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UDR Inc. (UDR) Beats on Q4 FFO Estimates; Revenue Up Y/Y
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Backed by growth in revenues, UDR Inc. (UDR - Free Report) came up with a better-than-expected performance for fourth-quarter 2016. The company reported funds from operations (“FFO”) as adjusted per share of 46 cents, beating the Zacks Consensus Estimate by a penny. The figure was also higher than the prior-year quarter tally of 42 cents.
Total revenue for this residential real estate investment trust (“REIT”) improved 2% year over year to $243.0 million. The figure also exceeded the Zacks Consensus Estimate of $242 million. Growth in revenue from same-store and stabilized, non-mature communities attributed to this increase. The company also announced a 2017 annualized dividend per share of $1.24. This denotes an increase of 5% over the prior year.
For full-year 2016, UDR came up with FFO as adjusted per share of $1.79; well ahead of the year-ago tally of $1.67. For full-year 2016, the company reported total revenue of $959.9 million, which depicted an increase of 7% year over year.
Inside the Headlines
During the quarter, same-store revenues jumped 5.0% year over year; while same-store expense climbed 4.2%. Consequently, same-store NOI rose 5.3% year over year. The company’s same-store physical occupancy expanded 30 basis points (bps) year over year to 96.8%. The fourth-quarter annualized rate of turnover contracted 110 bps year over year to 42.5%.
At the end of the fourth quarter, UDR’s development pipeline aggregated $1.1 billion. This included $216.7 million completed, non-stabilized projects and $913.2 million of under-construction developments.
As of Dec 31, 2016, the company had $1.156 billion available, through a combination of cash and undrawn capacity on its credit facilities. Further, the company’s total debt was $3.4 billion as of the same date. Subsequent to quarter end, UDR established a $500.0-million unsecured U.S. commercial paper program.
Guidance
For first-quarter 2017, UDR projects FFO as adjusted per share in the 44–46 cents range. The Zacks Consensus Estimate of 45 cents lies within this range.
For full-year 2017, the company expects FFO as adjusted per share in the range of $1.83–$1.87. The Zacks Consensus Estimate of $1.86 also lies within this range. The company anticipates same-store revenue growth of 3.0–4.0%, same-store expenses to increase 2.5–3.5% and same-store NOI growth of 3.25–4.25% for 2017.
Portfolio Activity
Notably, UDR accomplished the disposition of eight communities, having 1,782 homes in Baltimore and Dallas. Also, the company completed the acquisition of MetLife’s 50% stake in Ten20 and Ashton Bellevue, two neighboring communities consisting of 331 homes in Bellevue, WA through 1031 exchanges. In addition, the company acquired Milehouse, which is a 177-home community in Redmond, WA through a 1031 exchange.
Our Viewpoint
We are encouraged with the better-than-expected performance of UDR in the reported quarter. With a superior portfolio in the targeted U.S. markets and disciplined capital allocation, UDR is well poised to grow. Moreover, focus on enhancing portfolio through expansion in core markets and sale of non-core ones should support momentum.
However, elevated deliveries in a number of its markets remain a concern. Moreover, supply levels are anticipated to remain high in the upcoming quarters. This remains a concern as elevated levels of supply curtail a landlord’s ability to demand more rents and result in lesser absorption. Additionally, rate hike have added to its woes.
We now look forward to the earnings releases of the other residential REITs – AvalonBay Communities, Inc. (AVB - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Apartment Investment and Management Company (AIV - Free Report) – which are also expected to report their fourth-quarter results this week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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UDR Inc. (UDR) Beats on Q4 FFO Estimates; Revenue Up Y/Y
Backed by growth in revenues, UDR Inc. (UDR - Free Report) came up with a better-than-expected performance for fourth-quarter 2016. The company reported funds from operations (“FFO”) as adjusted per share of 46 cents, beating the Zacks Consensus Estimate by a penny. The figure was also higher than the prior-year quarter tally of 42 cents.
Total revenue for this residential real estate investment trust (“REIT”) improved 2% year over year to $243.0 million. The figure also exceeded the Zacks Consensus Estimate of $242 million. Growth in revenue from same-store and stabilized, non-mature communities attributed to this increase. The company also announced a 2017 annualized dividend per share of $1.24. This denotes an increase of 5% over the prior year.
For full-year 2016, UDR came up with FFO as adjusted per share of $1.79; well ahead of the year-ago tally of $1.67. For full-year 2016, the company reported total revenue of $959.9 million, which depicted an increase of 7% year over year.
Inside the Headlines
During the quarter, same-store revenues jumped 5.0% year over year; while same-store expense climbed 4.2%. Consequently, same-store NOI rose 5.3% year over year. The company’s same-store physical occupancy expanded 30 basis points (bps) year over year to 96.8%. The fourth-quarter annualized rate of turnover contracted 110 bps year over year to 42.5%.
At the end of the fourth quarter, UDR’s development pipeline aggregated $1.1 billion. This included $216.7 million completed, non-stabilized projects and $913.2 million of under-construction developments.
As of Dec 31, 2016, the company had $1.156 billion available, through a combination of cash and undrawn capacity on its credit facilities. Further, the company’s total debt was $3.4 billion as of the same date. Subsequent to quarter end, UDR established a $500.0-million unsecured U.S. commercial paper program.
Guidance
For first-quarter 2017, UDR projects FFO as adjusted per share in the 44–46 cents range. The Zacks Consensus Estimate of 45 cents lies within this range.
For full-year 2017, the company expects FFO as adjusted per share in the range of $1.83–$1.87. The Zacks Consensus Estimate of $1.86 also lies within this range. The company anticipates same-store revenue growth of 3.0–4.0%, same-store expenses to increase 2.5–3.5% and same-store NOI growth of 3.25–4.25% for 2017.
Portfolio Activity
Notably, UDR accomplished the disposition of eight communities, having 1,782 homes in Baltimore and Dallas. Also, the company completed the acquisition of MetLife’s 50% stake in Ten20 and Ashton Bellevue, two neighboring communities consisting of 331 homes in Bellevue, WA through 1031 exchanges. In addition, the company acquired Milehouse, which is a 177-home community in Redmond, WA through a 1031 exchange.
Our Viewpoint
We are encouraged with the better-than-expected performance of UDR in the reported quarter. With a superior portfolio in the targeted U.S. markets and disciplined capital allocation, UDR is well poised to grow. Moreover, focus on enhancing portfolio through expansion in core markets and sale of non-core ones should support momentum.
However, elevated deliveries in a number of its markets remain a concern. Moreover, supply levels are anticipated to remain high in the upcoming quarters. This remains a concern as elevated levels of supply curtail a landlord’s ability to demand more rents and result in lesser absorption. Additionally, rate hike have added to its woes.
Currently, UDR has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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We now look forward to the earnings releases of the other residential REITs – AvalonBay Communities, Inc. (AVB - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Apartment Investment and Management Company (AIV - Free Report) – which are also expected to report their fourth-quarter results this week.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>