アーバン・エッジ・プロパティーズ（UE）2026年第3四半期決算説明会：FFOとNOIのガイダンスを上方修正

主要なポイント

• Urban Edge Propertiesが発表した2026年第3四半期の調整後FFOは1株当たり0.38ドルとなり、前年同期比で6%増加した。年初来の調整後FFOも6%増加した。
• 再開発を含む既存物件NOIは、当四半期に4.6%増加し、年初来では3.6%増加した。経営陣は通期成長ガイダンスの中央値を従来の3.5%から4.1%に引き上げた。
• 同社は2026年の調整後FFOガイダンスの中央値を0.01ドル引き上げて1株当たり1.52ドル〜1.54ドルとし、通期で1.53ドル、第4四半期で0.39ドルとなる見込みを示した。
• 第3四半期の新規賃貸契約における同一スペースの現金ベース賃料スプレッドは27%となり、年初来の新規賃貸スプレッドは28%に達した。経営陣は第4四半期に約50%、通期で30%超のスプレッドを目標としている。
• 契約済み未開店（SNO）のパイプラインは総額2,100万ドルで、年換算NOIの7%に相当する。年換算総賃料のうち1,300万ドル近くが2027年に発生を開始する見込みである。
• Urban Edgeは2026年に1億8,500万ドルのショッピングセンターを取得した。これにはフロリダ州への初進出となるボカ・ラトンでの9,030万ドルによるRegency Courtの取得が含まれる。

主要財務データ

事業および業績の動向

Urban Edgeは第3四半期中に、計46万3,000平方フィートに及ぶ37件の賃貸契約を締結した。これには、12%のスプレッドで計40万6,000平方フィートの更新契約26件と、27%の同一スペーススプレッドで計5万8,000平方フィートの新規契約11件が含まれる。

経営陣は、立地の良いスペースの供給が限られていることが背景となり、リテール事業者の需要は引き続き堅調であると述べた。同社は30社以上のアンカーテナントおよびショップテナントと交渉中であり、テナントの質向上、賃料の上昇、オーナー側の投資負担額の減少を指摘した。

2024年から2026年第3四半期までの9か月間で、ショップの平均リーシング費用は約15%減少した。アンカーテナントの平均リーシング費用は30%強減少しており、現況有姿での契約が増加している。

第3四半期には、900万ドルを投資した2件の再開発プロジェクトが安定稼働に至り、平均利回り18%を達成した。過去12か月間で、Urban Edgeは加重平均利回り23%で4,000万ドル規模のプロジェクトを完了した。進行中の再開発パイプラインは1億5,200万ドル規模で、残り資金手当て額は5,700万ドル、予想利回りは約12%となっている。

資本の再投資（キャピタル・リサイクル）は、ポートフォリオ戦略の中核であり続けている。Urban EdgeはBriarcliff Commonsを6,050万ドルで売却し、リバース1031交換を通じてThe Village at Bridgewater Commonsの取得と組み合わせた。経営陣は、低成長かつ信用力の高い資産を売却し、長期的なNOI成長の見込みがより高い物件へ資本を再配分する戦略をとっていると述べた。

Regency Courtは、初期利回り約4%となる9,030万ドルで取得された。14万平方フィートの同センターはPublixとWalgreensを主要テナント（アンカー）としている。経営陣は、相場より低いアンカー賃料、テナントのグレードアップ、アクセスや駐車場の改善、潜在的な総賃貸可能面積の拡張を背景に、アンレバードIRR（レバレッジなし内部収益率）で8%〜9%を見込んでいる。

経営陣による業績予想（ガイダンス）

Urban Edgeは2026年の調整後FFOガイダンスを1株当たり1.52ドル〜1.54ドルに引き上げた。これは中央値で0.01ドルの上方修正である。中央値の1.53ドルは、2025年比で7%の成長を見込むものであり、第4四半期の調整後FFOが1株当たり0.39ドルとなることを示唆している。

再開発を含む通期の既存物件NOI成長率ガイダンスの中央値は、従来の3.5%から4.1%に引き上げられた。経営陣は、第3四半期に開始した賃料の四半期フル寄与、契約済み未開店の追加賃料、歩合賃料、付帯収入、前年同期からの除雪費用比較の改善が、第4四半期の成長に寄与すると述べた。

