UDR Announces First Quarter 2023 Results
UDR, Inc. (NYSE: UDR) reported its first quarter 2023 results, demonstrating strong financial performance. Net income per diluted share stood at $0.09, just below guidance. Funds from Operations (FFO) per diluted share was $0.59, matching expectations with a 9% year-over-year increase. Adjusted Funds from Operations (AFFO) grew 12% year-over-year to $0.57. The company completed The MO, a $145 million apartment community, and stabilized two others in Dallas and Philadelphia. Revenue increased 11.8% to $399.5 million, mainly due to same-store growth and prior investments. The company reaffirmed its full-year guidance, projecting FFOA per share between $2.45 and $2.53. Positive outlook on growth was expressed by management, supported by stable demand and robust liquidity of $957.4 million.
- Year-over-year FFOA per share increased by 9%, showing operational strength.
- Revenue rose by 11.8% to $399.5 million due to same-store performance.
- AFFO per diluted share grew 12% compared to the previous year.
- Successfully completed the construction of a $145 million apartment community.
- Reaffirmed full-year guidance for key financial metrics.
- Net income per diluted share of $0.09 was below the guidance range of $0.10 to $0.12.
- Sequential decline in same-store revenue by 0.3% compared to the fourth quarter of 2022.
|
Quarter Ended |
|||||||||||
Metric |
1Q 2023
|
1Q 2023
|
1Q 2022
|
$ Change vs.
|
% Change vs.
|
|||||||
Net Income per diluted share |
$ |
0.09 |
|
$ |
0.04 |
$ |
0.05 |
125 |
% |
|||
FFO per diluted share |
$ |
0.59 |
|
$ |
0.54 |
$ |
0.05 |
9 |
% |
|||
FFOA per diluted share |
$ |
0.60 |
|
$ |
0.55 |
$ |
0.05 |
9 |
% |
|||
AFFO per diluted share |
$ |
0.57 |
|
$ |
0.51 |
$ |
0.06 |
12 |
% |
|||
- Same-Store (“SS”) results for the first quarter 2023 versus the first quarter 2022 and the fourth quarter 2022 are summarized below.
|
Concessions reflected on a straight-line basis: |
Concessions reflected on a cash basis: |
||||||
SS Growth / (Decline) |
Year-Over-Year
|
Sequential:
|
YOY:
|
Sequential:
|
||||
Revenue |
9.6 |
% |
(0.3 |
)% |
8.2 |
% |
0.0 |
% |
Expense |
5.1 |
% |
0.4 |
% |
5.1 |
% |
0.4 |
% |
Net Operating Income (“NOI”) |
11.7 |
% |
(0.6 |
)% |
9.5 |
% |
(0.2 |
)% |
-
During the first quarter, the Company:
-
Completed construction of The MO, a
$145.0 million Washington, D.C. -
Achieved stabilization on two development communities; Vitruvian West Phase 3, a
$74.0 million Dallas, TX ; andThe George Apartments , a$68.0 million Philadelphia, PA.
-
Completed construction of The MO, a
“Our first quarter results, including 9 percent FFOA per share growth and nearly 12 percent same-store NOI growth over the prior year period, demonstrate the strength of our strategy and platform,” said
Outlook
For the full-year 2023, the Company has reaffirmed its prior FFOA per share, AFFO per share, and same-store growth guidance ranges. For the second quarter 2023, the Company has established the following guidance ranges(1):
|
2Q 2023
|
1Q 2023
|
Full-Year 2023
|
Full-Year 2023
|
||||
Net Income per diluted share |
|
$ |
0.09 |
|
|
$ |
0.51 |
|
FFO per diluted share |
|
$ |
0.59 |
|
|
$ |
2.48 |
|
FFOA per diluted share |
|
$ |
0.60 |
|
|
$ |
2.49 |
|
AFFO per diluted share |
|
$ |
0.57 |
|
|
$ |
2.26 |
|
YOY Growth: concessions reflected on a straight-line basis: |
||||||||
SS Revenue |
N/A |
|
9.6 |
% |
|
|
6.75 |
% |
SS Expense |
N/A |
|
5.1 |
% |
|
|
4.75 |
% |
SS NOI |
N/A |
|
11.7 |
% |
|
|
7.50 |
% |
YOY Growth: concessions reflected on a cash basis: |
||||||||
SS Revenue |
N/A |
|
8.2 |
% |
|
|
6.50 |
% |
SS NOI |
N/A |
|
9.5 |
% |
|
|
7.25 |
% |
(1) |
Additional assumptions for the Company’s second quarter and full-year 2023 outlook can be found on Attachment 13 of the Company’s related quarterly Supplemental Financial Information (“Supplement”). A reconciliation of FFO per share, FFOA per share, and AFFO per share to GAAP Net Income per share can be found on Attachment 14(D) of the Company’s related quarterly Supplement. Non-GAAP financial measures and other terms, as used in this earnings release, are defined and further explained on Attachments 14(A) through 14(D), “Definitions and Reconciliations,” of the Company’s related quarterly Supplement. |
First Quarter 2023 Operating Results
In the first quarter, total revenue increased by
“Stable demand for UDR apartment homes enabled us to achieve
For the first quarter 2023, the Company recorded a residential bad debt reserve of
In the tables below, the Company has presented YOY and sequential Same-Store results by region, with concessions accounted for on both cash and straight-line bases.
