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UDR Q3 FFO Beats Estimates by a Penny; 2015 Guidance Up

UDR Inc.UDR reported third-quarter 2015 funds from operations ("FFO") of 42 cents per share, which beat the Zacks Consensus Estimate by a penny. Further, the bottom line came considerably better than the prior-year quarter figure of 38 cents.

Results of this residential real estate investment trust ("REIT") were attributable to higher revenues and same-store net operating income ("NOI"). Also, the company raised its guidance for 2015.

Inside the Headlines

Total revenue improved 7.1% year over year to $221.4 million, exceeding the Zacks Consensus Estimate of $217.4 million.

Same-store revenues increased 5.9% year over year, while same-store net expense climbed 2.7%. Consequently, same-store NOI rose 7.3% year over year, whereas same-store physical occupancy inched down 30 basis points year over year to 96.6%.

During the quarter, UDR inked a deal to divest 6 communities for a total price of $221 million through Section 1031 exchanges. The REIT also signed another deal to divest 2 communities for $66 million.

As of Sep 30, 2015, UDR had a development pipeline (pro-rata basis) worth $1 billion, with 70% of the equity commitment funded.

As of the same date, the company's liquidity amounted to $791 million, through a combination of cash and un-drawn capacity on its credit facilities, compared with $446 million as of Jun 30, 2015. Further, the company had total debt of $3.5 billion, down from the prior-quarter figure of $3.6 billion.

2015 Guidance

UDR revised its guidance for 2015. For fourth-quarter 2015, it expects FFO per share in the range of 40-42 cents, up from the earlier guidance of 39-41 cents. For full-year 2015, the company provided FFO guidance within $1.65-$1.67, compared with the earlier projection of $1.64-$1.68.

For full-year 2015, UDR provided guidance for revenues, expense and NOI in the respective ranges of 5.25-5.50%, 2.75-3.00% and 6.25-6.75%, up from the prior projections of 5.00-5.50%, 2.50-3.00% and 5.75-6.75%.

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, thereby boosting its prospects.

Currently, UDR carries a Zacks Rank #3 (Hold). Presently, we look forward to other REIT stocks that are scheduled to release third-quarter 2015 results next week. These include General Growth Properties, Inc GGP , Vornado Realty Trust VNO and Apartment Investment and Management Company AIV .

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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