契約済み未開店パイプラインのうち、年換算総賃料で70万ドルが2026年第4四半期に、1,300万ドル近くが2027年に発生を開始する見込みである。Bruckner Commonsでは、Chick-fil-A、Chipotle、BJ’s、Ross、dd’sが2027年前半の開店を目指している。

経営陣は、物件の運営費用について年率約3%の増加を見込むことが合理的な前提条件であると示した。

リスクと注視事項

• Regency Courtへの投資根拠は、相場より低い賃料契約からの大幅な収益改善に一部依存している。オプションを含む両アンカーテナントの契約は6年後に満了するが、経営陣は潜在的な賃貸契約再編の具体的な時期を明らかにしていない。
• フロリダ州での拡張は機動的（オポチュニスティック）に行われる予定である。経営陣は、同市場において少数のセンターだけでも効率的な運営が可能であるとしながらも、Regency Courtに匹敵する資産が市場に出ることは稀であると認めた。
• Urban Edgeの進行中再開発パイプラインには5,700万ドルの未拠出額が残っており、リターンはプロジェクトの完了、テナントの開店、および賃料発生のタイミングに依存している。
• Sunrise敷地の売却は引き続き敷地計画の承認プロセスの下にある。経営陣は、最終的な取引完了スケジュールが確定する前に、1回または複数回の公聴会が必要になる可能性があると述べた。

アナリスト質疑応答の要点

アナリストはUrban Edgeのサウスフロリダ進出に高い関心を示した。経営陣はRegency Courtを基盤資産と位置付け、その計画的アプローチをニューイングランド地方での段階的な拡張と比較した。同地方での資産規模は5年間で会社全体の約10%、約5億ドルの価値に成長した。Urban Edgeは、再開発に適した老朽化リテール物件が存在する市場を含め、フロリダの他の地域へも拡大する可能性がある。

物件取得基準について、経営陣は、小売供給が限られ、既存ショッピングセンターの再配置（リポジショニング）の機会がある、人口密度が高く裕福な都市近郊（ファーストリング・サブーブ）を好む姿勢を維持していると述べた。同社は、物件形態やショップの構成比率よりも、資産レベルでのNOI成長の方が重要であることを強調した。

必要資金に関して、経営陣はリーシングおよび維持管理費用の低減が続くと予想している。テナントに対する交渉力の強化、現状渡しによるアンカー取引の増加、ならびに過去5〜10年間に完了した大規模なポートフォリオの改善を理由として挙げた。

経営陣は、Bruckner Commonsの賃貸契約がほぼ満室状態であり、短期的には利用可能なスペースが限られていると述べた。2027年前半に予定されている開店により、物件の安定化が支援され、テナント需要がさらに高まる可能性がある。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Greetings, welcome to the Urban Edge Properties Third Quarter 2026 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Areeba Ahmed, Investor Relations Associate. Thank you, Areeba, you may begin.

Areeba Ahmed

Good morning, and welcome to Urban Edge Properties Third Quarter 2026 Earnings Conference Call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer; Jeff Mooallem, Chief Operating Officer; Mark Langer, Chief Financial Officer; Heather Ohlberg, 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 our supplemental disclosure package.

At this time, it is my pleasure to introduce our Chairman and Chief Executive Officer, Jeff Olson.

Jeffrey Olson

Thank you, Areeba, and good morning. We delivered another strong quarter FFO, as adjusted, was $0.38 per share, up 6% from last year's third quarter and 6% year-to-date. Same-property NOI, including redevelopment, grew 4.6% for the quarter and 3.6% year-to-date. We raised FFO as adjusted guidance by $0.01 per share at the midpoint to $1.52 to $1.54, which implies 7% growth over 2025. We continue to improve the quality and long-term growth rates of the portfolio through capital recycling.

In September, we sold Briarcliff Commons, a Kohl's-anchored center in Morris Plains, New Jersey for $60.5 million. That sale moves Kohl's from our third largest tenant by ABR to our seventh. We structured it as an accretive reverse 1031 exchange paired with our acquisition of the Village at Bridgewater Commons. Earlier this month, we closed on the $90.3 million acquisition of Regency Court in Boca Raton marking our entry into Florida. As we've stated in the past, moving south is a natural extension of our footprint. Several of us on the leadership team spent years owning, living in and operating shopping centers in South Florida. So we know these communities well. We expect to keep growing in this market, mostly through selling some of our more stabilized, high credit power centers in New Jersey.

