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UDR Q2 FFOA and Revenues Miss Estimates, '23 View Revised
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UDR Inc. (UDR - Free Report) reported second-quarter 2023 funds from operations as adjusted (FFOA) per share of 61 cents, missing the Zacks Consensus Estimate by a whisker.
Revenues from rental income of $403.1 million, too, lagged the Zacks Consensus Estimate of $407.5 million.
Quarterly results reflect lower-than-anticipated revenues. A fall in occupancy and higher same-store expenses act as dampeners. Nonetheless, UDR benefited from a rise in blended lease rates and past accretive external growth investments. It also revised its 2023 outlook.
On a year-over-year basis, FFOA per share and revenues from rental income climbed 7% and 9.6%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “Combining this demand backdrop with UDR’s history of prudent capital allocation and operating margin expansion through the adoption of innovative technologies positions our company well for continued growth.”
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 6.9% year over year. Same-store expenses were up 7.4%. Consequently, the same-store net operating income (NOI), with concessions reported on a cash basis, improved 6.7%.
UDR registered same-store effective blended lease rate growth of 3.1% during the quarter.
The residential REIT’s weighted average same-store physical occupancy decreased 40 basis points year over year to 96.6%. Our estimate for the same was pegged at 96.7%.
Portfolio Activity
During the quarter, on behalf of an institutional client, UDR closed a $507.2 million joint venture with LaSalle Investment Management, through which, it retained 51% ownership in the four communities, which is contributed as a seed portfolio.
UDR’s development pipeline totaled $187.5 million at the end of the reported quarter and was 58% funded. The active pipeline includes two communities for 415 homes.
At the end of the quarter, the company’s redevelopment pipeline of 2,343 homes aggregated $124.7 million and was 34% funded. This includes densification projects featuring the addition of 30 new apartment homes in one community.
The company’s Developer Capital Program investment aggregated $520.9 million, with a weighted average return rate of 9.8% and a weighted average estimated remaining term of three years at the end of second-quarter 2023.
Balance Sheet Activity
As of Jun 30, 2023, UDR had $1.1 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities.
Total debt was $5.4 billion as of the same date, with no remaining consolidated maturities until 2024. In addition, net debt-to-EBITDAre declined to 5.5X in the second quarter from the year-ago quarter’s 6.2X.
UDR ended the second quarter with a weighted average interest rate of 3.21% and weighted average years to maturity of 6.3 years.
2023 Guidance
The company provided a third-quarter 2023 outlook and revised its full-year guidance.
It expects third-quarter 2023 FFOA per share in the range of 62-64 cents. The Zacks Consensus Estimate for the same is pegged at 63 cents.
For the full year, the company expects FFOA per share to be in the range of $2.47-$2.51, revised from the previously guided range of $2.45-$2.53. The Zacks Consensus Estimate for the same is presently pegged at 2.49 cents, which lies within the guided range.
UDR also projects 6-7% year-over-year growth in same-store cash revenues and 6.5-8% growth in same-store NOI growth for 2023, revised from 5.5-7.5% year-over-year growth in same-store cash revenues and 6-8.5% growth in same-store NOI growth, projected earlier.
Currently, UDR carries a Zacks Rank #4 (Sell).
United Dominion Realty Trust, Inc. Price, Consensus and EPS Surprise
We are looking forward to the earnings releases of other REITs like SBA Communications (SBAC - Free Report) and Host Hotels & Resorts (HST - Free Report) , which are slated to report their results on Jul 31 and Aug 3, respectively.
The Zacks Consensus Estimate for Host Hotels & Resorts’ second-quarter 2023 FFO per share is pegged at 56 cents, implying a year-over-year decrease of 3.5%. HST currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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UDR Q2 FFOA and Revenues Miss Estimates, '23 View Revised
UDR Inc. (UDR - Free Report) reported second-quarter 2023 funds from operations as adjusted (FFOA) per share of 61 cents, missing the Zacks Consensus Estimate by a whisker.
Revenues from rental income of $403.1 million, too, lagged the Zacks Consensus Estimate of $407.5 million.
Quarterly results reflect lower-than-anticipated revenues. A fall in occupancy and higher same-store expenses act as dampeners. Nonetheless, UDR benefited from a rise in blended lease rates and past accretive external growth investments. It also revised its 2023 outlook.
On a year-over-year basis, FFOA per share and revenues from rental income climbed 7% and 9.6%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “Combining this demand backdrop with UDR’s history of prudent capital allocation and operating margin expansion through the adoption of innovative technologies positions our company well for continued growth.”
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 6.9% year over year. Same-store expenses were up 7.4%. Consequently, the same-store net operating income (NOI), with concessions reported on a cash basis, improved 6.7%.
UDR registered same-store effective blended lease rate growth of 3.1% during the quarter.
The residential REIT’s weighted average same-store physical occupancy decreased 40 basis points year over year to 96.6%. Our estimate for the same was pegged at 96.7%.
Portfolio Activity
During the quarter, on behalf of an institutional client, UDR closed a $507.2 million joint venture with LaSalle Investment Management, through which, it retained 51% ownership in the four communities, which is contributed as a seed portfolio.
UDR’s development pipeline totaled $187.5 million at the end of the reported quarter and was 58% funded. The active pipeline includes two communities for 415 homes.
At the end of the quarter, the company’s redevelopment pipeline of 2,343 homes aggregated $124.7 million and was 34% funded. This includes densification projects featuring the addition of 30 new apartment homes in one community.
The company’s Developer Capital Program investment aggregated $520.9 million, with a weighted average return rate of 9.8% and a weighted average estimated remaining term of three years at the end of second-quarter 2023.
Balance Sheet Activity
As of Jun 30, 2023, UDR had $1.1 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities.
Total debt was $5.4 billion as of the same date, with no remaining consolidated maturities until 2024. In addition, net debt-to-EBITDAre declined to 5.5X in the second quarter from the year-ago quarter’s 6.2X.
UDR ended the second quarter with a weighted average interest rate of 3.21% and weighted average years to maturity of 6.3 years.
2023 Guidance
The company provided a third-quarter 2023 outlook and revised its full-year guidance.
It expects third-quarter 2023 FFOA per share in the range of 62-64 cents. The Zacks Consensus Estimate for the same is pegged at 63 cents.
For the full year, the company expects FFOA per share to be in the range of $2.47-$2.51, revised from the previously guided range of $2.45-$2.53. The Zacks Consensus Estimate for the same is presently pegged at 2.49 cents, which lies within the guided range.
UDR also projects 6-7% year-over-year growth in same-store cash revenues and 6.5-8% growth in same-store NOI growth for 2023, revised from 5.5-7.5% year-over-year growth in same-store cash revenues and 6-8.5% growth in same-store NOI growth, projected earlier.
Currently, UDR carries a Zacks Rank #4 (Sell).
United Dominion Realty Trust, Inc. Price, Consensus and EPS Surprise
United Dominion Realty Trust, Inc. price-consensus-eps-surprise-chart | United Dominion Realty Trust, Inc. Quote
Upcoming Earnings Releases
We are looking forward to the earnings releases of other REITs like SBA Communications (SBAC - Free Report) and Host Hotels & Resorts (HST - Free Report) , which are slated to report their results on Jul 31 and Aug 3, respectively.
The Zacks Consensus Estimate for SBA Communications’ second-quarter 2023 FFO per share is pegged at $3.14, suggesting year-over-year growth of 2.3%. SBAC currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Host Hotels & Resorts’ second-quarter 2023 FFO per share is pegged at 56 cents, implying a year-over-year decrease of 3.5%. HST currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.