Urban Edge Properties
02/11/2026 | Press release | Distributed by Public on 02/11/2026 06:04
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated audited financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K.
This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and provides a year-to-year comparison between 2025 and 2024. A discussion of 2023 items and year-to-year comparisons between 2024 and 2023 are not included in this Annual Report on Form 10-K but can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Executive Overview
Our Company
Urban Edge Properties ("UE", "Urban Edge", or the "Company") (NYSE: UE) is a Maryland real estate investment trust that owns, manages, acquires, develops, and redevelops retail real estate, primarily in the Washington, D.C. to Boston corridor. Urban Edge Properties LP ("UELP" or the "Operating Partnership") is a Delaware limited partnership formed to serve as UE's majority-owned partnership subsidiary and to own, through affiliates, all of our real estate properties and other assets. Unless the context otherwise requires, references to "we", "us" and "our" refer to Urban Edge Properties and UELP and their consolidated entities/subsidiaries.
The Operating Partnership's capital includes general and common limited partnership interests in the operating partnership ("OP Units"). As of December 31, 2025, Urban Edge owned approximately 94.9% of the outstanding common OP Units with the remaining limited OP Units held by members of management, Urban Edge's Board of Trustees and contributors of property interests acquired. Urban Edge serves as the sole general partner of the Operating Partnership. The third-party unitholders have limited rights over the Operating Partnership such that they do not have characteristics of a controlling financial interest. As such, the Operating Partnership is considered a variable interest entity ("VIE"), and the Company is the primary beneficiary that consolidates it. The Company's only investment is the Operating Partnership. The VIE's assets can be used for purposes other than the settlement of the VIE's obligations and the Company's partnership interest is considered a majority voting interest.
As of December 31, 2025, our portfolio was comprised of 17.2 million square feet including 69 shopping centers, two outlet centers and two malls.
Economic Considerations
In recent years, microeconomic and macroeconomic conditions have caused volatility in the financial markets, such as the recent impacts as a result of changes in tariff policies and interest rates. The economy continues to face several ongoing issues including inflation risk and elevated interest rates which present potential risks for our business and our tenants. We continue to monitor the impacts of inflation on our operations and measures taken by the Federal Reserve in response to inflationary levels.
During 2025, the Federal Reserve lowered its target range for the federal funds rate by 75 bps via rate cuts in September, October and December. The decision to lower the target range was driven in part by moderate economic growth, a weakened labor market and an increase in unemployment levels. The target rate now sits at a range of 3.50% to 3.75%. While inflation rates have decreased slightly compared to the prior year, they remain elevated in relation to the Federal Reserve's target of 2%. The current levels of inflation could result in reduced discretionary spending by consumers, putting pricing pressure on rents and limiting the amounts we are able to charge new tenants or tenants up for renewals.
Notwithstanding the foregoing, the Company continued to see strong demand from a variety of tenants wanting to operate in our core markets within the Washington, D.C. to Boston corridor. We believe demand for our centers is, in part, driven by our portfolio being primarily concentrated in first-ring suburban areas within high household income communities and limited new construction, creating high barriers to entry. We continue to maintain a strong balance sheet enabling us to pay off, finance and refinance several mortgage loans during the year, and our mortgage debt now consists entirely of fixed-rate, single asset, non-recourse loans. We believe our strong balance sheet and adequate liquidity provides us with financial flexibility and the capacity to execute on transactions that meet our criteria and align with our growth strategy. We expect to continue to add value to our portfolio through executing our leasing pipeline, active development, redevelopment and anchor repositioning projects, commencing leases signed but not yet opened and identifying additional accretive capital recycling opportunities.
2025 Highlights
Set forth below are highlights of our leasing activities, completed and activated development, redevelopment and anchor repositioning projects, financings, refinancings, and property acquisitions and dispositions:
•Signed 58 new leases totaling 360,691 square feet, including 40 new leases on a same-space(1)basis totaling 205,748 square feet at an average rental rate of $35.88 per square foot on a GAAP basis and $32.59 per square foot on a cash basis, generating average rent spreads of 53.4% on a GAAP basis and 32.0% on a cash basis;
•Renewed or extended 104 leases totaling 1,139,359 square feet, all of which were on a same-space(1)basis, at an average rental rate of $24.64 per square foot on a GAAP basis and $24.27 per square foot on a cash basis, generating average rent spreads of 12.5% on a GAAP basis and 10.8% on a cash basis;
•Acquired one property located in Allston, MA, totaling 91,000 square feet, for a purchase price of $39.2 million, inclusive of transaction costs, at a capitalization rate of 5.4%;
•Sold two non-core properties and one property parcel, totaling 208,000 square feet, for an aggregate gross price of $66.2 million at an average capitalization rate of 4.9%;
•Completed fourteen development, redevelopment and anchor repositioning projects, aggregating $55.3 million, expected to generate an approximate 19% unleveraged yield;
•Activated eleven development, redevelopment, and anchor repositioning projects, aggregating $61.3 million, expected to generate an approximate 14% unleveraged yield;
•Paid off two single-asset, non-recourse, mortgage loans aggregating $73.5 million with a weighted average interest rate of 4.86%;
•Financed one asset with an individual non-recourse mortgage of $123.6 million with a swapped fixed interest rate of 5.1%; and
•Completed the modification of an $80.2 million single-asset, non-recourse mortgage loan, resulting in a reduced interest rate from 6.6% to 6.15% and new maturity date of January 2031 with a three-year extension option.