Regency Court is a 140,000 square foot center anchored by Publix and Walgreens in an irreplaceable, highly affluent trade area. Average household income is $194,000 within 3 miles and more than $280,000 within 1 mile. The center sits at the entrance to Woodfield Country Club, surrounded by other high-end club communities, and there is no other grocery-anchored center within 2 miles. It draws 3.3 million visitors a year with traffic still increasing. We underwrote this acquisition on growth embedded in the rent roll, not on the going in yield, which was approximately 4%.

Both anchors pay a fraction of market and both leases expire, including all options in 6 years. Beyond the anchors, we see opportunities to add value through upgrading the tenant mix, improving access and parking and potentially adding GLA we expect to earn an 8% to 9% unlevered IRR. With Regency Court, the shop at West Falls Church in Virginia and the Village at Bridgewater Commons in New Jersey, we've acquired $185 million of high-quality centers this year, further diversifying our geographic footprint and increasing our long-term growth rate. We are encouraged by the strength and depth of the leasing environment.

Nationally, retail vacancy is 4.3%, near record lows. Big-box tenants are competing for a well-located space and scarcity is pushing rents higher. Our same-space new lease cash spreads are 28% year-to-date, and our signed but not open pipeline is $21 million, representing 7% of annualized net operating income, one of the largest pipelines in the sector. We're very well positioned for continued steady growth. With that, I'll turn it over to our Chief Operating Officer, Jeff Mooallem.

Jeffrey Mooallem

Thank you, Jeff. In the third quarter, we signed 37 leases totaling 463,000 square feet. That included 26 renewals totaling 406,000 square feet at a 12% spread and 11 new leases totaling 58,000 square feet at a 27% same-space spread. The new leases were with a good mix of retailers new to our portfolio as well as names we've worked with before. Examples include Veterinary Emergency Group, Foot Locker, First Watch, McDonald's, Honey Grow, and 7 Brew Coffee.

Same property lease occupancy is now 96.6%, up 20 basis points from last quarter and shop occupancy is 91.7%, unchanged. With every new lease, we try to achieve three things: enhanced quality and credit, higher starting rent and increases and a lower level of landlord investment. In that regard, the fourth quarter is shaping up to be one of our best. We are in active negotiations with over 30 tenants, a mix of both anchor and shop leases with a noticeable uptick in quality over the leases we were negotiating just a couple of years ago. Replacing outdated or lower credit concepts with stronger operators will keep adding value to these centers for years.

Rent spreads are stronger, too. With about 2 months left in the year, we are targeting rent spreads around 50% for the fourth quarter and over 30% for the year. Notably, those spreads are coming as much from anchors as shops as the scarcity of box space in our markets creates additional leverage in our favor. And finally, while we don't discuss it on these calls as much as we discuss rents, the reduction in leasing costs over the last few years is as impactful to our business as the increase in rents. The average shop deal leasing costs, defined as landlord work, tenant allowance and commissions paid has declined about 15% from 2024 compared to the first 3 quarters of 2026.

For anchors, it is even more meaningful, a little over a 30% decline in average leasing costs. Many of our anchor deals now are as is, reducing both overall cost and time to rent commencement. Tenants who previously insisted on their exact construction specs have had to adjust to a new reality. Two projects stabilized in the third quarter at a total investment of $9 million and an average yield of 18%. Nordstrom Rack and Fidelity at Manalapan Commons and a new Adidas store at Bergen Town center. In both cases, we brought in better quality tenants than what was previously there at solid returns.

Over the last 12 months, we've completed $40 million of these projects at a blended 23% yield. In this quarter, we started another, a $7 million multi-tenant pad development at Ledgewood Commons for Veterinary Emergency Group and two additional tenants. Our active redevelopment pipeline now stands at $152 million, with $57 million left to fund and an expected yield of about 12%. Most of that work is an asset we've owned for several years, but our three 2026 acquisitions will add to it, since each has some mix of vacancy, dated tenancy and below-market leases that provide an opportunity to create even more value.

With that, I'll turn it over to our CFO, Mark Langer.

Mark Langer

Thank you, Jeff, and good morning. We delivered another strong quarter. FFO as adjusted was $0.38 per share, up 6% from the third quarter of last year, and same-property NOI, including redevelopment, grew 4.6%. The growth came from higher rental revenue from rent commencements and contractual rent increases, along with the benefit of our earlier capital recycling. Results this quarter were slightly ahead of our expectations. NOI growth came in stronger because uncollectible revenue was better than budgeted at 45 basis points of gross rental income. That reflects the health of our tenant base, our bankruptcy watch list is smaller than at this time in prior years, consistent with the broader market.

In October, we modified and extended our existing $70 million mortgage secured by the outlets at Montehiedra, adding $17 million of additional proceeds through an interest-only B note at a fixed rate of 6.95%, reflecting the growth in NOI and favorable outlook for the property. Given income taxes paid in Puerto Rico, the tax effective interest rate of this B note debt is 3.9%. The modification extended the term on the entire mortgage to 7 years which now has a current weighted average interest rate of 5.4%. We ended the quarter with $75 million drawn on our credit facility.

After the quarter, we drew another $63 million for Regency Court. With that activity included, our liquidity remains very strong at over $875 million. That consists of $86 million in cash, $138 million drawn on the credit facility and nothing drawn on either our 5-year or 7-year delayed draw term loans. Net debt to EBITDA was 5.7x for the third quarter. Looking ahead, we are raising our 2026 FFO as adjusted guidance by $0.01 per share at the midpoint. That implies fourth quarter FFO of $0.39 per share and $1.53 for the full year. We have also raised our full year same property NOI growth guidance including redevelopment to a midpoint of 4.1%, up from 3.5%.

Our $21 million signed but not open pipeline continues to give us good visibility into future growth. In the third quarter, $2.6 million of annualized gross rent commenced. And we expect another $700,000 to be recognized in the fourth quarter and almost $13 million to be recognized in 2027. In closing, we are pleased with our third quarter results, encouraged by the strength of our leasing pipeline and excited about our progress on the capital recycling front.

With that, I'll turn the call over to the operator for Q&A.

Operator

[Operator Instructions]. Our first question is with Michael Goldsmith with UBS.

質疑応答

Michael Goldsmith

First question, let's just talk a little bit about Florida. Feels like the name of the game across REITs has been size and scale. You're entering a new market. It sounds like you want to build additional scale there. So can you just talk a little bit about what the process looks like the -- how quickly can you gain scale in that market? And then also, this was acquired at a pretty compressed initial yield. So would you maybe just a little touch on, just your -- whether you'd continue to maybe dilutively buy in that market as you tap over a cycle?

Jeffrey Olson

Michael, it's Jeff. I'll take part of it, and then I'll also ask Jeff Mooallem to take part of it. Regency Court was pretty darn special. I think it may be one of the best shopping centers in Florida has traded like in the last decade. So properties like this don't come to market very often, and actually reminds me of when we bought Westlake Shopping Center in Daly City, many years ago at Kymco and then also Aventura Square at Equity One, which is near Aventura Mall. And when I look at the common denominator behind those two as I compare it to Regency Court, one is if the location is just exceptional, beyond exception in a severely supply-constrained market. Number two is that they are older properties with leases anchor leases that run out of term, which is hard to find. Three is the land values are super high, so there will be opportunities to take that land value and monetize it at some point. And four, which is an important one, is all of these assets had been under the same ownership for decades and decades. So we think bringing a fresh perspective is going to be unique. And our experience, these types of assets are just gifts that keep on giving almost in perpetuity. But Jeff, why don't I turn it over to you in terms of like adding scale. And ironically, I used to live in South Florida, Langer lived in South Florida, Jeff lived in South Florida. So I mean, this is a market that we know very well.

Jeffrey Mooallem

Yes, I'd echo everything Jeff said about South Florida as a market and a unique specialty of Regency Court. And in terms of what the growth strategy would be, I think what's the most instructive thing is just look at -- look at what we've done in the New England and the Boston market over the last 5 years, that was a market that we had fairly early presence in 5 years ago, and it's now roughly 10% of our company, roughly $0.5 billion of value there. And that's a byproduct of slow and steady targeting the right kind of assets being visible in the market, being present in the market and buying selectively and strategically. It's really hard to do that when you don't already have a foot in the door. Regency Court is a very special foot in the door. It's a foundational asset that immediately is an asset that we're excited to get to work on, and it will open the door for other opportunities for us in South Florida.

