Good morning. And welcome to the Urban Edge Properties 2023 Year End Earnings Conference Call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer; Jeff Mooallem, Chief Operating Officer; Mark Langer, Chief Financial Officer; Rob Milton, General Counsel; Scott Auster, EVP and Head of Leasing; and Andrea Drazin, 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 in which the company does not undertake to update. Our actual results, financial conditions 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. 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, Areeba, and Happy Valentine’s Day to everyone. As highlighted in our press release, 2023 was a record year from virtually every perspective. Leasing, development, refinancings, acquisitions, dispositions, executive and board refreshment, simplification, and earnings growth. Our total return to shareholders was 35%, the highest in the shopping center REIT sector, outperforming our peers by 2,300 basis points. Moreover, we are optimistic about our future, particularly due to several points of differentiation relative to our peers. First, our portfolio is concentrated in the D.C. to Boston corridor, the most densely populated supply-constrained area in the country. This not only results in high embedded land values, but further limits new supply due to lack of available land and high costs to develop in our markets. Second, we have executed leases that will generate $27 million of rent upon commencement, representing 11% of our current NOI. We also have $168 million of anchor repositioning and redevelopment projects underway, expected to generate a 15% return. Importantly, over 90% of this pipeline is pre-leased. Third, our size. With an equity market cap of approximately $2 billion, we have a greater opportunity to increase per share earnings through higher internal growth and modest acquisition activity. For example, we have one $80 million property in our acquisition pipeline, which, if closed, should increase FFO by a penny a share on a leverage-neutral basis. Our FFO growth targets for 2024 and 2025 reflect minimal acquisition activity. Fourth, our balance sheet and secured debt strategy. Our long-term debt consists solely of non-recourse single-asset mortgages. This has allowed us to eliminate nearly $100 billion of debt during market dislocations. Only 13% of our debt is maturing through 2026 and we maintain a well-laddered debt maturity profile. Fifth, we own nearly all the anchors in our shopping centers,…

Thanks, Jeff, and good morning, everyone. I echo Jeff’s appreciation for the amazing job our team did in 2023, my first year at Urban Edge. As we look into 2024 and beyond, I feel confident that our efforts around capital recycling, leasing and development will continue to produce these strong results. First, acquisitions and dispositions. Our October 2023 sale of an industrial portfolio in East Hanover, New Jersey and our simultaneous purchase of Shoppers World and Gateway Center in Boston were our most notable transactions of the year. We’re delighted to add these two great retail assets to Urban Edge and I can tell you that retailer demand has already exceeded our initial expectations. We’ve been active on other fronts as well. In December, we sold an additional $101 million of non-core assets at a blended 5.8% cap rate and we’re now under contract to sell two small non-core properties for a total of $38 million by the end of this quarter at a blended 5% cap rate. We’ve also continued our buying momentum with last week’s acquisition of Heritage Square in Watchung, New Jersey for $34 million. Heritage Square is anchored by two TJX concepts, has four out parcels and is diagonally across Route 22 from our existing Greenbrook Commons, anchored by BJ’s and Aldi’s. We love the critical mass, stable national retailer lineup and flexibility that this property provides. We acquired Heritage Square at a going in cap rate above 7.75%, making it immediately accretive and providing future growth through blow market rents with minimal turnover risk. It’s worth mentioning here that the investment sales market is continuing to come back to life as both buyers and sellers have adjusted to the new normal for interest and cap rates. We’re seeing more and more deals, both on market…

