UDR's Q3 FFOA & Revenues Beat Estimates, Occupancy Increases

UDR Inc.’s (NYSE:UDR) third-quarter 2019 funds from operations as adjusted (FFOA) per share of 52 cents surpassed the Zacks Consensus Estimate of 49 cents. The figure also comes in higher than the prior-year quarter reported tally of 49 cents.

Moreover, third-quarter 2019 revenues from rental income climbed approximately 9.8% year over year to $289.01 million. Further, the figure surpassed the Zacks Consensus Estimate of nearly $284.4 million.

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

Inside the Headlines

During the third quarter, same-store revenues increased 3.7% year over year. However, same-store expenses flared up 3.1%. Consequently, same-store NOI improved 3.9% year over year. This residential REIT’s weighted average same-store physical occupancy expanded 10 basis points (bps), year over year, but remained flat sequentially at 96.9%. The third-quarter annualized-rate of turnover remained flat, year on year, at 63.8%.

UDR’s wholly-owned acquisition activity for the quarter included the buyout of two communities — The Commons at Windsor Gardens and One William — for an aggregate amount of $353.8 million.

At the end of the reported quarter, the company’s Developer Capital Program (DCP) investment, including accrued return, totaled $264.4 million.

At the end of the quarter, UDR’s development pipeline aggregated $129.5 million at its pro-rata ownership interest, out of which, 25% has already been funded.

As of Sep 30, 2019, the company had around $1.1 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities. Additionally, its total debt was $3.94 billion as of the same date.

Guidance

The company has issued its projections for fourth-quarter 2019. For the current quarter, UDR projects FFOA per share to be in the 53-55 cents range. The Zacks Consensus Estimate for the same is pinned at 53 cents.

Further, the company marginally raised its forecast for 2019 FFOA per share to $2.07-$2.09, from the previous outlook of $2.06-$2.09. The Zacks Consensus Estimate for the same is $2.07. Moreover, it anticipates same-store NOI growth of 4-4.4% for the ongoing year.

Conclusion

UDR continued to implement its Next Generation Operating Platform strategy during the July-September quarter. This facilitated year-over-year controllable operating margin expansion of 40 bps to 83.9%.

Additionally, it completed nearly 5,700 SmartHome installations during this period. 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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Highwoods Properties Inc.’s (NYSE:HIW) third-quarter FFO per share of 88 cents surpassed the Zacks Consensus Estimate of 85 cents. The reported tally excluded the net impact of 5 cents relating to the company’s market rotation plan. The figure also improved 2.3% year over year.

Cousins Properties Incorporated (NYSE:CUZ) reported third-quarter FFO per share (before TIER transaction costs) of 72 cents, outpacing the Zacks Consensus Estimate of 69 cents. Further, the figure came in higher than the prior-year quarter’s reported tally of 63 cents.

Ventas, Inc. (NYSE:VTR) delivered third-quarter 2019 normalized FFO per share of 96 cents, beating the Zacks Consensus Estimate of 94 cents. However, the figure came in lower than the year-ago tally of 99 cents.

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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