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UDR Meets Q2 FFO Estimates, Raises View on Better Operating Trends

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UDR Inc. UDR reported second-quarter 2021 funds from operations (FFO) as adjusted per share of 49 cents, in line with the Zacks Consensus Estimate. However, the figure is lower than the prior year’s 51 cents.

Driven by the pace of economic recovery, there has been an increase in revenues from rental income, fueling top-line growth. Also, improvement in operating trends as well as strong pricing power and accretive transactions have enabled the company to raise the 2021 guidance.

Quarterly revenues from rental income inched up 1% year over year to $309.1 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $301.1 million.

As of Jul 26, 2021, cash revenues collected for the second quarter of 2021 were 96.4% of total billed revenues.

Per management, “We continue to see sequential improvement in traffic, occupancy, rate growth, and collections in all of our markets”.

Inside the Headlines

In the reported quarter, same-store revenues (with concessions reported on a cash basis) decreased 1% year over year. Same-store expenses flared up 3.8%. Consequently, same-store net operating income, with concessions reported on a cash basis, declined 3.1%.

The residential REIT’s weighted average same-store physical occupancy expanded 80 basis points (bps) sequentially to 97.2%. The second-quarter annualized rate of turnover shrunk 170 bps year over year to 47.5%.

UDR continues to implement its Next Generation Operating Platform strategy. This restricted second-quarter 2021 same-store controllable expense growth to 2% year over year.

Portfolio Activity

The company’s development pipeline aggregated $501.5 million at the end of the reported quarter and 57% of the costs were incurred during the period. The active pipeline includes five development communities for 1,417 homes.

At the end of the second quarter, the company’s Developer Capital Program investment, including accrued return, totaled $297.6 million.

Balance Sheet Activity

As of Jun 30, 2021, UDR had $681.1 million of liquidity through a combination of cash and undrawn capacity under its credit facilities. The total debt was $5.5 billion, as of the same date.

UDR ended the second quarter with fixed-rate debt representing 89.7% of its total debt, a weighted average interest rate of 2.7% and weighted average years to maturity of 7.5 years.

Guidance

The company issued the outlook for third-quarter 2021. It expects FFO as adjusted per share of 49-51 cents. The Zacks Consensus Estimate for the same is pegged at 49 cents, similar to the company’s projection.

Further, it expects 2021 FFO as adjusted per share of $1.97-$2.01, up from the previously mentioned $1.94-$2. The Zacks Consensus Estimate for the same is pegged at $1.97. Additionally, for 2021, it anticipates year-over-year growth in same-store cash revenues of -0.25% to 0.75%, whereas same-store NOI growth is estimated to be -1% to 0.5%.

Currently, UDR carries a Zacks Rank #3 (Hold).

United Dominion Realty Trust, Inc. Price, Consensus and EPS Surprise

United Dominion Realty Trust, Inc. Price, Consensus and EPS Surprise
United Dominion Realty Trust, Inc. Price, Consensus and EPS Surprise

United Dominion Realty Trust, Inc. price-consensus-eps-surprise-chart | United Dominion Realty Trust, Inc. Quote

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We now look forward to the earnings releases of other REITs like Digital Realty Trust, Inc. DLR, Cousins Properties CUZ and CubeSmart CUBE. All three companies are slated to report second-quarter earnings on Jul 29, after market close.

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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