UDR Inc. (UDR) an apartment real estate investment trust reported first quarter 2011 FFO (fund from operations) of $56.8 million or 30 cents per share compared to $46.8 million or 28 cents in the year-earlier quarter. The reported FFO per share was in line with the Zacks Consensus Estimate.
Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
We cover below the results of the recent earnings announcement, as well as the subsequent analyst estimate revisions and the Zacks ratings for the short and long-term outlook on the stock.
First Quarter Review
Total revenue was $164.5 million compared to $145.1 million in the prior-year quarter. Quarterly revenue came in much below the Zacks Consensus Estimate of $170 million.
Same-store occupancy remained relatively high at 95.6% during the quarter. On a year-over-year basis, same-store revenue and net operating income increased 2.6% and 3.0% respectively, while same-store expenses rose 2.0%.
Read our full coverage on this earnings report: UDR REPORTS MIXED RESULTS
Earnings Estimate Revisions –– Overview
Fiscal 2011 earnings estimates have moved up for UDR since the earnings release, indicating that analysts are bullish about the long-term performance of the company. Let’s dig into the earnings estimate details.
Agreement of Estimate Revisions
In the last 7 days, for the coming quarter 6 out of 22 analysts have increased their earnings estimates while two have decreased the same. However, for fiscal 2011, 7 out of 22 analysts have increased their earnings estimate while none have decreased the same.
In the last 30 days, 8 out of 22 analysts have increased their earnings estimates for the upcoming quarter, while two have lowered the same. For fiscal 2011, earnings estimates were raised by 10 analysts out of 22 covering the stock, while none have lowered the same. This indicates a positive directional movement for full fiscal earnings.
Magnitude of Estimate Revisions
Earnings estimates for the upcoming quarter have remained constant in the last 7 days and 30 days at 31 cents. For fiscal 2011, earnings estimates for the last 7 days and 30 days were increased by a penny to $1.25.
Moving Forward
UDR is a multi-family real estate trust that owns, operates, acquires, develops and renovates middle-market apartment communities. Over the last nine months UDR has upgraded its portfolio in desirable locations that have favorable job conditions, low housing affordability, and favorable demand/supply ratio
UDR is among the best-positioned apartment REITs in the U.S., with the majority of its portfolio located in California, Florida and on the Atlantic Coast. These are areas where housing costs have soared in the past few years, and despite the drop in home values, the rent versus own spread remained high. The housing meltdown will continue to help apartment REITs and we expect this sector to remain comparatively stable in the coming quarters. However,the company has a significant development pipeline, which increases operational risks in a credit-constrained market.
UDR currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Equity Residential (EQR) currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
EQUITY RESIDENT (EQR): Free Stock Analysis Report
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