Michael Goldsmith

And just as a follow-up, the same-store guidance -- same-store NOI guidance moved higher and implies a material acceleration in the fourth quarter. Mark, do you mind just, kind of, talk about the building blocks there. I think you talked a little bit about the SNO pipeline and recognizing some revenue coming off. Maybe you can just provide a little bit more detail in the building blocks there?

Mark Langer

Hi, Michael, the biggest building blocks are what you said, really the full stabilization of rents that commenced in Q3 that will roll over as well as what I mentioned for the incremental rents from the SNO pipeline in Q4. In addition, fourth quarters, we're expecting that's when we get our largest percentage rent and some ancillary income. And then on the recovery side, it's hard to imagine, but a year ago, we actually had $3.5 million of snow removal expense. We got hit with some storms late in December last year. That could -- inure to our benefit, we don't model that level for this year as well. So a little bit on recovery. So it's really a blend of all of that, but the biggest propellant is really the new rents coming online.

Operator

Our next question is from Ronald Kamdem with Morgan Stanley.

Ronald Kamdem

Great. Just staying with the South Florida. I guess it sounds like you envision this could be 10% of the company, if I'm understanding correctly. Over time, obviously, just more color around are you only buying? Would you consider developing in the market? Were there other markets considered, right? Would you go beyond South Florida? Just trying to get a sense of the scope of what checks the box and what we could see from -- on the acquisition and potential capital deployment front?

Jeffrey Olson

I mean we'd love to find more Regency courts candidly. But again, they don't come up very often. I think we would extend to other portions of the state because we are very familiar with the state overall. But it's going to be opportunistic, and it's going to be -- it really is dependent upon the overall real estate.

Jeffrey Mooallem

Yes. And Ron, I would add on the question of development, I mean our forte is not necessarily always ground-up development, but we are really, really good at repurposing older products. So as South Florida as a community ages, as Tampa as a community ages, other markets like that age, there's lots and lots of shopping centers that will be sort of in need of what we do, and it is a skill set that not a lot of people do anymore because there hasn't been a whole lot of retail redevelopment over the last 15 years. So we are definitely hoping for more opportunities to do meaningful redevelopment as deals go forward.

Ronald Kamdem

Got it. That's helpful. And then maybe on the -- just staying on the theme of same-store, but on expenses. Just looking at the year-over-year growth. Maybe can you talk to that? Are they more elevated than they should be? Are they in line? Just would love to hear some comments on the expense line items this quarter and going forward.

Mark Langer

Are you referring to the expense side of things, Ron?

Ronald Kamdem

Yes.

Mark Langer

Okay. Yes. I mean when you look at the -- in the supplement, you may have noticed on the real estate taxes year-over-year, you saw the decline. And that's really just a reflection. In this quarter, we had a few properties where we settled pending tax appeals, which required a true-up for the year-to-date number. Because the recovery ratio on real estate taxes is so high, you had an offsetting impact on recovery revenues. So the net impact to NOI was negligible. In terms of other expense categories, Ron, I think on a go-forward basis, it's fair to assume we've been renegotiating looking hard at those. But I think a 3% escalation in general for property OpEx is a reasonable assumption.

Operator

Our next question is from Michael Griffin with Evercore ISI.

Michael Griffin

Not to belabor the point on Regency Court, but Jeff, I know you gave the going-in cap rate. Curious if you can give any commentary on what your expectations of stabilized yields are for that project. And how quickly you can realize those below market rents. And then given Walgreens' tenancy there, how do you write -- underwrite a renewal versus a potential vacancy? And just any kind of thoughts there on the tenancy at the center.

Jeffrey Olson

Yes. I mean I won't give specific numbers because it's a little bit speculative, but we know that those two leases expire in 6 years rarely do anchor leases, by the way, go to full term. So our expectation is that there probably will be some type of deal between now and 6 years. But I mean you can sort of do the back-of-the-envelope math looking at our 8% to 9% unlevered expected yield, and that sort of gives you, I think, enough guidance for you to put into your model.

