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UDR Beats Q3 FFOA & Revenue Estimates, Ups 2024 Guidance

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UDR Inc. (UDR - Free Report) reported third-quarter 2024 funds from operations as adjusted (FFOA) per share of 62 cents, in line with the Zacks Consensus Estimate. On a year-over-year basis, FFOA per share declined 1.6%.

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Quarterly rental income was $418.1 million and came ahead of the year-ago quarter’s $408.4 million. Total revenues came in at $420.2 million, surpassing the Zacks Consensus Estimate of $416.5 million. Both rental income and total revenues rose 2.4 each year over year.

Results reflect an increase in revenues from same-store communities, prior-year acquisitions and completed developments. UDR raised its full-year 2024 guidance.

Per Tom Toomey, UDR’s chairman and CEO, “Continued resiliency in the labor market coupled with attractive relative affordability of apartment rentals has resulted in solid performance despite decades-high levels of new supply completions.”

Inside UDR’s Headlines

In the reported quarter, same-store revenues increased 1.2% year over year. Same-store expenses were up 2%, and the same-store net operating income (NOI) improved 0.8% year over year.

For the same-store portfolio, UDR registered effective blended lease rate growth of 1.8% during the quarter, decreasing by 60 basis points (bps) sequentially.The residential REIT’s weighted average same-store physical occupancy of 96.3% decreased 50 bps sequentially and 40 bps year over year. Our estimate was pegged at 96.9%.

However, property operating and maintenance expenses of $76.5 million rose 6.8% year over year. Our estimate was pegged at $73.7 million. Interest expenses climbed 12.4% to $50.2 million.

UDR's Balance Sheet Activity

As of Sept 30, 2024, UDR had $1.0 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities.

The total debt was $5.9 billion as of the same date, with $180 million, or 3.2% of total consolidated debt, maturing through 2025. In addition, net debt-to-EBITDAre was 5.6X in the third quarter.

UDR ended the quarter with a weighted average interest rate of 3.43% and a weighted average years to maturity of 5.4 years.

UDR’s 2024 Guidance

UDR expects fourth-quarter 2024 FFOA per share in the range of 62-64 cents. The Zacks Consensus Estimate for the same is currently pegged at 62 cents.

UDR raised certain full-year 2024 guidance ranges.

The company now expects 2024 FFOA per share in the range of $2.47-$2.49, up 2 cents at the midpoint from the prior guided range of $2.42-$2.50. The Zacks Consensus Estimate is currently pegged at $2.47.

UDR’s guidance incorporated projections for growth of its same-store revenues in the range of 2-2.4%, up from the previously guided range of 1-3%. The company lowered the guidance for growth in its same-store expenses to 4-4.8% from the 4-6% guided earlier. It increased the guidance for growth in its same-store NOI to 1-1.4% from negative 0.25%-1.75% guided earlier.

Currently, UDR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs, such as AvalonBay Communities (AVB - Free Report) and Vornado Realty Trust (VNO - Free Report) , both of which are slated to report on Nov. 4.

The Zacks Consensus Estimate for AvalonBay’s third-quarter 2024 FFO per share stands at $2.71, indicating a 1.9% increase year over year. AVB currently has a Zacks Rank #2.

The Zacks Consensus Estimate for Vornado Realty Trust’s third-quarter 2024 FFO per share is pegged at 51 cents, implying a 22.7% year-over-year decline. VNO currently carries a Zacks Rank #3 (Hold).

Note: Anything related to earningspresented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.


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