Maintains Occupancy at Greater than 95 Percent and Operating Margin
at 67 Percent
Enhances Technology Platform
DENVER--(BUSINESS WIRE)--
UDR, Inc. (NYSE: UDR), a leading multifamily real estate investment
trust, today announced its third quarter 2009 results.
The Company generated Funds from Operations (FFO) of $29.8 million, or
$0.19 per diluted share, for the quarter ended September 30, 2009,
versus $49.6 million, or $0.33 per diluted share, in the third quarter
of 2008. The third quarter 2009 results reflect (1) a non-cash equity
loss of $0.10 per share on a diluted basis related to the Company's
investment in two of its single-asset unconsolidated joint ventures, and
(2) a $0.02 per share charge associated with the premium on a tender
offer for $37.5 million of the Company's bonds maturing in 2024 with a
coupon of 8.5 percent. The 2009 results exclude the negative $0.01 per
share effect of the implementation of FASB ASC Subtopic 470-201.
Excluding the one-time charge for the premium on the bond tender, the
equity loss on the Bellevue assets and the impact of ASC Subtopic
470-20, FFO-Core per diluted share would have been $0.31 versus FFO-Core
of $0.30 per diluted share in the prior year period.
For the nine months ended September 30, 2009, UDR generated FFO of $0.90
per diluted share as compared to $1.02 for the comparable period a year
ago, exclusive of the impact of ASC Subtopic 470-20. Including the
impact of ASC Subtopic 470-20, FFO per share would have been $0.86 per
diluted share for the nine months ended September 30, 2009 and $0.99 per
diluted share a year ago. Excluding the one-time charge for the premium
on the bond tender and gains on debt repurchases and the non-cash equity
loss, FFO-Core per diluted share for the nine months ended September 30,
2009 would have been $0.94 excluding the impact of ASC Subtopic 470-20
and $0.93 per diluted share a year ago.
A reconciliation of FFO follows below:
Q3 2009 Q3 2008 YTD 2009 YTD 2008
FFO-Core $ 0.31 $ 0.30 $ 0.94 $ 0.93
Equity Loss on Unconsolidated JV (0.10 ) - (0.10 ) -
Debt Gains - 0.02 0.08 0.06
Debt Tender Offer (0.02 ) (0.02 ) -
Asset Sales - - - (0.01 )
Tax Benefits - 0.01 - 0.04
FFO-Reported $ 0.19 $ 0.33 $ 0.90 $ 1.02
ASC Subtopic 470-20 (Additional
expense (0.01 ) (0.01 ) (0.04 ) (0.03 )
plus write-offs from repurchases)
FFO - adjusted for ASC Subtopic $ 0.18 $ 0.32 $ 0.86 $ 0.99
470-20
A reconciliation of FFO to GAAP Net Income can be found on page 8 of the
Company's earnings release.
In the third quarter of 2009, the Company recognized a non-cash equity
loss of $16.0 million or $0.10 per diluted share, representing a decline
in fair market value below the carrying value of the Company's
investment in two of its single-asset unconsolidated joint venture
properties.
Tom Toomey, UDR's President and CEO stated, "While it was a prudent
decision to write down our investment in these joint ventures, it should
not overshadow the solid performance of our portfolio. This includes the
stability of our occupancy, decline in expenses and year-over-year
maintenance of operating margin. We will continue to operate our
communities defensively, with occupancies in the 95 percent range and a
focus on tight cost controls, while also developing industry-leading
technology innovations in an effort to expand our margin as market
conditions improve."
Mr. Toomey continued, "We are energized by the capital markets'
willingness to provide UDR with numerous attractive sources of capital.
We improved the term and cost of our debt and implemented an
opportunistic equity offering program. Additionally, we are diligently
looking for opportunities to deploy capital and expand our footprint
with our joint venture partner, Kuwait Finance House. I am confident
that UDR is well-positioned to not only weather the remainder of this
downturn but to capitalize on improving conditions. We look forward to
taking advantage of the most attractive supply/demand dynamic our
industry has seen over the last thirty years."
Operations
The Company experienced a same-store net operating income (NOI) decline
of 3.7 percent for the third quarter 2009. Same-store physical occupancy
increased 60 basis points to 95.6 percent year-over-year. Same-store
revenue declined by 3.0 percent on a challenging revenue comparable of
positive 3.4 percent in the prior year. Same-store expenses were down
1.6 percent due to tight expense controls, allowing UDR to maintain a 67
percent operating margin substantially in line with the third quarter of
2008. Sequentially, revenues declined 1.5 percent, same-store expenses
increased by 3.6 percent and net operating income declined 3.9 percent.