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(1) Same-space leases represent those leases signed on spaces for which there was a previous lease.
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2026 Outlook
We intend to create value and grow earnings, funds from operations, and cash flows by:
•Adding essential tenants to our properties and positioning our retail assets with a mix of high-quality, credit tenants including grocers, discounters, big-box retailers, premium healthcare operators and elevated food offerings;
•Managing our balance sheet to allow for flexibility and execution on financing, refinancing, or prepayment opportunities when appropriate;
•Managing and monitoring property operating and general and administrative expenses and identifying opportunities for cost savings and efficiencies;
•Leasing vacant spaces, proactively extending leases, managing the exercise of tenant options and, when possible, replacing underperforming tenants with operators that can pay higher rents and positively impact our properties through increased foot traffic and customer retention;
•Expediting the delivery of space to tenants and the collection of rents from executed leases that have not yet rent commenced;
•Generating additional income from our existing assets by redeveloping underutilized existing space, repositioning anchors, and monetizing unused land by developing new spaces and pad sites and researching additional income producing uses; and
•Recycling capital by divesting smaller assets in non-core markets and low growth assets that may provide desirable proceeds, and acquiring assets that meet our investment criteria in our target markets.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as "GAAP", requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenue and expenses. These estimates are prepared using management's best judgment, after considering past and current events and economic conditions. In addition, certain information relied upon by management in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from consultations with third-party experts. Actual results could differ from these estimates. A discussion of possible risks which may affect these estimates is included in Part I, Item 1A. "Risk Factors" of this Annual Report on Form 10-K. Management considers an accounting estimate to be critical if changes in the estimate could have a material impact on our consolidated results of operations or financial condition.
Our significant accounting policies are more fully described in Note 3to the consolidated audited financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. The following accounting estimates are considered critical because they are particularly dependent on management's judgment about matters that have a significant level of uncertainty at the time the accounting estimates are made, and changes to those estimates could have a material impact on our financial condition or operating results.
Real Estate - Estimates Related to Valuing Acquired Assets and Liabilities
Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above and below-market leases, acquired in-place leases and tenant relationships) and acquired liabilities. We assess fair value based on estimated cash flow projections utilizing appropriate discount and capitalization rates and available market information, including market-based rental revenues. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities based on their relative fair values at date of acquisition.
In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases is estimated based on the present value of the difference between the contractual amounts, including fixed rate below-market renewal options, to be paid pursuant to the in-place leases and our estimate of the market lease rates and other lease provisions for comparable leases measured over a period equal to the estimated remaining term of the lease. Tenant related intangibles and improvements are amortized on a straight-line basis over the related lease term, including any bargain renewal options. We amortize identified intangibles that have finite lives over the period they are expected to contribute directly or indirectly to the future cash flows of the property or business acquired. We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below-market renewal option and include such renewal options in the calculation of in-place leases. If the value of below-market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a lease terminates prior to its stated expiration, all unamortized amounts relating to that lease are written off.
Since the assessment of fair value and allocation of these amounts is made at the time of acquisition, they are subject to future changes in market conditions and tenants' ability to continue operations and their exercise of options and renewals. In the case that these assumptions change materially, they could have a material impact on our results and financial statements. During 2025, we acquired one property and utilized the above factors, including the use of a third party, to allocate the purchase price of the property among various assets and liabilities. Further information on these allocations can be found in Part II, Item 8, Note 4of this Annual Report on Form 10-K. We have had no changes to our methods of fair value assessment and allocations during the year ended December 31, 2025.