Thanks, Jeff. Good morning. I will comment on our fourth quarter results, provide insights on our balance sheet and liquidity, and conclude with an outline of key assumptions impacting our 2024 guidance. Starting with our results for the quarter, we reported FFO as adjusted at $0.31 per share in the fourth quarter and $1.25 per share for the full year, achieving the high end of our guidance range. Same-property NOI growth, including redevelopment, was down 1.3% compared to the fourth quarter of 2022 and up 2.5% for the full year compared to 2022. When excluding the impact of out-of-period collections, same-property NOI growth with redevelopment was up 0.6% in the quarter and up 4.3% for the year. The 4.3% growth rate was at the high end of our prior guidance range of 3.5% to 4.5%. As we expected, there was a noticeable swing between headline NOI growth and the growth rate excluding collections on out-of-period receivables given nearly $2 million of collections in Q4 of last year, compared to about $700,000 received in Q4 of 2023. We also expected fourth quarter NOI to be impacted by the timing of certain deferred maintenance projects that were completed towards the end of the year. On the financing front, we obtained a new six-year $43.7 million non-recourse mortgage secured by Huntington Commons at a fixed rate of 6.29%, executed at a spread of 185 basis points and we paid off our $20.7 million maturing mortgage at Hudson Mall. After the quarter, we prepaid three variable rate mortgages aggregating $76 million that bore interest at a rate of SOFR plus 200 basis points or 7.34%. Looking ahead, as Jeff highlighted, our debt maturity profile is in great shape as we have minimum maturities aggregating $213 million through 2026, representing only 13% of outstanding debt.…

Thank you. [Operator Instructions] Thank you. And the first question comes from the line of Floris Van Dijkum with Compass Point. Please proceed with your question.

Good morning, guys.

Hey. Good morning, Floris.

Thanks for allowing me to ask your question. I’ve got a -- let me start with something that Jeff talked about, which I think is actually really interesting and potentially massive incremental upside, I think, from where we stand today, even though your pipeline is already, I think, 11% of NOI growth, something like that. Your 12% vacancy in your shop space, which is, based on my math, it’s almost $12 million of incremental ABI -- ABR upsides. What is going to move the needle there? Is that dependent on you doing more anchor repositionings and upgrading, redeveloping the assets or are you now finding greater demand from retailers just to take the space as is or is it dependent on you spending money on the centers and how do -- and how much potentially can you get at that $12 million potential bogey?

Hey, Floris. Good morning. Thanks for the question. Yeah. I mean, like anything else, there’s a few different answers, one of which is we’ve done so much anchor repositioning work over the last few years that we will start to see the fruits of that labor coming through in the shop occupancy. So a lot of our centers where new anchors have opened, for instance, we mentioned earlier in the call our asset in Watchung, New Jersey, we just had an Aldi open there in the fourth quarter. So there’ll be some shop leasing that’s a result of better anchor repositioning over the last few years. The second answer I’d give you is that the team is super focused on shop this year. We’re pretty much where we need to be on an anchor portfolio occupancy basis, so we’re really looking harder at all of our shops, spending more time canvassing, spending more time on the ground with brokers and with smaller retailers and we think that’ll also lead to some results. And then the third component to keep in mind is a lot of the shop occupancy gains we’re expecting do come from converting temporary tenants to permanent tenants. So in Puerto Rico, for example, we have quite a bit of temporary tenant space that we know those tenants are anxious to either get converted into permanent tenants or we have other people sort of waiting to take those spaces. So we’ll see some shop occupancy gains that won’t necessarily be fresh dollars. It’ll be the incremental dollars between the temp and the perm, which will hurt your little your $12 million number there a little bit, but there still we’re expecting about a $1 million of total gains from converting temp to permanent over the next year.

And Floris, the only thing I’d add is we actually made that part of an STI goal for the executive team and then obviously for the leasing team, specifically on shop leasing and I believe our targeted amount is around $6.5 million this year.

Great. And maybe a follow-up question, if I may. I’d love to get your an update on what’s going on at Sunrise as well as Hudson. I saw that you paid off the mortgage at Hudson. Any particular reason why you wanted to do that? Does that give you more flexibility and talk a little bit about the entitlement process at those properties?

Yeah. At Hudson, it does give us more flexibility. It was not that large of a loan to begin with. So we want to keep it unencumbered while we go through the process of redeveloping that asset, which is still in the early stages, but it has so much potential. Lots of stuff going on at Sunrise, but we can’t get into any specifics just given the confidential nature of the discussions underway, but we’re very optimistic and we hope to provide more guidance once it’s appropriate for us to do so.

Great. That’s it for me. Thanks.

Thank you, Floris.

Our next question is coming from the line of Samir Khanal with Evercore ISI. Please proceed with your question.

Hey, Jeff. Good morning. I guess with lease occupancy at 98% now, especially on the anchor side, just generally, what’s the conversation been with anchor tenants today, right? I mean, given all the comments you made on supply to strong demand, I mean, historically, they’ve paid lower rent. So trying to understand how much more runway there is on pricing power.

