Cuộc họp công bố kết quả kinh doanh Q3 2026 của Urban Edge Properties (UE): Nâng dự báo FFO và NOI

Điểm tin chính

• Urban Edge Properties đã báo cáo FFO điều chỉnh trong quý 3/2026 đạt 0,38 USD/cổ phiếu, tăng 6% so với cùng kỳ năm ngoái. FFO điều chỉnh tính từ đầu năm đến nay cũng tăng 6%.
• NOI của các bất động sản hiện hữu, bao gồm cả mảng tái phát triển, tăng 4,6% trong quý và tăng 3,6% tính từ đầu năm đến nay. Ban lãnh đạo đã nâng điểm trung bình của mục tiêu tăng trưởng cả năm lên 4,1% từ mức 3,5%.
• Công ty đã nâng dự báo FFO điều chỉnh cho năm 2026 thêm 0,01 USD tại điểm trung bình, lên mức 1,52–1,54 USD/cổ phiếu, tương ứng với 1,53 USD cho cả năm và 0,39 USD cho quý 4.
• Các hợp đồng cho thuê mới tạo ra mức chênh lệch giá thuê tiền mặt trên cùng diện tích là 27% trong quý 3, trong khi mức chênh lệch hợp đồng mới tính từ đầu năm đến nay đạt 28%. Ban lãnh đạo đặt mục tiêu mức chênh lệch khoảng 50% trong quý 4 và hơn 30% cho cả năm.
• Tổng giá trị danh mục hợp đồng đã ký nhưng chưa mở cửa đạt 21 triệu USD, tương đương 7% NOI quy năm. Khoảng 13 triệu USD tổng tiền thuê quy năm dự kiến sẽ bắt đầu phát sinh vào năm 2027.
• Urban Edge đã thâu tóm các trung tâm thương mại trị giá 185 triệu USD trong năm 2026, bao gồm thương vụ mua lại Regency Court trị giá 90,3 triệu USD tại Boca Raton, đánh dấu sự hiện diện của công ty tại Florida.

Dữ liệu tài chính chính

Kết quả hoạt động kinh doanh và vận hành

Urban Edge đã ký 37 hợp đồng cho thuê với tổng diện tích 463.000 foot vuông trong quý 3. Số này bao gồm 26 hợp đồng gia hạn với tổng diện tích 406.000 foot vuông có mức chênh lệch giá 12% và 11 hợp đồng mới với tổng diện tích 58.000 foot vuông có mức chênh lệch giá trên cùng diện tích là 27%.

Ban lãnh đạo cho biết nhu cầu của các nhà bán lẻ vẫn mạnh mẽ nhờ nguồn cung mặt bằng ở vị trí đắc địa còn hạn chế. Công ty đang đàm phán với hơn 30 khách thuê chủ lực và gian hàng nhỏ, trong đó ban lãnh đạo ghi nhận chất lượng khách thuê cải thiện, giá thuê cao hơn và yêu cầu đầu tư của chủ nhà giảm xuống.

Chi phí cho thuê gian hàng trung bình giảm khoảng 15% từ năm 2024 đến hết 9 tháng đầu năm 2026. Chi phí cho thuê khách thuê chủ lực trung bình giảm hơn 30% một chút, do có nhiều giao dịch với khách thuê chủ lực được hoàn tất trên cơ sở giữ nguyên hiện trạng.

Hai dự án tái phát triển đã đi vào hoạt động ổn định trong quý 3 sau khi được đầu tư 9 triệu USD, mang lại lợi suất trung bình 18%. Trong 12 tháng qua, Urban Edge đã hoàn thành các dự án trị giá 40 triệu USD với lợi suất tổng hợp là 23%. Danh mục dự án tái phát triển đang triển khai đạt 152 triệu USD, trong đó còn 57 triệu USD cần giải ngân và lợi suất dự kiến đạt khoảng 12%.

Tái xoay vòng vốn tiếp tục là trọng tâm trong chiến lược danh mục đầu tư. Urban Edge đã bán Briarcliff Commons với giá 60,5 triệu USD và kết hợp thương vụ thoái vốn này với việc mua lại Village at Bridgewater Commons thông qua giao dịch trao đổi 1031 ngược (reverse 1031 exchange). Ban lãnh đạo cho biết chiến lược của họ là bán các tài sản có mức tăng trưởng thấp hơn nhưng độ tín nhiệm cao, rồi tái đầu tư vốn vào các bất động sản có triển vọng tăng trưởng NOI dài hạn mạnh mẽ hơn.

Regency Court được thâu tóm với giá 90,3 triệu USD với lợi suất ban đầu khoảng 4%. Trung tâm thương mại rộng 140.000 foot vuông này có các khách thuê chủ lực là Publix và Walgreens. Ban lãnh đạo kỳ vọng tỷ suất sinh lời nội bộ không dùng đòn bẩy (unlevered IRR) đạt 8%–9%, dựa trên giá thuê của các khách thuê chủ lực đang thấp hơn giá thị trường, việc nâng cấp khách thuê, cải thiện lối vào và bãi đỗ xe, cùng tiềm năng mở rộng tổng diện tích cho thuê.

