DENVER--(BUSINESS WIRE)--
UDR, Inc. (NYSE: UDR), a leading multifamily real estate investment
trust (REIT), today announced its second quarter 2009 results.
The Company generated Funds from Operations (FFO) of $56.3 million, or
$0.35 per diluted share, for the quarter ended June 30, 2009, versus
$49.8 million, or $0.33 per diluted share, in the second quarter of
2008. Both 2009 and 2008 per share results reflect the issuance of 11.4
million shares of common stock distributed with the Company's January
29, 2009 special dividend. The results exclude the effects of the
implementation of Staff Position APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement.) Including the impact of APB
14-1, FFO would have been $53.6 million, or $0.34 per diluted
share, and $48.2 million, or $0.32 per diluted share, for the three
months ended June 30, 2009 and 2008, respectively. For the six months
ended June 30, 2009, UDR generated FFO of $0.72 per diluted share as
compared to $0.70 for the comparable period a year ago, exclusive of the
impact of APB 14-1. Including the impact of APB 14-1 FFO per share would
have been $0.68 per diluted share for the six months ended June 30, 2009
and $0.67 per diluted share a year ago.
Q2 2009 Q2 2008 YTD 2009 YTD 2008
FFO-Core $ 0.32 $ 0.31 $ 0.64 $ 0.64
Debt Gains 0.03 - 0.08 0.04
Asset Sales - - - (0.01)
Tax Benefits - 0.02 - 0.03
FFO-Reported $ 0.35 $ 0.33 $ 0.72 $ 0.70
APB 14-1 (Additional expense plus (0.01) (0.01) (0.04) (0.03)
write-offs from repurchase)
FFO - adjusted for APB 14-1 $ 0.34 $ 0.32 $ 0.68 $ 0.67
A reconciliation of FFO to GAAP Net Income can be found on Attachment 2
of the Company's earnings release.
Tom Toomey, UDR's President and CEO stated, "UDR's ongoing solid
operational execution led to increased occupancies and tight expense
controls resulted in stable operating margins during a period of
significant economic challenges."
"We expected this year to be challenging both operationally and from a
capital markets perspective; thus, we planned conservatively. Due to our
proactive efforts we have seen minimal erosion in our same store results
and have nearly $900 million of balance sheet capacity. Consequently our
operations are performing well and our balance sheet has the flexibility
and capacity to help us to effectively navigate this cycle," Mr. Toomey
concluded.
Operations
The Company generated same-store net operating income (NOI) decline of
1.0 percent for the second quarter 2009. Same-store physical occupancy
increased 90 basis points to 95.7 percent year-over-year. The occupancy
gains in every region helped stem same-store revenue declines to just 90
basis points in the quarter and 10 basis points sequentially. Same-store
expenses declined by 0.80 percent in the second quarter as a consequence
of lower utility and administrative and marketing costs. Despite a
same-store NOI decline, UDR maintained an operating margin of 68.3
percent for the first two quarters of the year; consistent with the
second quarter of 2008.
Summary Same-Store Results Second Quarter 2009 versus Second Quarter
2008
Revenue Expense NOI % Same- # Same-
Same-Store
Region Growth/ Growth/ Growth/ Store Store
Occupancy2
Decline Decline Decline Portfolio(1) Homes3
Western -1.4% -3.6% -0.5% 49.8% 95.5% 13,499
Mid-Atlantic 1.7% 0.9% 2.0% 24.5% 96.6% 8,134
Southeastern -2.1% 2.6% -4.9% 22.4% 95.2% 10,693
Southwestern -3.2% -3.3% -3.1% 3.3% 95.7% 1,219
Total -0.9% -0.8% -1.0% 100.0% 95.7% 33,545
1 Based on QTD 2009 NOI
2 Average same-store occupancy for the quarter
During the second quarter, 33,545 apartment homes, or 75 percent of total
3 apartment homes 44,701, were classified as same-store. The Company defines
same-store as all multifamily communities owned and stabilized for at least
one year as of the beginning of the most recent quarter.