Real Estate - Estimates Related to Impairments
Our properties are individually evaluated for impairment quarterly, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis taking into account the appropriate capitalization rate in determining a future terminal value. An impairment loss is measured based on the excess of the property's carrying amount over its estimated fair value. Estimated fair value may be based on discounted future cash flows utilizing appropriate discount and capitalization rates, future market rental rates and, in addition to available market information, third-party appraisals, broker selling estimates or sale agreements under negotiation. Impairment assessments are based on our current plans, intended holding periods and available market information at the time the assessments are prepared. If our estimates of the projected future cash flows change based on uncertain market conditions, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The carrying value of a property may also be individually reassessed in the event a casualty occurs at that property. Casualty events may include property damage from a natural disaster or fire. When such an event occurs, management estimates the net book value of assets damaged over the property's total gross leasable area and adjusts the property's carrying value to reflect the damages. Estimates are subjective and may change if additional damage is later assessed or if future cash flows are revised.
During the year ended December 31, 2025, we have had no changes to the methods or assumptions used in our assessment of fair value of our real estate assets and have not incurred any material impairments. Further information on impairments can be found in Part II, Item 8, Note 9of this Annual Report on Form 10-K. We operate in a business that has significant investments in real estate and our estimates of valuation are subject to current market conditions and tenant operations, which drive future cash flows, and are beyond our control. As these factors can result in changes to our estimates and result in material impairment losses, this is deemed a critical accounting estimate.
Recent Accounting Pronouncements
Refer to Note 3to the consolidated audited financial statements in Part II, Item 8 of this Annual Report on Form 10-K for information about recently issued and recently adopted accounting principles.
Results of Operations
We derive substantially all of our revenue from rents received from tenants under existing leases on each of our properties. This revenue includes fixed base rents, recoveries of expenses that we have incurred and that we pass through to the individual tenants and percentage rents that are based on specified percentages of tenants' revenue, in each case as provided in the respective leases.
Our primary cash expenditures consist of our property operating and capital costs, general and administrative expenses, and interest and debt expense. Property operating expenses include real estate taxes, repairs and maintenance, management expenses, insurance and utilities; general and administrative expenses include payroll, professional fees, information technology, office expenses and other administrative expenses; and interest and debt expense primarily consists of interest on our mortgage debt, our unsecured line of credit and borrowings under our term loans. In addition, we incur substantial non-cash charges for depreciation and amortization on our properties. We also capitalize certain expenses, such as taxes, interest and salaries related to properties under development or redevelopment until the property is ready for its intended use.
Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions, dispositions, developments, redevelopments and changes in accounting policies. The results of operations of any acquired properties are included in our financial statements as of the date of acquisition. Our results of operations are affected by national, regional and local economic conditions, as well as macroeconomic conditions, which are at times subject to volatility and uncertainty such as recent market volatility resulting from changes in tariff policies and the geopolitical climate. Increased tariffs on foreign imports could have a material impact on the cost of certain raw materials and goods and adversely affect the results of our operations or the operations of our tenants, and could also temper consumer spending. While most of our leases require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses, there is no guarantee we will be able to recoup all such amounts, and some larger tenants have capped the amount of these operating expenses they are responsible for under their lease.
In recent years, rising inflation has resulted in several interest rate hikes by the Federal Reserve, significantly increasing the cost of borrowing. During 2025, inflation began to abate and the Federal Reserve lowered its target range for the federal funds rate by 75 bps to a range of 3.50% to 3.75%. While interest rates and inflation have decreased compared to the prior year, both remain at elevated levels compared to the Federal Reserve's target of 2%, and could remain at this level in the near-term and long-term. We occasionally utilize interest rate derivative agreements to hedge the effect of rising interest rates on our variable rate debt. As of December 31, 2025, all of our outstanding mortgage debt is fixed rate or hedged with interest rate derivative agreements, and our only variable rate debt exposure is related to our unsecured line of credit which has no outstanding balance as of December 31, 2025 and is indexed to SOFR, plus an applicable margin per the agreement. On January 22, 2026, we amended and restated our line of credit and entered into agreements for two delayed draw term loans which are also indexed to SOFR, plus an applicable margin per the respective agreements. As of December 31, 2025, we were counterparty to two interest rate swap agreements, both of which qualify for, and are designated as, hedging instruments. We are actively managing our business to respond to the economic and social impacts from events and circumstances such as those described above. See "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K for more information.
The following provides an overview of our key non-GAAP measures based on our consolidated results of operations (refer to NOI, same-property NOI and Funds From Operations applicable to diluted common shareholders ("FFO") described later in this section):
| Year Ended December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Net income | $ | 97,510 | $ | 75,442 | |||||||
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FFO applicable to diluted common shareholders(1)
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186,379 | 186,732 | |||||||||
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NOI(2)
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289,637 | 273,268 | |||||||||
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Same-property NOI(2)
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241,597 | 231,610 | |||||||||
(1) Refer to page 35 for a reconciliation to the nearest generally accepted accounting principles ("GAAP") measure.
