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UDR Q4 FFOA Meets, Revenues Beat Estimates, Occupancy Rises

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UDR Inc.’s (UDR - Free Report) fourth-quarter 2019 funds from operations as adjusted (FFOA) per share of 54 cents came in line with the Zacks Consensus Estimate. The bottom line was higher than the prior-year quarter’s reported figure of 50 cents.

Fourth-quarter revenues from rental income climbed 9.8% year over year to $302.75 million. Further, the figure surpassed the Zacks Consensus Estimate of $298.49 million.

Results reflect year-over-year growth in same-store net operating income (NOI) and weighted average same-store physical occupancy.

In full-year 2019, FFOA per share came in at $2.08, up 6.1% year over year. It also matched the Zacks Consensus Estimate. Rental income of $1.14 billion, which jumped 10%, backed this upside.

Inside the Headlines

During the fourth quarter, same-store revenues increased 3.3% year over year. However, same-store expenses jumped 1.3%. Consequently, same-store NOI improved 4.1%. The residential REIT’s weighted average same-store physical occupancy expanded 10 basis points (bps), year over year, but remained flat sequentially at 96.9%. Fourth-quarter annualized-rate of turnover decreased 60 bps to 40.2%.

UDR’s wholly owned acquisition activity for the quarter included the buyout of one community — The Slade at Channelside — for an aggregate of $85.2 million.

At the end of the reported quarter, the company’s Developer Capital Program investment, including accrued return, totaled $405.3 million.

At the end of the fourth quarter, UDR’s development pipeline aggregated $278.5 million at its pro-rata ownership interest, out of which, 25% has already been funded.

As of Dec 31, 2019, the company had around $866.5 million of liquidity through a combination of cash and undrawn capacity on its credit facilities. Additionally, its total debt was $4.7 billion as of the same date.

Guidance

The company has issued projections for first-quarter 2020. For the quarter, UDR projects FFOA per share in the 53-55 cents range. The Zacks Consensus Estimate for the same is pegged at 54 cents.

Further, the company expects 2020 FFOA per share in the range of $2.18-$2.22. The consensus estimate for the same is $2.21. Moreover, it anticipates same-store NOI growth of 2.9-3.9% for the ongoing year.

Conclusion

UDR continued to implement its Next Generation Operating Platform strategy during the reported quarter. This facilitated year-over-year controllable operating margin expansion of 60 bps to 84.8%.

Additionally, it completed nearly 30,370 SmartHome installations in 2019. These technological and process initiatives will strengthen the company’s operating platform, enabling it to enjoy greater efficiencies.

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

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

Performance of Other REITs

Highwoods Properties Inc.’s (HIW - Free Report) fourth-quarter FFO per share of 91 cents surpassed the Zacks Consensus Estimate of 90 cents. The figure also improved from 86 cents reported in the year-ago quarter.

Cousins Properties Incorporated (CUZ - Free Report) reported fourth-quarter FFO per share (before TIER transaction costs) of 73 cents, missing the Zacks Consensus Estimate of 74 cents. However, the figure improved from the prior-year quarter’s 67 cents.

Alexandria Real Estate Equities, Inc. (ARE - Free Report) reported fourth-quarter 2019 FFO as adjusted of $1.77 per share, up 5.4% from the year-ago quarter’s $1.68. However, the figure missed the Zacks Consensus Estimate of $1.78.

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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