~ Occupancy Remains Strong at Greater than 95 Percent ~
~ Provides 2010 Guidance ~
DENVER--(BUSINESS WIRE)--
UDR, Inc. (NYSE: UDR), a leading multifamily real estate investment
trust, today announced its fourth quarter and full year 2009 results.
The Company generated Funds from Operations (FFO) of $45.5 million, or
$0.28 per diluted share, for the quarter ended December 31, 2009, versus
$58.3 million, or $0.40 per diluted share, in the fourth quarter of
2008. The fourth quarter 2009 results include a $1.0 million, or $0.01
per share, one-time charge associated with the early prepayment of debt.
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 prepayment penalty and the impact of ASC
Subtopic 470-20, FFO-Core per diluted share would have been $0.29 versus
FFO-Core of $0.30 per diluted share in the prior year period. Please see
the reconciliation below for further detail.
For the twelve months ended December 31, 2009, UDR generated FFO of
$1.19 per diluted share as compared to $1.50 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 $1.14 per
diluted share for the twelve months ended December 31, 2009 and $1.43
per diluted share a year ago. Excluding the one-time charges for the
previously announced premium on the bond tender, gains on debt
repurchases, the non-cash equity loss and above mentioned prepayment
penalty and the impact of ASC Subtopic 470-20, FFO-Core per diluted
share for the twelve months ended December 31, 2009 would have been
$1.24 compared to $1.30 per diluted share a year ago. Please see the
reconciliation below for further detail.
A reconciliation of FFO follows below:
Q4 2009 Q4 2008 YTD 2009 YTD 2008
FFO-Core $ 0.29 $ 0.30 $ 1.24 $ 1.30
Equity Loss on Unconsolidated JV - - (0.10 ) -
Debt Gains - 0.14 0.08 0.21
Debt Prepayment Penalties and DFC (0.01 ) (0.03 ) (0.01 ) (0.03 )
Write Offs
Debt Tender Offer - - (0.02 ) -
Asset Sales - - - (0.01 )
One-time Charges to G&A - (0.04 ) - (0.04 )
Tax Benefits - 0.03 - 0.07
FFO-Reported $ 0.28 $ 0.40 $ 1.19 $ 1.50
ASC Subtopic 470-20 (Additional
expense plus write-offs from (0.01 ) (0.04 ) (0.05 ) (0.07 )
repurchases)
FFO - adjusted for ASC Subtopic $ 0.27 $ 0.36 $ 1.14 $ 1.43
470-20
A reconciliation of FFO to GAAP Net Income can be found on page 9 of the
Company's earnings release.
Tom Toomey, UDR's President and CEO stated, "We are very pleased with
our performance and positioning given the challenging operating
environment in 2009. We exercised patience in managing through a capital
constrained market and took advantage of buying opportunities in our
debt and preferred securities at attractive discounts. We extended debt
maturities and tapped into a variety of capital sources that
strengthened our balance sheet and should afford UDR the ability to take
advantage of opportunities in the future." Mr. Toomey continued, "We
enter 2010 with cautious optimism and recognize that we still have
challenges ahead. We will continue to exercise patience while focusing
on improving our operating results and driving our technology
initiatives while finding ways to accretively deploy our capital."
Operations
Same-store net operating income (NOI) declined 5.1 percent for the
fourth quarter 2009. Same-store physical occupancy increased 90 basis
points to 95.5 percent year-over-year. Same-store revenue declined by
3.7 percent as a result of a 5.4 percent decline in rents, that were
partially offset by higher occupancy and utility reimbursements.
Same-store expenses were down 0.7 percent driven by continued tight
expense controls and favorable real estate tax appeals.
Sequentially from the third quarter of 2009, revenues declined 1.6
percent, same-store expenses decreased by 4.4 percent and net operating
income declined 0.2 percent; however, due to increased efficiencies, the
Company widened its operating margin by 100 basis points over the third
quarter to 67 percent.
Summary Same-Store Results Fourth Quarter 2009 versus Fourth Quarter
2008
Expense NOI Number of
Revenue % of Same- Same-Store
Region Growth/ Growth/ Growth/ Store Occupancy2 Same-Store
Decline Portfolio(1)
Decline Decline Homes3
Western -6.0% 1.0% -8.9% 44.9% 95.4% 14,693
Mid-Atlantic 0.3% 6.4% -2.4% 28.7% 96.2% 10,666
Southeastern -3.5% -10.0% 0.4% 21.3% 95.0% 11,375
Southwestern -6.0% -4.3% -7.0% 5.1% 94.7% 2,512
Total -3.7% -0.7% -5.1% 100.0% 95.5% 39,246
(1) Based on QTD 2009 NOI
2 Average same-store occupancy for the quarter
3 During the fourth quarter, 39,246 apartment
homes, or approximately 85 percent of 45,913 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.