Summary of Same-Store Results in First Quarter 2023 versus First Quarter 2022
Region |
Revenue
|
Expense
|
NOI
|
% of Same-Store
|
Physical
|
YOY Change in
|
||||||
West |
6.5 |
% |
2.1 |
% |
8.0 |
% |
32.1 |
% |
96.4 |
% |
(0.6 |
)% |
Mid- |
6.3 |
% |
2.8 |
% |
7.9 |
% |
21.2 |
% |
96.6 |
% |
(0.5 |
)% |
Northeast |
8.8 |
% |
4.3 |
% |
11.3 |
% |
17.5 |
% |
97.1 |
% |
(0.3 |
)% |
Southeast |
12.8 |
% |
9.8 |
% |
14.3 |
% |
13.8 |
% |
96.1 |
% |
(1.1 |
)% |
Southwest |
10.6 |
% |
12.3 |
% |
9.6 |
% |
8.6 |
% |
96.6 |
% |
(0.5 |
)% |
Other Markets |
6.7 |
% |
3.0 |
% |
8.2 |
% |
6.8 |
% |
97.0 |
% |
0.0 |
% |
Total (Cash) |
8.2 |
% |
5.1 |
% |
9.5 |
% |
100.0 |
% |
96.6 |
% |
(0.5 |
)% |
Total (Straight-Line) |
9.6 |
% |
5.1 |
% |
11.7 |
% |
- |
|
- |
|
- |
|
(1) |
Based on 1Q 2023 Same-Store NOI. For definitions of terms, please refer to the “Definitions and Reconciliations” section of the Company’s related quarterly Supplement. |
|
(2) |
Weighted average Same-Store physical occupancy for the quarter. |
Summary of Same-Store Results in First Quarter 2023 versus Fourth Quarter 2022
Region |
Revenue
|
Expense
|
NOI
|
% of Same-Store
|
Physical
|
Sequential
|
||||||
West |
0.2 |
% |
(4.6 |
)% |
1.8 |
% |
32.1 |
% |
96.4 |
% |
(0.1 |
)% |
Mid- |
0.4 |
% |
(0.6 |
)% |
0.8 |
% |
21.2 |
% |
96.6 |
% |
(0.3 |
)% |
Northeast |
0.1 |
% |
5.0 |
% |
(2.3 |
)% |
17.5 |
% |
97.1 |
% |
0.0 |
% |
Southeast |
(0.3 |
)% |
3.1 |
% |
(1.7 |
)% |
13.8 |
% |
96.1 |
% |
(0.5 |
)% |
Southwest |
(0.7 |
)% |
5.7 |
% |
(4.2 |
)% |
8.6 |
% |
96.6 |
% |
(0.2 |
)% |
Other Markets |
(1.3 |
)% |
(6.6 |
)% |
0.8 |
% |
6.8 |
% |
97.0 |
% |
0.4 |
% |
Total (Cash) |
0.0 |
% |
0.4 |
% |
(0.2 |
)% |
100.0 |
% |
96.6 |
% |
(0.1 |
)% |
Total (Straight-Line) |
(0.3 |
)% |
0.4 |
% |
(0.6 |
)% |
- |
|
- |
|
- |
|
(1) |
Based on 1Q 2023 Same-Store NOI. For definitions of terms, please refer to the “Definitions and Reconciliations” section of the Company’s related quarterly Supplement. |
|
(2) |
Weighted average Same-Store physical occupancy for the quarter. |
Development Activity and Other Projects
During the first quarter, the Company completed construction of The MO, a
At the end of the first quarter, the Company’s development pipeline totaled
At the end of the first quarter, the Company’s redevelopment pipeline of 1,623 apartment homes, which includes a densification project that features the addition of 30 new apartment homes at one community, totaled
Developer Capital Program (“DCP”) Portfolio
At the end of the first quarter, the Company’s commitments under its DCP platform totaled
Capital Markets and Balance Sheet Activity
“Our balance sheet remains in excellent shape with net Debt-to-EBITDAre at 5.7x and below pre-COVID levels, minimal committed forward funding obligations, strong next 3-year liquidity, and only 2 percent of total debt scheduled to mature through 2024, after excluding amounts on our commercial paper program,” said
The Company’s total indebtedness as of
In the table below, the Company has presented select balance sheet metrics for the quarter ended
|
Quarter Ended |
|||||
Balance Sheet Metric |
1Q 2023 |
|
1Q 2022 |
|
Change |
|
Weighted Average Interest Rate |
3.25 |
% |
2.80 |
% |
0.45 |
% |
Weighted Average Years to Maturity(1) |
6.3 |
|
7.4 |
|
(1.1 |
) |
Consolidated Fixed Charge Coverage Ratio |
5.2 |
x |
5.3 |
x |
(0.1 |
)x |
Consolidated Debt as a percentage of Total Assets |
33.0 |
% |
34.3 |
% |
(1.3 |
)% |
Consolidated Net Debt-to-EBITDAre |
5.7 |
x |
6.4 |
x |
(0.7 |
)x |
(1) |
If the Company’s commercial paper balance was refinanced using its line of credit, the weighted average years to maturity would have been 6.5 years without extensions and 6.6 years with extensions for 1Q 2023 and 7.6 years with and without extensions for 1Q 2022. |
ESG
As previously announced, during the quarter, the Company was named to Newsweek’s annual list of America’s Most Responsible Companies for the second consecutive year. Additionally, the Company was named to the list of America’s Most JUST Companies by
Dividend
As previously announced, the Company’s Board of Directors declared a regular quarterly dividend on its common stock for the first quarter 2023 in the amount of
Supplemental Information
The Company offers Supplemental Financial Information that provides details on the financial position and operating results of the Company which is available on the Company's website at ir.udr.com.
Attachment 14(A)
Definitions and Reconciliations
(Unaudited)
Acquired Communities: The Company defines Acquired Communities as those communities acquired by the Company, other than development and redevelopment activity, that did not achieve stabilization as of the most recent quarter.
