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Section 1: 8-K (8-K)

0000074208false00000742082020-02-112020-02-11

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 11, 2020

UDR, Inc.

(Exact name of registrant as specified in its charter)

Maryland

1-10524

54-0857512

(State or other jurisdiction

(Commission

(I.R.S. Employer

of incorporation)

File Number)

Identification No.)

1745 Shea Center Drive, Suite 200,
Highlands Ranch, Colorado

80129

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (720283-6120

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01

UDR

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company         

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Item 2.02 Results of Operations and Financial Condition.

On February 11, 2020, UDR, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2019. This press release is furnished as Exhibit 99.1 to this Report and refers to supplemental financial information that is available on the Company’s website and furnished as Exhibit 99.2 to this Report. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 Ex. No.

    

 Description

 99.1

 Earnings press release dated February 11, 2020.

 99.2

 Supplemental Financial Information dated February 11, 2020.

104

Cover Page Interactive Data File – The cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

UDR, Inc.

 February 11, 2020

By:

 /s/ Joseph D. Fisher

 Joseph D. Fisher

 Senior Vice President and Chief Financial Officer

 (Principal Financial Officer)

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Section 2: EX-99.1 (EX-99.1)

udr_Ex99_1

 

 

 

 

 

Image - Image1.jpeg

 

Exhibit 99.1

 

Press Release

 

 

 

 

DENVER, CO – February 11, 2020

 

 

Contact: Trent Trujillo

 

 

 

 

Phone:   720.283.6135

 

UDR ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2019 RESULTS AND 2020 GUIDANCE

 

UDR, Inc. (the “Company”) Fourth Quarter 2019 Highlights:

·

Net income per share was $0.33, Funds from Operations (“FFO”) per share was $0.46, FFO as Adjusted (“FFOA”) per share was $0.54, and Adjusted FFO (“AFFO”) per share was $0.48.

·

Net income attributable to common stockholders was $96.9 million as compared to $81.2 million in the prior year period. The increase was primarily due to net operating income (“NOI”) growth and higher gains on the sale of unconsolidated investments.

·

Year-over-year (“YOY”) same-store (“SS”) revenue, expense and NOI growth was 3.3 percent, 1.3 percent and 4.1 percent, respectively.

·

The Company’s operating margin (property NOI divided by property rental income) was 71.1 percent as compared to 70.8 percent in the prior year period. The continued implementation of the Company’s Next Generation Operating Platform drove SS controllable operating margin expansion of 60 basis points YOY to 84.8 percent, and reduced SS controllable expenses by 0.6 percent YOY.

·

Simplified the Company’s structure by closing a previously announced $1.8 billion transaction to halve the size of the UDR/MetLife Joint Venture in an accretive manner.

·

Invested $115.0 million in Brio, a 259-home Developer Capital Program community in Bellevue, WA.

·

Subsequent to quarter end, the Company acquired The Slade at Channelside, a 294-home community in Tampa, FL, for $85.2 million and closed on the acquisition of The Arbory, a 276-home Developer Capital Program community in suburban Portland, OR, pursuant to its option and for a cash outlay of $53.9 million.

 

Full-Year 2019 Highlights:

·

Net income per share was $0.63, FFO per share was $2.03, FFOA per share was $2.08, and AFFO per share was $1.92.

·

Net income attributable to common stockholders was $180.9 million as compared to $199.2 million in the prior year period. The decrease was primarily due to lower gains on the sale of real estate.

·

YOY SS revenue, expense and NOI growth was 3.6 percent, 2.5 percent and 4.0 percent, respectively.

·

The Company’s operating margin (property NOI divided by property rental income) was 71.0 percent as compared to 70.7 percent in the prior year period. The Company’s Next Generation Operating Platform drove controllable operating margin expansion of 50 basis points YOY to 84.6 percent, and limited SS controllable expense growth to 0.9 percent YOY.

