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UDR's Q3 FFOA and Revenues Surpass Estimates, '22 View Up

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UDR Inc. (UDR - Free Report) reported third-quarter 2022 funds from operations as adjusted (FFOA) per share of 60 cents, beating the Zacks Consensus Estimate by a penny. The figure increased 17.6% from the prior-year quarter’s 51 cents.

Quarterly results reflect better-than-anticipated revenues driven by robust operating trends and past accretive external growth investments. The bottom line, too, improved year over year. It raised its 2022 outlook for the third time.

Rental revenues climbed 18.7% year over year to $391.3 million. The top line surpassed the Zacks Consensus Estimate of $381.6 million.

Given the company’s solid collections in recent quarters, it now anticipates current resident collections to lie between 98.2% and 98.6% for 2022. This compares with the earlier estimation of 98-98.5%.  

Per Tom Toomey, UDR’s chairman and CEO, “Our third quarter FFOA per share results met the high end of our expectations provided in July, and we raised full-year 2022 guidance for the third time driven by our strong operating results and further accretion from our recent acquisitions.”

Inside the Headlines

In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 12.2% year over year. Same-store expenses were up 7.2%. Consequently, the same-store net operating income (NOI), with concessions reported on a cash basis, improved 14.6%.

UDR registered blended lease rate growth of 13.1% during the third quarter.
The residential REIT’s weighted average same-store physical occupancy decreased 70 basis points year over year to 96.8%.

Portfolio Activity

During the reported quarter, UDR entered into a contract to dispose of a 90-home community in Orange County, CA, for total gross proceeds of $41.5 million. The sale is expected to be completed in fourth-quarter 2022.
UDR’s development pipeline aggregated $531.5 million at the end of the reported quarter and was 69.3% funded. The active pipeline includes five communities for 1,340 homes.

At the end of the quarter, the company’s redevelopment pipeline of 1,638 homes aggregated $90 million and was 27.3% funded. This includes densification projects featuring the addition of 45 new apartment homes in two communities.

The company’s Developer Capital Program investment, including the accrued return, totaled $464 million with a weighted average return rate of 9.5% and a weighted average estimated remaining term of 3.9 years at the end of third-quarter 2022.

Balance Sheet Activity

As of Sep 30, 2022, UDR had $1.1 billion of liquidity.

The total debt was $5.6 billion as of the same date, with no remaining consolidated maturities until 2024. In addition, net debt-to-EBITDAre declined to 6.0X in the third quarter from the year-ago quarter’s 7.1X.

During the reported quarter, UDR settled around 1.8 million shares of common stock under its previously announced forward equity sales agreements at a weighted average net share price, after adjustments, of $57.00 for $99.8 million.

It also repurchased 685,000 shares of its common stock at a weighted average price per share of $41.46 for nearly $28.4 million.

UDR ended the third quarter with a weighted average interest rate of 3.06% and weighted average years to maturity of 6.7 years.

2022 Guidance Raised

The company raised its outlook for full-year 2022.

It expects fourth-quarter 2022 FFOA per share in the range of 60-62 cents. The Zacks Consensus Estimate for the same is pegged at 61 cents, which lies within the guided range.

For 2022, FFOA per share is expected to be in the range of $2.32-$2.34, up from the prior guided range of $2.29-$2.33. This indicates a change of 2 cents at the midpoint. The Zacks Consensus Estimate for the same is pegged at 2.32 cents.

For 2022, the company projects 10.75-11.25% year-over-year growth in same-store cash revenues, up from the prior range of 10-11%, whereas same-store NOI growth is estimated to be 13.25-14%, revised from 12.5-14%.

Currently, UDR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Equity Residential’s (EQR - Free Report) third-quarter 2022 normalized FFO per share of 92 cents outpaced the Zacks Consensus Estimate of 91 cents. On a year-over-year basis, the FFO per share grew 19.5% from 77 cents.

Results reflect healthy demand during the primary leasing season. This residential REIT also benefited from the favorable real estate tax and payroll expenses. EQR narrowed its full-year guidance for normalized FFO per share.

Essex Property Trust Inc. (ESS - Free Report) reported third-quarter 2022 core FFO per share of $3.69, beating the Zacks Consensus Estimate of $3.68. The figure also surpassed the midpoint of the company’s guidance range by 4 cents and improved by 18.3% from the year-ago quarter.

Results reflect improving same-property NOI in the quarter. ESS raised the full-year 2022 core FFO per share guidance.

Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported third-quarter 2022 core FFO per share of $2.19, surpassing the Zacks Consensus Estimate of $2.09. The reported number improved 23% year over year.

This residential REIT’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. MAA also increased its outlook for core FFO growth for the year.

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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