๐Ÿ“ข New Earnings In! ๐Ÿ”

UE (2025 - Q2)

Release Date: Jul 30, 2025

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Stock Data provided by Financial Modeling Prep

Current Financial Performance

Urban Edge Properties Q2 2025 Highlights

$0.36
FFO as Adjusted
+12%
7.4%
Same-Property NOI Growth
92.5%
Shop Occupancy
5.5x
Net Debt to EBITDA

Key Financial Metrics

Liquidity

$800M

Total liquidity including cash

Cash on Hand

$118M

Recurring G&A Expenses

$35M

2025 midpoint forecast

3%

Adjusted EBITDA to Interest

3.7x
30%

Net Debt to EBITDA

5.5x
14%

Period Comparison Analysis

FFO as Adjusted

$0.36
Current
Previous:$0.35
2.9% QoQ

FFO as Adjusted

$0.36
Current
Previous:$0.32
12.5% YoY

Same-Property NOI Growth

7.4%
Current
Previous:3.8%
94.7% YoY

Shop Occupancy

92.5%
Current
Previous:92.4%
0.1% YoY

Net Debt to EBITDA

5.5x
Current
Previous:5.9x
6.8% QoQ

Earnings Performance & Analysis

2025 FFO as Adjusted Guidance

Actual:$0.36
Estimate:$0.34 to $0.36
MISS

FFO as Adjusted Growth YTD

8%

Same-Property NOI Growth YTD

5.6%

Financial Health & Ratios

Key Financial Ratios

5.5x
Net Debt to Annualized EBITDA
3.7x
Adjusted EBITDA to Interest Expense
96.7%
Occupancy Rate
92.5%
Shop Occupancy Rate
$35M
Recurring G&A Expenses

Financial Guidance & Outlook

2025 FFO as Adjusted Guidance

$1.40 to $1.44
5%

Same-Property NOI Growth Guidance

4.25% to 5%

Recurring G&A Expense Forecast

$35M
3%

Maintenance CapEx Forecast

$20M to $22M

Surprises

FFO as adjusted Increase

12%

We delivered great second quarter results, increasing FFO as adjusted by 12% over last year and 8% year-to-date.

Same-property NOI Growth

7.4%

Same-property net operating income increased by 7.4% for the quarter and 5.6% year-to-date.

Shop Occupancy Rate Increase

92.5%

Our shop occupancy rate increased to a record high of 92.5%, up 270 basis points over the prior year.

Adjusted EBITDA to Interest Expense Ratio Increase

+30%

3.7x

Our adjusted EBITDA to interest expense has increased to 3.7x, up nearly 30% from 2.9x a year ago.

Recurring G&A Expense Forecast Lowered

$35 million midpoint

We have lowered our recurring G&A forecast for 2025 by $500,000, bringing the midpoint to $35 million, implying a reduction of 3% from 2024.

Impact Quotes

We delivered great second quarter results, increasing FFO as adjusted by 12% over last year and 8% year-to-date.

Tenant bankruptcies are a reality of this business. Removing dated stores and replacing them with higher credit operators has a positive ripple effect on the rest of the property.

Our adjusted EBITDA to interest expense has increased to 3.7x, up nearly 30% from 2.9x a year ago, positioning us well to capitalize on future growth opportunities.

Given that we are now nearly 97% leased and our properties have undergone significant improvements, we anticipate a substantial decrease in future capital expenditures.

We have an excellent pipeline for the second half of the year as we close in on our goal of exceeding 93% shop occupancy in 2025.

The investment sales market for retail assets is thriving, driven by both public and private buyers, solid operating fundamentals, increased debt availability and increased capital flows.

We have lowered our recurring G&A forecast for 2025 by $500,000, bringing the midpoint to $35 million, implying a reduction of 3% from 2024.

Our stock is relatively inexpensive given expected NOI growth of at least 4% over the next several years and current cap rate environment.