·

Installed SmartHome technology in 30,370 homes, or 60 percent of total homes, as of year-end.

·

Accretively grew the Company through $1.8 billion of acquisitions with significant operating/investment upside in markets targeted for expansion.

·

Simplified the Company’s structure by winding down the UDR/Kuwait Finance House (“KFH”) JV and halving the size of the UDR/MetLife JV in an accretive manner.

·

Funded accretive external growth with premium valued equity by issuing approximately 15.8 million common shares at a weighted average net price of $45.85 for proceeds of $725.6 million.

·

Issued $1.1 billion of long-duration unsecured debt (including a $300.0 million “green bond”) at a weighted average 3.2 percent interest rate, and prepaid $700.0 million of unsecured debt at a weighted average 4.2 percent interest rate.

1

“2019 was an active and very successful year for UDR and our investors. We accretively grew the Company through $1.8 billion of well-timed acquisitions, realized efficiencies and controllable margin expansion from implementing the initial phases of our Next Generation Operating Platform, advanced our predictive analytics platform which we use for market selection, simplified our structure by winding down the KFH JV and halving our relationship with MetLife, and actively de-risked our balance sheet in an accretive manner. 2020 has started off well. We expect it will be another great year for UDR and our investors,” said Tom Toomey, UDR’s Chairman and CEO.

 

 

 

 

 

 

Q4 2019

Q4 2018

FY 2019

FY 2018

Net income per common share, diluted

$0.33

$0.30

$0.63

$0.74

Conversion from GAAP share count

(0.026)

(0.028)

(0.052)

(0.069)

Net gain on the sale of depreciable real estate owned, incl. JVs

(0.360)

(0.221)

(0.402)

(0.459)

Cumulative effect of change in accounting principle

-

-

-

(0.007)

Depreciation and amortization, including JVs

0.489

0.411

1.793

1.653

Noncontrolling interests and preferred dividends

0.026

0.028

0.060

0.075

FFO per common share and unit, diluted

$0.46

$0.49

$2.03

$1.93

Cost associated with debt extinguishment and other

0.073

0.010

0.095

0.012

Promoted interest on settlement of note receivable, net of tax

-

-

(0.021)

-

Legal and other costs

-

0.001

0.012

0.005

Net gain on the sale of non-depreciable real estate owned

-

-

(0.017)

-

Unrealized (gain)/loss on unconsolidated investments, net of tax

0.000

-

(0.011)

-

Joint venture development success fee

-

-

(0.012)

-

Severance costs and other restructuring expense

0.000

0.000

0.001

0.000

Casualty-related charges/(recoveries), including JVs, net

0.005

(0.001)

0.001

0.008

FFOA per common share and unit, diluted

$0.54

$0.50

$2.08

$1.96

Recurring capital expenditures

(0.057)

(0.042)

(0.164)

(0.158)

AFFO per common share and unit, diluted

$0.48

$0.46

$1.92

$1.80

A reconciliation of FFO, FFOA and AFFO to GAAP Net income attributable to common stockholders can be found on Attachment 2 of the Company’s fourth quarter Supplemental Financial Information.

 

Operations

 

In the fourth quarter, total revenue increased by $37.2 million year-over-year, or 13.9 percent, to $304.8 million. This increase was primarily attributable to growth in revenue from operating and acquisition communities.

In the fourth quarter, same-store NOI increased 4.1 percent year-over-year, driven by same-store revenue growth of 3.3 percent and same-store expense growth of 1.3 percent. Weighted average same-store physical occupancy increased by 10 basis points to 96.9 percent versus the prior year period. The fourth quarter annualized rate of turnover decreased by 60 basis points to 40.2 percent versus the prior year period.