Michael Griffin

Great. That's super helpful. And then Jeff, well, I appreciated your comments around more favorable capital costs and I think having greater leverage just in the supply-constrained environment. I mean as you look out into the near and medium term, does this capital cost as a percent of NOI? Are we just in a different paradigm and you expect a more favorable environment here. Just curious how we think about this relating to the ultimate opportunity set within growing internal cash flow if you have less capital outlays to get the tenants into the properties.

Jeffrey Mooallem

Yes, I do think we see it as a trend that shows no sign of abating, and we are expecting it to continue. There's sort of two buckets of capital, right? There's the leasing costs and then there's the stuff that we have to do to maintain our shopping centers, whether that's renovation stuff the customer can see or deferred maintenance the customer can't see. And all those categories are going down. I talked about the leasing capital in my remarks and how we've just been able to negotiate better deals, more as-is deals, a lot of it around sort of you have to take the HVAC we have or you got to put the demising wall up kind of conversations that our leasing team is doing a really good job of delivering lower capital deals.

But even on the other side, in terms of what we spend on deferred maintenance and renovation, Mark has messaged consistently over the last few quarters that we spend a lot of money. I think we've improved probably 70% of the portfolio or something like that over the last 5 to 10 years, and we don't expect that to be the run rate going forward. And if you look at our 2027 budget numbers, it would bear that out. So no reason to believe that the trend of keeping capital lower on a go-forward basis will stop anytime soon.

Operator

Our next question is from Floris Van Dijkum with Ladenburg Thalmann.

Floris Gerbrand Van Dijkum

Couple follow-ups on Regency Court seems to be a topic du jour. What is the GAAP cash -- the GAAP yield versus the cash? I presume the 4% is a is it cash cap rates. Where are you marketing it today given the below-market leases? And what can you get away with?

Mark Langer

Well, we haven't finalized the purchase price allocation, Floris, but I expect the GAAP yield to be in the 5s.

Floris Gerbrand Van Dijkum

And then that apparently, if Publix was bidding on that property as well. I mean, could you consider doing something where you sell the grocery box to Publix to lower your lower your basis and increase the yield? Or would you want to mark the rents for Publix to market partly because of the upside potential? Or is that still an ongoing negotiation potentially?

Jeffrey Olson

Ongoing sort of all depends on price, as you would expect.

Floris Gerbrand Van Dijkum

Great. Maybe -- sorry, the second question I have is on Bruckner because that's going to be a major part of your SNO pipeline presumably. How is that progressing? When is that going to be stabilized? And any other developments there? Or are you seeing more momentum for that center? Because I think that's going to be $15 million of NOI once it's stabilized, if I'm not mistaken.

Jeffrey Mooallem

Yes, that's right, Floris. It's Jeff Mooallem. Well, first of all, I'll take the stabilization question. I mean, you can see in our supplemental, we're targeting the 4 or 5 new tenants that are going to be opening there, which is Chick-fil-A, Chipotle, BJ's, Ross and DDs, so all open in the first half of 2027, some in 1Q and some at Q2. Right now, we feel very good about those dates. We're hopeful that we'll beat them on average by 30 to 90 days, but we feel very good about where they are in the first half of the year.

And then as far as more momentum, I got to get more space. We're pretty much fully leased there. Scott and his team have done a very good job of increasing rents and improving tenancy. We just signed Foot Locker, tenants like that, but we really don't have a lot of vacancy at Bruckner Commons. So as space becomes available, these new tenants will only increase the level of demand.

Operator

Our next question is from Michael Gorman with U.S. Bancorp BTIG.

Michael Gorman

I was wondering if you could just talk about the last -- the three acquisitions done this year have a significantly higher shop component than kind of the in-place portfolio. And I'm just curious, is that just a function of the deals that you're seeing in the marketplace right now? Is this a specific strategy that you're trying to increase the percentage of shop components in the portfolio? Any color there would be helpful.

Jeffrey Olson

Yes. Look, I mean what we're trying to do is through capital recycling, sell more of our high credit sort of lower growth properties that might generate, I don't know, 1% to 2% growth each year that we can get pretty low cap rates for and redeploy that into assets that are 2.5%, 3.5%, 4.5% growth and Regency's case, much, much higher than that actually. So it's less about format and it's more about long-term NOI growth prospects over the next 5 to 7 years.