Technology Platform
The Company continues to pursue additional technology-based marketing
channels to expand its outreach and increase the efficiency of its
on-site personnel. UDR's call center, its website and mobile web
capabilities drive traffic to its communities "24/7", effectively
increasing the Company's hours of operation. For the first six months of
2009, UDR's website visitor traffic is up 53 percent year over year.
Year-to-date, 59 percent of UDR's signed leases were originated over the
Internet, a 29 percent improvement over the first six months of 2008.
The incremental improvement in usage and resultant savings in personnel
and marketing expenses illustrates the benefit of the Company's
technology platform, award winning website and the accessibility it
offers to residents and prospects.
As previously announced in January 2009, UDR launched a resident portal
which enables our residents to complete all interactions with UDR
electronically. After only six months, 75% of our residents are enrolled
in the portal. One significant benefit is the electronic rent payment
capability. By the end of the second quarter, 38 percent of the
Company's residents have adopted the ACH payment option resulting in
improved cash management, reduced collection costs and a reduction in
labor-hours associated with the rent collection process.
Portfolio Investment Activities
UDR has seven active development projects and two active redevelopment
projects underway, comprising 2,915 homes, at a total cost of $457
million. Management anticipates delivery of roughly 87 percent of this
pipeline in 2010, which should align with improving market conditions.
In addition to its active developments and redevelopments, the Company
has one pre-sale community of 289 homes at a cost of $29 million
underway, which was completed on July 28, 2009.
The Company does not intend to start any additional development projects
in 2009; however, as previously communicated, UDR did commence a $30
million redevelopment in Northern California after receiving requisite
zoning approvals. This project is expected to be completed in the third
quarter of 2010.
The Company did not complete any acquisitions or dispositions during the
quarter.
Liquidity Events
During the second quarter of 2009, the Company adjusted its dividend to
a quarterly payout of $0.18 per share, or $0.72 per share per annum,
resulting in an annual savings of $79.5 million. It also received cash
payment in full of a $200 million note receivable from its strategic
portfolio sale completed in March 2008. UDR continued its debt
repurchasing efforts retiring an additional $79.3 million of notes
during the second quarter bringing its year to date repurchases to $239
million. The majority or $72 million of the activity was to repurchase
its 4.0 percent convertible notes due in 2035 with an investor put
feature in 2011. These repurchases were completed in the open market at
an average discount of 9 percent. The open market purchases resulted in
a net gain of approximately $4.3 million, or $0.03 per diluted share.
Balance Sheet
At June 30, 2009, UDR had capacity of $887.3 million in a combination of
cash and undrawn credit capacity facilities, giving it ample flexibility
to meet its capital needs for its development activities and debt
maturities through 2011. Additional capacity, if needed, could be raised
from selective asset sales or borrowing on the Company's $3.2 billion
unencumbered asset base (on a historical non-depreciated cost basis).
UDR's total indebtedness at June 30, 2009 was $3.2 billion. The Company
ended the second quarter with 82.5 percent fixed-rate debt, a total
blended interest rate of 4.5 percent and a weighted average maturity of
6.0 years. UDR's fixed charge coverage ratio improved to 2.13 times as
compared to 1.9 times at the end of the second quarter 2008.
2009 Guidance
The Company is maintaining its previously announced 2009 guidance. UDR
believes that financial results for 2009 will be affected by ongoing
uncertainty related to global economic trends and events, credit market
volatility, projected job losses in key markets, financing activities,
and other factors. All guidance is based on current expectations of
future economic conditions and the judgment of the Company's management
team.
For full year 2009, the Company is estimating FFO of $1.23 to $1.35 per
diluted share exclusive of the impact of APB 14-1.
Assumptions for guidance in 2009 include:
-- A 1.0 percent to 3.0 percent decline in same-store revenue
year-over-year;
-- A 1.5 percent to 2.0 percent growth in same-store expense
year-over-year;
-- A 3.0 percent to 5.0 percent decline in same-store NOI year over year;
and,
-- No new development starts or asset sales.