Summary Same-Store Results Third Quarter 2009 versus Third Quarter 2008
Revenue Expense NOI
Growth/ Growth/ % of Same- Same-Store Number of
Region Growth/ Store Same-Store
Decline Decline Portfolio(1) Occupancy2 Homes3
Decline
Western -4.4% -2.9% -5.0% 48.0% 95.4% 13,692
Mid-Atlantic -0.1% -0.7% 0.2% 27.5% 96.5% 9,257
Southeastern -3.3% 0.2% -5.5% 21.0% 95.1% 10,693
Southwestern -4.8% -6.0% -4.1% 3.5% 95.3% 1,469
Total -3.0% -1.6% -3.7% 100.0% 95.6% 35,111
1 Based on QTD 2009 NOI
2 Average same-store occupancy for the quarter
During the third quarter, 35,111 apartment homes, or approximately 78 percent
3 of 45,249 total apartment homes, 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 make progress on automating its business as a
way to drive operating efficiencies and to better meet the changing
needs of our residents. In the third quarter, 64 percent of move-ins
were originated through an internet source versus 53 percent in third
quarter 2008. Since its launch in January 2009, 80 percent of UDR's
residents are utilizing the resident internet portal, and resident
electronic payments have increased to 52 percent from 38 percent at the
end of June. These incremental improvements in adopting the web as a way
to conduct business with the Company have resulted in: 1) higher
resident satisfaction, 2) a 7 percent decline in same-store marketing
and advertising costs and, 3) improved cash management, reduced
collection costs and a reduction in labor-hours associated with the rent
collection process.
Portfolio Investment Activities
UDR has six active development projects and two active redevelopment
projects underway, comprising 2,666 homes, at a total cost of $405
million. Management anticipates delivery of the majority of the
apartment homes in 2010, which should align with improving market
conditions. During the quarter, the Company purchased a recently
completed 289 home community in Dallas via our last pre-sale agreement
for $28.3 million and the property is currently 97 percent leased.
UDR does not intend to start additional development projects in 2009 and
did not complete any dispositions during the quarter.
Capital Markets Activity
During the third quarter of 2009, the Company completed a number of
activities geared toward managing the term and cost structure of its
debt. As previously announced, UDR closed on a $200 million, 10-year,
secured credit facility with Fannie Mae at a blended interest rate of
5.28 percent, the proceeds of the second draw will be used to prepay
substantially all of its 2010 secured debt. Additionally, the Company
completed a $37.5 million tender offer of its 2024, 8.5 percent coupon
bonds and anticipates that the retirement of this debt will result in a
savings of $15 to $17 million in future interest payments. The bonds
were retired at a 10 percent premium to face value and resulted in a
$3.8 million one-time charge to FFO.
In August, the Company announced the closing of a $450 million joint
venture with Kuwait Finance House. The joint venture will have a minimum
of 60 percent leverage with an equity contribution from UDR of $54
million when fully invested. The joint venture will invest in high
barrier to entry markets and may provide a way for UDR to expand its
geographic footprint. In addition, involvement in the joint venture does
not preclude UDR from pursuing other acquisition opportunities.
In September, UDR initiated an "At the Market" equity offering program
whereby it can sell up to 15 million shares. The program is intended to
allow the Company to opportunistically issue equity based on current
market conditions. During the quarter, UDR sold approximately 2.3
million shares under the program at a weighted average price of $14.89.
Balance Sheet
At September 30, 2009, UDR had capacity of more than $1 billion in a
combination of cash and undrawn capacity on its credit facilities,
giving the Company ample flexibility to meet its capital needs for debt
maturities and development activities through 2011. Additional capacity,
if needed, could be raised via its $3.2 billion unencumbered asset base
(on a historical non-depreciated cost basis).
UDR's total indebtedness at September 30, 2009 was $3.3 billion. The
Company ended the third quarter with 83 percent fixed-rate debt, a total
blended interest rate of 4.5 percent and a weighted average maturity of
5.8 years. UDR's fixed charge coverage ratio improved to 2.1 times as
compared to 1.9 times at the end of the third quarter 2008 when adjusted
for non-recurring items.
2009 Guidance
The Company is updating its previously announced 2009 guidance. UDR's
financial results for 2009 have been affected by ongoing uncertainty
related to global economic trends and events, credit market volatility,
projected job losses in key markets, financing activities, the equity
loss on two of its Bellevue, Washington JV investments and other
factors. All guidance is based on current expectations of future
economic conditions and the judgment of the Company's management team.
