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UDR Q3 FFO Meets Estimates, Revenues Grow Y/Y, View Up
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UDR Inc.’s (UDR - Free Report) third-quarter 2018 funds from operations (FFO) as adjusted per share of 49 cents came in line with the Zacks Consensus Estimate. The figure came in higher than the prior-year tally of 47 cents.
Total revenues in the reported quarter climbed 6.0% year over year to $266.1 million. Further, the top line beat the Zacks Consensus Estimate of $258.6 million. This upside primarily stemmed from growth in revenues from operating and lease-up communities. The company has also raised its guidance for 2018.
Inside the Headlines
During the quarter under review, same-store revenues increased 3.8% year over year. However, same-store expenses flared up 3.5%. Consequently, same-store net operating income (NOI) improved 3.9% year over year. This residential REIT’s weighted average same-store physical occupancy expanded 30 basis point (bps) to 96.9%. The third-quarter annualized-rate of turnover advanced 40 bps from the prior-year period to 63.4%.
During the quarter, UDR signed a contract to sell Circle Towers, a 46-year old, 604-home community in Fairfax County, VA, for $160.0 million. The transaction is slated to close during the current quarter.
At the end of the third quarter, UDR’s development pipeline aggregated $808.5 million at its pro-rata ownership interest, out of which, 98% has already been funded.
As of Sep 30, 2018, the company had around $710.1 million available from a combination of cash and undrawn capacity on its credit facilities. Furthermore, its total debt was $3.8 billion as of the same date.
Portfolio Activity
At the end of the reported quarter, the company’s Developer Capital Program investment, including accrued return, totaled $222.7 million.
Guidance
For fourth-quarter 2018, UDR projects FFO as adjusted per share to be in the 49-50 cents range. The Zacks Consensus Estimate of 49 cents lies at the lower end of this guidance.
The company also updated its estimates for full-year 2018. The FFO as adjusted per share lies in the band of $1.95-$1.96 compared with the previous projection of $1.93-$1.96. The Zacks Consensus Estimate for the same is $1.94. Moreover, the company anticipates same-store NOI to increase in the range of 3.25-3.5% for the year compared with the previous estimate of 3.0-3.5%.
Our Viewpoint
UDR is likely to benefit from its vast experience in the residential real estate market. The company’s portfolio, located in the targeted U.S. markets, has a superior product mix. Specifically, favorable demographics, household formation, recovering economy and job-market growth are expected to drive demand for UDR's properties. The company also adheres to disciplined capital allocation.
However, UDR has been plagued with escalating deliveries in a number of its markets. This remains a concern as elevated levels of supply curtail landlords’ ability to demand higher rents and also increase concessional activities. Rate hike adds to its woes.
We now look forward to the earnings releases of other REITs like Mid-America Apartment Communities, Inc. (MAA - Free Report) , Federal Realty Investment Trust (FRT - Free Report) and Realty Income Corp. (O - Free Report) , which are slated to report their quarterly numbers on Oct 31.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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UDR Q3 FFO Meets Estimates, Revenues Grow Y/Y, View Up
UDR Inc.’s (UDR - Free Report) third-quarter 2018 funds from operations (FFO) as adjusted per share of 49 cents came in line with the Zacks Consensus Estimate. The figure came in higher than the prior-year tally of 47 cents.
Total revenues in the reported quarter climbed 6.0% year over year to $266.1 million. Further, the top line beat the Zacks Consensus Estimate of $258.6 million. This upside primarily stemmed from growth in revenues from operating and lease-up communities. The company has also raised its guidance for 2018.
Inside the Headlines
During the quarter under review, same-store revenues increased 3.8% year over year. However, same-store expenses flared up 3.5%. Consequently, same-store net operating income (NOI) improved 3.9% year over year. This residential REIT’s weighted average same-store physical occupancy expanded 30 basis point (bps) to 96.9%. The third-quarter annualized-rate of turnover advanced 40 bps from the prior-year period to 63.4%.
During the quarter, UDR signed a contract to sell Circle Towers, a 46-year old, 604-home community in Fairfax County, VA, for $160.0 million. The transaction is slated to close during the current quarter.
At the end of the third quarter, UDR’s development pipeline aggregated $808.5 million at its pro-rata ownership interest, out of which, 98% has already been funded.
As of Sep 30, 2018, the company had around $710.1 million available from a combination of cash and undrawn capacity on its credit facilities. Furthermore, its total debt was $3.8 billion as of the same date.
Portfolio Activity
At the end of the reported quarter, the company’s Developer Capital Program investment, including accrued return, totaled $222.7 million.
Guidance
For fourth-quarter 2018, UDR projects FFO as adjusted per share to be in the 49-50 cents range. The Zacks Consensus Estimate of 49 cents lies at the lower end of this guidance.
The company also updated its estimates for full-year 2018. The FFO as adjusted per share lies in the band of $1.95-$1.96 compared with the previous projection of $1.93-$1.96. The Zacks Consensus Estimate for the same is $1.94. Moreover, the company anticipates same-store NOI to increase in the range of 3.25-3.5% for the year compared with the previous estimate of 3.0-3.5%.
Our Viewpoint
UDR is likely to benefit from its vast experience in the residential real estate market. The company’s portfolio, located in the targeted U.S. markets, has a superior product mix. Specifically, favorable demographics, household formation, recovering economy and job-market growth are expected to drive demand for UDR's properties. The company also adheres to disciplined capital allocation.
However, UDR has been plagued with escalating deliveries in a number of its markets. This remains a concern as elevated levels of supply curtail landlords’ ability to demand higher rents and also increase concessional activities. Rate hike adds to its woes.
Currently, UDR has a Zacks Rank #2 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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We now look forward to the earnings releases of other REITs like Mid-America Apartment Communities, Inc. (MAA - Free Report) , Federal Realty Investment Trust (FRT - Free Report) and Realty Income Corp. (O - Free Report) , which are slated to report their quarterly numbers on Oct 31.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>