Notable Topics Discussed

  • Shop occupancy reached a record high of 92.5%, up 270 basis points YoY, with a target to exceed 93% in H2 2025.
  • Management highlighted increased pricing power through better lease terms, including exclusives, radius restrictions, and faster store openings, leveraging high occupancy levels.
  • Sold $66 million of assets at a 4.9% cap rate YTD, including lower-growth properties like Kennedy Commons and MacDade Commons.
  • Evaluating new acquisitions with cap rates around 5.5%-6%, aiming for IRRs of 8-12%, with a focus on high-quality assets in core markets.
  • Plans to test the market for more dispositions in fall, with potential expansion into new markets if cap rates remain attractive.
  • Active redevelopment pipeline of $142 million with an expected 15% return, including projects at Bergen Town Center and others, driven by strong tenant demand for big-box retailers like Walmart, TJX, Ross.
  • Repositioning of assets like Hudson Mall, with 75% leased, driven by increased tenant demand and underrepresented big-box tenants.
  • Bankruptcies of Big Lots, Party City, and At-Home, with plans to recover and replace these tenants with higher-credit, better-concept operators.
  • Tenant replacements have historically had a positive impact on traffic and credit quality, with management viewing bankruptcies as opportunities for asset improvement.
  • Paid off a $50 million mortgage on Plaza at Woodbridge, due to no prepayment penalty, using lower-cost line of credit.
  • Remaining debt maturities are minimal, with only 9% due through 2026, and leverage ratios like net debt to EBITDA at 5.5x, supporting growth.
  • Post-COVID, investors see durable cash flows and growth in retail, with banks offering record low spreads (around 135 basis points over treasuries) for nonrecourse loans.
  • High demand and high prices for quality assets, with cap rates in the 5.5%-6% range, implying attractive unleveraged IRRs of 8-9% and leveraged IRRs of 10-12%.
  • Forecasted decline in CapEx from about $36 million in 2022 to $20-$22 million in 2023, then further down to $15 million as remaining renovations are completed.
  • High-quality tenant replacements and prior renovations reduce future CapEx needs, with a focus on yield-generating upgrades.
  • Leverage high occupancy to negotiate better lease terms, including rent increases, concessions, and delivery conditions.
  • Shift towards more favorable lease clauses, such as as-is tenant improvements and reduced permitting delays, enhancing economic returns.
  • Management views current stock valuation as inexpensive relative to expected NOI growth (~4% annually), with implied cap rates starting with a 7, suggesting undervaluation.
  • Confident in continued sector-leading growth driven by strong leasing, redevelopment, and capital recycling strategies.
  • Anticipates minimal future CapEx due to high-quality tenant base and extensive prior renovations, supporting sustainable growth.

Key Insights:

  • 2025 FFO as adjusted guidance increased by $0.02 per share to a range of $1.40 to $1.44, reflecting 5% growth over 2024 at the midpoint.
  • Capital recycling efforts will continue with plans to test the market for dispositions in the fall.
  • Confident in ability to deliver sector-leading growth driven by leasing, occupancy, and expense management.
  • Expect to recognize $1.7 million in new commencements from the S&O pipeline in the remainder of 2025, predominantly in Q4.
  • Projected same-property NOI growth for 2025 is in the range of 4.25% to 5%, including redevelopment.
  • Recurring G&A expense forecast for 2025 lowered by $500,000 to a midpoint of $35 million, implying a 3% reduction from 2024.
  • Uncollectible revenue assumptions remain at 75 to 100 basis points of gross rent, incorporating expected impact of At-Home bankruptcies.
  • Activated new food projects at Bergen Town Center, enhancing dining options with Tatte Bakery, Capon's Burgers, and Tommy's Tavern.
  • Active redevelopment pipeline totals $142 million with an expected 15% return.
  • Capital recycling since October 2023 includes $552 million acquisitions at a 7.2% cap rate and $493 million sales at a 5.2% cap rate.
  • Completed 5 redevelopment projects during the quarter, adding tenants like Burlington, Cava, First Watch, Starbucks, and Sweetgreen.
  • Executed 42 leasing deals totaling 482,000 square feet in Q2, including 27 renewals at a 12% spread and 15 new leases at a 19% spread.
  • New tenants include Boot Barns, Fidelity Investments, Just Salad, and Wonder.
  • Over 95% of the S&O pipeline is comprised of national and regional tenants, strengthening the credit platform.
  • Portfolio concentrated in the densely populated, supply-constrained D.C. to Boston corridor.
  • Redevelopment and repositioning of about 70% of the portfolio expected by 2027, reducing future capital expenditures.
  • CEO Jeff Olson emphasized strong operating fundamentals and the 'revenge of the nerds' in retail, highlighting durable cash flows and growth.
  • CEO Olson expressed gratitude for the dedicated team and collaborative execution of the strategic plan.
  • CFO Mark Langer highlighted improved cash flow, strong balance sheet metrics, and prudent debt management during growth.
  • COO Jeff Mooallem noted tenant bankruptcies as opportunities to replace dated stores with higher credit tenants, improving traffic and portfolio quality.
  • Management confident in pricing power due to high occupancy and ability to negotiate better lease terms including rent increases and delivery conditions.
  • Management expects future CapEx to decline significantly due to completed renovations and higher quality tenants reducing tenant churn.
  • Management is monitoring Kohl's closely but does not expect imminent store closures impacting their portfolio.
  • Management views the stock as relatively inexpensive given expected NOI growth and current cap rate environment.
  • Anchor occupancy steady at 97.4% despite bankruptcies of Big Lots, Party City, and At-Home; active efforts to re-tenant anchor vacancies ongoing.
  • CapEx expected to decline as heavy maintenance work is completed and leasing CapEx terms improve with better tenants.
  • Capital recycling market remains active with competitive financing and high pricing expectations; company plans to test disposition market in fall.
  • G&A expenses elevated in Q2 due to severance and transaction costs but recurring run rate is lower, supporting guidance reduction.
  • Kohl's stores are currently 4-wall profitable; no immediate plans for closures but company is engaged in discussions about store returns.
  • Mortgage loan payoff in Q2 was opportunistic due to no prepayment penalty and lower interest rate on line of credit.
  • Redevelopment plans may expand due to stronger tenant demand, including interest from large big box tenants like Walmart, BJ's, Ross, and TJX.
  • Shop occupancy expected to reach 93% to 94% by year-end with continued pricing power on leases including better economic and non-economic terms.
  • Only 9% of total debt matures through 2026, providing financial stability.
  • Tenant bankruptcies are considered a normal part of the business and can create opportunities for portfolio improvement.
  • The company benefits from a resilient balance sheet and strong liquidity position.
  • The company has $1.5 billion in nonrecourse mortgages and 42 unencumbered properties valued at nearly $2 billion.
  • The company is focused on strategic capital recycling to enhance portfolio quality and returns.
  • The company uses non-GAAP financial measures and provides reconciliations in earnings releases and supplemental disclosures.
  • The investment sales market for retail assets is thriving with increased debt availability and capital flows.
  • The S&O pipeline represents 8% of current NOI, one of the highest in the sector.
  • Leasing spreads remain strong with 12% on renewals and 19% on new leases, reflecting robust demand.
  • Management emphasizes the importance of collaboration and passion in executing the strategic plan.
  • Redevelopment projects are expected to yield a 15% return, supporting growth and portfolio enhancement.
  • The company expects to continue capitalizing on growth opportunities with a strong balance sheet and liquidity.
  • The company is actively managing tenant relationships to negotiate better lease terms including exclusives and co-tenancy requirements.
  • The company is focused on improving food and dining options at key assets to increase traffic and tenant mix quality.
  • The company is monitoring market conditions closely to optimize timing and pricing of acquisitions and dispositions.
  • The company is negotiating a bank loan with a record low spread of 135 basis points over treasuries for nonrecourse debt.
Complete Transcript:
UE:2025 - Q2
Operator:
Greetings, and welcome to the Urban Edge Properties Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Areeba Ahmed, Investor Relations Associate. Thank you. You may begin. Areeba A
Areeba Ahmed:
Investor Relations & ESG Associate:
Good morning, and welcome to Urban Edge Properties Second Quarter 2025 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 and which the company does not undertake to update. Our actual results, financial condition 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 S. Olson:
Great. Thank you, Areeba, and good morning, everyone. We delivered great second quarter results, increasing FFO as adjusted by 12% over last year and 8% year-to-date. Same-property net operating income increased by 7.4% for the quarter and 5.6% year-to-date. The demand for space in our shopping centers remains strong. There are a few high-quality vacancies remaining in our markets, often leading to multiple bids on available space, which is driving upward pressure on rents and lease terms. Our same-property occupancy increased to 96.7%, up 10 basis points from the prior quarter, and our shop occupancy rate increased to a record high of 92.5%, up 270 basis points over the prior year. Given that we are now nearly 97% leased and our properties have undergone significant improvements, including new anchors, parking lots, facades and roofs, we anticipate a substantial decrease in future capital expenditures. The investment sales market for retail assets is thriving, driven by both public and private buyers. One of our Board members recently described the current shopping center landscape as the revenge of the nerds, highlighting that retail is back in demand driven by solid operating fundamentals, increased debt availability and increased capital flows. Year-to-date, we have sold $66 million of assets at a blended cap rate of 4.9%. This includes the sale of 2 high-value, lower-growth properties, Kennedy Commons and MacDade Commons for $41 million and the previously announced sale of a 44,000 square foot building across from Bergen Town Center for $25 million. Looking ahead, based on the strong results we have achieved to date, we increased our 2025 FFO as adjusted guidance by $0.02 per share to a new range of $1.40 to $1.44 per share, reflecting growth of 5% over 2024 at the midpoint. We remain confident in our strategy, which is anchored by 5 key strengths: one, a portfolio concentrated in the densely populated supply-constrained D.C. to Boston corridor; two, highly visible future net operating income growth, supported by our $24 million signed but not open pipeline, representing 8% of current NOI; three, a $142 million redevelopment pipeline expected to yield a 15% return; four, strategic capital recycling. Since October 2023, we have acquired $552 million of high-quality shopping centers at a 7.2% cap rate and sold $493 million of noncore low-growth assets at a 5.2% cap rate. And five, a resilient balance sheet with $1.5 billion in nonrecourse mortgages and 42 unencumbered properties valued at nearly $2 billion. We only have $139 million or 9% of our total debt maturing through 2026. Our continued momentum and success are driven by our dedicated team. I'm grateful for their passion and commitment to execute our strategic plan while working in such a collaborative manner to achieve outstanding results. I will now turn it over to our Chief Operating Officer, Jeff Mooallem.
Jeffrey S. Mooallem:
Thanks, Jeff, and good morning, everyone. It was another strong quarter for leasing and development as we continue to hit on our goals of increasing occupancy, generating double-digit leasing spreads, completing development projects at or ahead of budgeted time lines and adding new developments at double-digit returns. Let's get into it. We executed 42 deals totaling 482,000 square feet in the second quarter. This included 27 renewals totaling 394,000 square feet at a 12% spread and 15 new leases totaling 88,000 square feet at a 19% spread. New leasing activity included 2 Boot Barns, Fidelity Investments, Just Salad and Wonder. With these executions, over 95% of our S&O pipeline is now comprised of national and regional tenants, providing further assurance that our NOI growth is derived from a stronger credit platform than what we used to see in years past. Our same-property leased rate is now 96.7%, reflecting an increase of 10 basis points from last quarter. Leading the way in occupancy, again, was shop leasing, which reached a new record high of 92.5%, a 10 basis point increase from last quarter and a 270 basis point increase from the same period last year. We have an excellent pipeline for the second half of the year as we close in on our goal of exceeding 93% shop occupancy in 2025. Anchor occupancy remained steady, moving from 97.2% to 97.4% despite the bankruptcies of Big Lots and Party City earlier this year. Just as we were expecting those 2 bankruptcies, we were not surprised when At-Home filed last month. We have 2 At-Home stores, both paying single-digit rents, and we expect to get one location back this year. As we've said before, tenant bankruptcies are a reality of this business. And in times like this, we can embrace that reality as an opportunity. Removing dated stores that generate minimal traffic from our centers and replacing them with higher credit and better concept operators has consistently had a positive ripple effect on the rest of the property. On the development front, we continue to progress on multiple projects, delivering spaces and getting stores open. During the quarter, we completed 5 redevelopment projects, enabling new tenant openings at Montehiedra, Marlton, Brick, Walnut Creek and Huntington. Adding national tenants like Burlington, Cava, First Watch, Starbucks and Sweetgreen to these properties has strengthened credit and increased traffic. We also activated new projects at Bergen Town Center, where we continue to improve the food options at one of the busiest assets in our portfolio. Tatte Bakery, Capon's Burgers and Tommy's Tavern will complement 4 other new food concepts we previously announced, giving this newly renovated property one of the best dining lineups in all of Bergen County. With the 5 projects that came off our development pipeline and the 2 new projects added, active redevelopment now totals $142 million and maintains a strong expected return of 15%. With that, I'll hand it over to our CFO, Mark Langer.
Mark J. Langer:
Thank you, Jeff, and good morning. We were pleased to deliver another strong quarter, marked by solid earnings performance and continued leasing momentum. FFO as adjusted came in at $0.36 per share and our same-property NOI, including redevelopment, increased 7.4% compared to the second quarter of 2024. The outperformance was driven in part by higher rental revenue from tenant rent commencements, higher net recoveries and year-end CAM reconciliation billings, of which approximately $0.01 per share is nonrecurring. Same-property NOI growth would have been 5.6%, excluding the $1.2 million of nonrecurring tenant billings, still a very strong result, reflecting growth from our S&O pipeline. FFO as adjusted also benefited from lower recurring G&A expenses. I will comment on our favorable trend on G&A in a moment when I provide an update on guidance. On the financing front, at the end of June, we paid off our $50 million mortgage loan on the Plaza at Woodbridge, which had an effective interest rate of 6.4% and was due to mature in June 2027. Payment was made in part using our line of credit, which has a current interest rate of approximately 5.4%. Our $800 million line now has $90 million drawn. Our balance sheet remains in excellent shape with total liquidity of approximately $800 million, including $118 million in cash. As Jeff highlighted, we have just 9% of our outstanding debt coming due through 2026. Our cash flow has improved steadily as we have added high-quality anchors and strong regional shop tenants to our portfolio. We have carefully managed our debt during our growth cycle the past few years. Our adjusted EBITDA to interest expense has increased to 3.7x, up nearly 30% from 2.9x a year ago. Our net debt to annualized EBITDA was 5.5x in the second quarter, positioning us well to capitalize on future growth opportunities. Looking ahead to the remainder of 2025, we are increasing our FFO as adjusted guidance by $0.02 per share to a new range of $1.40 to $1.44 and projecting same-property NOI growth, including redevelopment, to be in the range of 4.25% to 5%. Our assumptions for uncollectible revenue remain unchanged at 75 to 100 basis points of gross rent and incorporate the expected impact of At-Home. Our $24 million S&O pipeline continues to be a key growth driver with $3.9 million in annualized gross rent already commenced in the second quarter, and we expect to recognize another $1.7 million in new commencements in the remainder of the year, which will predominantly come online in Q4. Based on results year-to-date and our future expectations, we have lowered our recurring G&A forecast for 2025 by $500,000, bringing the midpoint to $35 million, which implies a reduction of 3% from 2024. This is due to a combination of factors, including lower headcount and the expected timing to backfill open positions in addition to other cost-saving measures. In closing, we remain focused on executing our strategic plan, driving leasing and occupancy, delivering new tenant spaces on schedule and carefully managing expenses. We're confident in our ability to continue delivering sector-leading growth. With that, I'll turn the call over to the operator for questions.
Operator:
The first question is from Ronald Kamdem from Morgan Stanley.
Ronald Kamdem:
Just 2 quick ones. I guess, starting with the record occupancy in the in-line space. Maybe can you talk a little bit about what -- how much more upside do you think is that number -- that occupancy number? And number two, how is that translating into either better lease contracts or pricing power for you guys in the business?
