On Jul 18, 2013, we reaffirmed our long-term recommendation on
) - one of the leading apartment real estate investment trusts
(REITs) - at Neutral. The decision depicts company's successful
execution of strategic initiatives in past quarters. Nonetheless,
UDR's vast development pipeline and tough competition from other
housing alternatives remain matters of concern.
UDR is among the best-positioned apartment REITs in the U.S.,
with the majority of its portfolio located in the Western and
Mid-Atlantic U.S. Moreover, the company's strategy of expanding
its reach through the introduction of a resident Internet portal
and an apartment search application in iPhone and iPod devices
bodes well for its overall growth.
In addition, the improving apartment sector will enable UDR to
witness a growing demand for its upscale communities in the
coming years. Further, the company has been allocating its
capital efficiently, reducing financial leverage over time and
improving cash flows.
However, UDR's active development and redevelopment pipeline
exposes it to various risks such as rising construction costs,
entitlement delays and lease-ups. Additionally, increasing
competition from developers of other housing alternatives
somewhat restricts the company's growth momentum and poses a drag
Over the last 60 days, the Zacks Consensus Estimate for 2013
funds from operations (FFO) per share remained stable at $1.39.
On the other hand, for 2014, it nudged up 0.7% to $1.49. Thus,
UDR now carries a Zacks Rank #3 (Hold).
UDR is scheduled to report second-quarter 2013 earnings on Jul
30, before the opening bell. The Zacks Consensus Estimate for FFO
per share for the upcoming quarter is pegged at 34 cents per
share. The earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) for UDR is 0.00% for the second quarter. This, along with its
Zacks Rank #3 reduces the company's chance of an earnings
Other Stock to Consider
Other apartment REITs that are currently performing better
AvalonBay Communities, Inc.
Mid America Apartment Communities Inc.
Sun Communities, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
FFO, 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.
AVALONBAY CMMTY (AVB): Free Stock Analysis
MID-AMER APT CM (MAA): Free Stock Analysis
SUN CMNTYS INC (SUI): Free Stock Analysis
UDR INC (UDR): Free Stock Analysis Report
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