(2) Refer to page 34 for a reconciliation to the nearest GAAP measure.
Comparison of the Year Ended December 31, 2025 to December 31, 2024
Net income for the year ended December 31, 2025 was $97.5 million, compared to net income of $75.4 million for the year ended December 31, 2024. The following table summarizes certain line items from our consolidated statements of income and comprehensive income that we believe are important in understanding our operations and/or those items which changed significantly in the year ended December 31, 2025 as compared to the same period in 2024:
| For the Year Ended December 31, | |||||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | $ Change | ||||||||||||||
| Total revenue | $ | 471,935 | $ | 444,966 | $ | 26,969 | |||||||||||
| Depreciation and amortization | 139,166 | 150,389 | (11,223) | ||||||||||||||
| Real estate taxes | 66,428 | 68,651 | (2,223) | ||||||||||||||
| Property operating expenses | 86,435 | 78,776 | 7,659 | ||||||||||||||
| General and administrative | 39,975 | 37,474 | 2,501 | ||||||||||||||
| Gain on sale of real estate | 49,695 | 38,818 | 10,877 | ||||||||||||||
| Interest and debt expense | 78,232 | 81,587 | (3,355) | ||||||||||||||
| (Loss) gain on extinguishment of debt | (534) | 21,423 | (21,957) | ||||||||||||||
| Income tax expense | 2,601 | 2,386 | 215 | ||||||||||||||
Total revenue increased by $27.0 million to $471.9 million in the year ended December 31, 2025 from $445.0 million in the year ended December 31, 2024. The increase is primarily attributable to:
•$21.9 million increase in property rentals and tenant reimbursements due to rent commencements and contractual rent increases, partially offset by tenant vacates; and
•$8.9 million increase as a result of property acquisitions net of dispositions; offset by
•$1.7 million increase in rental revenue deemed uncollectible;
•$1.1 million decrease in non-cash revenues driven by accelerated amortization of below-market lease intangibles in connection with tenant vacates during 2024;
•$0.8 million decrease in lease termination and other income; and
•$0.2 million decrease in percentage rent primarily due to timing of recognition as compared to 2024.
Depreciation and amortization decreased by $11.2 million to $139.2 million in the year ended December 31, 2025 from $150.4 million in the year ended December 31, 2024. The decrease is primarily attributable to:
•$20.3 million decrease primarily related to accelerated depreciation in 2024 on buildings taken out of service for redevelopment; offset by
•$9.1 million increase as a result of property acquisitions net of dispositions.
Real estate tax expense decreased by $2.2 million to $66.4 million in the year ended December 31, 2025 from $68.7 million in the year ended December 31, 2024. The decrease is primarily attributable to:
•$1.1 million increase in capitalized real estate taxes due to the commencement of development, redevelopment and anchor repositioning projects, offset by project completions;
•$0.7 million decrease as a result of successful tax appeals and lower assessments; and
•$0.4 million decrease as a result of property dispositions net of acquisitions.
Property operating expenses increased by $7.7 million to $86.4 million in the year ended December 31, 2025 from $78.8 million in the year ended December 31, 2024. The increase is primarily attributable to:
•$6.6 million higher expenses incurred for common area maintenance and utilities across the portfolio as compared to 2024; and
•$1.1 million increase as a result of property acquisitions net of dispositions.
General and administrative expenses increased by $2.5 million to $40.0 million in the year ended December 31, 2025 from $37.5 million in the year ended December 31, 2024. The increase is primarily attributable to higher employment expenses and other corporate level expenses.
We recognized a gain on sale of real estate of $49.7 million in 2025 related to the sale of two properties and one property parcel. We recognized a gain on sale of real estate of $38.8 million in 2024 related to the sale of three properties.
Interest and debt expense decreased by $3.4 million to $78.2 million in the year ended December 31, 2025 from $81.6 million in the year ended December 31, 2024. The decrease is primarily attributable to:
•$4.9 million decrease due to a lower average balance and lower interest rate on our line of credit;
•$2.9 million decrease in interest expense due to the mortgage debt forgiven in connection with the foreclosure of Kingswood Center; and
•$1.8 million increase in capitalized interest expense due to the commencement of development, redevelopment, and anchor repositioning projects, offset by project completions; offset by
•$4.9 million increase due to new financings and refinancings since the fourth quarter of 2024, net of loan repayments; and
•$1.3 million increase in amortization of deferred financing costs.
