The multifamily real estate investment trust (REIT) -
) - recently announced a 7% hike in its quarterly cash dividend
rate. The company will now pay a dividend of 23.5 cents per share
for first-quarter 2013, up from 22 cents paid in the
prior-quarter. The increased dividend will be paid on Apr 30,
2013 to stockholders of record on Apr 9.
UDR is focused on managing its capital conservatively and the
announced dividend will represent the company's 162nd consecutive
quarterly dividend payment. Based on the current dividend rate,
the 2013 annual dividend rate comes to 94 cents per share, 6
cents above the 2012 annual dividend of 88 cents per share.
As of Dec 31, 2012, UDR's liquidity amounted to $913 million
through a combination of cash and undrawn capacity on its credit
facilities. We believe that the company has adequate cash to
provide optimum shareholder value.
Last month, UDR reported fourth quarter 2012 FFO (funds from
operations), excluding non-recurring items, of 35 cents per
share, 2 cents ahead of the Zacks Consensus Estimate of 33 cents
and a cent above the prior-year quarter figure. The quarterly
results benefited from increased rental income and higher
UDR possesses a strong portfolio of apartment properties in prime
business locations in the U.S., and operates across multiple
markets that mitigate geographical risks. As of Dec 31, 2012, the
company owned or had an ownership position in 54,195 apartment
homes including 3,066 homes under development.
Furthermore, UDR is repositioning its portfolio to focus on
markets that have better job and rent growth prospects. Recent
development and joint venture activities are expected to position
the company well for future growth. It has automated most of its
businesses and has introduced electronic renewal initiatives,
enabling its customers to renew their leases online. As such, the
company is well poised to maintain its growth curve and
simultaneously benefit the shareholders with steadily rising
Solid dividend payouts are arguably the biggest attraction for
REIT investors since the U.S. law requires these companies to
distribute 90% of their annual taxable income in the form of
dividends to shareholders.
In addition to UDR, many other REITs have raised their dividends
in the recent months. Recently,
Taubman Centers Inc.
) announced an 8.1% hike in its quarterly cash dividend rate,
while in February,
Simon Property Group Inc.
) raised its dividend by 4.5% sequentially and
BRE Properties Inc.
) declared a 2.6% sequential hike in its quarterly cash dividend.
Yet, UDR has a significant development pipeline, which increases
operational risks in the current credit-constrained market and
undermines its growth potential to some extent.
UDR currently retains a Zacks Rank #4 (Sell).
BRE PROPERTIES (BRE): Free Stock Analysis
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UDR INC (UDR): Free Stock Analysis Report
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