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UDR misses Q4 estimates on elevated supply than demand

Published 02/06/2024, 05:56 PM
Updated 02/06/2024, 06:01 PM

(Reuters) - Real estate investment trust UDR missed market estimates for funds from operation (FFO) in the fourth quarter on Tuesday, a sign that higher supply than demand weighed on rental growth rates.

Rental supply in the U.S. remains elevated, especially in the Sunbelt region where supply is currently outstripping demand.

The company said earlier on an earnings call it had been providing concessions on rent in recent months, especially in West Coast markets.

"Elevated new supply deliveries in 2024 suggest near-term market rent growth will be more muted compared to long-term averages," CEO Tom Toomey said.

Effective renewal lease rates stood at 4.2%, compared with 4.7% in the third quarter.

UDR posted FFO, a REIT performance key measure, at $0.61 per share in the quarter ended Dec. 31, versus analysts' average estimate of $0.63 per share, according to LSEG data.

The Colorado-based REIT operates multifamily apartment communities in the U.S. and has a portfolio of more than 50,000 apartment units in 21 markets.

The REIT expects full-year 2024 FFO to be in the range of $2.36 to $2.48 per share, also below analysts' average estimate of $2.49 per share, as per LSEG data.

Its effective new lease rates, offered to tenants moving in, remained negative at 5.1% in the fourth quarter due to seasonality and supply pressures.

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