We recognized a $1.0 million loss on the extinguishment of debt for the year ended December 31, 2025 related to the modification of the loan secured by the Shops at Caguas due to the substantial change in terms and the prepayment of the mortgage loan secured by the Plaza at Woodbridge, partially offset by a $0.5 million gain on the extinguishment of debt attributable to the return of escrow funds related to the Kingswood Center foreclosure. We recognized a $21.7 million gain on the extinguishment of debt for the year ended December 31, 2024 attributable to the foreclosure settlement of Kingswood Center, partially offset by a $0.3 million loss on extinguishment of debt as a result of the early payoff of three variable rate loans in January 2024.
Income tax expense increased by $0.2 million to $2.6 million in the year ended December 31, 2025 from $2.4 million in the year ended December 31, 2024. The increase is primarily attributable to the income tax impact of the Company's captive insurance program.
Comparison of the Year Ended December 31, 2024 to December 31, 2023
Discussions of 2024 items and comparisons between the years ended December 31, 2024 and 2023 that are not included in this Report can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Non-GAAP Financial Measures
We use NOI internally to make investment and capital allocation decisions and to compare the unlevered performance of our properties to our peers. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition and disposition activity on an unleveraged basis, providing perspective not immediately apparent from net income. The most directly comparable GAAP financial measure to NOI is net income. NOI excludes certain components from net income in order to provide results that are more closely related to a property's results of operations. We calculate NOI by adjusting net income to add back depreciation and amortization expense, general and administrative expenses, casualty and real estate impairment losses, interest and debt expense, income tax expense and non-cash lease expense, and deduct management and development fee income from non-owned properties, gains on sale of real estate, interest income, non-cash rental income resulting from the straight-lining of rents and amortization of acquired below market leases net of above market leases. NOI should not be considered a substitute for net income and may not be comparable to similarly titled measures employed by others.
We calculate same-property NOI using net income as defined by GAAP reflecting only those income and expense items that are reflected in NOI (as described above) and excluding properties that were under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service, and also excluding properties acquired, sold, or that are in the foreclosure process during the periods being compared and results of our captive insurance program. We also exclude for the following items in calculating same-property NOI: lease termination fees, bankruptcy settlement income, and income and expenses that we do not believe are representative of ongoing operating results, if any. As such, same-property NOI assists in eliminating disparities in net income due to the development, redevelopment, acquisition, disposition or foreclosure of properties, and results of our captive insurance program during the periods presented, and thus provides a more consistent performance measure for the comparison of the operating performance of the Company's properties, which the Company believes to be useful to investors. Same-property NOI should not be considered a substitute for net income and may not be comparable to similarly titled measures employed by others.
Throughout this section, we have provided certain information on a "same-property" basis which includes the results of operations that were owned and operated for the entirety of the reporting periods being compared, which total 63 properties for the years ended December 31, 2025 and 2024. Information provided on a same-property basis excludes properties that were under development, redevelopment or that involve anchor repositioning where a substantial portion of the gross leasable area is taken out of service and also excludes properties acquired, sold, or that are in the foreclosure process, and results of our captive insurance program during the periods being compared. While there is judgment surrounding changes in designations, a property is removed from the same-property pool when a property is considered to be a redevelopment property because it is undergoing significant renovation or retenanting pursuant to a formal plan and is expected to have a significant impact on property
operating income based on the retenanting that is occurring. A development or redevelopment property is moved back to the same-property pool once a substantial portion of the NOI growth expected from the development or redevelopment is reflected in both the current and comparable prior year period, generally one year after at least 80% of the expected NOI from the project is realized on a cash basis. Acquisitions are moved into the same-property pool once we have owned the property for the entirety of the comparable periods and the property is not under significant development or redevelopment.
Same-property NOI increased by $10.0 million, or 4.3%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. Same-property NOI, including properties in redevelopment, increased by $12.8 million, or 5.0%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024.
The following table reconciles net income to NOI, same-property NOI and same-property NOI including properties in redevelopment for the years ended December 31, 2025 and 2024.
| For the year ended December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Net income | $ | 97,510 | $ | 75,442 | |||||||
| Other expense | 1,211 | 897 | |||||||||
| Depreciation and amortization | 139,166 | 150,389 | |||||||||
| General and administrative expense | 39,975 | 37,474 | |||||||||
| Gain on sale of real estate | (49,695) | (38,818) | |||||||||
| Interest income | (2,768) | (2,667) | |||||||||
| Interest and debt expense | 78,232 | 81,587 | |||||||||
| Loss (gain) on extinguishment of debt | 534 | (21,423) | |||||||||
| Income tax expense | 2,601 | 2,386 | |||||||||
| Non-cash revenue and expenses | (17,129) | (11,999) | |||||||||
| NOI | 289,637 | 273,268 | |||||||||
| Adjustments: | |||||||||||
| Sunrise Mall net operating loss | 1,099 | 1,733 | |||||||||
| Tenant bankruptcy settlement income and lease termination income | (185) | (1,762) | |||||||||
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Non-same property NOI and other(1)
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(48,954) | (41,629) | |||||||||
| Same-property NOI | $ | 241,597 | $ | 231,610 | |||||||
| NOI related to properties being redeveloped | 25,472 | 22,668 | |||||||||
| Same-property NOI including properties in redevelopment | $ | 267,069 | $ | 254,278 | |||||||
(1) Non-same property NOI includes NOI related to properties being redeveloped and properties acquired, disposed, or that are in the foreclosure process in the periods being compared, and results of the Company's captive insurance program.