Yeah. Hey, Samir. It’s Jeff Mooallem. Good morning. Yeah. I would say that a 98% leased anchor portfolio allows us to play a little more offense than defense and certainly more offense than we’ve been able to play in the past. We only have a few anchor boxes left, but we have other anchor boxes that we view to be under leased, meaning if we have the opportunity to get them back and those conversations can get started, we think there’s a lot of spread in the rents. Some of those are tenants that are potential watch list tenants, so we keep a close eye on those and kind of think about who we want to put in and at what kind of rent rates if we get certain space back. But your question is a good one. There’s certainly an opportunity now to push not just rent, but to push other things that are important to us, increases, restrictions, all of that sort of stuff, the amount of capital we put into space, that all goes into the deals, and of course, if we have the leverage of less vacancy or more users for our vacancy, we can cut a better deal.

Got it. And I guess, Mark, on the same-store NOI growth, the 3% to 5%, I mean, it’s still a pretty wide range there. Maybe talk us through, what needs to happen to sort of get us to the top end and the low end there. Thanks.

Sure. Good morning, Samir. So really, the main pillars, when we look at our NOI growth in that range, it gets down to the pace and rate at which the incoming leases get executed and filled. So from an RCD space basis, you saw my comments on the S&O and the timing of that. So that’s one element. And another big element, of course, is the tenant credit loss provision, which has its own range. So in order to get to the high and low end, it’s really a function of taking for the low end, the more conservative levels of bad debt, some tenant fallout and some slowdown in the pace of the rent commencements. And on the upper end of that range, Samir, it’s really getting to low levels of reserve, low fallout, and getting full execution on the S&O. So those are the really the biggest drivers.

And maybe as a follow-up, I mean, is it taking longer to open up open tenants these days, given some of the approvals you need, maybe talk around that a little bit? Thanks.

Samir, you’re hitting on all my hot buttons today. Yeah. Listen, I mean, it’s just the nature of the business where we are today. Things take a little bit longer to negotiate. Things take a little bit longer to get approved. There’s more municipality involvement than there has historically been in the past. We are in some very high density, good income demographic locations, and generally, those are the places that have towns that get very involved in a permitting process. So you get the bad along with the good of these kinds of first-ranked suburban locations. It is taking longer than we’d like. We’ve had a couple of deals where we’ve pushed delivery back a quarter or two quarters. We are getting it done, but certainly, we’d love to expedite the process.

Thank you.

Our next question is from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.

Hey. Just two quick ones for me. Just on the same-store on why, both sort of the 4Q number, you talked about sort of the, I think, there was some out-of-period stuff that happened in there. Maybe can you just provide a little bit more color on what happened in 4Q and why and the diversion between the first half versus second half in the 2024 guidance as well?

Sure. Good morning, Ron. It’s Mark. 4Q was -- the specific answer was really the timing. We -- as we noted in the press release, the deferred maintenance. The big dollars really come from some parking lot and paving projects. That was the big driver. So it was just a function of timing. If you look on a full year basis, as I said in my comment, the NOI number for the year was in line or even behind of our guidance. In particular, when you exclude the other big variable in this quarter, Ron, on a year-over-year basis was the collections from out-of- period receivables. I mean, that was a meaningful difference of about a $1.3 million and that we had expected as well. So the combination of just the timing of spend, and so I just say, if you look at it more on a full year basis, you’d get a better picture than just looking individually at Q4, which is evident when you look at our guide for next year.

Right. And then so for the guide for next year, I think, you talked about the first half potentially being lower before wrapping in the second half of the year. Is that sort of similar timing? Is it lease commencements? What’s sort of driving that?

Yeah. Two factors driving that. One is just seasonality on the OpEx side. Snow removal costs, obviously, much more pronounced in 1Q and sometimes even a little in Q2. And then, secondly and importantly, what I commented on in the opening remarks about the cadence and pace of the S&O delivery, Ron, 75% of that S&O amount that we disclosed this year is really coming in the back half of the year. So NOI and FFO will be a gradual build and not ratable for those two factors, both on the expense side and just the timing of rent commencements.

