~ Sequential Same-Store Revenue Turns Positive ~
DENVER--(BUSINESS WIRE)--
UDR,
Inc. (NYSE: UDR), a leading multifamily real estate investment trust,
today announced its first quarter 2010 results.
The Company generated Funds from Operations (FFO) of $46.8 million or
$0.28 per diluted share, for the quarter ended March 31, 2010, versus
$55.0 million, or $0.35 per diluted share, in the first quarter of 2009.
The year-over-year variance is primarily due to a gain recorded in the
first quarter of 2009 of $7.1 million, or $0.05 per diluted share,
associated with the repurchase of $160 million of unsecured debt at a
discount, the impact of an 8 percent increase in weighted-average shares
outstanding compared to the prior year, or approximately $0.02 per
diluted share, and weaker operating results due to the economic downturn.
A reconciliation of FFO to GAAP Net Income can be found on page 8 of the
Company's earnings release.
Tom Toomey, UDR's President and CEO stated, "The environment today is
encouraging as we have seen a bottoming of fundamentals. In the first
quarter, we experienced positive sequential same-store revenue growth
and we are seeing strong interest on the leasing side at our development
and redevelopment properties. These factors combined with existing
occupancy of greater than 95 percent and record low levels of
development activity give us confidence there is a considerable
opportunity for pricing power as we enter our prime leasing season."
Operations
Same-store revenue declined 3.1 percent year-over-year while net
operating income (NOI) declined 4.4 percent for the first quarter 2010.
Same-store physical occupancy increased 110 basis points to 95.8 percent
year-over-year. Same-store expenses declined by 30 basis points driven
by lower turnover costs and a favorable real estate tax variance,
partially offset by unusually high snow removal costs in our
Mid-Atlantic region.
Sequentially, same-store revenue increased by 10 basis points, while
same-store NOI declined by 90 basis points driven by a 2.3 percent
sequential increase in same-store expenses. On average, rental rates on
renewing leases were slightly higher as compared to the expiring leases.
The rate of annualized resident turnover improved to 46 percent from 51
percent in the first quarter of 2009. Bad debt expense as a percentage
of revenues for the first quarter improved to 40 basis points from 60
basis points in the prior year period.
Summary Same-Store Results First Quarter 2010 versus First Quarter
2009
Revenue Expense NOI % of Same- Same-Store Number of
Region Growth/ Growth/ Growth/ Store Occupancy2 Same-Store
Decline Decline Decline Portfolio(1) Homes3
Western -5.2% 1.8% -8.1% 43.6% 95.6% 14,587
Mid-Atlantic -0.1% 2.7% -1.5% 28.4% 96.3% 10,667
Southeastern -2.9% -3.7% -2.4% 20.4% 95.6% 11,375
Southwestern -2.2% -7.5% 1.8% 7.6% 95.6% 4,219
Total -3.1% -0.3% -4.4% 100.0% 95.8% 40,848
1 Based on QTD 2010 NOI
2 Average same-store occupancy for the quarter
During the first quarter, 40,848 apartment homes, or approximately 88 percent
3 of 46,357 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's business automation efforts continue to gain acceptance
and recognition from our residents as shown by the following increasing
utilization rates:
Percentage of: March March December
2010 2009 2009
Resident electronic payments received via ACH 71% 15% 62%
Online service requests 68% n/a 40%
Move-ins originated via the internet (mature) 63% 53% 63%
Given the high levels of utilization of the resident portal, the Company
is in the early stages of testing ways to make the leasing renewal
process more interactive and more convenient for the residents. These
efforts continue to 1) enhance the resident experience; 2) incrementally
reduce marketing, advertising, maintenance and payroll costs; and 3)
improve the Company's cash management and rent collection processes as
well as the level of bad debt.
During the quarter, the Company was once again recognized by the
International Academy of Digital Arts & Sciences with a "Webby Award" in
the category of "Best Use of GPS or Location Technology and Experimental
Innovation" related to UDR's efforts in rolling out interactive leasing
applications for various smartphones and other hand held devices.
Post Quarter Portfolio Investment
Activities
On April 26, the Company, in conjunction with its joint venture partner,
Kuwait Finance House, closed on the acquisition of Portico
at Silver Spring Metro, a 151 home high-rise apartment community
located near the Metrorail station in Silver Spring, Maryland. The
property, which was completed in 2009 and is fully stabilized, was
acquired for $43 million, or $285,000 per home. The community has 1 and
2 bedroom homes ranging in size from 567 to 1,172 square feet and rents
from $1,600 to $3,000 per month. This acquisition represents a
continuation of UDR's effort to deepen its presence in high barrier to
entry and urban markets proximate to transportation, employment and
entertainment hubs.
Development and Redevelopment
Activities
While still early in the process, leasing velocity for all of our
communities that delivered homes during the first quarter is ahead of
Company expectations.
