UDR Inc. UDR reported first-quarter 2015 funds from operations (“FFO”) of 43 cents per share, which comfortably beat the Zacks Consensus Estimate of 41 cents. The bottom line, too, came in 19.4% higher than the prior-year quarter figure.
Results of this residential real estate investment trust (“REIT”) were attributable to higher revenues and same-store net operating income (“NOI”) as well as portfolio restructuring activities. Also, the company revised its guidance for 2015 and introduced for 2016.
Inside the Headlines
Total revenue for the quarter improved 11% year over year to $219.8 million, exceeding the Zacks Consensus Estimate of $209 million.
Same-store revenues for the quarter increased 5.1% year over year, while same-store net expenses climbed 2.5%. Consequently, same-store NOI rose 6.2% from the year-ago quarter, whereas same-store physical occupancy inched up 60 basis points year over year to 96.7%.
During the quarter, UDR completed the disposition of 20% interest in its 3,359-home Texas Joint Venture. At 100%, the sales price was $400 million.
As of Mar 31, 2015, UDR had a development pipeline of recently completed and under-construction assets of $838 million. A new development project that kick started during the quarter was Domain Mountain View, a 155-home community located at Mountain View, CA. The project is approximately valued at $99 million.
As of the same date, the company’s liquidity amounted to $517 million, through a combination of cash and un-drawn capacity on its credit facilities, as against $763 million as of Dec 31, 2014. Further, the company had total debt of $3.5 billion, down from the prior-quarter figure of $3.6 billion.
2015 Guidance
UDR revised 2015 guidance and introduced guidance for 2016. For second-quarter 2015, UDR expects FFO per share in the range of 39–41 cents. For full-year 2015, the company provided FFO guidance within $1.63–$1.67, an upward revision from the earlier guidance of $1.60–$1.66.
For full-year 2015, UDR declared revenue, expense and NOI guidance ranges of 4.25–4.75%, 2.50–3.00% and 4.75–5.75%, respectively, up from the previous projections of 3.75–4.25%, 2.50–3.00% and 4.00–5.00%.
Our Viewpoint
We believe superior performance of UDR’s operating portfolio will help it deliver better results, going forward. Also, ongoing portfolio restructuring and extensive construction activities position the company well in upscale markets, boding well for its future growth.
Currently, UDR carries a Zacks Rank #2 (Buy). We currently look forward to other REIT stocks that are scheduled to release first-quarter 2015 results later this week. These include Apartment Investment and Management Company AIV, Host Hotels & Resorts, Inc. HST and Public Storage PSA.
Note: Funds 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.
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