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UDR Meets Q3 FFO Estimates, Raises View on Solid Operating Trends

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UDR Inc. (UDR - Free Report) reported third-quarter 2021 funds from operations (FFO) as adjusted per share of 51 cents, in line with the Zacks Consensus Estimate. Further, the figure is higher than the prior year’s 50 cents.

Driven by the pace of economic recovery, there has been an increase in revenues from rental income, fueling top-line growth. Also, improvement in operating trends as well as strong pricing power and accretive transactions enabled the company to raise the 2021 guidance.

Quarterly revenues from rental income climbed 6.4% year over year to $328.7 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $319.7 million.

As of Oct 25, 2021, cash revenues collected for the third quarter of 2021 were 96.7% of the total billed revenues.

Per management, “We continue to realize sequential improvement in blended rate growth, collections, and our other income initiatives, while portfolio occupancy remains above 97 percent”.

Inside the Headlines

In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 5.3% year over year. Same-store expenses flared up 3.3%. Consequently, the same-store net operating income, with concessions reported on a cash basis, improved 6.3%.

The residential REIT’s weighted average same-store physical occupancy expanded 30 basis points (bps) sequentially to 97.5%. The third-quarter annualized rate of turnover shrunk 1120 bps year over year to 53.8%.

UDR continues to implement its Next Generation Operating Platform strategy. This restricted third-quarter 2021 same-store controllable expense growth to 1.8% year over year.

Portfolio Activity

The company’s development pipeline aggregated $501.5 million at the end of the reported quarter, and 66% of the costs were incurred during the period. The active pipeline includes five development communities for 1,417 homes.

At the end of the third quarter, the company’s Developer Capital Program investment, including accrued return, totaled $316.3 million.

Balance Sheet Activity

As of Sep 30, 2021, UDR had $1 million of liquidity through a combination of cash and undrawn capacity under its credit facilities. The total debt was $5.5 billion, as of the same date.

UDR ended the third quarter with a weighted average interest rate of 2.75% and weighted average years to maturity of 7.8 years.


The company issued the outlook for fourth-quarter 2021. It expects FFO as adjusted per share of 52-54 cents. The Zacks Consensus Estimate for the same is pegged at 53 cents, in line with the company’s projection.

Further, it projects 2021 FFO as adjusted per share of $2.00-$2.02, up from the prior estimate of $1.97-$2.01. The Zacks Consensus Estimate for the same is pegged at $2.01. Additionally, for 2021, it anticipates year-over-year growth in same-store cash revenues of 1-1.50%, whereas same-store NOI growth is estimated to be 0.25-0.75%.

Currently, UDR carries a Zacks Rank #2 (Buy). 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 CyrusOne Inc. scheduled for Oct 28, Apple Hospitality REIT  (APLE - Free Report) and CubeSmart  (CUBE - Free Report) for Nov 4.

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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