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UDR Q4 FFOA Meets Estimates, Revenues Up Y/Y, Dividend Hiked
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UDR Inc. (UDR - Free Report) reported fourth-quarter 2023 funds from operations as adjusted (FFOA) per share of 63 cents, in line with the Zacks Consensus Estimate.
Quarterly revenues from rental income were $410.9 million, which outpaced the Zacks Consensus Estimate of $409.4 million. Total revenues came in at $413.3 million.
Results reflect year-over-year growth in revenues, driven by healthy operating trends and past accretive external growth investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners. The company increased its annualized dividend payment and issued 2024 guidance.
On a year-over-year basis, FFOA per share climbed 3.3%. Rental income and total revenues rose 3.1% and 3.4%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “The long-term fundamental outlook for the Multifamily sector is positive due to continued employment gains, a high propensity to rent, and attractive relative affordability versus other forms of housing. However, elevated new supply deliveries in 2024 suggest near-term market rent growth will be more muted compared to long-term averages.”
In 2023, FFOA was $2.47 per share, beating the Zacks Consensus Estimate by a penny. The figure increased 6% from the prior year’s $2.33 per share. Full-year revenues from rental income jumped 7.2% to $1.62 billion, in line with the Zacks Consensus Estimate.
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 2.6% year over year. Same-store expenses were up 3%. Consequently, the same-store net operating income (NOI), with concessions reported on a cash basis, improved 2.4%.
UDR registered a same-store effective blended lease rate decline of 0.5% during the quarter.
The residential REIT’s weighted average same-store physical occupancy of 96.9% increased 20 basis points, both sequentially and year over year. Our estimate was pegged at 96.6%.
However, property operating and maintenance expenses of $68.4 million rose 5.9% year over year. Interest expenses climbed almost 9.5% to $47.3 million.
Portfolio Activity
During the quarter, through its joint venture with LaSalle Investment Management, UDR acquired One Upland, a 262-home apartment community portfolio in suburban Boston, MA, for $114.3 million.
It sold The Arbory, a 276-home apartment community in Portland, OR, for gross proceeds of $78.6 million.
UDR entered into a contract to dispose of a 214-home apartment community in Metropolitan Washington, D.C., for total gross proceeds of $100 million. The sale is expected to be completed in first-quarter 2024.
UDR’s development pipeline totaled $187.5 million at the end of the fourth quarter and was 86% funded. The active pipeline includes two communities for 415 apartment homes.
The company’s Developer Capital Program investment aggregated $476.6 million, with a contractual weighted average return rate of 10% and a weighted average estimated remaining term of 2.9 years at the end of fourth-quarter 2023.
Balance Sheet Activity
As of Dec 31, 2023, UDR had $965.3 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 only $332 million, or 5.7% of total consolidated debt, maturing through 2025. In addition, net debt-to-EBITDAre of 5.6X remained unchanged in the fourth quarter from the year-ago quarter.
UDR ended the quarter with a weighted average interest rate of 3.4% and a weighted average years to maturity of 5.6 years.
Dividend Update
Concurrent with the earnings release, UDR’s board of directors announced a 2024 annualized dividend per share of $1.70, marking a year-over-year increase of 1.2%.
2024 Guidance
The company provided first-quarter and full-year 2024 guidance.
It expects first-quarter 2024 FFOA per share in the range of 60-62 cents. The Zacks Consensus Estimate for the same is pegged at 61 cents currently.
For 2024, FFOA per share is expected to be in the range of $2.36-$2.48. This is lower than the Zacks Consensus Estimate of $2.49.
For the full year, on a straight-line basis, the company projects 0.0-3.0% year-over-year growth in same-store revenues while same-store NOI growth is estimated to be -1.75-1.75%.
Essex Property Trust Inc. (ESS - Free Report) reported fourth-quarter 2023 core funds from operations (FFO) per share of $3.83, beating the Zacks Consensus Estimate of $3.81. The figure also improved by 1.6% from the year-ago quarter.
Results reflect favorable growth in same-property revenues and NOI. However same-property operating expenses partly acted as a dampener. ESS issued first-quarter and full-year 2024 guidance for core FFO per share.
AvalonBay Communities (AVB - Free Report) reported a fourth-quarter 2023 core FFO per share of $2.74, beating the Zacks Consensus Estimate of $2.73. Moreover, the figure climbed 5.8% from the prior-year quarter’s tally.
The quarterly results reflect a year-over-year increase in same-store residential rental revenues. AVB's same-store average rental revenue per occupied home reported a rise, though occupancy declined.
Equity Residential (EQR - Free Report) reported a fourth-quarter 2023 normalized FFO per share of $1.00, which was in line with the Zacks Consensus Estimate. The rental income of $727.5 million narrowly missed the consensus mark of $727.6 million.
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 Q4 FFOA Meets Estimates, Revenues Up Y/Y, Dividend Hiked
UDR Inc. (UDR - Free Report) reported fourth-quarter 2023 funds from operations as adjusted (FFOA) per share of 63 cents, in line with the Zacks Consensus Estimate.
Quarterly revenues from rental income were $410.9 million, which outpaced the Zacks Consensus Estimate of $409.4 million. Total revenues came in at $413.3 million.
Results reflect year-over-year growth in revenues, driven by healthy operating trends and past accretive external growth investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners. The company increased its annualized dividend payment and issued 2024 guidance.
On a year-over-year basis, FFOA per share climbed 3.3%. Rental income and total revenues rose 3.1% and 3.4%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “The long-term fundamental outlook for the Multifamily sector is positive due to continued employment gains, a high propensity to rent, and attractive relative affordability versus other forms of housing. However, elevated new supply deliveries in 2024 suggest near-term market rent growth will be more muted compared to long-term averages.”
In 2023, FFOA was $2.47 per share, beating the Zacks Consensus Estimate by a penny. The figure increased 6% from the prior year’s $2.33 per share. Full-year revenues from rental income jumped 7.2% to $1.62 billion, in line with the Zacks Consensus Estimate.
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reported on a cash basis) increased 2.6% year over year. Same-store expenses were up 3%. Consequently, the same-store net operating income (NOI), with concessions reported on a cash basis, improved 2.4%.
UDR registered a same-store effective blended lease rate decline of 0.5% during the quarter.
The residential REIT’s weighted average same-store physical occupancy of 96.9% increased 20 basis points, both sequentially and year over year. Our estimate was pegged at 96.6%.
However, property operating and maintenance expenses of $68.4 million rose 5.9% year over year. Interest expenses climbed almost 9.5% to $47.3 million.
Portfolio Activity
During the quarter, through its joint venture with LaSalle Investment Management, UDR acquired One Upland, a 262-home apartment community portfolio in suburban Boston, MA, for $114.3 million.
It sold The Arbory, a 276-home apartment community in Portland, OR, for gross proceeds of $78.6 million.
UDR entered into a contract to dispose of a 214-home apartment community in Metropolitan Washington, D.C., for total gross proceeds of $100 million. The sale is expected to be completed in first-quarter 2024.
UDR’s development pipeline totaled $187.5 million at the end of the fourth quarter and was 86% funded. The active pipeline includes two communities for 415 apartment homes.
The company’s Developer Capital Program investment aggregated $476.6 million, with a contractual weighted average return rate of 10% and a weighted average estimated remaining term of 2.9 years at the end of fourth-quarter 2023.
Balance Sheet Activity
As of Dec 31, 2023, UDR had $965.3 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 only $332 million, or 5.7% of total consolidated debt, maturing through 2025. In addition, net debt-to-EBITDAre of 5.6X remained unchanged in the fourth quarter from the year-ago quarter.
UDR ended the quarter with a weighted average interest rate of 3.4% and a weighted average years to maturity of 5.6 years.
Dividend Update
Concurrent with the earnings release, UDR’s board of directors announced a 2024 annualized dividend per share of $1.70, marking a year-over-year increase of 1.2%.
2024 Guidance
The company provided first-quarter and full-year 2024 guidance.
It expects first-quarter 2024 FFOA per share in the range of 60-62 cents. The Zacks Consensus Estimate for the same is pegged at 61 cents currently.
For 2024, FFOA per share is expected to be in the range of $2.36-$2.48. This is lower than the Zacks Consensus Estimate of $2.49.
For the full year, on a straight-line basis, the company projects 0.0-3.0% year-over-year growth in same-store revenues while same-store NOI growth is estimated to be -1.75-1.75%.
Currently, UDR carries a Zacks Rank #4 (Sell).
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
Essex Property Trust Inc. (ESS - Free Report) reported fourth-quarter 2023 core funds from operations (FFO) per share of $3.83, beating the Zacks Consensus Estimate of $3.81. The figure also improved by 1.6% from the year-ago quarter.
Results reflect favorable growth in same-property revenues and NOI. However same-property operating expenses partly acted as a dampener. ESS issued first-quarter and full-year 2024 guidance for core FFO per share.
AvalonBay Communities (AVB - Free Report) reported a fourth-quarter 2023 core FFO per share of $2.74, beating the Zacks Consensus Estimate of $2.73. Moreover, the figure climbed 5.8% from the prior-year quarter’s tally.
The quarterly results reflect a year-over-year increase in same-store residential rental revenues. AVB's same-store average rental revenue per occupied home reported a rise, though occupancy declined.
Equity Residential (EQR - Free Report) reported a fourth-quarter 2023 normalized FFO per share of $1.00, which was in line with the Zacks Consensus Estimate. The rental income of $727.5 million narrowly missed the consensus mark of $727.6 million.
EQR's results reflect healthy same-store revenue performance.
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.