Supplemental Information
The Company offers Supplemental Financial Information that provides
details regarding the financial position and operating results of the
Company. This Supplemental Information is available on the Company's
website at: www.udr.com.
Conference Call and Webcast Information
UDR will host a webcast and conference call on Tuesday, August 4th
at 5:00 p.m. ET, to discuss second quarter results. A webcast will be
available on UDR's website at www.udr.com.
To listen to a live broadcast, access the site at least 15 minutes prior
to the scheduled start time in order to register and download and
install any necessary audio software.
To participate in the teleconference dial 877-941-2332 for domestic and
480-629-9722 for international.
A replay of the conference call will be available through August 11,
2009, by dialing 800-406-7325 for domestic and 303-590-3030 for
international and entering the confirmation number, 4133326 when
prompted for the passcode.
A replay of the call will be available for 90 days on UDR's website.
Full Text of the Earnings Report and
Supplemental Data
Internet -- The full text of the earnings report and supplemental data
will be available at the UDR web site, www.udr.com.
Mail -- For those without Internet access, the second quarter 2009
earnings release will be available by mail or fax, on request. To
receive a copy, please call UDR Investor Relations at 720-283-6120.
Forward Looking Statements
Certain statements made in this press release may constitute
"forward-looking statements." The words "expect," "intend," "believe,"
"anticipate," "likely," "will" and similar expressions generally
identify forward-looking statements. These forward-looking statements
are subject to risks and uncertainties which can cause actual results to
differ materially from those currently anticipated, due to a number of
factors, which include, but are not limited to, unfavorable changes in
the apartment market, changing economic conditions, the impact of
inflation/deflation on rental rates and property operating expenses,
expectations concerning availability of capital and the stabilization of
the capital markets, the impact of competition and competitive pricing,
acquisitions or new developments not achieving anticipated results,
delays in completing developments and lease-ups on schedule,
expectations on job growth, home affordability and demand/supply ratio
for multi-family housing, expectations concerning development and
redevelopment activities, expectations on occupancy levels, expectations
concerning the Vitruvian Park project, expectations that automation will
help grow net operating income, expectations on post-renovated
stabilized annual operating income, expectations on annualized net
operating income and other risk factors discussed in documents filed by
the Company with the Securities and Exchange Commission from time to
time including the Company's Annual Report on Form 10-K and the
Company's Quarterly Reports on Form 10-Q. These forward-looking
statements and such risks, uncertainties and other factors speak only as
of the date of this press release, and the Company expressly disclaims
any obligation or undertaking to disseminate any updates or revisions to
any forward-looking statement contained herein, to reflect any change in
the Company's expectations with regard thereto, or any other change in
events, conditions or circumstances on which any such statement is
based, except to the extent otherwise required by law.
About UDR, Inc.
UDR is a leading multifamily real estate investment trust (REIT) with a
demonstrated performance history of delivering superior and dependable
returns by successfully managing, buying, selling, developing and
redeveloping attractive real estate properties in targeted U.S. markets.
As of June 30, 2009, UDR owned 44,701 apartment homes and had 1,916
homes under development and another 289 homes under contract for
development in its pre-sale program. For over 37 years, UDR has
delivered long-term value to shareholders, the best standard of service
to residents, and the highest quality experience for associates.
Additional information can be found on the Company's website at www.udr.com.