Adjusted Funds from Operations ("AFFO") attributable to common stockholders and unitholders: The Company defines AFFO as FFO as Adjusted attributable to common stockholders and unitholders less recurring capital expenditures on consolidated communities that are necessary to help preserve the value of and maintain functionality at our communities.
Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company's operational performance than FFO or FFO as Adjusted. AFFO is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance. The Company believes that net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to AFFO. Management believes that AFFO is a widely recognized measure of the operations of REITs, and presenting AFFO enables investors to assess our performance in comparison to other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not always be comparable to AFFO calculated by other REITs. AFFO should not be considered as an alternative to net income/(loss) (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. A reconciliation from net income/(loss) attributable to common stockholders to AFFO is provided on Attachment 2.
Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items: The Company defines Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items as Consolidated Interest Coverage Ratio - adjusted for non-recurring items divided by total consolidated interest, excluding the impact of costs associated with debt extinguishment, plus preferred dividends.
Management considers Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lenders with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation of the components that comprise Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.
Consolidated Interest Coverage Ratio - adjusted for non-recurring items: The Company defines Consolidated Interest Coverage Ratio - adjusted for non-recurring items as Consolidated EBITDAre – adjusted for non-recurring items divided by total consolidated interest, excluding the impact of costs associated with debt extinguishment.
Management considers Consolidated Interest Coverage Ratio - adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lenders with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation of the components that comprise Consolidated Interest Coverage Ratio - adjusted for non-recurring items is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.
Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items: The Company defines Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items as total consolidated debt net of cash and cash equivalents divided by annualized Consolidated EBITDAre - adjusted for non-recurring items. Consolidated EBITDAre - adjusted for non-recurring items is defined as EBITDAre excluding the impact of income/(loss) from unconsolidated entities, adjustments to reflect the Company’s share of EBITDAre of unconsolidated joint ventures and other non-recurring items including, but not limited to casualty-related charges/(recoveries), net of wholly owned communities.
Management considers Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lenders with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation between net income/(loss) and Consolidated EBITDAre - adjusted for non-recurring items is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.
Controllable Expenses: The Company refers to property operating and maintenance expenses as Controllable Expenses.
Controllable Operating Margin: The Company defines Controllable Operating Margin as (i) rental income less Controllable Expenses (ii) divided by rental income. Management considers Controllable Operating Margin a useful metric as it provides investors with an indicator of the Company’s ability to limit the growth of expenses that are within the control of the Company.
Development Communities: The Company defines Development Communities as those communities recently developed or under development by the Company, that are currently majority owned by the Company and have not achieved stabilization as of the most recent quarter.
Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre): The Company defines EBITDAre as net income/(loss) (computed in accordance with GAAP), plus interest expense, including costs associated with debt extinguishment, plus real estate depreciation and amortization, plus other depreciation and amortization, plus (minus) income tax provision/(benefit), net, (minus) plus net gain/(loss) on the sale of depreciable real estate owned, plus impairment write-downs of depreciable real estate, plus the adjustments to reflect the Company’s share of EBITDAre of unconsolidated joint ventures. The Company computes EBITDAre in accordance with standards established by the
Management considers EBITDAre a useful metric for investors as it provides an additional indicator of the Company’s ability to incur and service debt, and enables investors to assess our performance against that of its peer REITs. EBITDAre should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company’s activities in accordance with GAAP. EBITDAre does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs. A reconciliation between net income/(loss) and EBITDAre is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.
Effective Blended Lease Rate Growth: The Company defines Effective Blended Lease Rate Growth as the combined proportional growth as a result of Effective New Lease Rate Growth and Effective Renewal Lease Rate Growth. Management considers Effective Blended Lease Rate Growth a useful metric for investors as it assesses combined proportional market-level, new and in-place demand trends.
Effective New Lease Rate Growth: The Company defines Effective New Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior resident effective rent for the prior lease term on new leases commenced during the current quarter.
Management considers Effective New Lease Rate Growth a useful metric for investors as it assesses market-level new demand trends.
Effective Renewal Lease Rate Growth: The Company defines Effective Renewal Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior effective rent for the prior lease term on renewed leases commenced during the current quarter.
Management considers Effective Renewal Lease Rate Growth a useful metric for investors as it assesses market-level, in-place demand trends.
Attachment 14(B)
Definitions and Reconciliations
(Unaudited)
Funds from Operations as Adjusted ("FFO as Adjusted") attributable to common stockholders and unitholders: The Company defines FFO as Adjusted attributable to common stockholders and unitholders as FFO excluding the impact of other non-comparable items including, but not limited to, acquisition-related costs, prepayment costs/benefits associated with early debt retirement, impairment write-downs or gains and losses on sales of real estate or other assets incidental to the main business of the Company and income taxes directly associated with those gains and losses, casualty-related expenses and recoveries, severance costs and legal and other costs.
Management believes that FFO as Adjusted is useful supplemental information regarding our operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. FFO as Adjusted is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance. The Company believes that net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to FFO as Adjusted. However, other REITs may use different methodologies for calculating FFO as Adjusted or similar FFO measures and, accordingly, our FFO as Adjusted may not always be comparable to FFO as Adjusted or similar FFO measures calculated by other REITs. FFO as Adjusted should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. A reconciliation from net income attributable to common stockholders to FFO as Adjusted is provided on Attachment 2.