Low High
Original Guidance Range - February 2009 $ 1.23 $ 1.35
Equity Loss on Unconsolidated JV (0.10 ) (0.10 )
Update of Underlying Assumptions 0.01 (0.05 )
Revised Guidance Range $ 1.14 $ 1.20
The table above excludes the impact of ASC Subtopic 470-20.
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 Monday, October 19th
at 5:00 p.m. EST, to discuss third 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 877-941-6010 for domestic and
480-629-9772 for international and provide the following conference ID
number: 4141754.
A replay of the conference call will be available through November 9,
2009, by dialing 800-406-7325 for domestic and 303-590-3030 for
international and entering the confirmation number, 4141754 when
prompted for the pass code.
A replay of the call will be available for 90 days on UDR's website at www.udr.com.
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 third quarter 2009
earnings report and supplemental data 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 presentation 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 multifamily 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. Actual results may differ
materially from those described in the forward-looking statements. These
forward-looking statements and such risks, uncertainties and other
factors speak only as of the date of this presentation, and the Company
expressly disclaims any obligation or undertaking to update or revise
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, Inc. (NYSE:UDR),
an S&P 400 company, is a leading multifamily real estate investment
trust 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 September 30, 2009, UDR owned 45,249 apartment homes and
had 1,657 homes under development. 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.
1 Formerly Staff Position APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement).
UDR
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
In thousands, except per 2009 2008 2009 2008
share amounts
Rental income $ 150,311 $ 147,414 $ 452,769 $ 413,955
Rental expenses:
Real estate taxes and 18,908 19,101 57,771 47,775
insurance
Personnel 13,049 12,675 38,464 36,523
Utilities 8,207 8,113 23,924 22,017
Repair and maintenance 8,315 8,318 23,423 22,544
Administrative and marketing 3,636 3,635 10,553 10,784
Property management 4,134 4,054 12,452 11,384
Other operating expenses 1,172 1,153 4,437 3,183
57,421 57,049 171,024 154,210
Non-property income:
Loss from unconsolidated (16,742 ) (1,897 ) (18,187 ) (3,286 )
entities (1)
Tax benefit/(expense) for (14 ) 829 (65 ) 5,743
taxable REIT subsidiary
Interest and other income 1,627 9,969 10,609 21,286
(15,129 ) 8,901 (7,643 ) 23,743
Other expenses:
Real estate depreciation and 69,695 65,551 207,747 180,493
amortization
Interest 33,909 39,860 105,794 118,381
Net gain on debt - (2,523 ) (9,849 ) (8,595 )
extinguishment (2)
Amortization of convertible 967 1,670 3,316 5,010
debt premium
Expenses related to tender 3,764 - 3,764 -
offer
Total interest 38,640 39,007 103,025 114,796
Hurricane related expenses - 833 127 833
General and administrative 8,924 9,835 27,797 29,535
Other depreciation and 858 1,140 3,730 3,013
amortization
118,117 116,366 342,426 328,670
Loss from continuing (40,356 ) (17,100 ) (68,324 ) (45,182 )
operations
Income from discontinued 601 6,736 2,486 806,908
operations
Consolidated net (39,755 ) (10,364 ) (65,838 ) 761,726
(loss)/income
Net loss/(income)
attributable to 1,779 450 3,175 (48,598 )
non-controlling interests
Net (loss)/income (37,976 ) (9,914 ) (62,663 ) 713,128
attributable to UDR, Inc.
Distributions to preferred
stockholders - Series E (931 ) (931 ) (2,793 ) (2,793 )
(Convertible)
Distributions to preferred (1,869 ) (1,989 ) (5,607 ) (6,545 )
stockholders - Series G
Discount on preferred stock - 3,056 - 3,056
repurchases, net
Net (loss)/income available $ (40,776 ) $ (9,778 ) $ (71,063 ) $ 706,846
to common stockholders
Earnings per weighted
average common share - basic
and diluted: (3)
Loss from continuing
operations available to ($0.27 ) ($0.12 ) ($0.50 ) ($0.71 )
common stockholders
Income from discontinued $ 0.00 $ 0.05 $ 0.02 $ 5.79
operations
Net (loss)/income available ($0.27 ) ($0.07 ) ($0.48 ) $ 5.08
to common stockholders
Common distributions $ 0.180 $ 0.305 $ 0.665 $ 0.915
declared per share (2)
Weighted average number of
common shares outstanding - 150,000 137,329 149,048 139,266
basic (2)
Weighted average number of
common shares outstanding - 150,000 137,329 149,048 139,266
diluted (2)
(1) Includes $16,000 equity loss on Bellevue Plaza and Ashwood Commons joint
ventures for the three and
nine months ended September 30, 2009.