UDR
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
In thousands, except per 2009 2008 2009 2008
share amounts
Rental income $ 151,843 $ 139,955 $ 302,458 $ 266,541
Rental expenses:
Real estate taxes and 18,843 16,180 38,863 28,674
insurance
Personnel 12,782 12,051 25,415 23,848
Utilities 7,350 6,821 15,717 13,904
Repair and maintenance 7,899 7,436 15,108 14,226
Administrative and marketing 3,584 3,863 6,917 7,149
Property management 4,176 3,849 8,318 7,330
Other operating expenses 1,769 1,026 3,265 2,030
56,403 51,226 113,603 97,161
Non-property income:
Loss from unconsolidated (728 ) (1,015 ) (1,445 ) (1,389 )
entities
Tax benefit/(expense) for - 3,649 (51 ) 4,914
taxable REIT subsidiary
Interest and other income 3,958 6,690 8,982 11,317
3,230 9,324 7,486 14,842
Other expenses:
Real estate depreciation and 69,067 62,507 138,052 114,942
amortization
Interest 35,376 38,015 71,885 78,521
Net gain on debt (2,736 ) (1,333 ) (9,849 ) (6,072 )
extinguishment (1)
Amortization of convertible 1,053 1,670 2,349 3,340
debt premium
Total interest 33,693 38,352 64,385 75,789
General and administrative 9,145 9,931 19,000 19,700
Other depreciation and 1,478 944 2,872 1,873
amortization
113,383 111,734 224,309 212,304
Loss from continuing (14,713 ) (13,681 ) (27,968 ) (28,082 )
operations
Income from discontinued 2,053 13,316 1,885 800,172
operations
Consolidated net (12,660 ) (365 ) (26,083 ) 772,090
(loss)/income
Net loss/(income)
attributable to 602 (312 ) 1,396 (49,048 )
non-controlling interests
Net (loss)/income (12,058 ) (677 ) (24,687 ) 723,042
attributable to UDR, Inc.
Distributions to preferred
stockholders - Series E (931 ) (931 ) (1,862 ) (1,862 )
(Convertible)
Distributions to preferred (1,869 ) (2,278 ) (3,738 ) (4,556 )
stockholders - Series G
Net (loss)/income available $ (14,858 ) $ (3,886 ) $ (30,287 ) $ 716,624
to common stockholders
Earnings per weighted
average common share - basic
and diluted: (2)
Loss from continuing
operations available to ($0.11 ) ($0.13 ) ($0.21 ) ($0.60 )
common stockholders
Income from discontinued $ 0.01 $ 0.10 $ 0.01 $ 5.71
operations
Net (loss)/income available ($0.10 ) ($0.03 ) ($0.20 ) $ 5.11
to common stockholders
Common distributions $ 0.180 $ 0.305 $ 0.485 $ 0.305
declared per share (2)
Weighted average number of
common shares outstanding - 149,444 137,969 148,564 140,257
basic (2)
Weighted average number of
common shares outstanding - 149,444 137,969 148,564 140,257
diluted (2)
(1) Includes $1,611 and $3,365 write-off of convertible debt premium for the
three and six months ended June 30, 2009.
Amounts for all periods represented have been adjusted to reflect the
(2) issuance of 11.4 million common shares issued in connection with the
Company's January 29, 2009 special dividend.
UDR
Funds From Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
In thousands, except per 2009 2008 2009 2008
share amounts
Net (loss)/income $ (12,058 ) $ (677 ) $ (24,687 ) $ 723,042
attributable to UDR, Inc.
Distributions to preferred (2,800 ) (3,209 ) (5,600 ) (6,418 )
stockholders
Real estate depreciation
and amortization, including 69,067 62,507 138,052 114,942
discontinued operations
Non-controlling interest (602 ) 312 (1,396 ) 49,048
Real estate depreciation
and amortization on 1,165 1,317 2,308 2,062
unconsolidated joint
ventures
Net gains on the sale of
depreciable property in (2,053 ) (13,027 ) (1,885 ) (780,989 )
discontinued operations,
excluding RE3
Funds from operations $ 52,719 $ 47,223 $ 106,792 $ 101,687
("FFO") - basic
Distribution to preferred
stockholders - Series E 931 931 1,862 1,862
(Convertible)
Funds from operations - $ 53,650 $ 48,154 $ 108,654 $ 103,549
diluted
FFO per common share - $ 0.34 $ 0.32 $ 0.69 $ 0.68
basic
FFO per common share - $ 0.34 $ 0.32 $ 0.68 $ 0.67
diluted
Write-off of convertible
debt premium due to 1,611 - 3,365 -
adoption of APB 14-1
Amortization of convertible
debt premium due to 1,053 1,670 2,349 3,340
adoption of APB 14-1
Funds from operations as $ 56,314 $ 49,824 $ 114,368 $ 106,889
adjusted - diluted
FFO as adjusted per common $ 0.35 $ 0.33 $ 0.72 $ 0.70
share - diluted
Weighted average number of
common shares and OP Units 155,958 147,591 155,841 149,921
outstanding - basic (1)
Weighted average number of
common shares, OP Units,
and common stock 159,039 151,412 158,896 153,680
equivalents outstanding -
diluted (1)
Amounts for all periods represented have been adjusted to reflect the
(1) issuance of 11.4 million common shares issued in connection with the
Company's January 29, 2009 special dividend.