Funds from Operations ("FFO") attributable to common stockholders and unitholders: The Company defines FFO attributable to common stockholders and unitholders as net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate related to the main business of the Company or of investments in non-consolidated investees that are directly attributable to decreases in the fair value of depreciable real estate held by the investee, gains and losses from sales of depreciable real estate related to the main business of the Company and income taxes directly associated with those gains and losses, plus real estate depreciation and amortization, and after adjustments for noncontrolling interests, and the Company’s share of unconsolidated partnerships and joint ventures. This definition conforms with the
Management considers FFO a useful metric for investors as the Company uses FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company's activities in accordance with GAAP. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs. A reconciliation from net income/(loss) attributable to common stockholders to FFO is provided on Attachment 2.
Held For Disposition Communities: The Company defines Held for Disposition Communities as those communities that were held for sale as of the end of the most recent quarter.
| Joint Venture Reconciliation at UDR's weighted average ownership interest: | |||
| In thousands |
|
1Q 2023 |
|
| Income/(loss) from unconsolidated entities | $ |
9,707 |
|
| Management fee |
|
610 |
|
| Interest expense |
|
4,031 |
|
| Depreciation |
|
7,485 |
|
| General and administrative |
|
60 |
|
| Developer Capital Program (excludes Menifee and |
|
(10,122 |
) |
| Other (income)/expense |
|
88 |
|
| Realized (gain)/loss on real estate technology investments, net of tax |
|
520 |
|
| Unrealized (gain)/loss on real estate technology investments, net of tax |
|
(1,455 |
) |
| Total Joint Venture NOI at UDR's Ownership Interest | $ |
10,924 |
|
Net Operating Income (“NOI”): The Company defines NOI as rental income less direct property rental expenses. Rental income represents gross market rent and other revenues less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense, which is calculated as
Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization and is a widely used input, along with capitalization rates, in the determination of real estate valuations. A reconciliation from net income/(loss) attributable to
| In thousands |
|
1Q 2023 |
|
|
4Q 2022 |
|
|
3Q 2022 |
|
|
2Q 2022 |
|
|
1Q 2022 |
|
|
| Net income/(loss) attributable to |
$ |
30,964 |
|
$ |
44,530 |
|
$ |
23,605 |
|
$ |
5,084 |
|
$ |
13,705 |
|
|
| Property management |
|
12,945 |
|
|
12,949 |
|
|
12,675 |
|
|
11,952 |
|
|
11,576 |
|
|
| Other operating expenses |
|
3,032 |
|
|
4,008 |
|
|
3,746 |
|
|
5,027 |
|
|
4,712 |
|
|
| Real estate depreciation and amortization |
|
169,300 |
|
|
167,241 |
|
|
166,781 |
|
|
167,584 |
|
|
163,622 |
|
|
| Interest expense |
|
43,742 |
|
|
43,247 |
|
|
39,905 |
|
|
36,832 |
|
|
35,916 |
|
|
| Casualty-related charges/(recoveries), net |
|
4,156 |
|
|
8,523 |
|
|
901 |
|
|
1,074 |
|
|
(765 |
) |
|
| General and administrative |
|
17,480 |
|
|
16,811 |
|
|
15,840 |
|
|
16,585 |
|
|
14,908 |
|
|
| Tax provision/(benefit), net |
|
234 |
|
|
(683 |
) |
|
377 |
|
|
312 |
|
|
343 |
|
|
| (Income)/loss from unconsolidated entities |
|
(9,707 |
) |
|
(761 |
) |
|
(10,003 |
) |
|
11,229 |
|
|
(5,412 |
) |
|
| Interest income and other (income)/expense, net |
|
(1,010 |
) |
|
(1 |
) |
|
7,495 |
|
|
(3,001 |
) |
|
2,440 |
|
|
| Joint venture management and other fees |
|
(1,242 |
) |
|
(1,244 |
) |
|
(1,274 |
) |
|
(1,419 |
) |
|
(1,085 |
) |
|
| Other depreciation and amortization |
|
3,649 |
|
|
4,823 |
|
|
3,430 |
|
|
3,016 |
|
|
3,075 |
|
|
| (Gain)/loss on sale of real estate owned |
|
(1 |
) |
|
(25,494 |
) |
|
- |
|
|
- |
|
|
- |
|
|
| Net income/(loss) attributable to noncontrolling interests |
|
1,961 |
|
|
2,937 |
|
|
1,540 |
|
|
280 |
|
|
898 |
|
|
| Total consolidated NOI | $ |
275,503 |
|
$ |
276,886 |
|
$ |
265,018 |
|
$ |
254,555 |
|
$ |
243,933 |
|
Attachment 14(C)
Definitions and Reconciliations
(Unaudited)
NOI Enhancing Capital Expenditures ("Cap Ex"): The Company defines NOI Enhancing Capital Expenditures as expenditures that result in increased income generation or decreased expense growth over time.
Management considers NOI Enhancing Capital Expenditures a useful metric for investors as it quantifies the amount of capital expenditures that are expected to grow, not just maintain, revenues or to decrease expenses.
Non-Mature Communities: The Company defines Non-Mature Communities as those communities that have not met the criteria to be included in same-store communities.
Non-Residential / Other: The Company defines Non-Residential / Other as non-apartment components of mixed-use properties, land held, properties being prepared for redevelopment and properties where a material change in home count has occurred.
Other Markets: The Company defines Other Markets as the accumulation of individual markets where it operates less than 1,000 Same-Store homes. Management considers Other Markets a useful metric as the operating results for the individual markets are not representative of the fundamentals for those markets as a whole.
Physical Occupancy: The Company defines Physical Occupancy as the number of occupied homes divided by the total homes available at a community.
QTD Same-Store Communities: The Company defines QTD Same-Store Communities as those communities Stabilized for five full consecutive quarters. These communities were owned and had stabilized operating expenses as of the beginning of the quarter in the prior year, were not in process of any substantial redevelopment activities, and were not held for disposition.