In January a final certificate of occupancy was issued for Elements
Too, the second phase of its high-rise development in the heart of
downtown Bellevue containing 274 homes. At quarter end, the property was
86.5 percent leased. In addition, UDR began leasing the first phase of
its Vitruvian
ParkSM development, the Savoye
I in Addison, Texas. The 392 home community opened its doors to
residents in March and is 26 percent occupied. The Company also opened
its 359 home Tribute
development in March. The property is located in Raleigh, North Carolina
and as of the end of the quarter, the property is 28.4 percent leased.
The active development pipeline has four projects underway comprising
1,575 apartment homes with an anticipated total cost of $264 million;
roughly $24 million remains to be funded. These properties are expected
to be completed in 2010 with the majority of the deliveries in the
second half of the year.
During the second quarter of 2010, UDR broke ground on the Savoye II in
Addison, Texas, the second phase of its Vitruvian
ParkSM development. The community is being built to meet
LEED Gold standards and will consist of 352 homes and 28,140 square feet
of retail and office space, with an expected cost of $69 million. The
second phase of the Vitruvian
ParkSM development fulfills the Company's requirement to
the City of Addison thereby triggering the city's funding of the nearly
$40 million in infrastructure improvements related to the development of
the Vitruvian
ParkSM site.
The redevelopment pipeline has three properties underway, representing
862 homes with budgeted costs of $69.2 million; roughly $38 million
remains to be funded. During the first quarter the Company began the
redevelopment of Lake
Pines, a 288 home community in the San Francisco Metropolitan Area
with a target completion date in the second quarter of 2012. Communities
that will be completed in 2010 include: Barton
Creek Landing, a 250 home community in Austin, Texas; and the Highlands
of Marin, a 324 home community in San Rafael, California.
Capital Markets Activity
During the quarter, the Company raised approximately $75 million of
equity through the sale of 4.4 million shares at a weighted average net
price of $16.82 under its previously established "At the Market" equity
offering program. Since September 2009, the Company has sold
approximately 9 million shares and has 5.4 million shares available to
sell under the existing program.
In February 2010, UDR priced $150 million of its 5.25 percent senior
unsecured notes under its existing shelf registration statement. The
notes were priced at 99.46 percent of the principal amount plus accrued
interest from January 15, 2010 with a yield to maturity of 5.375
percent. The notes are due on January 15, 2015.
Balance Sheet
At March 31, 2010, UDR had $787 million in availability through 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. The Company's
unencumbered asset base of $3.4 billion (on a historical non-depreciated
cost basis) is a potential additional source of capital.
UDR's total indebtedness at March 31, 2010 was $3.4 billion. The Company
ended the first quarter with 75 percent fixed-rate debt, a total blended
interest rate of 4.4 percent and a weighted average maturity of 5.8
years. UDR's fixed charge coverage ratio was 2.0 times.
2010 Guidance
For full year 2010, the Company is affirming its prior estimate of FFO
of $1.00 to $1.07. Guidance is based on current expectations of future
economic conditions and the judgment of the Company's management team.
The Company will reevaluate and anticipates updating guidance on its
second quarter conference call.
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 at 5:00 p.m. EST on May 3,
2010, to discuss first 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
480-629-9723 for international and provide the following conference ID
number: 4282238.
A replay of the conference call will be available through May 24, 2010,
by dialing 800-406-7325 for domestic and 303-590-3030 for international
and entering the confirmation number, 4282238 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 first quarter 2010
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, developments and redevelopments not achieving anticipated
results, delays in completing developments, redevelopments 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
ParkSM project, expectations that automation will help
grow net 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 March 31, 2010, UDR owned or had an ownership position in
51,320 apartment homes including 971 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.
UDR
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
In thousands, except per share amounts 2010 2009
Rental income $ 151,629 $ 150,615
Rental expenses:
Real estate taxes and insurance 19,601 20,020
Personnel 13,533 12,633
Utilities 8,710 8,367
Repair and maintenance 7,912 7,209
Administrative and marketing 3,850 3,333
Property management 4,170 4,142
Other operating expenses 1,485 1,654
59,261 57,358
Non-property income:
Loss from unconsolidated entities (737 ) (717 )
Tax expense for taxable REIT subsidiary (65 ) (51 )
Interest and other income 3,320 5,024
2,518 4,256
Other expenses:
Real estate depreciation and amortization 72,207 68,985
Interest 35,899 36,509
Net gain on debt extinguishment (1) - (7,113 )
Amortization of convertible debt premium 967 1,296
Total interest 36,866 30,692
Hurricane related expenses - 241
General and administrative 9,575 9,456
Other depreciation and amortization 1,223 1,394
119,871 110,768
Loss from continuing operations (24,985 ) (13,255 )
Loss from discontinued operations (41 ) (168 )
Consolidated net loss (25,026 ) (13,423 )
Net loss attributable to non-controlling 970 794
interests
Net loss attributable to UDR, Inc. (24,056 ) (12,629 )
Distributions to preferred stockholders - (931 ) (931 )
Series E (Convertible)
Distributions to preferred stockholders - (1,448 ) (1,869 )
Series G
Net loss available to common stockholders $ (26,435 ) $ (15,429 )
Earnings per weighted average common share -
basic and diluted:
Loss from continuing operations available to ($0.17 ) ($0.11 )
common stockholders
Loss from discontinued operations $0.00 $0.00
Net loss available to common stockholders ($0.17 ) ($0.11 )
Common distributions declared per share $0.180 $0.305
Weighted average number of common shares 156,131 144,176
outstanding - basic
Weighted average number of common shares 156,131 144,176
outstanding - diluted
(1) Includes $1,754 write-off of convertible debt premium for the three
months ended March 31, 2009.
