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UDR Lags Q1 FFO Estimates, Ups View on Better Operating Trends

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UDR Inc. (UDR - Free Report) reported first-quarter 2021 funds from operations (FFO) as adjusted per share of 47 cents, missing the Zacks Consensus Estimate of 48 cents. Also, the figure is lower than the prior year’s 54 cents.

Results reflect the adverse impacts of the coronavirus pandemic and the resultant regulatory restrictions that remain in place, especially in the urban markets. Moreover, a decline in revenues from mature communities affected top-line growth. Nonetheless, improvement in operating trends and collections as well as completed accretive transactions have enabled the company to raise 2021 guidance.

First-quarter revenues from rental income dipped 6.3% year over year to $299.8 million. Moreover, the top line missed the Zacks Consensus Estimate of $301.3 million.

As of Apr 25, 2021, cash revenues collected for the first quarter of 2021 were 96% of total billed revenues.

Per management, “billed revenue is demonstrating signs of sequential quarterly improvement, cash revenue collection rates are increasing, rising traffic volume is supportive of continued strength in occupancy, and pricing power has returned across most of our markets, as evidenced by sequential quarterly improvements in effective blended lease rate growth”.

Inside the Headlines

In the reported quarter, same-store revenues (with concessions reported on a cash basis) decreased 6.4% year over year. Same-store expenses flared up 3.3%. Consequently, same-store net operating income, with concessions reported on a cash basis, declined 10.4%.

The residential REIT’s weighted average same-store physical occupancy expanded 30 basis points (bps) sequentially to 96.4%. First-quarter annualized rate of turnover expanded 110 bps year over year to 39.4%.

UDR continues to implement its Next Generation Operating Platform strategy. This restricted first-quarter 2021 same-store controllable expense growth to 2% year over year.

Portfolio Activity

In the March-end quarter, the company acquired a multifamily community in Boston, MA, for $77.4 million.

The company’s development pipeline aggregated $501.5 million at the end of the reported quarter and 49% of the costs were incurred during the period. The active pipeline includes five development communities for 1,417 homes.

At the end of the first quarter, the company’s Developer Capital Program investment, including accrued return, totaled $447.3 million.

Balance Sheet Activity

As of Mar 31, 2021, UDR had $948.4 million of liquidity through a combination of cash and undrawn capacity under its credit facilities. Additionally, its total debt was $5 billion as of the same date.

UDR ended the first quarter with fixed-rate debt representing 94.3% of its total debt, a weighted average interest rate of 2.84% and weighted average years to maturity of 8.2 years.


The company provided the outlook for second-quarter 2021. It expects FFO as adjusted per share of 47-49 cents. The Zacks Consensus Estimate for the same is pegged at 48 cents, above the company’s projection.

Further, it expects 2021 FFO as adjusted per share of $1.91-$2, up from the previously mentioned $1.88-$2. The Zacks Consensus Estimate for the same is pegged at $1.95. Moreover, for 2021, it anticipates year-over-year growth in same-store cash revenues of -2% to 0.5%, whereas same-store NOI growth is expected to be -3.25% to flat

Currently, UDR carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Digital Realty Trust, Inc. (DLR - Free Report) , Cousins Properties (CUZ - Free Report) and CubeSmart (CUBE - Free Report) . All three companies are slated to report first-quarter earnings on Apr 29.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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