Funds From Operations
FFO applicable to diluted common shareholders for the year ended December 31, 2025 was $186.4 million compared to $186.7 million for the year ended December 31, 2024.
We calculate FFO in accordance with the National Association of Real Estate Investment Trusts' (''Nareit'') definition. Nareit defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable real estate and land when connected to the main business of a REIT, impairments on depreciable real estate or land related to a REIT's main business, earnings from consolidated partially owned entities, and rental property depreciation and amortization expense. We believe FFO is a meaningful non-GAAP financial measure useful in comparing our levered operating performance from period to period both internally and among our peers because this non-GAAP measure excludes net gains on sales of depreciable real estate, real estate impairment losses, rental property depreciation and amortization expense which implicitly assumes that the value of real estate diminishes predictably over time rather than fluctuating based on market conditions. We believe the presentation of comparable period operating results generated from FFO provides useful information to investors because the definition excludes items included in net income that do not relate to, or are not, indicative of our operating and financial performance, such as depreciation and amortization related to real estate, and items which can make periodic and peer analyses of operating and financial performance more difficult, such as gains (or losses) from sales of depreciable real estate and land when connected to the main business of a REIT and impairments on depreciable real estate or land related to a REIT's main business. FFO does not represent cash flows from operating activities in accordance with GAAP, should not be considered an alternative to net income as an indication of our performance, and is not indicative of cash flow as a measure of liquidity or our ability to make cash distributions. FFO may not be comparable to similarly titled measures employed by others.
The following table reflects the reconciliation of net income to FFO for the years ended December 31, 2025 and 2024.
| For the year ended December 31, | |||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Net income | $ | 97,510 | $ | 75,442 | |||||||
| Less: net (income) loss attributable to noncontrolling interests in: | |||||||||||
| Operating partnership | (4,992) | (3,978) | |||||||||
| Consolidated subsidiaries | 1,017 | 1,099 | |||||||||
| Net income attributable to common shareholders | 93,535 | 72,563 | |||||||||
| Adjustments: | |||||||||||
| Rental property depreciation and amortization | 137,547 | 149,009 | |||||||||
| Gain on sale of real estate | (49,695) | (38,818) | |||||||||
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Limited partnership interests in operating partnership(1)
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4,992 | 3,978 | |||||||||
| FFO applicable to diluted common shareholders | $ | 186,379 | $ | 186,732 | |||||||
(1)Represents earnings allocated to Long-Term Incentive Plan ("LTIP") and OP unitholders for unissued common shares. LTIP and OP units are excluded for purposes of calculating earnings per diluted share when their effect is anti-dilutive.
Liquidity and Capital Resources
Due to the nature of our business, the cash generated from operations is primarily paid to our shareholders and unitholders of the Operating Partnership in the form of distributions. Our status as a REIT requires that we generally distribute at least 90% of our REIT's ordinary taxable income each year. Our Board of Trustees declared a quarterly dividend of $0.19 per common share and OP unit for each of the four quarters in 2025, or an annual rate of $0.76. Historically, we have paid regular cash dividends; however, the timing, declaration, amount and payment of distributions to shareholders and unitholders of the Operating Partnership fall within the discretion of our Board of Trustees. Our Board of Trustees' decisions regarding the payment of dividends depend on many factors, such as maintaining our REIT status, our financial condition, earnings, capital requirements, debt service obligations, limitations under our financing arrangements, industry practice, legal requirements, regulatory constraints, and other factors.
Property rental income is our primary source of cash flow and is dependent on a number of factors, including our occupancy level and rental rates, as well as our tenants' ability to pay rent. Our properties have historically provided us with a relatively consistent stream of cash flow that enables us to pay operating expenses, debt service and recurring capital expenditures. Other sources of liquidity to fund cash requirements include proceeds from financings, equity offerings and asset sales.
