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UDR, Inc ( UDR - Analyst Report ) , a real estate investment trust (REIT), reported second quarter 2012 FFO (funds from operations) of $81.2 million or 33 cents per share, compared with $63.6 million or 31 cents in the year-earlier quarter. Reported FFO per share was in line with the Zacks Consensus Estimate.
Total revenues during the quarter were $177.5 million compared with $150.6 million in the prior-year quarter.
Same-store occupancy remained relatively high at 95.8% during the quarter. Same-store revenues and net operating income increased 5.6% and 6.7% respectively, during the reported quarter compared to the year-ago quarter.
UDR acquired the remaining 80% ownership stake in two Austin communities from its Texas joint venture partner for $11.7 million cash and assumed $34.4 million in debt. The communities consist of 633 homes and had an average income of $907 per occupied home per month in the reported quarter. Additionally, the company acquired a land parcel in Boston for $25 million through a joint venture.
During the reported quarter, UDR completed the sale of 15 apartment communities totaling 4,931 units for gross proceeds of $476 million. At the time of divestiture, total income per occupied home for the communities was $967 per month.
The properties were spread across diverse locations such as Phoenix, Arizona; Jacksonville, Florida; Dallas, Texas and Richmond, Virginia. With the asset sale, the company exited the Phoenix, Arizona and Jacksonville, Florida markets.
UDR completed an equity offering of 21.9 million shares for $24.69 each . It generated net proceeds of approximately $538.8 million. The proceeds from the offering were partly used to repay $363.9 million of 3.3% secured debt. The remainder of the proceeds were used to redeem all of the Company’s outstanding 6.75% Series G preferred stock for $81.6 million and to repay a portion of the outstanding balance under its unsecured credit facility.
Additionally, UDR sold about 666,000 shares at a net price of $25.30 per share generating proceeds of approximately $16.8 million. At the end of the quarter, the company had a liquidity of $1.2 billion through a combination of cash and undrawn capacity on its credit facilities. This amount is likely to meet its immediate capital needs for debt maturities, development and redevelopment activities.
As of June 30, 2012, UDR had a total debt of $3.3 billion and a fixed charge coverage ratio of 2.7x. UDR ended the quarter with 89% fixed-rated debt at a total blended interest rate of 4.5% and a weighted average debt maturity of 5.1 years.
UDR has reiterated its fiscal 2012 FFO guidance in the range of $1.34 - $1.39 per share. The company maintained a revenue guidance range of 5.0%-6.0% growth and revised its net operating income growth guidance in the range 6.0%-8.0% for full year 2012
UDR currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We maintain our long-term Neutral recommendation on the stock. One of its competitors, Equity Residential ( EQR - Analyst Report ) also currently retains a Zacks #3 Rank, which translates into the same short-term Hold rating.
Note: 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.
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