Jeffrey S. Olson:
Jeff, go ahead.
Jeffrey S. Mooallem:
Yes. Yes, listen, we're really happy with where we are on the shop space. I'll take that first. But as I said in my prepared comments, we think we can get to between 93,000 and 94,000 square feet -- 93% and 94% shop occupancy, which requires us to get another 50,000, 60,000, 70,000 square feet and also account for some vacates as the year goes on, although we don't expect much of that. The nice thing about the shop occupancy right now is that we do have, as you said, real pricing power. And of course, pricing power today is not just charging a higher rent or asking for better interest rates, but it's on things like exclusive use provisions, radius restrictions, opening dates, landlord contributions, tying things to permitting. We've been able to extract much better terms on all of the shop leasing we've been doing. So there's a little bit of run rate there in terms of occupancy growth and certainly better economic and other terms in the leases. On the anchor side, we have a name circled next to pretty much every anchor vacancy in the portfolio. Some of those deals should happen in the next few weeks to a couple of months, and we'll announce them in 3Q. And some of them might take longer. But there's certainly more activity on all of our spaces than we've seen in years past, and we're not really too worried about having a lot of space that's going to be sort of static inherent long- term anchor vacancy. So that's pretty good news as well.
Ronald Kamdem:
Great. And then my second one, a little bit of a 2-parter, but just you guys have had a lot of success on sort of the capital recycling front. Maybe just talk a little bit about what you're seeing sort of in terms of cap rates and opportunities going forward? And then the second part is the At-Home update was helpful, but any sort of update on Kohl's as well?
Jeffrey S. Olson:
Ron, it's Jeff. Let me start with the acquisition market, which has been heating up even over the last several months. And I think what's happened sort of in this post-COVID environment, investors have realized that in the shopping center space, the cash flows are durable and there's actually a fair amount of growth coming going forward. In addition, the lenders have really stepped up, in particular, the banks. So we're starting to see them become much more active in the market. And as you know, the banks are much more flexible than CMBS lenders and the pricing is very competitive. In fact, we're negotiating a bank loan right now where the equivalent spread is 135 basis points over treasuries. That would be a record low for us. And remember, this is nonrecourse debt. So overall, as financing becomes more attractive in the space, there certainly are more buyers now willing to pay higher prices. I think the sellers overall generally recognize what's happening. So they are putting more product into the market, and they're also asking a whole lot of money for that product, too. So pricing expectations are awfully high. At the moment, we're evaluating lots of deals, and we do hope to find some opportunities for more capital recycling. I think we're going to test the market this fall for more dispositions. And again, we're sort of hoping to place that disposition capital into higher- yielding acquisitions that have higher long-term growth rates as well. But in the meantime, we've got plenty of growth to mine from our existing assets including from our S&O pipeline, which is, as we said, 8% of total NOI, which I think may be the highest in the space and also from redevelopment. In terms of pricing, Ron, I think what you're seeing for higher quality assets today are cap rates sort of in that 5.5% to 6% range, if the CAGRs are able -- the NOI CAGRs are able to get 3% growth. That would imply unleveraged IRRs in the 8% to 9% range and leveraged IRRs in the 10% to 12% range. As I sort of reflect on those numbers, Ron, and look at our stock at $20, which is implying a cap rate that starts with a 7. And then when I overlay that on top of our expected NOI growth, which we think will be probably at least 4% over the next several years, which is driven largely by this S&O pipeline, it seems to us that our stock is relatively inexpensive.
Ronald Kamdem:
Great. And then the update on Kohl's?
Jeffrey S. Olson:
Jeff, why don't you take that one?
Jeffrey S. Mooallem:
Yes. I mean, Ron, obviously, Kohl's is on our radar screen. They're on everyone's radar screen. But at this point in the process, and we've met with everybody there, Mark and his team have done a very good job of understanding both their current maturity debt profile and where the stock is trading and interest in the company. You saw it was a mean stock last week and had a really nice spike for a little while. We're really still playing offense when it comes to Kohl's, meaning we are talking to them about locations where they have term that we'd like to get back. And we've approached them about 2 of those locations already and having some conversation, but we're not seeing a great sense of urgency from them to close stores. They've told us that they are 4-wall profitable in almost all of their stores. Obviously, they're keeping an eye on the declining sales environment as are we. But right now, they don't seem to be too concerned that they can't be a profitable ongoing business. And most of their stores in the Northeast, which is where our stores with them are located, are generally amongst their best performers in the portfolio. So what I would say is while we're tracking Kohl's, we don't think of it as a 2025 or even really a 2026 decision we're going to have to make. If we can get some stores back and play offense and re-tenant them, we will. But in the meantime, we're just kind of keeping an eye on it, and we don't think it's imminent.