Recurring Capital Expenditures: The Company defines Recurring Capital Expenditures as expenditures that are necessary to help preserve the value of and maintain functionality at its communities.
Redevelopment Communities: The Company generally defines Redevelopment Communities as those communities where substantial redevelopment is in progress. Based upon the level of material impact the redevelopment has on the community (operations, occupancy levels, and future rental rates), the community may or may not maintain Stabilization. As such, for each redevelopment, the Company assesses whether the community remains in Same-Store.
Same-Store Revenue with Concessions on a Cash Basis: Same-Store Revenue with Concessions on a Cash Basis is considered by the Company to be a supplemental measure to rental income on a straight-line basis which allows investors to evaluate the impact of both current and historical concessions and to more readily enable comparisons to revenue as reported by its peer REITs. In addition, Same-Store Revenue with Concessions on a Cash Basis allows an investor to understand the historical trends in cash concessions.
A reconciliation between Same-Store Revenue with Concessions on a Cash Basis to Same-Store Revenue on a straight-line basis (inclusive of the impact to Same-Store NOI) is provided below:
|
1Q 23 |
|
|
1Q 22 |
|
|
1Q 23 |
|
|
4Q 22 |
||||
| Revenue (Cash basis) | $ |
379,379 |
|
$ |
350,768 |
|
$ |
379,379 |
|
$ |
379,517 |
|||
| Concessions granted/(amortized), net |
|
60 |
|
|
(4,532 |
) |
|
60 |
|
|
1,098 |
|||
| Revenue (Straight-line basis) | $ |
379,439 |
|
$ |
346,236 |
|
$ |
379,439 |
|
$ |
380,615 |
|||
| % change - Same-Store Revenue with Concessions on a Cash basis: |
|
8.2 |
% |
|
0.0 |
% |
||||||||
| % change - Same-Store Revenue with Concessions on a Straight-line basis: |
|
9.6 |
% |
|
-0.3 |
% |
||||||||
| % change - Same-Store NOI with Concessions on a Cash basis: |
|
9.5 |
% |
|
-0.2 |
% |
||||||||
| % change - Same-Store NOI with Concessions on a Straight-line basis: |
|
11.7 |
% |
|
-0.6 |
% |
||||||||
Sold Communities: The Company defines Sold Communities as those communities that were disposed of prior to the end of the most recent quarter.
Stabilization/Stabilized: The Company defines Stabilization/Stabilized as when a community’s occupancy reaches
Stabilized, Non-Mature Communities: The Company defines Stabilized, Non-Mature Communities as those communities that have reached Stabilization but are not yet in the same-store portfolio.
Total Revenue per Occupied Home: The Company defines Total Revenue per Occupied Home as rental and other revenues with concessions reported on a Cash Basis, divided by the product of occupancy and the number of apartment homes. A reconciliation between Same-Store Revenue with Concessions on a Cash Basis to Same-Store Revenue on a straight-line basis is provided above.
Management considers Total Revenue per Occupied Home a useful metric for investors as it serves as a proxy for portfolio quality, both geographic and physical.
TRS: The Company’s taxable REIT subsidiaries (“TRS”) focus on making investments and providing services that are otherwise not allowed to be made or provided by a REIT.
YTD Same-Store Communities: The Company defines YTD Same-Store Communities as those communities Stabilized for two full consecutive calendar years. These communities were owned and had stabilized operating expenses as of the beginning of the prior year, were not in process of any substantial redevelopment activities, and were not held for disposition.
Conference Call and Webcast Information
UDR will host a webcast and conference call at
Given a high volume of conference calls occurring during this time of year, delays are anticipated when connecting to the live call. As a result, stakeholders and interested parties are encouraged to utilize the Company’s webcast link for its earnings results discussion.
A replay of the conference call will be available through
Full Text of the Earnings Report and Supplemental Data
The full text of the earnings report and related quarterly Supplement will be available on the Company’s website at ir.udr.com.
Forward-Looking Statements
Certain statements made in this press release may constitute “forward-looking statements.” Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement, due to a number of factors, which include, but are not limited to, general market and economic conditions, unfavorable changes in the apartment market and economic conditions that could adversely affect occupancy levels and rental rates, including as a result of COVID-19, the impact of inflation/deflation on rental rates and property operating expenses, the availability of capital and the stability of the capital markets, rising interest rates, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments, redevelopments and lease-ups on schedule or at expected rent and occupancy levels, changes in job growth, home affordability and demand/supply ratio for multifamily housing, development and construction risks that may impact profitability, risks that joint ventures with third parties and DCP investments do not perform as expected, the failure of automation or technology to help grow net operating income, and other risk factors discussed in documents filed by the Company with the