Summary of Same-Store Results Fourth Quarter 2019 versus Fourth Quarter 2018

 

 

 

 

 

 

 

 

 

 

 

 

Region

Revenue Growth

Expense

Growth/

(Decline)

NOI Growth/

(Decline)

% of Same‑Store

Portfolio(1)

Same-Store

Occupancy(2)

Number of Same-Store Homes(3)

West

4.2%

(0.1)%

5.5%
46.3%
96.6%
13,942

Mid-Atlantic

3.0%
1.7%
3.5%
23.1%
97.3%
9,877

Southeast

3.2%
2.6%
3.5%
12.6%
96.9%
7,683

Northeast

1.3%
9.7%

(2.5)%

11.8%
96.9%
2,840

Southwest

3.1%

(8.7)%

10.9%
6.2%
96.8%
3,835

Total

3.3%
1.3%
4.1%
100.0%
96.9%
38,177

(1)Based on Q4 2019 SS NOI.

(2)Weighted average same-store occupancy for the quarter.

(3)During the fourth quarter, 38,177 apartment homes were classified as same-store. The Company defines QTD SS Communities as those communities stabilized for five full consecutive quarters. These communities were owned and had stabilized occupancy and 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.

 

2

In the fourth quarter, sequential same-store NOI increased by 1.1 percent, driven by a same-store revenue decrease of 0.3 percent and a same-store expense decrease of 3.7 percent. Weighted average same-store physical occupancy remained at 96.9 percent sequentially.

 

For the twelve months ended December 31, 2019, total revenue increased by $105.3 million year-over-year, or 10.1 percent, to $1.2 billion. This increase was primarily attributable to growth in revenue from operating and acquisition communities.

For the twelve months ended December 31, 2019, same-store NOI increased 4.0 percent year-over-year, driven by same-store revenue growth of 3.6 percent and same-store expense growth of 2.5 percent. Weighted average same-store physical occupancy remained at 96.9 percent versus the prior year period. The full-year rate of turnover decreased by 20 basis points year-over-year to 49.6 percent.

 

Summary of Same-Store Results Full-Year 2019 versus Full-Year 2018

 

 

 

 

 

 

 

 

 

Region

Revenue Growth

Expense

Growth/ (Decline)

NOI Growth/ (Decline)

% of

Same-Store

Portfolio(1)

Same-Store

Occupancy(2)

Number of Same-Store Homes(3)

West

4.4%
2.2%
5.1%
46.6%
96.6%
13,942

Mid-Atlantic

3.2%
1.5%
3.9%
23.1%
97.4%
9,877

Southeast

3.7%
3.4%
3.8%
12.9%
96.8%
7,683

Northeast

2.1%
7.4%

(0.3)%

12.1%
97.0%
2,840

Southwest

2.7%

(2.1)%

6.0%
5.3%
97.0%
3,617

Total

3.6%
2.5%
4.0%
100.0%
96.9%
37,959

(1)Based on FY 2019 NOI.

(2)Weighted average same-store physical occupancy for FY 2019.

(3)For the twelve months ended December 31, 2019, 37,959 apartment homes were classified as same-store. The Company defines YTD SS Communities as those communities stabilized for two full consecutive calendar years. These communities were owned and had stabilized occupancy and 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.

 

Wholly Owned Transactional Activity

 

Subsequent to quarter end, the Company acquired The Slade at Channelside, a 294-home community in Tampa, FL, for $85.2 million or $290,000 per home. At the time of the acquisition, the community had average monthly revenue per occupied home of $1,898, occupancy of 92 percent and was 11 years old.

 

Joint Venture Transactional Activity

 

During the quarter, the Company closed on a previously announced $1.8 billion transaction with MetLife, whereby the Company acquired the approximately 50 percent interest not previously owned in 10 UDR/MetLife JV operating communities, one community under development and four development land sites, valued at $1.1 billion, or $564.2 million at UDR’s share; and sold its approximately 50 percent ownership interest in five UDR/MetLife JV communities valued at $645.8 million, or $322.9 million at UDR’s share, to MetLife. See the press release entitled “UDR Announces UDR/MetLife Investment Management Joint Venture Transaction Valued at $1.76 Billion and Increases Select Full-Year Earnings Guidance Ranges”, which can be found at ir.udr.com, for further details.

