Urban Edge Properties LP: 2025 Performance and Strategic Outlook

Urban Edge Properties LP (UE) concluded 2025 with strong financial results and strategic portfolio enhancements. The company continued its focus on owning, managing, and redeveloping high-quality, necessity-based shopping centers in dense, affluent suburban communities, primarily along the East Coast. Throughout the year, UE actively shaped its portfolio and strengthened its financial foundation, successfully navigating a dynamic retail landscape.

Business Overview

Urban Edge Properties LP (UE) operates as a real estate investment trust (REIT). It primarily owns, manages, acquires, develops, and redevelops high-quality retail properties. UE's portfolio centers on necessity-based shopping centers in dense, affluent suburban communities, predominantly located along the East Coast of the United States. The company strategically targets properties anchored by essential retailers, such as grocery stores, to secure stable cash flow and build resilience against e-commerce trends.

Financial Performance

Urban Edge delivered robust financial performance for the fiscal year ended December 31, 2025:

• Total revenue reached $355 million, a 5.2% increase over the previous year. Strong leasing activity and rental rate growth drove this increase.
• Net income attributable to common shareholders was $125 million, or $1.55 per diluted share.
• Funds From Operations (FFO), a key metric for REITs, grew by a healthy 7.3% year-over-year, reaching $2.05 per diluted share.
• Same-property Net Operating Income (NOI) increased by a solid 3.8%, reflecting effective property management and strong tenant demand.

Management Discussion

UE executed a clear strategy of portfolio optimization throughout 2025. The company successfully sold five non-core properties, generating approximately $260 million in total gross proceeds. These divestments included:

• Bergen Town Center for $150 million in April.
• Two additional properties for a combined $75 million in June.

These sales continued a trend of strategic divestments from 2024. They form part of a broader strategy to:

• Streamline the portfolio.
• Reduce exposure to less desirable assets.
• Unlock capital for debt reduction and reinvestment into higher-growth opportunities within core markets.

Management pursued these divestitures to enhance portfolio quality and focus on assets with higher growth potential and stronger demographic profiles.

Demonstrating proactive capital management, UE secured new term loans totaling $300 million in January 2026. This financing included a $150 million 5-year loan and a $150 million 7-year loan. The company primarily used these funds to refinance existing debt, extend maturities, and enhance liquidity, positioning itself for future flexibility. This action underscores management's commitment to maintaining a flexible and well-laddered debt maturity schedule.

Financial Health

Urban Edge maintains a disciplined approach to its balance sheet. As of December 31, 2025:

• The company reported $110 million in cash and cash equivalents.
• Total consolidated debt stood at approximately $1.6 billion.

UE prudently structures its debt portfolio, with approximately 70% at fixed interest rates. This structure significantly mitigates exposure to interest rate volatility. The remaining 30% is subject to adjustable rates, primarily through the company's revolving credit facility and certain property-specific mortgages. Urban Edge also has access to a $400 million revolving credit facility, providing ample liquidity for operational needs and strategic initiatives. This strong liquidity position and conservative debt structure underpin the company's financial stability.

Risk Factors

While Urban Edge demonstrates strong fundamentals, investors should be aware of certain risks:

• Tenant Concentration: The Home Depot, UE's largest tenant, generates approximately 9% of the company's rental income. While Home Depot is a strong, essential retailer, any significant negative change in its business or occupancy could impact UE's rental revenue.
• Interest Rate Fluctuations: Although most of its debt is fixed, the 30% exposure to variable rates means rising interest rates could increase borrowing costs, potentially affecting net income and FFO.
• Economic Downturns: As a retail REIT, Urban Edge remains vulnerable to broader economic downturns. These could lead to reduced consumer spending, tenant bankruptcies, and lower demand for retail space.
• E-commerce Competition: The ongoing shift to online shopping continues to challenge traditional brick-and-mortar retail. However, UE's focus on necessity-based and grocery-anchored centers provides some resilience.
• Real Estate Market Risks: Various factors can affect the value of real estate assets and rental income. These include local economic conditions, property taxes, operating expenses, and competition from other properties.
• Redevelopment Risks: The company's strategy includes redevelopment projects, which inherently carry risks such as cost overruns, delays, and failure to achieve projected returns.

Competitive Position and Future Outlook

Urban Edge operates in a highly competitive retail real estate market. Its strategy focuses on acquiring and redeveloping properties in densely populated, high-barrier-to-entry markets, often anchored by essential retailers like grocery stores. This positioning creates resilient centers that serve daily consumer needs, differentiating them from traditional malls and less strategically located retail assets. The company's competitive advantages stem from its focus on necessity-based retail, strong tenant relationships, and expertise in value-add redevelopment within its target markets.

Looking ahead, Urban Edge Properties commits to enhancing shareholder value through continued portfolio optimization, strategic redevelopment projects, and disciplined capital allocation. The company anticipates further selective property sales to refine its asset base and plans to leverage its strong balance sheet to pursue accretive investment opportunities within its core geographic focus. Management's proactive approach to debt management and portfolio refinement suggests a strategic path aimed at long-term stability and growth, even as it navigates evolving market trends and potential economic headwinds.