On Dec 30, 2014, we issued an updated research report on UDR, Inc. (UDR). The Highlands Ranch, CO-based residential real estate investment trust (“REIT”) is continuing with its strategic focus on the core markets of the country. This has ensured generation of strong rental income for the company. At the same time, the company is also divesting its non-core businesses.
UDR’s improved performance in the core markets has driven 7.7% rental income growth on a year-over-year basis for the first nine months of 2014. Enhanced performance in the core markets came on the back of the company’s advantageous sub-markets locations and superior product mix. Further, a solid balance sheet, disciplined capital allocation strategies and strong cash flow support UDR’s operational performance.
Notably, UDR reported third-quarter 2014 funds from operations (“FFO”) per share of 38 cents, which missed the Zacks Consensus Estimate by 2 cents. The results, however, came in 2 cents higher than the prior-year quarter figure. The year-over-year beat is attributable to higher same store net operating income (“NOI”) and strong portfolio restructuring activities.
Although UDR’s large construction pipeline is encouraging for its future growth, it increases operational risks by exposing the company to rising construction costs, entitlement delays and lease-up risks. Also, divestiture of non-core assets will put pressure on FFO in the near term.
Over the past 30 days, the Zacks Consensus Estimates for both 2014 and 2015 have remained unchanged at $1.54 and $1.63, respectively.
UDR currently carries a Zacks Rank #3 (Hold).
Some better-ranked residential REITs include American Campus Communities, Inc. (ACC), Equity Residential (EQR) and Home Properties Inc. (HME). All these stocks sport a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation, amortization and other non-cash expenses to net income.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment