UBS Starts Urban Edge Properties (UE) at Neutral

UBS analyst Michael Goldsmith initiates coverage on Urban Edge Properties (NYSE: UE) with a Neutral rating and a price target of $21.00.

The analyst comments: "We launch coverage of UE with a Neutral rating, reflecting strong NOI growth powered by leasing momentum offset by potential headwinds from its elevated exposure to tenants at risk of closing stores. UE has one of the largest signed not open (SNO) pipelines of 430 bps (peer avg of 280 bps). We think this provides line of sight into elevated future SSNOI and FFO growth. We model solid UE 2025 FFO growth of 6.0% (cons. 6.0%, peer avg of 4.7%) & 2026 FFO growth of 4.2% (cons. 5.3% peer avg of 6.3%). Despite this growth, we think share upside should be limited due to its outsized exposure to challenged tenants, including Kohl's (300 bps of ABR). While Kohl's may not be closing stores in the immediate future, UE's elevated exposure ties its success to the retailer's trajectory. Kohl's rents at UE Centers are $11.43/ft vs. existing anchor rents of $23.51/ft. Thus, there could be strong rent upside when new leases are signed. But the Kohl's boxes are very large averaging 95k sq ft. Getting new tenants in would likely require significant downtime, construction costs, and capex. We think these dynamics keep a lid on the stock until there is more clarity on Kohl's store count."

For an analyst ratings summary and ratings history on Urban Edge Properties click here. For more ratings news on Urban Edge Properties click here.

Shares of Urban Edge Properties closed at $20.37 yesterday.

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