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UDR Inc. (UDR - Free Report) reported first-quarter 2024 funds from operations as adjusted (FFOA) per share of 61 cents, in line with the Zacks Consensus Estimate.
Quarterly rental income was $411.7 million, which outpaced the Zacks Consensus Estimate of $408.6 million and came ahead of the year-ago quarter’s $398.3 million. Total revenues came in at $413.6 million.
Results reflect an increase in revenues from same-store communities and growth from past accretive external investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners. UDR raised certain full-year 2024 guidance ranges.
On a year-over-year basis, FFOA per share climbed 1.7%. Rental income and total revenues rose 3.4% and 3.5%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “We have started the year with improving leasing conditions, largely due to employment growth that has exceeded expectations and led to near-record high absorption. Our first quarter results, including 3.1 percent same-store revenue growth over the prior year period, demonstrate the strength of our strategy and the value of our operating platform.”
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reflected on a straight-line basis) increased 3.1% year over year. Same-store expenses were up 7.5%. Consequently, the same-store net operating income (NOI) improved 1.2%.
However, the company noted that, in the year-ago period, it had recorded a $3.7 million refundable payroll tax credit related to the Employee Retention Credit program. Excluding this benefit, year-over-year same-store expenses and NOI growth would have been 4% and 2.7%, respectively.
UDR registered same-store effective blended lease rate growth of 0.8% during the quarter. The residential REIT’s weighted average same-store physical occupancy of 97.1% increased 20 basis points sequentially and 60 basis points year over year. Our estimate was pegged at 96.8%.
However, property operating and maintenance expenses of $73.5 million rose 13.3% year over year. Interest expenses climbed 9.9% to $48.1 million. Our estimate was $46.5 million.
Portfolio Activity
During the quarter, UDR sold Crescent Falls Church, which is a 214-home apartment community in Metropolitan Washington, D.C., for $100.0 million.
The company also completed development at Villas at Fiori, a $53.5 million, 85-home townhome community developed in the Addison submarket of Dallas, TX. At the end of the first quarter, UDR’s development pipeline included one 330-home apartment community in Tampa, FL, at a total budgeted cost of $134.0 million. Of this, 94% has been funded, and only $7.8 million remains to be funded.
UDR had fully funded its $476.6 million of commitments under its Developer Capital Program platform at the end of the first quarter. These investments carry a contractual weighted average return rate of 10.0% and have a weighted average remaining term of 2.7 years.
Balance Sheet Activity
As of Mar 31, 2024, UDR had $960 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 $291.2 million, or 5.1% of total consolidated debt, maturing through 2025. In addition, net debt-to-EBITDAre of 5.7X remained unchanged in the first quarter from the year-ago quarter.
UDR ended the quarter with a weighted average interest rate of 3.38% and a weighted average years to maturity of 5.4 years.
2024 Guidance
UDR raised certain full-year 2024 guidance ranges.
The company now expects 2024 FFOA per share in the range of $2.38-$2.50, up 2 cents at the midpoint from the prior range of $2.36-$2.48. The Zacks Consensus Estimate for the same is pegged at $2.44 currently.
For the full year, with concessions reflected on a straight-line basis, the company projects 0.0-3.0% year-over-year growth in same-store revenues, 4.25-6.25% year-over-year growth in same-store expenses and same-store NOI growth is estimated to be -1.75% to 1.75%.
UDR expects second-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.
Equity Residential (EQR - Free Report) reported a first-quarter 2024 normalized FFO per share of 93 cents, which surpassed the Zacks Consensus Estimate of 91 cents. The rental income of $730.8 million also beat the consensus mark of $729.8 million. On a year-over-year basis, the normalized FFO per share grew 6.9% from 87 cents, with rental income climbing 3.6%.
Equity Residential’s results reflected decent same-store performances, backed by healthy demand, modest supply and a focus on expense efficiency. The company also experienced the lowest quarterly same-store turnover in its history. Presently, EQR carries a Zacks Rank #3.
AvalonBay Communities (AVB - Free Report) reported a first-quarter 2024 core FFO per share of $2.70, which beat the Zacks Consensus Estimate of $2.64. Moreover, the figure climbed 5.1% from the prior-year quarter’s tally. Total revenues in the quarter came in at $712.9 million, which outpaced the Zacks Consensus Estimate of $706.6 million. The figure increased 5.7% on a year-over-year basis.
The quarterly results of AvalonBay Communities reflect better-than-expected performance in the stabilized portfolio. This residential REIT also raised its 2024 core FFO per share, same-store residential revenue and net operating income (NOI) growth outlook following the Q1 FFO beat. Currently, AVB carries a Zacks Rank of 3.