Operator:
The next question is from Floris Van Dijkum from Ladenburg Thalmann.
Floris Gerbrand Hendrik Van Dijkum:
So this accretive recycling has been incredibly profitable for you guys in the past. Are you running out of runway? How much more in terms of volume do you think you can sell? I know you've got some California assets. You got an asset in Missouri and New Hampshire potentially and obviously, some other boxier assets. And would you consider if there is pressure on cap rates in your core markets in New York and in Boston and D.C., maybe expanding your reach going forward?
Jeffrey S. Olson:
Yes. Floris, I think everything is on the table, including centers that we own in the New York Metro market, provided pricing is there. There is a price for every asset at which we would be willing to transact. So I don't want to put a number on it, but we absolutely will be testing the market this fall to see what we might be able to achieve just given the demand that's taking place in the market. We would have never anticipated a couple of years ago that we'd be able to buy and sell $0.5 billion of properties at a 200 basis point spread. I would have never said that on an earnings call. But we realized that it really has supercharged this company. And given the size of our company, we are highly focused on trying to make things like that happen going forward.
Floris Gerbrand Hendrik Van Dijkum:
Maybe a follow-up. I mean, does the improvement in the markets also make you think about your redevelopment plans on some of your existing assets? I'm thinking of assets like Hudson Mall, which as last look is still 75% leased or something like that and make you more confident about deploying capital into assets like that to reposition them?
Jeffrey S. Olson:
We do. I mean that's largely driven by tenant demand, which is also much stronger than it was earlier. So there are many large big box tenants that are underrepresented throughout our markets, including names like Walmart and BJ's and Ross and TJX, all are looking for new space and all are having a hard time finding space, which is putting upward pressure on rents.
Operator:
[Operator Instructions] The next question is from Michael Griffin from Evercore ISI.
Michael Anderson Griffin:
Maybe just first hitting on the balance sheet. Just some commentary around the mortgage loan payoff in the quarter says that it's maturing June of 2027, but you've got a couple more maturities before that. Just I don't know maybe, Langer, if you could comment on that, why pay off that mortgage relative to the stuff that's coming due earlier?
Mark J. Langer:
Yes. Sure, Michael. It's actually pretty easy. That was a loan that had no prepayment penalty, and we were able to use our line at 100 basis points lower than that rate. So we took advantage. We've looked at our upcoming maturities, and there was just an opportunity there where it made a lot of sense.
Michael Anderson Griffin:
Great. That's helpful. And then maybe just stepping back, kind of thinking about the leasing environment in the portfolio now. Obviously, you're about 97% leased, that lease to occupied spread continues to narrow. I mean, Jeff, as you kind of talk about pricing power from a landlord perspective, is this more the ability to push base rents? Are you -- do you have better negotiating power when it comes to concessions? I'm just trying to get a sense of kind of the landlord tenant relationship here and how best you can utilize that position of being very highly leased to maximize revenues.
Jeffrey S. Olson:
Jeff, go ahead.
Jeffrey S. Mooallem:
Yes, it's a little of everything, right? Each deal is kind of its own animal in terms of finding the soft spots to push down on. I will tell you that one of the areas that we have had much greater success in the past is on increases. The concept of 10% every 5 years only really happens if it's a national tenant who's absolutely dug in on it and is willing to pay a face rent and agree to capital and other things that they never would have agreed to in the past. But most often, we find that our nationals are willing to negotiate much better increases than before. The other place that it really comes in for us that's very important is in the delivery conditions. In the past, you would always have a situation where the landlord was doing a bunch of work prior to the tenant getting into the space and that required 2 permits and extended time and maybe took another 3, 4 months to get the tenant open for business. Very often now, we're able to say you're taking it as is. Not only does that provide a better economic result for us, but it allows the tenant to get open faster because it's one permitting time. So those are 2 areas that our leasing team has really drilled down on in their negotiations and had really good success in. But they're really pushing on everything else. It's things like exclusives. It's things like not giving too many options, and it's things like co- tenancy requirements. We're trying to just negotiate better terms across the board, economic and noneconomic, and we're having good success.