About
Attachment 1 |
||||||||
| Consolidated Statements of Operations | ||||||||
| (Unaudited) (1) | ||||||||
| Three Months Ended | ||||||||
| In thousands, except per share amounts | 2023 |
2022 |
||||||
| REVENUES: | ||||||||
| Rental income (2) | $ |
398,307 |
|
$ |
356,181 |
|
||
| Joint venture management and other fees |
|
1,242 |
|
|
1,085 |
|
||
| Total revenues |
|
399,549 |
|
|
357,266 |
|
||
| OPERATING EXPENSES: | ||||||||
| Property operating and maintenance |
|
64,834 |
|
|
58,484 |
|
||
| Real estate taxes and insurance |
|
57,970 |
|
|
53,764 |
|
||
| Property management |
|
12,945 |
|
|
11,576 |
|
||
| Other operating expenses |
|
3,032 |
|
|
4,712 |
|
||
| Real estate depreciation and amortization |
|
169,300 |
|
|
163,622 |
|
||
| General and administrative |
|
17,480 |
|
|
14,908 |
|
||
| Casualty-related charges/(recoveries), net |
|
4,156 |
|
|
(765 |
) |
||
| Other depreciation and amortization |
|
3,649 |
|
|
3,075 |
|
||
| Total operating expenses |
|
333,366 |
|
|
309,376 |
|
||
| Gain/(loss) on sale of real estate owned |
|
1 |
|
|
- |
|
||
| Operating income |
|
66,184 |
|
|
47,890 |
|
||
| Income/(loss) from unconsolidated entities (2) |
|
9,707 |
|
|
5,412 |
|
||
| Interest expense |
|
(43,742 |
) |
|
(35,916 |
) |
||
| Interest income and other income/(expense), net |
|
1,010 |
|
|
(2,440 |
) |
||
| Income/(loss) before income taxes |
|
33,159 |
|
|
14,946 |
|
||
| Tax (provision)/benefit, net |
|
(234 |
) |
|
(343 |
) |
||
| Net Income/(loss) |
|
32,925 |
|
|
14,603 |
|
||
| Net (income)/loss attributable to redeemable noncontrolling interests in the |
|
(1,953 |
) |
|
(879 |
) |
||
| Net (income)/loss attributable to noncontrolling interests |
|
(8 |
) |
|
(19 |
) |
||
| Net income/(loss) attributable to |
|
30,964 |
|
|
13,705 |
|
||
| Distributions to preferred stockholders - Series E (Convertible) |
|
(1,183 |
) |
|
(1,092 |
) |
||
| Net income/(loss) attributable to common stockholders | $ |
29,781 |
|
$ |
12,613 |
|
||
| Income/(loss) per weighted average common share - basic: | $ |
0.09 |
|
$ |
0.04 |
|
||
| Income/(loss) per weighted average common share - diluted: | $ |
0.09 |
|
$ |
0.04 |
|
||
| Common distributions declared per share | $ |
0.42 |
|
$ |
0.38 |
|
||
| Weighted average number of common shares outstanding - basic |
|
328,789 |
|
|
318,009 |
|
||
| Weighted average number of common shares outstanding - diluted |
|
329,421 |
|
|
319,680 |
|
||
(1) |
See Attachment 14 for definitions and other terms. | ||||||
(2) |
During the three months ended |
||||||
Attachment 2 |
||||||||
| Funds From Operations | ||||||||
| (Unaudited) (1) | ||||||||
| Three Months Ended | ||||||||
| In thousands, except per share and unit amounts | 2023 |
2022 |
||||||
| Net income/(loss) attributable to common stockholders | $ |
29,781 |
|
$ |
12,613 |
|
||
| Real estate depreciation and amortization |
|
169,300 |
|
|
163,622 |
|
||
| Noncontrolling interests |
|
1,961 |
|
|
898 |
|
||
| Real estate depreciation and amortization on unconsolidated joint ventures |
|
7,485 |
|
|
7,624 |
|
||
| Net gain on the sale of depreciable real estate owned, net of tax |
|
(1 |
) |
|
- |
|
||
| Funds from operations ("FFO") attributable to common stockholders and unitholders, basic | $ |
208,526 |
|
$ |
184,757 |
|
||
| Distributions to preferred stockholders - Series E (Convertible) (2) |
|
1,183 |
|
|
1,092 |
|
||
| FFO attributable to common stockholders and unitholders, diluted | $ |
209,709 |
|
$ |
185,849 |
|
||
| FFO per weighted average common share and unit, basic | $ |
0.60 |
|
$ |
0.54 |
|
||
| FFO per weighted average common share and unit, diluted | $ |
0.59 |
|
$ |
0.54 |
|
||
| Weighted average number of common shares and OP/DownREIT Units outstanding, basic |
|
350,112 |
|
|
339,543 |
|
||
| Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding, diluted | 353,653 | 344,132 | ||||||
| Impact of adjustments to FFO: | ||||||||
| Variable upside participation on DCP, net | $ |
- |
|
$ |
(10,622 |
) |
||
| Legal and other |
|
(1,258 |
) |
|
774 |
|
||
| Realized (gain)/loss on real estate technology investments, net of tax |
|
595 |
|
|
(2,238 |
) |
||
| Unrealized (gain)/loss on real estate technology investments, net of tax |
|
(858 |
) |
|
15,631 |
|
||
| Casualty-related charges/(recoveries), net |
|
4,156 |
|
|
(765 |
) |
||