Michael Gorman

Okay. Great. That's helpful. And then just maybe one. Any updates that you can provide on the parcel sale at Sunrise, I think that's still pending. Is that just going through normal channels or anything to keep an eye on there?

Jeffrey Mooallem

Good morning, Michael. It's Jeff. We have a hearing in 2 weeks, which is a publicly noticed hearing to move forward with the site plan approval for the parcel sale there. We've been working diligently behind the scenes to get ready for that hearing. And once that is completed and that goes through the process. And with these things, it's impossible to say if it's going to take one hearing or two or three. But we feel very confident that we're prepared and ready for it. Once that goes through the process, we can start targeting things like closing time lines and planning out the rest of the project. So in terms of new developments, I would tell you in 2 weeks from, I think tomorrow is when our hearing is, and that will be the next critical day in the process.

Michael Gorman

Great. And maybe just one last quick one. The Publix at Regency Court, has that been redeveloped or refreshed as a store at any time in recent years?

Jeffrey Olson

It has not.

Operator

[Operator Instructions]. Our next question is from Paulina Rojas with Green Street.

Paulina Rojas Schmidt

Good morning. I'm interested on the demographics of acquisitions and how would you define your buy box in general? Your recent acquisition in Florida has really has really outstanding demographics. And per your comments on the very high barriers to entry. Would -- I imagine it's very hard to replicate. So should we assume you're targeting similar demographics going forward in this market? Or are you open to something slightly different?

Jeffrey Olson

Look, I mean, we favor densely populated markets, first-ring suburbs, highly affluent areas where supply is severely constrained and where we can do something with a shopping center that makes it a need. So I would expect that we would continue to deploy capital in areas where those demographic trends are all in line. I would not expect us to -- and remember, we named the company Urban Edge because we're on the edge of these urban markets in these first-ring suburbs. I would not expect us to go away from that strategy.

And the tenants are paying the rents that's required, in many cases, for us to invest significant amounts of capital into these properties to bring them to current standards.

Jeffrey Mooallem

Yes. And Paulina, I would just add in the case of Regency Court in Boca, like Jeff mentioned in his comments that there's no other grocery-anchored center within 2 miles. But if you look at our competition map and zoomed out even further, the other shopping centers that are competitive are owned by names like Regency, Edens, Simon as the mall. And then most notably, Publix is the big owner of these kinds of properties.

So that does a couple of things. Number one, it makes it very difficult to ever buy in these kinds of markets, which is why we wanted to pounce on this opportunity. And number two, you're surrounded by owners who like us know how to push rents and don't give space away that generally kind of lifts all boats. So Regency Court is a very unique property for that reason.

Paulina Rojas Schmidt

My second question is, so the vast majority of your portfolio is in the DC Boston corridor, but you own very few assets outside the two centers in Puerto Rico, and I think there is an asset in St. Luis, a couple in California. What are your updated thoughts on them? Are they short term or midterm homes or candidates for recycling as you build in your new regions?

Jeffrey Olson

I think those could likely be candidates for recycling, Paulina, all price dependent, and we'll weigh that against other possible sale candidates that we have, again, referencing to some of the much higher -- very high credit and lower growth power centers that we have in New Jersey that trade very well. So we'll weigh it all.

Paulina Rojas Schmidt

Can I add one more question?

Jeffrey Olson

Of course.

Paulina Rojas Schmidt

So what about the topic of scale? Do you need certain scale in South Florida to be efficient or you can leave for a while with one, two or three centers?

Jeffrey Mooallem

I think we can live for a while with one, two or three centers. I mean, don't forget, we have a lot of operating expertise in this market. I think between the three of us, Mark, Jeff and I, we probably have over 20 years of living there and working there. So we know a lot of the key players. We have a good management strategy for the asset. And while we may use a local broker to help us with some of the more local leasing, the national relationships that want to be in both of its own are the same national relationships that want to be in Bridgewater, New Jersey and Framingham, Massachusetts.

So we have lots of different ways that we can reach the right tenants and manage the property effectively. Having said that, scale is always nice. And if we could add 2 or 3 or 4 more centers in the area and spread out our management a little bit, we certainly are going to try to do that.

Operator

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Jeff Olson for closing comments.

Jeffrey Olson

Great. Thank you for joining us. We appreciate your interest in UE, and we look forward to seeing you guys soon. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.