UDR
Funds From Operations
(Unaudited)
Three Months Ended
March 31,
In thousands, except per share amounts 2010 2009
Net loss attributable to UDR, Inc. $ (24,056 ) $ (12,629 )
Distributions to preferred stockholders (2,379 ) (2,800 )
Real estate depreciation and amortization, including 72,207 68,985
discontinued operations
Non-controlling interest (970 ) (794 )
Real estate depreciation and amortization on 1,009 1,143
unconsolidated joint ventures
Net gains on the sale of depreciable property to a - -
joint venture
Net loss on the sale of depreciable property in 41 168
discontinued operations, excluding RE3
Funds from operations ("FFO") - basic $ 45,852 $ 54,073
Distribution to preferred stockholders - Series E 931 931
(Convertible)
Funds from operations - diluted $ 46,783 $ 55,004
FFO per common share - basic $ 0.28 $ 0.36
FFO per common share - diluted $ 0.28 $ 0.35
Weighted average number of common shares and OP 162,107 152,031
Units outstanding - basic
Weighted average number of common shares, OP Units,
and common stock
equivalents outstanding - diluted 166,657 155,085
FFO is defined as net income (computed in accordance with GAAP), excluding gains
(or losses) from sales of depreciable property, 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.
RE3 gain on sales, net of taxes, is defined as net sales proceeds less a tax
provision and the gross investment basis of the asset before accumulated
depreciation. We consider FFO with RE3 gain on sales, net of taxes, to be a
meaningful supplemental measure of performance because the short-term use of
funds produce profits which differ from the traditional long-term investment in
real estate for REITs.
UDR
Consolidated Balance Sheets
March 31, December 31,
In thousands, except share and per share 2010 2009
amounts
(unaudited) (audited)
ASSETS
Real estate owned:
Real estate held for investment $ 6,115,026 $ 5,995,290
Less: accumulated depreciation (1,414,593 ) (1,350,067 )
4,700,433 4,645,223
Real estate under development
(net of accumulated depreciation of $1,464 237,923 318,531
and $1,226)
Total real estate owned, net of accumulated 4,938,356 4,963,754
depreciation
Cash and cash equivalents 19,920 5,985
Marketable securities 37,992 37,650
Restricted cash 8,642 8,879
Deferred financing costs, net 26,710 26,601
Notes receivable 7,800 7,800
Investment in unconsolidated joint ventures 13,241 14,126
Other assets 63,055 67,822
Total assets $ 5,115,716 $ 5,132,617
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $ 1,945,065 $ 1,989,434
Unsecured debt 1,469,013 1,437,155
Real estate taxes payable 16,895 16,976
Accrued interest payable 20,098 19,146
Security deposits and prepaid rent 30,223 31,798
Distributions payable 32,000 30,857
Deferred gains on the sale of depreciable 28,822 28,826
property
Accounts payable, accrued expenses, and other 56,449 80,685
liabilities
Total liabilities 3,598,565 3,634,877
Redeemable non-controlling interests in 105,229 98,758
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, 2009)
3,432,962 shares of 6.75% Series G Cumulative
Redeemable issued
and outstanding (3,432,962 shares at December 85,824 85,824
31, 2009)
Common stock, $0.01 par value; 250,000,000 shares authorized
161,369,435 shares issued and outstanding 1,614 1,555
(155,465,482 shares at December 31, 2009)
Additional paid-in capital 2,027,966 1,948,669
Distributions in excess of net income (752,226 ) (687,180 )
Accumulated other comprehensive loss, net (1,403 ) 2
Total UDR, Inc. stockholders' equity 1,408,346 1,395,441
Non-controlling interest 3,576 3,541
Total equity 1,411,922 1,398,982
Total liabilities and stockholders' equity $ 5,115,716 $ 5,132,617
Source: UDR, Inc.
Contact: UDR, Inc.
H. Andrew Cantor, 720-283-6083