

    Urban Edge Properties Q2 FY26 — Record FFO and Raised Guidance on Strong Leasing Demand

    Urban Edge Properties delivered a strong second quarter, exceeding internal expectations with record FFO and robust same-property NOI growth, driven by high demand for quality retail space in supply-constrained markets. The company is actively executing a capital recycling strategy, acquiring higher-growth assets and divesting lower-growth properties, while leveraging a significant signed-not-open pipeline and redevelopment platform to fuel future earnings. Despite increased competition in the acquisition market and a slight dip in occupancy due to strategic tenant upgrades, management remains confident in achieving attractive rent growth and portfolio quality improvements.

    Highlights

    5

    • Reported record FFO as adjusted of $0.40 per share, a 10% increase over Q2 FY25.

    • Same-property NOI, including redevelopment, grew 3.2% for the quarter and 3% year-to-date.

    • Signed but not open pipeline represents $22 million of future annual gross rent, approximately 7% of current NOI.

    • Executed 26 leases (199,000 sq ft) with new leases generating a same space cash spread of nearly 30% year-to-date.

    • Raised full year FFO as adjusted guidance by $0.02 per share at the midpoint to $1.50-$1.54 per share, implying 6% growth over 2025.

    Concerns

    3

    • Same-property leased occupancy decreased 10 basis points sequentially to 96.3% and 40 basis points YoY due to Wren Kitchens bankruptcy.

    • Shop occupancy declined 70 basis points sequentially to 91.7% due to tenant quality emphasis and recapture opportunities.

    • Market for acquisitions remains highly competitive with significant capital chasing retail, compressing cap rates across the sector.

    Guidance & targets

    6
    CategoryTargetConfidence
    FFO as adjusted per share
    $1.50 to $1.54
    high materiality
    High
    Same-property NOI growth (including redevelopment)
    3.25% to 3.75%
    high materiality
    High
    Credit losses
    60 to 75 basis points of gross rent
    medium materiality
    Medium
    Signed but not open (SNO) pipeline new rents
    $1.7 million
    medium materiality
    High
    Acquisition volume
    $95 million
    medium materiality
    High
    Disposition volume
    $60.5 million
    medium materiality
    High

    Operational metrics

    25
    FFO as adjusted per share
    $0.40up 10% YoY
    Q2 FY26
    FFO as adjusted per share
    $0.40up 7% YoY
    YTD Q2 FY26
    Same-property NOI growth (including redevelopment)
    3.2%YoY
    Q2 FY26
    Same-property NOI growth (including redevelopment)
    3%YoY
    YTD Q2 FY26
    Traffic increase
    3%vs prior year
    Q2 FY26
    Capital recycling acquisitions
    $700 million
    Past 3 years
    Capital recycling dispositions
    $500 million
    Past 3 years
    Leases executed
    26
    Q2 FY26
    New lease same space cash spread
    13%lower than Q1
    Q2 FY26
    Renewal and option exercise same space cash spread
    10%
    Q2 FY26
    New lease same space cash spread
    nearly 30%
    YTD Q2 FY26
    Same-property leased occupancy
    96.3%down 10 bps QoQ, down 40 bps YoY
    Q2 FY26 end
    Shop occupancy
    91.7%declined 70 bps sequentially
    Q2 FY26 end
    Development project investment
    $33 million
    Last 12 months
    Total liquidity
    $960 million
    Q2 FY26 end
    Cash on hand
    $82 million
    Q2 FY26 end
    Credit facility drawn
    $55 million
    Q2 FY26 end
    Net debt to adjusted EBITDA
    5.5x
    Q2 FY26
    Lease termination income
    $0.02
    Q2 FY26

    From Wren Kitchens

    Accelerated amortization and tax refund
    $0.01
    Q2 FY26

    Each contributed about $500,000

    Bad debt
    40 bps
    Q2 FY26

    Of gross rents; benefited from collections on accounts reserved in Q1.

    Shop space backfill average rents
    $45
    Over balance of year
    Shop space backfill mark-to-market
    approximately 20%
    Over balance of year
    Shop occupancy target
    over 93%
    By year-end
    Blended occupancy target
    97%
    By year-end

    Industry KPIs

    6
    MetricValueDetails
    Credit loss ratio40 bpsbps
    Lease termination income$0.02USD per share
    Same store rent revenue growth3.2%%
    Investment volume and initial cash yield$50.5 millionUSD
    Rent recapture rate on renewals re leasing10%%
    Blended acquisition cap rate and spread vs cost6%%

    Orderbook & backlog

    2
    Signed but not open (SNO) pipeline annual gross rent$22 millionQ2 FY26

    Approximately 7% of current NOI

    Expected to generate $1.7 million in new rents in remainder of FY26, with majority online in Q4, representing $7.7 million annualized.

    Disposition volume under contract$60.5 millionQ2 FY26

    Unchanged from prior guidance

    Reflects expected closing of Briarcliff Commons in August 2026.

    Deals & partnerships

    3
    The Shops at West Falls ChurchAcquired an 85,000 square foot Safeway-anchored center.$40 million

    Located in Falls Church, Virginia, a densely populated and affluent submarket of Washington, D.C. Offers visible growth through lease-up, contractual annual rent increases, and mark-to-market opportunities.

    Shoppers WorldPurchased a ground lease position.$10.5 million

    Located in Framingham, Massachusetts.

    Briarcliff CommonsUnder contract to sell a Kohl's-anchored center.$60.5 million

    Located in New Jersey. Expected to close this month.