Kế hoạch kinh doanh của ban lãnh đạo

Urban Edge đã nâng dự báo FFO điều chỉnh năm 2026 lên mức 1,52–1,54 USD/cổ phiếu, tăng 0,01 USD tại điểm trung bình. Mức trung bình 1,53 USD thể hiện kỳ vọng của ban lãnh đạo về mức tăng trưởng 7% so với năm 2025 và tương ứng với FFO điều chỉnh quý 4 đạt 0,39 USD/cổ phiếu.

Dự báo tăng trưởng NOI của các bất động sản hiện hữu cho cả năm, bao gồm cả mảng tái phát triển, đã được nâng điểm trung bình lên 4,1% từ mức 3,5%. Ban lãnh đạo cho biết tăng trưởng quý 4 sẽ hưởng lợi từ đóng góp trọn quý của tiền thuê bắt đầu phát sinh từ quý 3, tiền thuê bổ sung từ các hợp đồng đã ký nhưng chưa mở cửa, tiền thuê theo tỷ lệ phần trăm doanh thu, thu nhập phụ trợ và sự so sánh thuận lợi hơn về chi phí dọn dẹp tuyết.

Trong danh mục hợp đồng đã ký nhưng chưa mở cửa, 700.000 USD tổng tiền thuê quy năm dự kiến sẽ bắt đầu phát sinh trong quý 4/2026 và gần 13 triệu USD trong năm 2027. Tại Bruckner Commons, Chick-fil-A, Chipotle, BJ’s, Ross và dd’s dự kiến sẽ mở cửa trong nửa đầu năm 2027.

Ban lãnh đạo chỉ ra rằng mức tăng khoảng 3% mỗi năm là một giả định hợp lý cho chi phí vận hành bất động sản trong thời gian tới.

Rủi ro và các yếu tố cần theo dõi

• Luận điểm đầu tư của Regency Court phụ thuộc một phần vào việc khai thác tiềm năng tăng giá đáng kể từ các hợp đồng cho thuê đang thấp hơn giá thị trường. Cả hai hợp đồng cho thuê chủ lực, bao gồm tất cả các tùy chọn gia hạn, sẽ hết hạn sau 6 năm nữa, và ban lãnh đạo chưa đưa ra mốc thời gian cụ thể cho khả năng tái cấu trúc hợp đồng cho thuê.
• Việc mở rộng tại Florida sẽ mang tính chớp thời cơ. Ban lãnh đạo thừa nhận rằng các tài sản tương tự như Regency Court rất hiếm khi xuất hiện trên thị trường, mặc dù công ty vẫn có thể vận hành hiệu quả chỉ với một số lượng nhỏ trung tâm tại khu vực này.
• Urban Edge còn 57 triệu USD cần giải ngân trong danh mục tái phát triển đang triển khai, khiến tỷ suất sinh lời phụ thuộc vào tiến độ hoàn thành dự án, thời điểm mở cửa của khách thuê và thời điểm bắt đầu tính tiền thuê.
• Việc bán khu đất Sunrise vẫn đang chờ phê duyệt quy hoạch tổng thể. Ban lãnh đạo cho biết quá trình này có thể yêu cầu một hoặc nhiều buổi điều trần công khai trước khi có thể xác định lộ trình hoàn tất giao dịch.

Điểm nhấn phần Hỏi & Đáp với chuyên gia phân tích

Các chuyên gia phân tích tập trung nhiều vào việc Urban Edge thâm nhập thị trường Nam Florida. Ban lãnh đạo mô tả Regency Court là tài sản nền tảng và so sánh định hướng dự kiến với quá trình mở rộng từng bước của công ty tại New England — nơi quy mô đã tăng trưởng trong 5 năm lên khoảng 10% giá trị công ty, tương đương khoảng 500 triệu USD. Urban Edge có thể tiếp tục mở rộng sang các khu vực khác ở Florida, bao gồm các thị trường có bất động sản bán lẻ đã xuống cấp phù hợp để tái phát triển.

Về tiêu chí thâu tóm, ban lãnh đạo cho biết họ tiếp tục ưu tiên các khu ngoại ô vành đai 1 đông dân cư, giàu có với nguồn cung bán lẻ hạn chế và có cơ hội định vị lại các trung tâm thương mại hiện hữu. Công ty nhấn mạnh rằng tăng trưởng NOI ở cấp độ tài sản quan trọng hơn hình thức bất động sản hay tỷ lệ gian hàng nhỏ.

Về yêu cầu vốn, ban lãnh đạo kỳ vọng chi phí cho thuê và bảo trì sẽ tiếp tục ở mức thấp hơn. Họ viện dẫn lợi thế đàm phán tốt hơn với khách thuê, nhiều giao dịch cho thuê chủ lực trên cơ sở giữ nguyên hiện trạng hơn và những cải thiện đáng kể đối với danh mục đầu tư đã được hoàn tất trong 5 đến 10 năm qua.

Ban lãnh đạo cho biết Bruckner Commons gần như đã được lấp đầy hoàn toàn, khiến nguồn cung diện tích trống trong ngắn hạn bị hạn chế. Các đợt mở cửa theo kế hoạch trong nửa đầu năm 2027 dự kiến sẽ hỗ trợ quá trình đi vào hoạt động ổn định và có khả năng thúc đẩy mạnh mẽ hơn nữa nhu cầu của khách thuê.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

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.

Phần hỏi đáp

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.