For the year ended 2009, the Company's same-store revenue growth
declined 2.0 percent as compared to the prior year while expenses
declined 1.6 percent resulting in a same-store NOI decline of 2.2
percent as compared to 2008. Year-over-year occupancy increased by 60
basis points which helped to maintain our operating margin at 68.0
percent.
Summary Same-Store Results 2009 versus 2008
Revenue NOI % of Number of
Expense Same-Store
Region Growth/ Growth/ Growth/ Same- Store Occupancy2 Same-Store
Decline Decline Decline Portfolio(1)
Homes3
Western -2.8% -2.6% -2.9% 49.1% 95.1% 13,329
Mid-Atlantic 0.9% 1.3% 0.7% 24.8% 96.4% 8,134
Southeastern -2.8% -2.4% -3.1% 22.8% 95.0% 10,484
Southwestern -3.8% -0.8% -5.3% 3.3% 95.3% 1,219
Total -2.0% -1.6% -2.2% 100.0% 95.4% 33,166
(1) Based on YTD 2009 NOI
2 Average same-store occupancy for the quarter
3 During 2009, 33,166 apartment homes, or
approximately 72 percent of 45,913 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 year.
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 its residents. In the fourth quarter, 62 percent of move-ins
were originated through an internet source as compared to 51 percent in
the fourth quarter 2008. Since its launch in January 2009, 91 percent of
UDR's residents are utilizing its resident internet portal, and resident
electronic payments have increased to 63 percent from 53 percent at the
end of September. 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 9 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 five active development projects and two active redevelopment
projects underway, comprising 2,424 homes, at a total cost of $421
million. Management anticipates delivery of all of the apartment homes
in 2010, which should align with improving market conditions.
UDR did not complete any acquisitions or dispositions during the quarter.
Capital Markets Activity
During the fourth 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 repaid its $240 million term loan due
in February 2010 with proceeds from a new $100 million term loan and
capacity from its $600 million unsecured bank credit facility. The new
loan was provided by a group of six banks and has identical covenants to
those contained in the loan that was repaid. The debt carries a floating
rate of 350 basis points over LIBOR with payments of interest only
through the maturity date of July 2012. In addition to the repayment of
the term loan, the Company prepaid $102 million in secured debt with an
average interest rate of 5.5 percent due in 2010 and 2013. The
prepayments resulted in a $1.0 million, or $0.01 per share, one-time
charge to FFO.
During the fourth quarter, the Company repurchased 997,738 shares of
Series G Cumulative Redeemable Shares at an average price per share of
$21.55 a 14 percent discount to their liquidation value saving $1.7
million in annual cash flow.
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 2.2
million shares under the program at a weighted average net price of
$15.78 per share. Through December 31, 2009, the Company sold 4.5
million shares at a weighted average net price per share of $15.17.
Subsequent to the end of the year, the Company sold 312,000 shares at a
weighted average net price per share $16.20 bringing the total number of
shares issued under the program to 4.8 million at a weighted average net
price of $15.24 per share.
Balance Sheet
At December 31, 2009, UDR had $732 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. Additional capital,
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 December 31, 2009 was $3.4 billion. The
Company ended the fourth quarter with 79 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 was 2.0 times
as compared to 1.7 times at the end of the fourth quarter 2008 when
adjusted for non-recurring items.
Subsequent Event
On February 2, 2010, UDR announced that it had reopened and priced $150
million of its 5.25 percent senior unsecured notes originally issued on
November 1, 2004. The notes were priced at 99.46 percent of the
principal amount plus accrued interest from January 15, 2010 to yield
5.375 percent to maturity.
2010 Guidance
For full year 2010, the Company is estimating FFO of $1.00 to $1.07 per
diluted share based on the following same-store assumptions:
Same-store: Low High
Revenue (4.5%) (3.0%)
Expense 0.0% 2.0%
NOI (7.5%) (4.5%)
All guidance is based on current expectations of future economic
conditions and the judgment of the Company's management team. The
following is a reconciliation from forecasted FFO per share to GAAP Net
Loss per share:
FFO Guidance Reconciliation Per Diluted Share
Low High
Forecasted 2010 FFO Guidance Per Diluted Share $ 1.00 $ 1.07
Conversion to GAAP Share Count (0.07 ) (0.07 )
Depreciation (1.88 ) (1.88 )
Non-Controlling Interests 0.02 0.02
Preferred Dividends (0.02 ) (0.02 )
Forecasted GAAP Net Loss Per Diluted Share $ (0.95 ) $ (0.88 )
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, February 9, 2010
at 5:00 p.m. EST, to discuss fourth 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 877-941-2333 for domestic and
480-629-9723 for international and provide the following conference ID
number: 4200528.