    Capital programs

    3
    Bruckner Commons Redevelopmentunderway

    Benefit: Addition of BJ's Wholesale Club, Ross, Chick-fil-A, Chipotle, totaling over $8 million in annual rent.

    Tenants are all under construction with rent commencement dates beginning throughout 2027.

    Hudson Mall Reinventionunderway

    Benefit: Opening of new Burlington Stores (May), HomeGoods under construction. Marks the beginning of reinvention.

    One project stabilized at Hudson Mall with Burlington opening in May. HomeGoods scheduled to open later this year.

    Active Development Pipelineunderway$155 million
    Period spend: $67 million remaining to fund

    Benefit: Expected to yield 12%. Comprised exclusively of projects emanating from signed leases.

    Includes projects like Bruckner Commons and Hudson Mall. In the last 12 months, $33 million invested in completed projects yielding 25%.

    Risks & headwinds

    3
    Unexpected Wren Kitchens bankruptcyQ2 FY26

    Occupied 2 locations within portfolio; contributed to 10 bps sequential decrease in same-property leased occupancy.

    Mitigation: Collected meaningful settlement; expect improved merchandising mix at healthy spreads.

    Shop occupancy decline due to tenant quality emphasisQ2 FY26

    Shop occupancy declined 70 bps sequentially to 91.7%; about half tied to recapture opportunities where existing tenant was not renewed.

    Mitigation: Expect to backfill shop space at average rents of $45/sq ft (20% mark-to-market) and push shop occupancy back to over 93% over the balance of the year.

    Highly competitive acquisition marketOngoing

    Significant capital (institutional and private) chasing retail, compressing cap rates across the sector.

    Mitigation: Focus on fragmented market to find deals meeting return thresholds; fund activity by selling lower growth, high credit stabilized assets; double down on off-market deals and leverage buyer reputation.

    What to watch in Q3 FY26

    5

    Shop occupancy recovery

    By year-end
    Current91.7%
    TargetOver 93%

    Why it matters

    Indicates success of strategic tenant upgrades and backfill efforts, impacting future NOI.

    Over the balance of the year, we expect to backfill shop space at average rents in the $45 a square foot range, a mark-to-market of approximately 20% and push shop occupancy back to over 93%.

    Q&A highlights

    6

    Asked for clarification on how the $0.03 of one-time benefits (lease termination income, accelerated amortization, tax refund) reconciled with the $0.02 FFO guidance increase, implying a net negative impact from other factors.

    Mark Langer explained that some of the termination income was already baked into the plan as rent, and some Q2 benefits (percentage rent timing) would have occurred later in the year, thus not being purely incremental to the full-year guidance raise.

    “Yes, Michael, the $0.03 one-timers that I highlight versus the $0.02 increase in guide, part of that, as you said, was termination income. So on a full year basis, some of that income was already baked into our plan in the form of rent. And likewise, some of the beat this quarter I highlight from the timing of percentage rent elevated the second quarter, but would have normally come in later in the year. So that kind of reconciles the $0.03 onetimer versus the $0.02 bump.”

    asked by Michael Goldsmith · answered by Mark Langer

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Demand and Strategic Leasing

    Demand for high-quality retail space in the D.C. to Boston corridor remains robust, allowing Urban Edge to be highly strategic in its leasing efforts. The company focuses on identifying long-term tenants and pushing for strong initial rents, capital contributions, and favorable ongoing economics like rent increases. This approach has resulted in new lease cash spreads exceeding 20% for the fifth consecutive year, despite quarter-to-quarter fluctuations, with year-to-date spreads at nearly 30%.

    02

    Capital Recycling for Portfolio Enhancement

    Urban Edge is actively executing a capital recycling strategy to improve asset quality and long-term growth. Over the past three years, the company acquired approximately $700 million of high-quality shopping centers at a 7% cap rate and sold approximately $500 million of noncore properties at a 5.2% cap rate. Recent transactions include the acquisition of The Shops at West Falls Church for $40 million at a 6% cap rate and the disposition of Briarcliff Commons for $60.5 million, expected to close in August.

    03

    Development and Redevelopment Pipeline

    The company maintains an active development pipeline of $155 million, expected to yield 12%, with $67 million remaining to fund. This pipeline is exclusively comprised of projects emanating from signed leases, ensuring visibility into future NOI growth. Key projects include Bruckner Commons in the Bronx, adding BJ's Wholesale Club, Ross, Chick-fil-A, and Chipotle with rent commencements throughout 2027, and the reinvention of Hudson Mall, with Burlington Stores recently opened and HomeGoods under construction.

    04

    Occupancy Management and Tenant Quality

    While same-property leased occupancy saw a slight decrease to 96.3% and shop occupancy to 91.7%, this was largely attributed to the strategic decision to vacate weaker tenants and the unexpected Wren Kitchens bankruptcy. Management views these as opportunities to upgrade the merchandising mix and expects shop occupancy to return to over 93% by year-end, backfilling space at average rents of $45 per square foot with a 20% mark-to-market. Blended occupancy is targeted at 97% by year-end.

    05

    Balance Sheet Strength and Liquidity

    Urban Edge maintains a strong balance sheet with total liquidity of $960 million, including $82 million of cash on hand. Net debt to adjusted EBITDA stands at a healthy 5.5x, providing ample capacity to pursue future growth opportunities. The company's portfolio is largely unencumbered, with 31 individual nonrecourse mortgages and 44 assets unencumbered, offering significant financial flexibility.

    AI-generated summary of the company’s earnings call. Not investment advice.