Great. And so just my last one, if I may, is just on, so I saw the Heritage Square deal. Let me just talk just broad strokes about the acquisition market, are you seeing sort of more opportunities, less opportunities, how are you guys thinking about that pipeline this year?

Yeah. I mean, I think, we’re seeing more opportunities. We do have a nice pipeline that’s building. We closed on Heritage. We’ve got probably another $80-ish million under serious negotiation at the time and we do hope to close on more acquisitions this year. We’re finding that, the market is tough to find an asset that meets all of the characteristics that we’re looking for, so maybe every one out of 100 deals sort of fits our profile, but Heritage Square certainly was one of those and the one that we have -- that we’re negotiating fits that as well. Jeff, do you want to add anything to that?

No. I would echo that the market is a little bit -- it’s still tough, it’s still tight, but what is a little different, Ron, from maybe in past cycles is, because interest rates are not at historic lows anymore, the highly levered buyers or the buyers who are maybe dependent on raising capital for investment deals don’t show up at the table quite as often, and when they do, they don’t have quite the same credibility and certainty with the sellers that we do as a well-capitalized all cash buyer, so we are seeing some competitive advantages as a buyer in the market today versus where it might have been a few years ago.

Great. Thanks so much.

Thank you.

[Operator Instructions] The next questions are from the line of Paulina Rojas with Green Street. Please proceed with your questions.

Good morning. And following up with a prior question, so you have the plan to do modest acquisition and you have -- your preferred option has been recycling assets, but if you were to see an opportunity, larger opportunity, would you consider issuing equity to take advantage of that, considering how well your stock has done recently?

Hi, Paulina. I think we would provided again that all the boxes are checked, where the portfolio is accretive in terms of cap rate relative to implied cap rate, growth relative to the growth of our portfolio, risk relative to risk levels in our portfolio, but yeah, I think, that could be a source of capital for us under the right circumstances.

Okay. And then, I’m curious about...

And again, Paulina, what I would come back to, which I think is different from many of our peers in this space, because of our company size, there aren’t that many companies that can do an $80 million deal and actually show a penny a share in FFO accretion. So this could play to our advantage if everything lines up.

Yes. I agree. And then, I’m looking at the Heritage property you acquired, it’s anchored by Ulta, and it has no grocer and that’s what I thought. So, the industry in general, investors love grocery anchored centers. So I’m intrigued by your thoughts about what do you see is the benefit of adding a grocer to centers like this in terms of…

Well, I mean, in particular, this center is anchored by two TJX concepts and in total…

Okay.

… I would say they bring the same amount of traffic to the center as a grocery store. By the way, TJX is now our largest tenant and we love TJX.

Yeah.

We think they are a phenomenal company, so we looked at it from that perspective.

Paulina, I would add to that…

Yeah.

I would add to that, that this center has four out parcels to, I believe, the best-in-class tenants in each of their categories. You have a Miller’s Ale House, a CityMD, a Chick-fil-A and a Starbucks that’s under construction. So those out parcels alone drive a tremendous amount of traffic. We own the property across the street, which has a BJ’s Warehouse Club and an Aldi’s grocer, so we’re very familiar with the trade area. In our view, more important than having a grocer in the property is really understanding the market and this is a market we know really well. We feel very comfortable with the tenancy there.

That’s very interesting and do you think that there is a cap rate compression for having a grocer, even if it’s unwarranted?

No question. No question, Paulina. This could have been a sub-six asset, 6% cap rate asset with a grocer -- with a high quality grocer or around 6%.

And then, if I may, the last one, I mean, we have talked about how good fundamentals are. Big picture, do you think this is a business that could grow on a same-store basis more than 3% in the coming years…

I think it’s probably 2% to 3%. I think it’s more likely a 2% to 3% business for the next several years. I think that trend could move in a positive direction, but it’s only as leases expire, which takes a longer time period and I think it’s possible that we get above that 3%, but it’s going to take some time to get there as an industry.

Great. Thank you.

Thank you. At this time, we’ve reached the end of our question-and-answer session. I’ll now turn the floor back to Jeff Olson for closing remarks.

Great. We appreciate your interest in UE and we look forward to seeing many of you soon. Thank you very much.

Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.