At December 31, 2025, we had an $800 million unsecured line of credit which had a maturity date of February 9, 2027 and included two six-month extension options. The Company obtained seven letters of credit issued under the unsecured line of credit, aggregating $30.2 million, and provided them to mortgage lenders and other entities to secure its obligations in relation to certain reserves and capital requirements. The letters of credit issued under the unsecured line of credit have reduced the amount available under the facility commensurate with their face values but remain undrawn and no separate liability has been recorded in association with them. As of December 31, 2025, there was no outstanding balance under the unsecured line of credit with an available remaining capacity of $769.8 million under the facility, including undrawn letters of credit. On January 22, 2026, we amended and restated the agreement for our unsecured line of credit, which reduced the facility size by $100 million to $700 million and extended the maturity date to June 28, 2030, with two six-month extension options. The previously issued letters of credit were migrated to the amended and restated agreement and remain undrawn. Contemporaneous with the amendment and restatement of the unsecured line of credit, the Company executed agreements for two term loans aggregating $250 million which includes a 5-year maturity and a 7-year maturity of $125 million each, both of which have a 12-month delayed draw feature. See Note 6to the consolidated audited financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on our unsecured line of credit and delayed draw term loans.
In August 2025, in connection with the launch of the ATM Program, the Company entered into an equity distribution agreement with various financial institutions acting as agents, forward sellers, and forward purchasers (the "Equity Distribution Agreement"). Pursuant to the Equity Distribution Agreement, the Company may from time to time offer and sell, through the agents and forward sellers, the Company's common shares, par value $0.01 per share, having an aggregate offering price of up to $250 million. The ATM Program replaced the Company's previous at-the-market program established on August 15, 2022. During the year ended December 31, 2025, the Company did not issue any common shares under the current or prior ATM Program. During the year ended December 31, 2024, the Company issued 7,097,124 common shares at a weighted average gross price of $18.71 per share under the ATM Program, generating cash proceeds of $131.1 million, net of commissions paid to distribution agents. See Note 14in Part II, Item 8 of this Annual Report on Form 10-K for more information regarding the ATM Program.
Our short-term cash requirements consist of normal recurring operating expenses, lease obligations, regular debt service requirements, general and administrative expenses, expenditures related to leasing activity and distributions to shareholders and unitholders of the Operating Partnership. Our long-term capital requirements consist primarily of maturities under our long-term debt agreements, development and redevelopment costs and potential acquisitions. As of the date of this filing, we have approximately $113.5 million of debt maturing within the next 12 months related to mortgage loans encumbering three of our properties and are actively exploring our options to refinance or pay at maturity.
At December 31, 2025, we had cash and cash equivalents, including restricted cash, of $78.9 millionand $769.8 million available under ourunsecured line of credit. These amounts are readily available to fund the debt obligations discussed above which are coming due within the next year.
Summary of Cash Flows
Cash and cash equivalents, including restricted cash, was $78.9 million at December 31, 2025, compared to $90.6 million as of December 31, 2024, a decrease of $11.8 million.
Our cash flow activities are summarized as follows:
| Year Ended December 31, | ||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||||||||
| Net cash provided by operating activities | $ | 182,719 | $ | 153,177 | ||||||||||
| Net cash used in investing activities | (75,605) | (234,697) | ||||||||||||
| Net cash used in financing activities | (118,889) | (2,088) | ||||||||||||
Operating Activities
Net cash provided by operating activities primarily consists of cash inflows from rental revenue and cash outflows for property operating expenses, general and administrative expenses and interest and debt expense.
Net cash provided by operating activities for the year ended December 31, 2025 increased by $29.5 million as compared to December 31, 2024. The increase is attributed to higher rental revenue from new tenant rent commencements and the timing of cash receipts and payments related to tenant collections and operating expenses.
Investing Activities
Net cash used in investing activities is impacted by the timing and extent of our real estate development, capital improvements, and acquisition and disposition activities during the period.
Net cash used in investing activities for the year ended December 31, 2025 decreased by $159.1 million as compared to December 31, 2024. The decrease is attributed to:
•$145.3 million decrease in cash used for acquisitions of real estate;
•$9.7 million decrease in cash used for real estate development and capital improvements; and
•$4.1 million increase in proceeds from the sale of real estate.
The Company has 23 active development, redevelopment or anchor repositioning projects with total estimated costs of $165.5 million, of which $79.9 million has been incurred and $85.6 million remains to be funded as of December 31, 2025.
The following summarizes capital expenditures presented on a cash basis for the years ended December 31, 2025 and 2024:
| Year Ended December 31, | ||||||||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||||||||
| Capital expenditures: | ||||||||||||||
| Development and redevelopment costs | $ | 59,677 | $ | 78,230 | ||||||||||
| Capital improvements | 29,790 | 26,650 | ||||||||||||
| Tenant improvements and allowances | 11,454 | 5,222 | ||||||||||||
| Total capital expenditures | $ | 100,921 | $ | 110,102 | ||||||||||
Financing Activities
Net cash used in financing activities is impacted by the timing and extent of issuances of debt and equity securities, distributions paid to common shareholders and unitholders of the Operating Partnership as well as principal and other payments associated with our outstanding indebtedness.
