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UDR Inc. (UDR - Free Report) reported third-quarter 2023 funds from operations as adjusted (FFOA) per share of 63 cents, in line with the Zacks Consensus Estimate.
Total revenues during the quarter were $410.1 million. The Zacks Consensus Estimate for quarterly revenues was pegged at $411.9 million. Rental income came in at $408.6 million.
Quarterly results reflect year-over-year growth in revenues. UDR also benefited from past accretive external growth investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners. It also revised its 2023 outlook.
On a year-over-year basis, FFOA per share climbed 5%. Rental income and total revenues rose 4.7% and 4.8%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “Recent operating trends across the industry have been softer than typical due to all-time high levels of new supply, leading us to lower our expectation for FFOA per diluted share during the fourth quarter to a midpoint of $0.63 versus the $0.65 that was implied by our prior full-year 2023 guidance. Nevertheless, we believe UDR is well positioned due to our diversified portfolio, investment grade balance sheet, and unique operating initiatives that will differentiate our growth profile moving forward.”
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 5% year over year. Same-store expenses were up 3.4%. Consequently, the same-store net operating income (NOI), with concessions reported on a cash basis, improved 5.7%.
UDR registered same-store effective blended lease rate growth of 1.6% during the quarter.
The residential REIT’s weighted average same-store physical occupancy of 96.7% increased 10 basis points sequentially but was unchanged year over year. Our estimate was pegged at 96.7%.
However, property operating and maintenance expenses of $71.6 million rose 7.2% year over year. Interest expenses climbed almost 12% to $44.7 million.
Portfolio Activity
During the quarter, UDR closed the buyout of a six-community portfolio in Texas for around $402.2 million. This comprised four communities in Dallas and two in Austin, aggregating 1,753 apartment homes.
UDR’s development pipeline totaled $187.5 million at the end of the third quarter and was 74% funded. The active pipeline includes two communities for 415 homes.
At the end of the quarter, the company’s redevelopment pipeline of 2,313 homes aggregated $105 million and was 34% funded.
The company’s Developer Capital Program investment aggregated $520.9 million, with a contractual weighted average return rate of 9.9% and a weighted average estimated remaining term of 2.9 years at the end of third-quarter 2023.
Balance Sheet Activity
As of Sep 30, 2023, UDR had $970 million of liquidity through a combination of cash and undrawn capacity on its credit facilities.
Total debt was $5.8 billion as of the same date, with no remaining consolidated maturities until the third quarter of 2024. In addition, net debt-to-EBITDAre declined to 5.7X in the third quarter from the year-ago quarter’s 6.0X.
UDR ended the quarter with a weighted average interest rate of 3.37% and a weighted average years to maturity of 5.9 years.
During the quarter, the company repurchased 0.6 million shares of its common stock at a weighted average price of $40.13 per share for $25 million.
Guidance
The company provided its outlook for the fourth quarter of 2023 and revised its full-year guidance.
It expects fourth-quarter 2023 FFOA per share in the range of 62-64 cents. The Zacks Consensus Estimate is pegged at 65 cents.
For the full year, the company expects FFOA per share to be in the range of $2.46-$2.48, revised downward from the earlier guided range of $2.47-$2.51. The Zacks Consensus Estimate is presently pegged at 2.49 cents, which lies within expectations.
UDR now projects year-over-year growth in same-store cash revenues to be 5.4-5.9%, lowered from 6-7% estimated earlier. Same-store NOI growth is expected in the range of 6.0-6.5%, down from 6.5-8.0% stated previously.
AvalonBay Communities (AVB - Free Report) reported a third-quarter 2023 core FFO per share of $2.66, beating the Zacks Consensus Estimate of $2.64. Moreover, the figure climbed 6.4% from the prior-year quarter’s tally.
The quarterly results reflect a year-over-year increase in same-store residential rental revenues, driven by effective lease rates. AVB also raised its core FFO per share outlook for 2023.
Mid-America Apartment Communities (MAA - Free Report) reported third-quarter 2023 core FFO per share of $2.29, which surpassed the Zacks Consensus Estimate by a penny. Moreover, the reported figure climbed 4.6% 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 revised its outlook for 2023.
Essex Property Trust Inc. (ESS - Free Report) reported third-quarter 2023 core FFO per share of $3.78, beating the Zacks Consensus Estimate of $3.77. The figure improved 2.4% from the year-ago quarter.
Results reflected favorable growth in same-property revenues, though higher same-property operating expenses partly acted as a dampener. ESS reaffirmed the midpoint of the full-year 2023 guidance range for core FFO per share.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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UDR's Q3 FFOA Meets, Revenues Increase Y/Y, '23 View Revised
UDR Inc. (UDR - Free Report) reported third-quarter 2023 funds from operations as adjusted (FFOA) per share of 63 cents, in line with the Zacks Consensus Estimate.