 

Development Activity

At the end of the fourth quarter, the Company’s development pipeline totaled $278.5 million and was 25 percent funded. The development pipeline is currently expected to produce a weighted average spread between stabilized yields and current market cap rates of 150 to 200 basis points.

During the quarter, the Company commenced the construction of Dublin, a 220-home community in Dublin, CA. Dublin has a total budgeted cost of $117.0 million, or $531,800 per home, and is expected to be completed during the second quarter of 2022.

3

Developer Capital Program (“DCP”) Activity

 

At the end of the fourth quarter, the Company’s DCP investments, including accrued return, totaled $405.3 million.

During the quarter, the Company invested $115.0 million into Brio, a 259-home community in lease-up in Bellevue, WA, at a 4.75 percent interest rate through a secured note. The Company has a $170.0 million fixed price purchase option to acquire the community in 2021.

Subsequent to quarter end, the Company  closed on the acquisition of the Arbory pursuant to its option, acquiring the approximately 51 percent interest it did not own from its West Coast Development Joint Venture. The Arbory is a 276-home community completed in 2018 in suburban Portland, OR. The cash outlay for the acquisition totaled $53.9 million, including the payoff of debt, and the Company’s blended all-in investment in the community was $72.3 million. At the time of acquisition, average monthly revenue per occupied home was $1,545 and occupancy was 94 percent.

 

Capital Markets and Balance Sheet Activity

 

During the fourth quarter, the Company,

·

Settled all 1.3 million common shares sold under its previously announced forward sales agreement at a forward price per share of $47.41 for net proceeds of $63.5 million. Uses of proceeds include external growth opportunities and general corporate purposes. 

·

Issued $400.0 million of unsecured debt at a weighted average effective interest rate of 3.1 percent with a weighted average years to maturity of 13.9 years. $300.0 million of this debt qualified as a “green bond” and represented the Company’s first use of this ESG-friendly product.

·

Prepaid $400.0 million of 4.6 percent unsecured debt. The make-whole amount totaled approximately $22.0 million.

 

At December 31, 2019, the Company had approximately $866.5 million of liquidity through a combination of cash and undrawn capacity on its credit facilities.

The Company’s total indebtedness as of December 31, 2019 was $4.7 billion. The Company ended the quarter with fixed‑rate debt representing 92.0 percent of its total debt, a total blended interest rate of 3.43 percent and a weighted average years to maturity of 7.1 years. The Company’s consolidated leverage was 34.2 percent versus 31.2 percent a year ago, its consolidated net‑debt-to-EBITDAre was 6.1x versus 5.0x a year ago and its consolidated fixed charge coverage ratio was 4.9x versus 4.6x a year ago.

Senior Management

 

Subsequent to quarter end, the Company announced that Warren L. Troupe, Senior Executive Vice President, will transition to the role of Senior Advisor to the Office of the Chairman effective April 1, 2020. In conjunction with the transition, Mr. Troupe has agreed to a consulting agreement with the Company running through December 2022 and renewable by either party thereafter. In this role, Mr. Troupe will continue to assist with the Company’s transactional, risk management, legal and capital markets activities, as well as provide expertise pertaining to special projects for the Chairman.

 

Dividend

 

As previously announced, the Company’s Board of Directors declared a regular quarterly dividend on its common stock for the fourth quarter of 2019 in the amount of $0.3425 per share. The dividend was paid in cash on January 31, 2020 to UDR common stock shareholders of record as of January 10, 2020. The fourth quarter 2019 dividend represented the 189th consecutive quarterly dividend paid by the Company on its common stock.

 

In conjunction with this release, the Company’s Board of Directors has announced a 2020 annualized dividend per share of $1.44, a 5.1 percent increase over 2019.