A replay of the conference call will be available through March 2, 2010,
by dialing
800-406-7325 for domestic and 303-590-3030 for international and
entering the confirmation number, 4200528 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 fourth 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 December 31, 2009, UDR owned 45,913 apartment homes and
had 1,415 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 Twelve Months Ended
December 31, December 31,
In thousands, except 2009 2008 2009 2008
per share amounts
Rental income $ 150,130 $ 149,453 $ 602,899 $ 563,408
Rental expenses:
Real estate taxes and 16,846 19,217 74,617 66,992
insurance
Personnel 13,344 12,149 51,808 48,672
Utilities 7,794 7,284 31,718 29,301
Repair and maintenance 8,274 7,789 31,697 30,333
Administrative and 4,046 3,856 14,599 14,640
marketing
Property management 4,129 4,110 16,581 15,494
Other operating 1,144 1,380 5,581 4,563
expenses
55,577 55,785 226,601 209,995
Non-property income:
Loss from
unconsolidated (478 ) (326 ) (18,665 ) (3,612 )
entities (1)
Tax benefit/(expense)
for taxable REIT (246 ) 3,970 (311 ) 9,713
subsidiary
Gain on consolidation 1,912 - 1,912 -
of joint ventures (2)
Interest and other 1,753 5,904 12,362 27,190
income
2,941 9,548 (4,702 ) 33,291
Other expenses:
Real estate
depreciation and 70,644 71,491 278,391 251,984
amortization
Interest 35,586 40,144 141,380 158,525
Net gain on debt - (17,711 ) (9,849 ) (26,306 )
extinguishment (3)
Amortization of
convertible debt 967 1,588 4,283 6,598
premium
Prepayment penalty on 1,022 4,201 1,022 4,201
debt restructure
Write-off of FMV
adjustment for debt
paid off on 1,552 - 1,552 -
consolidated joint
venture (4)
Expenses related to - - 3,764 -
tender offer
Total interest 39,127 28,222 142,152 143,018
Hurricane related - 477 127 1,310
expenses
General and 12,015 18,297 39,812 47,832
administrative
Other depreciation and 1,431 1,853 5,161 4,866
amortization
123,217 120,340 465,643 449,010
Loss from continuing (25,723 ) (17,124 ) (94,047 ) (62,306 )
operations
(Loss)/income from
discontinued (62 ) (735 ) 2,424 806,173
operations
Consolidated net (25,785 ) (17,859 ) (91,623 ) 743,867
(loss)/income
Net loss/(income)
attributable to 916 2,521 4,091 (46,077 )
non-controlling
interests
Net (loss)/income
attributable to UDR, (24,869 ) (15,338 ) (87,532 ) 697,790
Inc.
Distributions to
preferred stockholders (931 ) (931 ) (3,724 ) (3,724 )
- Series E
(Convertible)
Distributions to
preferred stockholders (1,581 ) (1,869 ) (7,188 ) (8,414 )
- Series G
Discount on preferred 2,586 - 2,586 3,056
stock repurchases, net
Net (loss)/income
available to common $ (24,795 ) $ (18,138 ) $ (95,858 ) $ 688,708
stockholders
Earnings per weighted
average common share -
basic and diluted:
Loss from continuing
operations available ($0.16 ) ($0.13 ) ($0.66 ) ($0.90 )
to common stockholders
Income from
discontinued $ 0.00 $ 0.00 $ 0.02 $ 6.19
operations
Net (loss)/income
available to common ($0.16 ) ($0.13 ) ($0.64 ) $ 5.29
stockholders
Common distributions $ 0.180 $ 1.300 $ 0.845 $ 2.290
declared per share
Weighted average
number of common 152,672 134,916 149,090 130,219
shares outstanding -
basic
Weighted average
number of common 152,672 134,916 149,090 130,219
shares outstanding -
diluted
(1) Includes $0 and $16,000 equity loss on Bellevue Plaza and Elements Too
joint ventures for the three and twelve months ended December 31, 2009.
