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UDR Readies to Report Q2 Earnings: What's in the Offing?
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UDR Inc. (UDR - Free Report) , a premier multifamily real estate investment trust (REIT), is set to announce its second-quarter 2024 results after the closing bell on Jul 30. While its quarterly results are likely to reflect growth in revenues, funds from operations (FFO) per share might remain unchanged.
In the last reported quarter, this Denver, CO-based residential REIT came up with an FFO as adjusted per share of 61 cents, in line with the consensus mark. Quarterly results reflected an increase in revenues from same-store communities and growth from past accretive external investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners.
In the last four quarters, UDR’s FFO as adjusted per share met the Zacks Consensus Estimate on three occasions and missed on the other, the average negative surprise being -0.40%. 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 Q2
Per RealPage data, the U.S. apartment market witnessed a surge in demand in the second quarter despite supply continuing to grab headlines.
This is evidenced by high absorption rates. Around 389,629 apartment units were absorbed on net over the past 12 months, with some 257,000 units being absorbed during the first two quarters of 2024. However, there were massive amounts of new supply, with 522,743 new market-rate apartment units delivered in the past 12 months.
With the narrow gap between demand and supply, national occupancy and rent growth rates have stabilized. Occupancy held steady for three straight months, remaining at 94.2% in June. Rents inched up 0.2% in the year ending June, and the monthly effective rent change was north 0.4%. The average effective rent was $1,838.
Projections
UDR owns a geographically diverse portfolio featuring a superior mix of A/B quality properties in both urban and suburban markets. The company’s portfolio includes properties across the United States, spanning coastal and Sunbelt locations, with a balanced blend of urban and suburban communities.
UDR’s investments in technology and process improvements are anticipated to enhance cost control and support margin expansion through its Next Generation Operating Platform. This platform enables the company to electronically interact with and provide services to residents, thereby supporting its business prospects. Additionally, its strong balance sheet is likely to have bolstered its growth efforts.
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, the REIT is expected to have incurred high interest expenses in the quarter.
Per the company’s June Investor Presentation, UDR noted that it enjoyed 96.9% average physical occupancy in May and April, down from 97.1% in the first quarter of 2024. UDR experienced effective blended lease rate growth of around 3% for May and 2% in April compared with 0.8% in the first quarter.
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $413.61 million. This indicates a 2.6% year-over-year rise.
For the second quarter, we estimate weighted average same-store physical occupancy at 96.9%, down 20 basis points sequentially. Moreover, our estimate for same-store net operating income growth is currently pegged at 2.1%. We expect interest expenses to grow 1.6% year over year in the second quarter.
UDR projected second-quarter 2024 FFO as adjusted per share in the range of 60-62 cents.
Before the second-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 61 cents in the past month. This suggests no growth year over year.
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 2 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 two stocks from the residential REIT sector — Essex Property Trust, Inc. (ESS - Free Report) and American Homes 4 Rent (AMH - 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.
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UDR Readies to Report Q2 Earnings: What's in the Offing?
UDR Inc. (UDR - Free Report) , a premier multifamily real estate investment trust (REIT), is set to announce its second-quarter 2024 results after the closing bell on Jul 30. While its quarterly results are likely to reflect growth in revenues, funds from operations (FFO) per share might remain unchanged.
In the last reported quarter, this Denver, CO-based residential REIT came up with an FFO as adjusted per share of 61 cents, in line with the consensus mark. Quarterly results reflected an increase in revenues from same-store communities and growth from past accretive external investments. However, a rise in property operating and maintenance and interest expenses acted as dampeners.
In the last four quarters, UDR’s FFO as adjusted per share met the Zacks Consensus Estimate on three occasions and missed on the other, the average negative surprise being -0.40%. 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 Q2
Per RealPage data, the U.S. apartment market witnessed a surge in demand in the second quarter despite supply continuing to grab headlines.
This is evidenced by high absorption rates. Around 389,629 apartment units were absorbed on net over the past 12 months, with some 257,000 units being absorbed during the first two quarters of 2024. However, there were massive amounts of new supply, with 522,743 new market-rate apartment units delivered in the past 12 months.
With the narrow gap between demand and supply, national occupancy and rent growth rates have stabilized. Occupancy held steady for three straight months, remaining at 94.2% in June. Rents inched up 0.2% in the year ending June, and the monthly effective rent change was north 0.4%. The average effective rent was $1,838.
Projections
UDR owns a geographically diverse portfolio featuring a superior mix of A/B quality properties in both urban and suburban markets. The company’s portfolio includes properties across the United States, spanning coastal and Sunbelt locations, with a balanced blend of urban and suburban communities.
UDR’s investments in technology and process improvements are anticipated to enhance cost control and support margin expansion through its Next Generation Operating Platform. This platform enables the company to electronically interact with and provide services to residents, thereby supporting its business prospects. Additionally, its strong balance sheet is likely to have bolstered its growth efforts.
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, the REIT is expected to have incurred high interest expenses in the quarter.
Per the company’s June Investor Presentation, UDR noted that it enjoyed 96.9% average physical occupancy in May and April, down from 97.1% in the first quarter of 2024. UDR experienced effective blended lease rate growth of around 3% for May and 2% in April compared with 0.8% in the first quarter.
The Zacks Consensus Estimate for quarterly revenues is currently pegged at $413.61 million. This indicates a 2.6% year-over-year rise.
For the second quarter, we estimate weighted average same-store physical occupancy at 96.9%, down 20 basis points sequentially. Moreover, our estimate for same-store net operating income growth is currently pegged at 2.1%. We expect interest expenses to grow 1.6% year over year in the second quarter.
UDR projected second-quarter 2024 FFO as adjusted per share in the range of 60-62 cents.
Before the second-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 61 cents in the past month. This suggests no growth year over year.
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 2 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 two stocks from the residential REIT sector — Essex Property Trust, Inc. (ESS - Free Report) and American Homes 4 Rent (AMH - 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.
Essex Property Trust is scheduled to report quarterly numbers on Jul 30. ESS has an Earnings ESP of +1.00% and a Zacks Rank of 2 presently. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Homes 4 Rent is slated to report quarterly numbers on Aug 1. AMH has an Earnings ESP of +2.33% and carries a Zacks Rank of 2 presently.
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.