Jeffrey S. Olson:
Just one more point on that issue because I do think there's been a fair amount of discussion on CapEx. And what I'd say is that the last decade of CapEx spending is not representative of future spending. And it's in part because our portfolio is now 97% leased. It's in part because the retail market is much, much stronger, as Jeff just outlined. And it's also in part because by 2027, we will have redeveloped or repositioned about 70% of our portfolio. So we feel that's going to be a great thing going forward for CapEx.
Operator:
The next question is from Paulina Rojas from Green Street.
Paulina Alejandra Rojas-Schmidt:
My question was actually about CapEx, and you touched on that at the end of the prior question. Thank you for adding that disclosure. It's very helpful. Can you maybe elaborate on the idea of CapEx declining in the future? It seems to me that in general, CapEx has been related to redevelopments, which have in turn been triggered by tenant churn. So given that we know that tenant churn is a constant in the industry, why wouldn't we expect future turnover not just in the short term, but in the next few years, driven by an expected tenant fallout continue to drive CapEx at similar levels, perhaps a little lower. But yes, basically, I'm trying to gain confidence on the very low levels that you are forecasting at the end of that period in your chart.
Jeffrey S. Olson:
Paulina, I think the main point is that the tenants that we replaced -- we replaced tenants that were struggling for years. This is like Toys "R" Us and Kmart and so many others that barely made it, but they made it over an extended time period. And we put in very high-quality credit tenants to replace them, tenants like ShopRite, tenants like TJX, tenants like Ross and many others. So we're not expecting as much dislocation going forward in part because of the high-quality retailers that we put in place and also in part because the retail market overall is just much healthier than it was 10 years ago.
Jeffrey S. Mooallem:
Yes. And Paulina, I would add, in addition to the fact that when it comes to leasing CapEx, we can negotiate better terms and we have better tenants than we've had in years past. The other component of CapEx, fixing your roofs in your parking lots or renovating your shopping centers, that piece of it, we've mostly done all the heavy lifting on. So we have -- as Jeff said in his comments, we've renovated about 70% of the portfolio already. So we don't think we're going to have that same recurring run rate of maintenance CapEx. And then when it comes to renovating shopping centers with new facades and signs and things that the customer sees, so to speak, we believe there's a yield on that. We believe that the work we do on that will pay itself -- pay for itself in the form of better rents. So on all elements of CapEx, whether it's the defensive deferred maintenance CapEx, the offensive renovation CapEx or the leasing CapEx, the metrics are a lot better than they were.
Mark J. Langer:
And I'll just end, Pauline, for you with some numbers behind that. So our maintenance CapEx, as Jeff was saying, where we've done a lot of this heavy lifting was about $36 million in 2022. We think it's going to be $20 million to $22 million this year and then will gradually decline closer to $15 million as these remaining projects come online. So that shows you by order of magnitude what we're seeing.
Operator:
[Operator Instructions] The next question is from Ken Billingsley from Compass Point.
Kenneth G. Billingsley:
Just a numbers question here on G&A from guidance and then what was in the third -- second quarter here. I see you lowered obviously, G&A expense range to $34 million to $35.5 million. The line item was up year-over-year was about $11.7 million. Can you just talk about maybe what's different in that number? And was it just increased for the second quarter and going to come down for the second half? Or just add a little color there?
Mark J. Langer:
Sure. I think you're looking at the gross versus what we call the net recurring items. So in the quarter, the elevation that you saw was primarily we had $2 million of severance expense and then $1 million of some nonrecurring transaction costs. So when you look at on a recurring run rate basis, which is what we guided on, that's how you get to the lower number.
Operator:
There are no further questions at this time. I would like to turn the floor back over to Jeff Olson for closing comments.
Jeffrey S. Olson:
Great. Thank you for your interest, and we look forward to talking to you on our next call.
Operator:
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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