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UDR Tops Q1 FFO and Revenue Estimates, Revises '19 Outlook

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UDR Inc.’s (UDR - Free Report) first-quarter 2019 funds from operations (FFO) per share of 51 cents surpassed the Zacks Consensus Estimate by a whisker. The figure comes in higher than the prior-year quarter reported tally of 47 cents.

Revenues from rental income in the reported quarter climbed approximately 7% year over year to $267.9 million. Further, the figure surpassed the Zacks Consensus Estimate of $267.1 million.

Results reflect year-over-year growth in same-store net operating income (NOI). However, weighted average same-store physical occupancy declined on a year-over-year basis.

Inside the Headlines

During the first quarter, same-store revenues increased 3.8% year over year. However, same-store expenses flared up 3%. Consequently, same-store NOI improved 4.1% year over year. This residential REIT’s weighted average same-store physical occupancy shrunk 10 basis points (bps) year over year to 96.8%. The first-quarter annualized-rate of turnover contracted 110 bps from the prior-year period to 39.2%.

During the quarter, UDR acquired four apartment communities consisting of 1,110 homes and two development sites. The company shelled out $402.9 million, including debt payoffs, for these purchases.

At the end of the first quarter, UDR’s development pipeline aggregated $747.9 million at its pro-rata ownership interest, out of which, 96% has already been funded.

As of Mar 31, 2019, the company had around $1 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities. Additionally, its total debt was $3.6 billion as of the same date.

Portfolio Activity

At the end of the reported quarter, the company’s Developer Capital Program (DCP) investment, including accrued return, totaled $213.1 million.

Guidance

The company has issued estimates for second-quarter 2019. For the current quarter, UDR projects FFO per share to be in the 50-52 cents range. The Zacks Consensus Estimate for the same is pinned at 52 cents.

The FFO per share for 2019 is expected in the band of $2.05-$2.09 as compared to the previous outlook of $2.03-$2.07. The Zacks Consensus Estimate for the same is $2.06. Moreover, the company anticipates same-store NOI to be up 3.25-4.25% for the ongoing year.

Our Viewpoint

UDR’s efforts to enhance the overall quality of its portfolio have enabled the company to witness rental income growth. Specifically, continued focus to acquire, develop and redevelop properties in core operating markets will improve its operating platform and drive long-term profitability.

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

At present, UDR has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Cousins Properties Incorporated (CUZ - Free Report) reported FFO per share of 20 cents during the January-March quarter, in line with the Zacks Consensus Estimate. The figure came in higher than the prior-year reported tally of 15 cents. 

Duke Realty Corporation’s (DRE - Free Report) first-quarter 2019 core FFO per share of 33 cents surpassed the Zacks Consensus Estimate of 32 cents. Moreover, the figure came in ahead of the year-ago quarter’s reported tally of 30 cents.

Ventas, Inc. (VTR - Free Report) delivered first-quarter normalized FFO of 99 cents, beating the Zacks Consensus Estimate of 96 cents. The reported figure, however, came in lower than the prior year’s $1.05.

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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