Total revenues during the quarter were $410.1 million. The Zacks Consensus Estimate for quarterly revenues was pegged at $411.9 million. Rental income came in at $408.6 million.
Quarterly results reflect year-over-year growth in revenues. UDR also benefited from past accretive external growth investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners. It also revised its 2023 outlook.
On a year-over-year basis, FFOA per share climbed 5%. Rental income and total revenues rose 4.7% and 4.8%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “Recent operating trends across the industry have been softer than typical due to all-time high levels of new supply, leading us to lower our expectation for FFOA per diluted share during the fourth quarter to a midpoint of $0.63 versus the $0.65 that was implied by our prior full-year 2023 guidance. Nevertheless, we believe UDR is well positioned due to our diversified portfolio, investment grade balance sheet, and unique operating initiatives that will differentiate our growth profile moving forward.”
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 5% year over year. Same-store expenses were up 3.4%. Consequently, the same-store net operating income (NOI), with concessions reported on a cash basis, improved 5.7%.
UDR registered same-store effective blended lease rate growth of 1.6% during the quarter.
The residential REIT’s weighted average same-store physical occupancy of 96.7% increased 10 basis points sequentially but was unchanged year over year. Our estimate was pegged at 96.7%.
However, property operating and maintenance expenses of $71.6 million rose 7.2% year over year. Interest expenses climbed almost 12% to $44.7 million.
Portfolio Activity
During the quarter, UDR closed the buyout of a six-community portfolio in Texas for around $402.2 million. This comprised four communities in Dallas and two in Austin, aggregating 1,753 apartment homes.
UDR’s development pipeline totaled $187.5 million at the end of the third quarter and was 74% funded. The active pipeline includes two communities for 415 homes.
At the end of the quarter, the company’s redevelopment pipeline of 2,313 homes aggregated $105 million and was 34% funded.
The company’s Developer Capital Program investment aggregated $520.9 million, with a contractual weighted average return rate of 9.9% and a weighted average estimated remaining term of 2.9 years at the end of third-quarter 2023.
Balance Sheet Activity
As of Sep 30, 2023, UDR had $970 million of liquidity through a combination of cash and undrawn capacity on its credit facilities.
Total debt was $5.8 billion as of the same date, with no remaining consolidated maturities until the third quarter of 2024. In addition, net debt-to-EBITDAre declined to 5.7X in the third quarter from the year-ago quarter’s 6.0X.
UDR ended the quarter with a weighted average interest rate of 3.37% and a weighted average years to maturity of 5.9 years.
During the quarter, the company repurchased 0.6 million shares of its common stock at a weighted average price of $40.13 per share for $25 million.
Guidance
The company provided its outlook for the fourth quarter of 2023 and revised its full-year guidance.
It expects fourth-quarter 2023 FFOA per share in the range of 62-64 cents. The Zacks Consensus Estimate is pegged at 65 cents.
For the full year, the company expects FFOA per share to be in the range of $2.46-$2.48, revised downward from the earlier guided range of $2.47-$2.51. The Zacks Consensus Estimate is presently pegged at 2.49 cents, which lies within expectations.
UDR now projects year-over-year growth in same-store cash revenues to be 5.4-5.9%, lowered from 6-7% estimated earlier. Same-store NOI growth is expected in the range of 6.0-6.5%, down from 6.5-8.0% stated previously.
Currently, UDR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Performance of Other Residential REITs
AvalonBay Communities (AVB - Free Report) reported a third-quarter 2023 core FFO per share of $2.66, beating the Zacks Consensus Estimate of $2.64. Moreover, the figure climbed 6.4% from the prior-year quarter’s tally.
The quarterly results reflect a year-over-year increase in same-store residential rental revenues, driven by effective lease rates. AVB also raised its core FFO per share outlook for 2023.
Mid-America Apartment Communities (MAA - Free Report) reported third-quarter 2023 core FFO per share of $2.29, which surpassed the Zacks Consensus Estimate by a penny. Moreover, the reported figure climbed 4.6% 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 revised its outlook for 2023.
Essex Property Trust Inc. (ESS - Free Report) reported third-quarter 2023 core FFO per share of $3.78, beating the Zacks Consensus Estimate of $3.77. The figure improved 2.4% from the year-ago quarter.
Results reflected favorable growth in same-property revenues, though higher same-property operating expenses partly acted as a dampener. ESS reaffirmed the midpoint of the full-year 2023 guidance range for core FFO per share.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.