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UDR Sees Q1 Results In Line With Prior View, Updates on Liquidity

Zacks Equity Research

UDR Inc. UDR recently announced that it expects its first-quarter results to be in line with the previously-issued guidance. However, the company will address its full-year guidance during the first-quarter earnings conference call.

The move comes in the wake of the coronavirus outbreak wreaking havoc on the global economy, with the number of infected patients in the United States skyrocketing. The crisis has battered most industries, the residential REIT sector being no exception.

Moreover, UDR’s measures include aligning of its operational policies with state and local regulations and this comprised eviction moratoriums in many markets. The company is making efforts in accommodating residents, commercial tenants and associates affected by the outbreak as required.

Uncertainties relating to the pandemic’s crippling economic impact, and associated government actions and regulations on the residential REIT sector’s performance have been heightening. Therefore, UDR’s residential REIT counterparts, including Mid-America Apartment Communities, Inc. MAA and Apartment Investment and Management Company AIV and AvalonBay Communities, Inc. AVB have withdrawn their full-year 2020 guidance.

Given the current capital-market conditions and the uncertain environment, UDR has updated on its liquidity and debt position. The company said that it has a combined $1.175-billion revolving credit facility and working capital credit facility, with roughly $900 million in available capacity currently. While the revolving credit facility is scheduled to mature in 2023, there are options to extend the maturity to 2024.

Further, the company noted that with hard money deposits, it is under contract to vend two wholly-owned operating communities in Greater Seattle, WA, for $142 million in aggregate and the transactions are expected to close during the second quarter, assuring about the company’s liquidity position.

Regarding its debt position, UDR noted that through 2022, just 2%, or $105 million, of its consolidated debt outstanding is slated to mature. The figure, however, excludes commercial paper and amounts due under its $75-million working capital credit facility. Supporting its balance-sheet strength, the company’s unencumbered asset pool comprises 87.5% of total net operating income and as of Mar 25, 2020, the company has minimal external growth funding commitments with a development pipeline comprising less than 2% of enterprise value.

In addition to the above-mentioned financial updates, UDR announced certain additional steps to deal with this pandemic. These include practicing “social distancing” through reduction of on-site-leasing office staff, closure of leasing offices to only UDR Associates, closing all amenity spaces and several others. The company’s Next Generation Operating Platform also helped shift all property/home tours to virtual.

Shares of this Zacks Rank #3 (Hold) company have depreciated 23.4% so far this year, while its industry has declined 32.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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