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UDR Q1 FFO In Line With Expectations, Revenues Increase

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UDR Inc. (UDR - Free Report) reported funds from operations (FFO) as adjusted per share of 47 cents for first-quarter 2018, in line with the Zacks Consensus Estimate. The figure was higher than the prior-year quarter tally of 45 cents.

Total revenues in the reported quarter rose 3.9% year over year to $253.3 million. Further, the top line came marginally above the Zacks Consensus Estimate of $253 million. Growth in revenues for the first quarter were due to the rise in revenues from same-store communities, stabilized, non-mature and development communities.

Inside the Headlines

During the quarter, same-store revenues increased 3% year over year while same-store expenses increased 3.6%. Consequently, same-store net operating income (NOI) rose 2.7% year over year. This residential REIT’s same-store physical occupancy grew 30 basis point (bps) to 96.9%. The first-quarter annualized-rate of turnover contracted 120 basis points from the prior-year period to 40%.

At the end of the first quarter, UDR’s development pipeline aggregated $810.5 million at its pro-rata ownership interest. Out of which, 91% has already been funded.

As of Mar 31, 2018, the company had around $843.4 million available from a combination of cash and undrawn capacity on its credit facilities. Further, its total debt was $3.7 billion as of the same date.

During the reported quarter, the company repurchased 593,000 shares at an average price of $33.69, totaling approximately $20 million.

Portfolio Activity

At the end of the first quarter, the company’s Developer Capital Program investment, including accrued return, totaled $159.3 million.

Guidance

For second-quarter 2018, UDR projects FFO as adjusted per share to be 47-49 cents range. The Zacks Consensus Estimate of 49 cents lies at the higher end of this guidance.

For full-year 2018, the company reaffirmed its estimates. The FFO as adjusted per share remains at $1.91-$1.95. The Zacks Consensus Estimate of $1.93 lies within this range. Moreover, the company anticipates same-store revenues, expenses and same-store NOI to remain in the range of 2.5-3.5% for the year.

Our Viewpoint

UDR’s portfolio, located in the targeted U.S. markets, has a superior product-mix. Further, the company’s focus on enhancing the portfolio through expansion in core markets and the sale of non-core ones is likely to support long-term growth. Also, during the quarter, UDR declared a 4% increase in annualized common dividend for 2018.

However, the company continues to deal with an elevated level of apartment supply in a number of its markets. This is likely to limit the landlord’s ability to demand higher rents while increasing concessional activities. Moreover, any rise in interest rates remains a concern for the company.

United Dominion Realty Trust, Inc. Price, Consensus and EPS Surprise

 

Currently, UDR has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Alexandria Real Estate Equities, Inc. (ARE - Free Report) , Regency Centers Corporation (REG - Free Report) and Welltower Inc. (WELL - Free Report) . Alexandria and Regency Centers are scheduled to release results on Apr 30, while Welltower is slated to report numbers on May 1.

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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