FASB Staff Position APB 14-1 requires companies to expense, on a current
and retroactive basis, certain implied costs of the option value related
to convertible debt and is effective for fiscal years beginning on or
after December 15, 2008. Adoption of APB 14-1 results in the recognition
of non-cash charges.
FFO is defined as net income (computed in accordance with GAAP),
excluding gains (or losses) from sales of depreciable property, premiums
or original issuance costs associated with preferred stock redemptions,
plus real estate depreciation and amortization, and after adjustments
for unconsolidated partnerships and joint ventures. This definition
conforms with the National Association of Real Estate Investment Trust's
definition issued in April 2002. UDR considers 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 flows as a measure of UDR's activities in accordance
with generally accepted accounting principles and is not necessarily
indicative of cash available to fund cash needs.
UDR
Consolidated Balance Sheets
June 30, December 31,
In thousands, except share and per share amounts 2009 2008
(unaudited) (audited)
ASSETS
Real estate owned:
Real estate held for investment $ 5,720,069 $ 5,644,930
Less: accumulated depreciation (1,214,447 ) (1,078,637 )
4,505,622 4,566,293
Real estate under development
(net of accumulated depreciation of $1,123 and 248,335 186,771
$52)
Total real estate owned, net of accumulated 4,753,957 4,753,064
depreciation
Cash and cash equivalents 4,983 12,740
Marketable securities 33,979 -
Restricted cash 8,795 7,726
Deferred financing costs, net 26,561 29,168
Notes receivable 7,300 207,450
Investment in unconsolidated joint ventures 63,475 47,048
Other assets 71,848 85,842
Other assets - real estate held for disposition - 767
Total assets $ 4,970,898 $ 5,143,805
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $ 1,729,290 $ 1,462,471
Unsecured debt 1,484,659 1,798,662
Real estate taxes payable 18,665 14,035
Accrued interest payable 18,717 20,744
Security deposits and prepaid rent 30,843 28,829
Distributions payable 30,386 57,144
Deferred gains on the sale of depreciable 28,835 28,845
property
Accounts payable, accrued expenses, and other 58,453 71,395
liabilities
Other liabilities - real estate held for - 1,204
disposition
Total liabilities 3,399,848 3,483,329
Redeemable non-controlling interests in 65,295 108,092
operating partnership
Stockholders' equity
Preferred stock, no par value; 50,000,000 shares
authorized
2,803,812 shares of 8.00% Series E Cumulative
Convertible issued
46,571 46,571
and outstanding (2,803,812 shares at December
31, 2008)
4,430,700 shares of 6.75% Series G Cumulative
Redeemable issued
110,768 110,768
and outstanding (4,430,700 shares at December
31, 2008)
Common stock, $0.01 par value; 250,000,000
shares authorized
150,557,442 shares issued and outstanding 1,506 1,488
(148,781,115 shares at December 31, 2008)
Additional paid-in capital 1,871,525 1,850,871
Distributions in excess of net income (522,945 ) (448,737 )
Accumulated other comprehensive loss, net (5,112 ) (11,927 )
Total UDR, Inc. stockholders' equity 1,502,313 1,549,034
Non-controlling interest 3,442 3,350
Total equity 1,505,755 1,552,384
Total liabilities and stockholders' equity $ 4,970,898 $ 5,143,805
Source: UDR, Inc.
Contact: UDR, Inc.
David Messenger, 720-283-6120
CFO