| Total impact of adjustments to FFO | $ |
2,635 |
|
$ |
2,780 |
|
||
| FFO as Adjusted attributable to common stockholders and unitholders, diluted | $ |
212,344 |
|
$ |
188,629 |
|
||
| FFO as Adjusted per weighted average common share and unit, diluted | $ |
0.60 |
|
$ |
0.55 |
|
||
| Recurring capital expenditures |
|
(12,299 |
) |
|
(11,804 |
) |
||
| AFFO attributable to common stockholders and unitholders, diluted | $ |
200,045 |
|
$ |
176,825 |
|
||
| AFFO per weighted average common share and unit, diluted | $ |
0.57 |
|
$ |
0.51 |
|
||
(1) |
See Attachment 14 for definitions and other terms. | ||||||
(2) |
Series E cumulative convertible preferred shares are dilutive for purposes of calculating FFO per share for the three months ended |
||||||
Attachment 3 |
||||||||
| Consolidated Balance Sheets | ||||||||
| (Unaudited) (1) | ||||||||
| In thousands, except share and per share amounts | 2023 |
2022 |
||||||
| ASSETS | ||||||||
| Real estate owned: | ||||||||
| Real estate held for investment | $ |
15,565,915 |
|
$ |
15,365,928 |
|
||
| Less: accumulated depreciation |
|
(5,926,651 |
) |
|
(5,762,205 |
) |
||
| Real estate held for investment, net |
|
9,639,264 |
|
|
9,603,723 |
|
||
| Real estate under development | ||||||||
| (net of accumulated depreciation of |
|
76,455 |
|
|
189,809 |
|
||
| Real estate held for disposition | ||||||||
| (net of accumulated depreciation of |
|
- |
|
|
14,039 |
|
||
| Total real estate owned, net of accumulated depreciation |
|
9,715,719 |
|
|
9,807,571 |
|
||
| Cash and cash equivalents |
|
1,172 |
|
|
1,193 |
|
||
| Restricted cash |
|
28,038 |
|
|
29,001 |
|
||
| Notes receivable, net |
|
71,125 |
|
|
54,707 |
|
||
| Investment in and advances to unconsolidated joint ventures, net |
|
751,387 |
|
|
754,446 |
|
||
| Operating lease right-of-use assets |
|
193,230 |
|
|
194,081 |
|
||
| Other assets |
|
207,029 |
|
|
197,471 |
|
||
| Total assets | $ |
10,967,700 |
|
$ |
11,038,470 |
|
||
| LIABILITIES AND EQUITY | ||||||||
| Liabilities: | ||||||||
| Secured debt | $ |
1,051,000 |
|
$ |
1,052,281 |
|
||
| Unsecured debt |
|
4,525,963 |
|
|
4,435,022 |
|
||
| Operating lease liabilities |
|
188,402 |
|
|
189,238 |
|
||
| Real estate taxes payable |
|
35,052 |
|
|
37,681 |
|
||
| Accrued interest payable |
|
26,580 |
|
|
46,671 |
|
||
| Security deposits and prepaid rent |
|
57,738 |
|
|
51,999 |
|
||
| Distributions payable |
|
148,409 |
|
|
134,213 |
|
||
| Accounts payable, accrued expenses, and other liabilities |
|
111,795 |
|
|
153,220 |
|
||
| Total liabilities |
|
6,144,939 |
|
|
6,100,325 |
|
||
| Redeemable noncontrolling interests in the |
|
901,652 |
|
|
839,850 |
|
||
| Equity: | ||||||||
| Preferred stock, no par value; 50,000,000 shares authorized at |
||||||||
| 2,686,308 shares of |
||||||||
| and outstanding (2,686,308 shares at |
|
44,614 |
|
|
44,614 |
|
||
| 12,090,558 shares of Series F outstanding (12,100,514 shares at |
|
1 |
|
|
1 |
|
||
| Common stock, |
||||||||
| 329,173,125 shares issued and outstanding (328,993,088 shares at |
|
3,292 |
|
|
3,290 |
|
||
| Additional paid-in capital |
|
7,494,042 |
|
|
7,493,423 |
|
||
| Distributions in excess of net income |
|
(3,627,873 |
) |
|
(3,451,587 |
) |
||
| Accumulated other comprehensive income/(loss), net |
|
6,823 |
|
|
8,344 |
|
||
| Total stockholders' equity |
|
3,920,899 |
|
|
4,098,085 |
|
||
| Noncontrolling interests |
|
210 |
|
|
210 |
|
||
| Total equity |
|
3,921,109 |
|
|
4,098,295 |
|
||
| Total liabilities and equity | $ |
10,967,700 |
|
$ |
11,038,470 |
|
||
(1) |
See Attachment 14 for definitions and other terms. |
Attachment 4(C) |
||||||||||||||||
| Selected Financial Information | ||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||
| (Unaudited) (1) | ||||||||||||||||
| Quarter Ended | ||||||||||||||||
| Coverage Ratios | ||||||||||||||||
| Net income/(loss) | $ |
32,925 |
|
|||||||||||||
| Adjustments: | ||||||||||||||||
| Interest expense, including debt extinguishment and other associated costs |
|
43,742 |
|
|||||||||||||
| Real estate depreciation and amortization |
|
169,300 |
|
|||||||||||||
| Other depreciation and amortization |
|
3,649 |
|
|||||||||||||
| Tax provision/(benefit), net |
|
234 |
|
|||||||||||||
| Net (gain)/loss on the sale of depreciable real estate owned |
|
(1 |
) |
|||||||||||||
| Adjustments to reflect the Company's share of EBITDAre of unconsolidated joint ventures |
|
11,516 |
|
|||||||||||||
| EBITDAre | $ |
261,365 |
|
|||||||||||||
| Casualty-related charges/(recoveries), net |
|
4,156 |
|
|||||||||||||
| Legal and other costs |
|
(1,258 |
) |
|||||||||||||
| Unrealized (gain)/loss on real estate technology investments |
|
597 |
|
|||||||||||||
| Realized (gain)/loss on real estate technology investments |
|
75 |
|
|||||||||||||
| (Income)/loss from unconsolidated entities |
|
(9,707 |
) |
|||||||||||||
