Back to top

Analyst Blog

Shares of UDR, Inc. (UDR - Analyst Report) reached a new 52-week high, touching $27.11 during the trading session on May 9 after gaining momentum on decent first quarter 2014 results. The closing price of $27.07 of this residential real estate investment trust (REIT) reflected a strong year-to-date return of 18.7%. The trading volume for the session was around 1.7 million shares.

Despite its strong price appreciation, this Zacks Rank #3 (Hold), stock has plenty of upside left, given its long-term expected growth rate of 6.3%.

Growth Drivers

On Apr 29, UDR reported first-quarter 2014 funds from operations (FFO) as adjusted of 36 cents per share, which surpassed the Zacks Consensus Estimate by a penny and the year-ago quarter figure by 2 cents. Results were driven by higher revenues, same-store net operating income and notable portfolio restructuring activity.

Going forward, we believe that the ongoing extensive development and redevelopment activities position the company well in upscale markets and provide notable growth prospects. Moreover, giving us confidence is the recent analysis by the commercial real estate services firm CBRE Group, Inc. (CBG - Analyst Report). The study revealed that national apartment demand is currently growing at a stronger pace (over 220,000 units or 1.6% on an annual basis) than what the market has observed historically.

Over the last 30 days, the Zacks Consensus Estimate for full-year 2014 FFO per share have moved up a cent to $1.50 while that for 2015 remained stable at $1.60.

Other Stocks to Consider

In addition to UDR, two other REITs also scaled 52-week highs on May 9. The stocks are Boston Properties Inc. (BXP - Analyst Report) and Vornado Realty Trust (VNO - Analyst Report).

Note: Funds from operations, a widely accepted and reported measure of REITs performance, are derived by adding depreciation, amortization and other non-cash expenses to net income.

Please login to Zacks.com or register to post a comment.