Net cash used in financing activities of $118.9 million for the year ended December 31, 2025 increased by $116.8 million as compared to December 31, 2024. The increase is attributed to:
•$137.0 million decrease in proceeds from the issuance of common shares;
•$13.6 million increase in distributions to shareholders and unitholders of the Operating Partnership; and
•$3.5 million decrease in cash contributed by noncontrolling interests; offset by
•$36.1 million increase in proceeds from mortgage loan and credit facility borrowings, net of repayments; and
•$1.2 million decrease in debt issuance costs driven by the financing and refinancing of multiple properties during 2024.
Financing activity for the year included:
•On December 10, 2025, the Company paid off the $23.3 million mortgage loan secured by its property, West End Commons, at maturity. The mortgage had a fixed interest rate of 3.99% and was repaid using cash on hand.
•On October 27, 2025, the Company executed a modification of its $80.2 million mortgage loan secured by the Shops at Caguas. The modification resulted in a reduced fixed interest rate of 6.15% and a new maturity date of January 2031, with a three-year extension option to January 2034. Prior to modification the loan was bearing interest at a fixed rate of 6.6% and maturing in August 2033.
•On August 4, 2025, the Company obtained a 4-year, $123.6 million interest-only mortgage loan secured by its property, Shoppers World, located in Framingham, MA. The loan bears interest at a rate of one-month SOFR plus 170 bps, of which the variable component is hedged with an interest rate swap agreement, fixing the rate at 5.12%.
•On June 26, 2025, the Company paid off the variable rate mortgage loan secured by the Plaza at Woodbridge which had an outstanding balance of $50.2 million and a maturity date of June 8, 2027. The loan was repaid using proceeds from the Company's line of credit.
Contractual Obligations
We have contractual obligations related to our mortgage loans and unsecured line of credit that are both fixed and variable. As of December 31, 2025, our only variable rate exposure was related to our line of credit, which had no outstanding balance, that bears interest at a floating rate based on SOFR plus an applicable margin of 1.03%. Further information on our mortgage loans and unsecured line of credit can be found in Note 6to the consolidated audited financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
In addition, we have contractual obligations for certain properties that are subject to long-term ground and building leases where a third party owns and has leased the underlying land to us. We also have non-cancelable operating leases pertaining to office space from which we conduct our business. Below is a summary of our contractual obligations as of December 31, 2025:
| Commitments Due by Period | ||||||||||||||||||||||||||||||||
| (Amounts in thousands) | Total | Less than 1 year | 1 to 3 years | 3 to 5 years | More than 5 years | |||||||||||||||||||||||||||
| Contractual cash obligations | ||||||||||||||||||||||||||||||||
|
Long-term debt obligations(1)
|
$ | 1,930,476 | $ | 208,643 | $ | 542,235 | $ | 814,104 | $ | 365,494 | ||||||||||||||||||||||
|
Operating lease obligations(2)
|
66,444 | 8,307 | 15,909 | 12,282 | 29,946 | |||||||||||||||||||||||||||
|
Finance lease obligations(2)
|
6,423 | 124 | 254 | 254 | 5,791 | |||||||||||||||||||||||||||
| $ | 2,003,343 | $ | 217,074 | $ | 558,398 | $ | 826,640 | $ | 401,231 | |||||||||||||||||||||||
(1)Includes interest and principal payments. Interest on variable rate debt is computed using rates in effect as of December 31, 2025. See Note 6to the consolidated audited financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information.
(2)See Note 8to the consolidated audited financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further information.
Additional contractual obligations that have been excluded from this table are as follows:
•Obligations related to construction and development contracts, since amounts are not fixed or determinable. Such contracts will generally be due over the next two years;
•Obligations related to maintenance contracts, since these contracts typically can be canceled upon 30 to 60 days' notice without penalty;
•Obligations related to employment contracts with certain executive officers, since all agreements are subject to cancellation by either the Company or the executive without cause upon notice;
•Obligations related to letters of credit issued under our unsecured line of credit; and
•Recorded debt premiums or discounts.
We believe that cash flows from our current operations, cash on hand, our unsecured line of credit, term loans, the potential to refinance our loans and our general ability to access the capital markets will be sufficient to finance our operations and fund our obligations in both the short-term and long-term.
Urban Edge Properties published this content on February 11, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 11, 2026 at 12:04 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]