We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UDR Readies to Report Q4 Earnings: What's in the Offing?
Read MoreHide Full Article
UDR Inc. (UDR - Free Report) , a premier multifamily real estate investment trust (REIT), is set to announce its fourth-quarter and full-year 2023 results after the closing bell on Feb 6. Its quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Denver, CO-based residential REIT came up with FFO as adjusted per share of 63 cents, in line with the consensus mark. Quarterly results reflected year-over-year growth in revenues. UDR also benefited from past accretive external growth investments. However, a rise in interest expenses acted as a dampener.
In the last four quarters, UDR’s FFO as adjusted per share met the Zacks Consensus Estimate on two occasions for as many misses, the average negative surprise being -0.81%. The graph below depicts the surprise history of the company:
United Dominion Realty Trust, Inc. Price and EPS Surprise
Let’s see how things have shaped up before this announcement.
US Apartment Market in Q4
Per RealPage data, although there was a significant recovery in apartment demand in the fourth quarter, it was not enough to keep up with the huge amounts of new supply, with the onslaught affecting occupancy and rent growth.
There was demand for 58,200 units in the fourth quarter, pushing the total demand figure to 233,741 units in the 12-month period, which marked a considerable change from net move-outs from 123,290 units recorded in 2022. However, there were massive amounts of new supply, with 129,015 units being delivered in the fourth quarter across the top 150 markets tracked by RealPage, bringing the total number of units delivered to 439,394 in 2023.
With supply outpacing demand, the occupancy level was 94.2%, contracting 30 basis points (bps) in the quarter and 90 points year over year. Apart from the occupancy rate, operators’ pricing power was also affected, with fourth-quarter rents contracting 1.3% but increasing 0.2% in the year. The monthly rent was $1,805, while the rent per square foot was $1.986.
Projections
UDR owns a geographically diverse portfolio with a superior product mix of A/B quality properties in urban and suburban markets. The company’s portfolio comprises properties throughout the United States, including both coastal and Sunbelt locations, with a good mix of urban and suburban communities.
UDR’s technological investments and process enhancements are expected to have helped enhance cost control and aided margin expansion via its Next Generation Operating Platform. The platform allows the company to electronically interact with and provide service to residents, aiding its business prospects. Its healthy balance sheet position is likely to have boosted its growth endeavors.
However, the elevated supply of rental units in some of its markets may have increased competition and partly limited rent growth, casting a pall on the company’s quarterly performance to a certain extent. In addition, a high interest rate environment is likely to have acted as a spoilsport.
Per the company’s November Investor Presentation, UDR noted that it enjoyed 96.8% average occupancy in October, up from 96.7% in the third quarter of 2023. UDR experienced blended lease rate growth of around 0.5% through Nov 10, while the resident turnover was lower on a year-over-year basis for the sixth consecutive month in October.
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $409.41 million. This indicates a 2.76% year-over-year rise.
For the fourth quarter, we estimate same-store physical occupancy at 96.6%. Moreover, our estimate for same-store net operating income growth is currently pegged at 2.8%. We expect interest expenses to grow 8.9% year over year in the fourth quarter.
UDR projected fourth-quarter 2023 FFO as adjusted per share in the range of 62-64 cents.
Before the fourth-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO as adjusted per share has remained unchanged at 63 cents in the past month. However, this suggests year-over-year growth of 3.28%.
For the full year 2023, UDR expected FFO as adjusted per share in the range of $2.46-$2.48. This is based on the company’s projection of year-over-year growth in same-store cash revenues of 5.4-5.9% and same-store NOI growth in the range of 6-6.5%.
For the full year, the Zacks Consensus Estimate for FFO as adjusted per share is pegged at $2.47. The figure indicates a 6.01% increase year over year on 6.93% year-over-year growth in revenues to $1.62 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for UDR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
UDR currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are three stocks from the broader REIT sector — Welltower Inc. (WELL - Free Report) , VICI Properties Inc. (VICI - Free Report) and Kimco Realty Corporation (KIM - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
UDR Readies to Report Q4 Earnings: What's in the Offing?
UDR Inc. (UDR - Free Report) , a premier multifamily real estate investment trust (REIT), is set to announce its fourth-quarter and full-year 2023 results after the closing bell on Feb 6. Its quarterly results are likely to reflect growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Denver, CO-based residential REIT came up with FFO as adjusted per share of 63 cents, in line with the consensus mark. Quarterly results reflected year-over-year growth in revenues. UDR also benefited from past accretive external growth investments. However, a rise in interest expenses acted as a dampener.