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 Meets Q1 FFOA Estimates, Beats Revenues, Ups 2024 Guidance
UDR Inc. (UDR - Free Report) reported first-quarter 2024 funds from operations as adjusted (FFOA) per share of 61 cents, in line with the Zacks Consensus Estimate.
Quarterly rental income was $411.7 million, which outpaced the Zacks Consensus Estimate of $408.6 million and came ahead of the year-ago quarter’s $398.3 million. Total revenues came in at $413.6 million.
Results reflect an increase in revenues from same-store communities and growth from past accretive external investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners. UDR raised certain full-year 2024 guidance ranges.
On a year-over-year basis, FFOA per share climbed 1.7%. Rental income and total revenues rose 3.4% and 3.5%, respectively.
Per Tom Toomey, UDR’s chairman and CEO, “We have started the year with improving leasing conditions, largely due to employment growth that has exceeded expectations and led to near-record high absorption. Our first quarter results, including 3.1 percent same-store revenue growth over the prior year period, demonstrate the strength of our strategy and the value of our operating platform.”
Inside the Headlines
In the reported quarter, same-store revenues (with concessions reflected on a straight-line basis) increased 3.1% year over year. Same-store expenses were up 7.5%. Consequently, the same-store net operating income (NOI) improved 1.2%.
However, the company noted that, in the year-ago period, it had recorded a $3.7 million refundable payroll tax credit related to the Employee Retention Credit program. Excluding this benefit, year-over-year same-store expenses and NOI growth would have been 4% and 2.7%, respectively.
UDR registered same-store effective blended lease rate growth of 0.8% during the quarter. The residential REIT’s weighted average same-store physical occupancy of 97.1% increased 20 basis points sequentially and 60 basis points year over year. Our estimate was pegged at 96.8%.
However, property operating and maintenance expenses of $73.5 million rose 13.3% year over year. Interest expenses climbed 9.9% to $48.1 million. Our estimate was $46.5 million.
Portfolio Activity
During the quarter, UDR sold Crescent Falls Church, which is a 214-home apartment community in Metropolitan Washington, D.C., for $100.0 million.
The company also completed development at Villas at Fiori, a $53.5 million, 85-home townhome community developed in the Addison submarket of Dallas, TX.
At the end of the first quarter, UDR’s development pipeline included one 330-home apartment community in Tampa, FL, at a total budgeted cost of $134.0 million. Of this, 94% has been funded, and only $7.8 million remains to be funded.
UDR had fully funded its $476.6 million of commitments under its Developer Capital Program platform at the end of the first quarter. These investments carry a contractual weighted average return rate of 10.0% and have a weighted average remaining term of 2.7 years.
Balance Sheet Activity
As of Mar 31, 2024, UDR had $960 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 $291.2 million, or 5.1% of total consolidated debt, maturing through 2025. In addition, net debt-to-EBITDAre of 5.7X remained unchanged in the first quarter from the year-ago quarter.
UDR ended the quarter with a weighted average interest rate of 3.38% and a weighted average years to maturity of 5.4 years.
2024 Guidance
UDR raised certain full-year 2024 guidance ranges.
The company now expects 2024 FFOA per share in the range of $2.38-$2.50, up 2 cents at the midpoint from the prior range of $2.36-$2.48. The Zacks Consensus Estimate for the same is pegged at $2.44 currently.
For the full year, with concessions reflected on a straight-line basis, the company projects 0.0-3.0% year-over-year growth in same-store revenues, 4.25-6.25% year-over-year growth in same-store expenses and same-store NOI growth is estimated to be -1.75% to 1.75%.
UDR expects second-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.
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
Equity Residential (EQR - Free Report) reported a first-quarter 2024 normalized FFO per share of 93 cents, which surpassed the Zacks Consensus Estimate of 91 cents. The rental income of $730.8 million also beat the consensus mark of $729.8 million. On a year-over-year basis, the normalized FFO per share grew 6.9% from 87 cents, with rental income climbing 3.6%.
Equity Residential’s results reflected decent same-store performances, backed by healthy demand, modest supply and a focus on expense efficiency. The company also experienced the lowest quarterly same-store turnover in its history. Presently, EQR carries a Zacks Rank #3.
AvalonBay Communities (AVB - Free Report) reported a first-quarter 2024 core FFO per share of $2.70, which beat the Zacks Consensus Estimate of $2.64. Moreover, the figure climbed 5.1% from the prior-year quarter’s tally. Total revenues in the quarter came in at $712.9 million, which outpaced the Zacks Consensus Estimate of $706.6 million. The figure increased 5.7% on a year-over-year basis.
The quarterly results of AvalonBay Communities reflect better-than-expected performance in the stabilized portfolio. This residential REIT also raised its 2024 core FFO per share, same-store residential revenue and net operating income (NOI) growth outlook following the Q1 FFO beat. Currently, AVB carries a Zacks Rank of 3.
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.