| Adjustments to reflect the Company's share of EBITDAre of unconsolidated joint ventures |
|
(11,516 |
) |
|||||||||||||
| Management fee expense on unconsolidated joint ventures |
|
(610 |
) |
|||||||||||||
| Consolidated EBITDAre - adjusted for non-recurring items | $ |
243,102 |
|
|||||||||||||
| Annualized consolidated EBITDAre - adjusted for non-recurring items | $ |
972,408 |
|
|||||||||||||
| Interest expense, including debt extinguishment and other associated costs |
|
43,742 |
|
|||||||||||||
| Capitalized interest expense |
|
2,242 |
|
|||||||||||||
| Total interest | $ |
45,984 |
|
|||||||||||||
| Preferred dividends | $ |
1,183 |
|
|||||||||||||
| Total debt | $ |
5,576,963 |
|
|||||||||||||
| Cash |
|
(1,172 |
) |
|||||||||||||
| Net debt | $ |
5,575,791 |
|
|||||||||||||
| Consolidated Interest Coverage Ratio - adjusted for non-recurring items | 5.3x |
|||||||||||||||
| Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items | 5.2x |
|||||||||||||||
| Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items | 5.7x |
|||||||||||||||
| Debt Covenant Overview | ||||||||||||||||
| Unsecured Line of Credit Covenants (2) | Required | Actual | Compliance | |||||||||||||
| Maximum Leverage Ratio |
≤ |
|
(2) |
Yes |
||||||||||||
| Minimum Fixed Charge Coverage Ratio | ≥1.5x |
5.3x |
Yes | |||||||||||||
| Maximum Secured Debt Ratio |
≤ |
|
8.9 |
% |
Yes | |||||||||||
| Minimum Unencumbered Pool Leverage Ratio |
≥ |
|
380.8 |
% |
Yes | |||||||||||
| Senior Unsecured Note Covenants (3) | Required | Actual | Compliance | |||||||||||||
| Debt as a percentage of Total Assets |
≤ |
|
(3) |
Yes |
||||||||||||
| Consolidated Income Available for Debt Service to Annual Service Charge | ≥1.5x |
5.6x |
Yes | |||||||||||||
| Secured Debt as a percentage of Total Assets |
≤ |
|
6.2 |
% |
Yes | |||||||||||
| Total Unencumbered Assets to Unsecured Debt |
≥ |
|
317.9 |
% |
Yes | |||||||||||
| Securities Ratings | Debt | Outlook | Commercial Paper | |||||||||||||
| Baa1 | Stable | P-2 | ||||||||||||||
| BBB+ | Stable | A-2 | ||||||||||||||
| Gross | % of | |||||||||||||||
| Number of | 1Q 2023 NOI (1) | Carrying Value | Total Gross | |||||||||||||
| Asset Summary | Homes | ( |
% of NOI | ( |
Carrying Value | |||||||||||
| Unencumbered assets | 47,637 |
$ |
243,511 |
88.4 |
% |
$ |
13,888,429 |
|
|
88.8 |
% |
|||||
| Encumbered assets | 7,522 |
|
31,992 |
11.6 |
% |
|
1,753,941 |
|
|
11.2 |
% |
|||||
55,159 |
$ |
275,503 |
100.0 |
% |
$ |
15,642,370 |
|
|
100.0 |
% |
||||||
(1) |
See Attachment 14 for definitions and other terms. | |||||||||||
(2) |
As defined in our credit agreement dated |
|||||||||||
(3) |
As defined in our indenture dated |
|||||||||||
Attachment 14(D) |
|||||||||
| Definitions and Reconciliations | |||||||||
| (Unaudited) | |||||||||
| All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team. The following reconciles from GAAP Net income/(loss) per share for full-year 2023 and second quarter of 2023 to forecasted FFO, FFO as Adjusted and AFFO per share and unit: |
| Full-Year 2023 | ||||||||
| Low | High | |||||||
| Forecasted net income per diluted share | $ |
0.47 |
|
$ |
0.55 |
|
||
| Conversion from GAAP share count |
|
(0.02 |
) |
|
(0.02 |
) |
||
| Depreciation |
|
1.97 |
|
|
1.97 |
|
||
| Noncontrolling interests |
|
0.01 |
|
|
0.01 |
|
||
| Preferred dividends |
|
0.01 |
|
|
0.01 |
|
||
| Forecasted FFO per diluted share and unit | $ |
2.44 |
|
$ |
2.52 |
|
||
| Legal and other costs |
|
- |
|
|
- |
|
||
| Casualty-related charges/(recoveries) |
|
0.01 |
|
|
0.01 |
|
||
| Realized/unrealized (gain)/loss on real estate technology investments |
|
- |
|
|
- |
|
||
| Forecasted FFO as Adjusted per diluted share and unit | $ |
2.45 |
|
$ |
2.53 |
|
||
| Recurring capital expenditures |
|
(0.23 |
) |
|
(0.23 |
) |
||
| Forecasted AFFO per diluted share and unit | $ |
2.22 |
|
$ |
2.30 |
|
||
2Q 2023 |
||||||||
| Low | High | |||||||
| Forecasted net income per diluted share | $ |
0.11 |
|
$ |
0.13 |
|
||
| Conversion from GAAP share count |
|
(0.01 |
) |
|
(0.01 |
) |
||
| Depreciation |
|
0.50 |
|
|
0.50 |
|
||
| Noncontrolling interests |
|
- |
|
|
- |
|
||
| Preferred dividends |
|
- |
|
|
- |
|
||
| Forecasted FFO per diluted share and unit | $ |
0.60 |
|
$ |
0.62 |
|
||
| Legal and other costs |
|
- |
|
|
- |
|
||
| Casualty-related charges/(recoveries) |
|
- |
|
|
- |
|
||
| Realized/unrealized (gain)/loss on real estate technology investments |
|
- |
|
|
- |
|
||
| Forecasted FFO as Adjusted per diluted share and unit | $ |
0.60 |
|
$ |
0.62 |
|
||
| Recurring capital expenditures |
|
(0.06 |
) |
|
(0.06 |
) |
||
| Forecasted AFFO per diluted share and unit | $ |
0.54 |
|
$ |
0.56 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230425006016/en/
Email: ttrujillo@udr.com
Source:
FAQ
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