In the last four quarters, UDR’s FFO as adjusted per share met the Zacks Consensus Estimate on two occasions for as many misses, the average negative surprise being -0.81%. The graph below depicts the surprise history of the company:
United Dominion Realty Trust, Inc. Price and EPS Surprise
United Dominion Realty Trust, Inc. price-eps-surprise | United Dominion Realty Trust, Inc. Quote
Let’s see how things have shaped up before this announcement.
US Apartment Market in Q4
Per RealPage data, although there was a significant recovery in apartment demand in the fourth quarter, it was not enough to keep up with the huge amounts of new supply, with the onslaught affecting occupancy and rent growth.
There was demand for 58,200 units in the fourth quarter, pushing the total demand figure to 233,741 units in the 12-month period, which marked a considerable change from net move-outs from 123,290 units recorded in 2022. However, there were massive amounts of new supply, with 129,015 units being delivered in the fourth quarter across the top 150 markets tracked by RealPage, bringing the total number of units delivered to 439,394 in 2023.
With supply outpacing demand, the occupancy level was 94.2%, contracting 30 basis points (bps) in the quarter and 90 points year over year. Apart from the occupancy rate, operators’ pricing power was also affected, with fourth-quarter rents contracting 1.3% but increasing 0.2% in the year. The monthly rent was $1,805, while the rent per square foot was $1.986.
Projections
UDR owns a geographically diverse portfolio with a superior product mix of A/B quality properties in urban and suburban markets. The company’s portfolio comprises properties throughout the United States, including both coastal and Sunbelt locations, with a good mix of urban and suburban communities.
UDR’s technological investments and process enhancements are expected to have helped enhance cost control and aided margin expansion via its Next Generation Operating Platform. The platform allows the company to electronically interact with and provide service to residents, aiding its business prospects. Its healthy balance sheet position is likely to have boosted its growth endeavors.
However, the elevated supply of rental units in some of its markets may have increased competition and partly limited rent growth, casting a pall on the company’s quarterly performance to a certain extent. In addition, a high interest rate environment is likely to have acted as a spoilsport.
Per the company’s November Investor Presentation, UDR noted that it enjoyed 96.8% average occupancy in October, up from 96.7% in the third quarter of 2023. UDR experienced blended lease rate growth of around 0.5% through Nov 10, while the resident turnover was lower on a year-over-year basis for the sixth consecutive month in October.
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $409.41 million. This indicates a 2.76% year-over-year rise.
For the fourth quarter, we estimate same-store physical occupancy at 96.6%. Moreover, our estimate for same-store net operating income growth is currently pegged at 2.8%. We expect interest expenses to grow 8.9% year over year in the fourth quarter.
UDR projected fourth-quarter 2023 FFO as adjusted per share in the range of 62-64 cents.
Before the fourth-quarter earnings release, the company’s activities were not adequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO as adjusted per share has remained unchanged at 63 cents in the past month. However, this suggests year-over-year growth of 3.28%.
For the full year 2023, UDR expected FFO as adjusted per share in the range of $2.46-$2.48. This is based on the company’s projection of year-over-year growth in same-store cash revenues of 5.4-5.9% and same-store NOI growth in the range of 6-6.5%.
For the full year, the Zacks Consensus Estimate for FFO as adjusted per share is pegged at $2.47. The figure indicates a 6.01% increase year over year on 6.93% year-over-year growth in revenues to $1.62 billion.
Here Is What Our Quantitative Model Predicts:
Our proven model does not conclusively predict a surprise in terms of FFO per share for UDR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.
UDR currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks That Warrant a Look
Here are three stocks from the broader REIT sector — Welltower Inc. (WELL - Free Report) , VICI Properties Inc. (VICI - Free Report) and Kimco Realty Corporation (KIM - Free Report) — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.
Welltower is slated to report quarterly numbers on Feb 13. WELL has an Earnings ESP of +0.80% and carries a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
VICI Properties, scheduled to report quarterly numbers on Feb 22, has an Earnings ESP of +2.16% and carries a Zacks Rank of 2.
Kimco Realty, slated to release quarterly numbers on Feb 8, has an Earnings ESP of +2.56% and carries a Zacks Rank of 2 at present.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.