Back to top

Analyst Blog

UDR, Inc. (UDR - Analyst Report), a leading multi-family real estate investment trust (REIT), reported third quarter 2011 FFO (funds from operations) of $73.0 million or 32 cents per share compared with $46.9 million or 27 cents in the year-earlier quarter. Fund from operations, 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.

The reported FFO per share was in line with the Zacks Consensus Estimate. Total revenue during the quarter were $187.3 million compared with $150.1 million in the prior-year quarter. Total revenue for the reported quarter exceeded the Zacks Consensus Estimate of $185 million.

Same-store occupancy remained relatively high at 95.6% during the quarter. Same-store revenues and net operating income increased 5.0% and 7.0% respectively, during the quarter compared to the year-ago quarter. Same-store expenses increased 1.1% during the quarter, primarily due to higher utility and insurance costs, partially offset by a decrease in marketing and administrative costs.

During third quarter 2011, UDR acquired ‘Rivergate’ – a 706-unit apartment community in Manhattan, for $443 million. The 35-story high-rise building also features 24,315 square feet of fully-leased commercial space along with adequate parking space. In addition, the company purchased ‘21 Chelsea’ – a 210-unit community in Manhattan with 1,600 square feet of fully-leased retail space and a parking garage, for $138 million.

UDR also purchased 95 Wall – a 507-unit apartment community in Manhattan, for $328.9 million. The 22-story high-rise contains 7,526 square feet of fully-leased retail space and a 97-space parking garage. Furthermore, the company and its joint venture partner Kuwait Finance House acquired ‘Twenty400’ – a 217-unit 5-story apartment community in Arlington, Virginia, for $84 million.

UDR started construction work of 2,440 homes in 5 new communities during the quarter for a total cost of $290 million. At quarter-end, the development and redevelopment pipeline of the company, including joint ventures projects, totaled $751 million and $337 million, respectively. During the quarter, UDR sold ‘Riachi at One21’ and ‘Ridgeview Park Townhomes’ – a 402-unit and a 48-unit community, respectively, in Texas, for total proceeds of $50.5 million.

During third quarter 2011, UDR issued 20.7 million shares at a gross price of $25.00 each, generating net proceeds of approximately $496.3 million. Bulk of the proceeds was utilized to fund recent acquisitions. Simultaneously, under its “At the Market” equity offering program, UDR raised $42.9 million from the sale of approximately 1.7 million shares at a weighted average net price of $24.90.

At quarter-end, the company had a liquidity of $506 million through a combination of cash and available capacity under its credit facility. Subsequent to the quarter-end, UDR increased its liquidity by an additional $300 million by replacing its previous $600 million revolving credit facility with a new $900 million unsecured revolving credit facility.

As of September 30, 2011, UDR had a total debt of $4.0 billion and a fixed charge coverage ratio of 2.5x. UDR ended the quarter with 76% fixed-rated debt at a total blended interest rate of 4.1% and a weighted average debt maturity of 4.2 years.

With superior quarterly results, UDR reiterated its fiscal 2011 FFO guidance of $1.25 - $1.30 per share. The company expects to complete acquisitions worth $1.2 - $1.5 billion during the current fiscal, with total asset sales of $500 - $600 million and development starts of $450 - $600 million.

We maintain our ‘Neutral’ recommendation on UDR, which currently retains a Zacks #3 Rank that translates into a short-term ‘Hold’ rating. We also have a ‘Neutral’ rating and a Zacks #3 Rank for Equity Residential (EQR - Analyst Report), one of the competitors of UDR.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%