(2) Includes $0 and $3,365 write-off of convertible debt premium for the three
and nine months ended
September 30, 2009.
(3) Amounts for all periods represented have been adjusted to reflect the
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 Nine Months Ended
September 30, September 30,
In thousands, except per 2009 2008 2009 2008
share amounts
Net (loss)/income $ (37,976 ) $ (9,914 ) $ (62,663 ) $ 713,128
attributable to UDR, Inc.
Distributions to preferred (2,800 ) (2,920 ) (8,400 ) (9,338 )
stockholders
Real estate depreciation
and amortization, including 69,695 65,551 207,747 180,493
discontinued operations
Non-controlling interest (1,779 ) (450 ) (3,175 ) 48,598
Real estate depreciation
and amortization on 1,276 1,302 3,584 3,364
unconsolidated joint
ventures
Net gains on the sale of
depreciable property in (555 ) (6,566 ) (2,440 ) (787,555 )
discontinued operations,
excluding RE3
Funds from operations $ 27,861 $ 47,003 $ 134,653 $ 148,690
("FFO") - basic
Distribution to preferred
stockholders - Series E 931 931 2,793 2,793
(Convertible)
Funds from operations - $ 28,792 $ 47,934 $ 137,446 $ 151,483
diluted
FFO per common share - $ 0.18 $ 0.32 $ 0.86 $ 1.00
basic
FFO per common share - $ 0.18 $ 0.32 $ 0.86 $ 0.99
diluted
Write-off of convertible
debt premium for - - 3,365 -
repurchases (1)
Amortization of convertible 967 1,670 3,316 5,010
debt premium (1)
Funds from operations as $ 29,759 $ 49,604 $ 144,127 $ 156,493
adjusted - diluted
FFO as adjusted per common $ 0.19 $ 0.33 $ 0.90 $ 1.02
share - diluted
Weighted average number of
common shares and OP Units 156,317 146,899 156,001 148,899
outstanding - basic (2)
Weighted average number of
common shares, OP Units,
and common stock
equivalents outstanding - 160,197 151,185 159,357 153,160
diluted (2)
(1)
FASB ASC Subtopic 470-20, formerly 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. The adoption results
in the recognition of non-cash charges.
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.
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
September 30, December 31,
In thousands, except share and per share amounts 2009 2008
(unaudited) (audited)
ASSETS
Real estate owned:
Real estate held for investment $ 5,835,852 $ 5,644,930
Less: accumulated depreciation (1,284,227 ) (1,078,637 )
4,551,625 4,566,293
Real estate under development
(net of accumulated depreciation of $482 and 232,957 186,771
$52)
Total real estate owned, net of accumulated 4,784,582 4,753,064
depreciation
Cash and cash equivalents 24,954 12,740
Marketable securities 37,020 -
Restricted cash 8,280 7,726
Deferred financing costs, net 26,002 29,168
Notes receivable 7,300 207,450
Investment in unconsolidated joint ventures 53,598 47,048
Other assets 68,521 85,842
Other assets - real estate held for disposition - 767
Total assets $ 5,010,257 $ 5,143,805
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $ 1,863,127 $ 1,462,471
Unsecured debt 1,411,919 1,798,662
Real estate taxes payable 32,500 14,035
Accrued interest payable 19,108 20,744
Security deposits and prepaid rent 30,771 28,829
Distributions payable 30,810 57,144
Deferred gains on the sale of depreciable 28,831 28,845
property
Accounts payable, accrued expenses, and other 56,560 71,395
liabilities
Other liabilities - real estate held for - 1,204
disposition
Total liabilities 3,473,626 3,483,329
Redeemable non-controlling interests in 99,137 108,092
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
and outstanding (2,803,812 shares at December 46,571 46,571
31, 2008)
4,430,700 shares of 6.75% Series G Cumulative
Redeemable issued
and outstanding (4,430,700 shares at December 110,768 110,768
31, 2008)
Common stock, $0.01 par value; 250,000,000
shares authorized
152,846,734 shares issued and outstanding 1,528 1,488
(148,781,115 shares at December 31, 2008)
Additional paid-in capital 1,906,300 1,850,871
Distributions in excess of net income (628,445 ) (448,737 )
Accumulated other comprehensive loss, net (2,714 ) (11,927 )
Total UDR, Inc. stockholders' equity 1,434,008 1,549,034
Non-controlling interest 3,486 3,350
Total equity 1,437,494 1,552,384
Total liabilities and stockholders' equity $ 5,010,257 $ 5,143,805
Source: UDR, Inc.
Contact: UDR, Inc.
H. Andrew Cantor, IR, 720-283-6083