(2) As of December 2009, UDR began consolidating Bellevue Plaza, Elements Too
and 989 Elements joint ventures.
(3) Includes $0 and $3,365 write-off of convertible debt premium for the three
and twelve months ended December 31, 2009.
(4) UDR paid off 989 Elements debt of $33.4 million in December 2009.
UDR
Funds From Operations
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
In thousands, except per 2009 2008 2009 2008
share amounts
Net (loss)/income $ (24,869 ) $ (15,338 ) $ (87,532 ) $ 697,790
attributable to UDR, Inc.
Distributions to preferred (2,512 ) (2,800 ) (10,912 ) (12,138 )
stockholders
Real estate depreciation
and amortization, 70,644 71,491 278,391 251,984
including discontinued
operations
Non-controlling interest (916 ) (2,521 ) (4,091 ) 46,077
Real estate depreciation
and amortization on 1,175 1,138 4,759 4,502
unconsolidated joint
ventures
Net gains on the sale of
depreciable property in 97 497 (2,343 ) (787,058 )
discontinued operations,
excluding RE3
Funds from operations $ 43,619 $ 52,467 $ 178,272 $ 201,157
("FFO") - basic
Distribution to preferred
stockholders - Series E 931 931 3,724 3,724
(Convertible)
Funds from operations - $ 44,550 $ 53,398 $ 181,996 $ 204,881
diluted
FFO per common share - $ 0.27 $ 0.37 $ 1.14 $ 1.45
basic
FFO per common share - $ 0.27 $ 0.36 $ 1.14 $ 1.43
diluted
Write-off of convertible
debt premium for - 3,333 3,365 3,333
repurchases (1)
Amortization of
convertible debt premium 967 1,588 4,283 6,598
(1)
Funds from operations as $ 45,517 $ 58,319 $ 189,644 $ 214,812
adjusted - diluted
FFO as adjusted per common $ 0.28 $ 0.40 $ 1.19 $ 1.50
share - diluted
Weighted average number of
common shares and OP Units 158,831 143,235 155,796 138,970
outstanding - basic
Weighted average number of
common shares, OP Units,
and common stock
equivalents outstanding - 163,427 146,870 159,561 142,904
diluted
(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.
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
December 31, December 31,
In thousands, except share and per share 2009 2008
amounts
(unaudited) (unaudited)
ASSETS
Real estate owned:
Real estate held for investment $ 5,995,290 $ 5,644,930
Less: accumulated depreciation (1,350,067 ) (1,078,637 )
4,645,223 4,566,293
Real estate under development
(net of accumulated depreciation of $1,226 318,531 186,771
and $52)
Total real estate owned, net of accumulated 4,963,754 4,753,064
depreciation
Cash and cash equivalents 5,985 12,740
Marketable securities 37,650 -
Restricted cash 8,879 7,726
Deferred financing costs, net 26,601 29,168
Notes receivable 7,800 207,450
Investment in unconsolidated joint ventures 14,126 47,048
Other assets 67,822 85,842
Other assets - real estate held for - 767
disposition
Total assets $ 5,132,617 $ 5,143,805
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $ 1,989,434 $ 1,462,471
Unsecured debt 1,437,155 1,798,662
Real estate taxes payable 16,976 14,035
Accrued interest payable 19,146 20,744
Security deposits and prepaid rent 31,798 28,829
Distributions payable 30,857 190,189
Deferred gains on the sale of depreciable 28,826 28,845
property
Accounts payable, accrued expenses, and other 80,685 71,395
liabilities
Other liabilities - real estate held for - 1,204
disposition
Total liabilities 3,634,877 3,616,374
Redeemable non-controlling interests in 98,758 108,092
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 46,571 46,571
December 31, 2008)
3,432,962 shares of 6.75% Series G
Cumulative Redeemable issued
and outstanding (4,430,700 shares at 85,824 110,768
December 31, 2008)
Common stock, $0.01 par value; 250,000,000
shares authorized
155,465,482 shares issued and outstanding 1,555 1,374
(137,423,074 shares at December 31, 2008)
Additional paid-in capital 1,948,669 1,717,940
Distributions in excess of net income (687,180 ) (448,737 )
Accumulated other comprehensive loss, net 2 (11,927 )
Total UDR, Inc. stockholders' equity 1,395,441 1,415,989
Non-controlling interest 3,541 3,350
Total equity 1,398,982 1,419,339
Total liabilities and stockholders' equity $ 5,132,617 $ 5,143,805
Source: UDR, Inc.
Contact: UDR, Inc.
H. Andrew Cantor, 720-283-6083