4

 

 

Outlook

 

For the first quarter of 2020, the Company has established the following earnings guidance ranges:

 

 

 

 

 

 

 

Net income per share

    

$0.01 to $0.03

 

 

    

 

 

 

 

 

 

 

 

FFO per share

 

$0.52 to $0.54

 

 

 

 

 

 

 

 

 

 

 

FFOA per share

 

$0.53 to $0.55

 

 

 

 

 

 

 

 

 

 

 

AFFO per share

 

$0.50 to $0.52

 

 

 

 

 

 

For the full-year 2020, the Company has established the following earnings guidance ranges:

 

Net income per share

    

$0.12 to $0.16

 

 

    

 

 

 

 

 

 

 

 

FFO per share

 

$2.17 to $2.21

 

 

 

 

 

 

 

 

 

 

 

FFOA per share

 

$2.18 to $2.22

 

 

 

 

 

 

 

 

 

 

 

AFFO per share

 

$2.01 to $2.05

 

 

 

 

 

Full-Year 2019 FFOA per share as compared to full-year 2020 FFOA per share guidance at the midpoint:

 

The difference between the Company’s full-year 2019 FFOA of $2.08 per share and the $2.20 per share midpoint of its full-year 2020 FFOA guidance range is primarily due to:

 

·

A positive impact of approximately $0.07 from same-store, stabilized JVs and commercial operations;

·

A positive impact of approximately $0.05 from transactional activity, DCP, development, redevelopment;

·

A positive impact of approximately $0.03 from lower financing costs;

·

Flat year-over-year G&A; and,

·

A negative impact of approximately $0.03 from a variety of other corporate items including ground lease resets and the amortization of certain NextGen Operating Platform investments.

 

For the full-year 2020,  the Company has established the following same-store growth and occupancy guidance ranges:

 

Revenue growth

    

2.70% to 3.70%

 

 

    

 

 

 

 

 

 

 

 

Expense growth

 

2.20% to 3.00%

 

 

 

 

 

 

 

 

 

 

 

Net operating income growth

 

2.90% to 3.90%

 

 

 

 

 

 

 

 

 

 

 

Physical occupancy

 

96.9% to 97.1%

 

 

 

 

 

Additional assumptions for the Company’s first quarter and full-year 2020 guidance can be found on Attachment 15 of the Company’s fourth quarter Supplemental Financial Information. A reconciliation of FFO per share, FFOA per share and AFFO per share to GAAP Net income per share can be found on Attachment 16(D) of the Company’s fourth quarter Supplemental Financial Information. Non-GAAP financial measures and other terms, as used in this earnings release, are defined and further explained on Attachments 16(A) through 16(D), “Definitions and Reconciliations,” of the Company’s fourth quarter Supplemental Financial Information.

5

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.

 

Conference Call and Webcast Information

 

UDR will host a webcast and conference call at 1:00 p.m. Eastern Time on February 12, 2020 to discuss fourth quarter and full-year 2019 results as well as guidance and high-level views for 2020.

 

The webcast will be available on UDR's website at ir.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, download and install any necessary audio software.

 

To participate in the teleconference dial 877-705-6003 for domestic and 201-493-6725 for international. A passcode is not necessary.

 

A replay of the conference call will be available through March 12, 2020, by dialing 844-512-2921 for domestic and 412-317-6671 for international and entering the confirmation number, 13697880, when prompted for the passcode.

 

A replay of the call will also be available for 30 days on UDR's website at ir.udr.com.

Full Text of the Earnings Report and Supplemental Data

 

The full text of the earnings report and Supplemental Financial Information will be available on the Company’s website at ir.udr.com.  

 

6

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. Such statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward‑looking statements. Such factors include, among other things, unfavorable changes in the apartment market, changing economic conditions, the impact of inflation/deflation on rental rates and property operating expenses, expectations concerning the availability of capital and the stability of the capital markets, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments and redevelopments, delays in completing lease-ups on schedule or at expected rent and occupancy levels, expectations on job growth, home affordability and demand/supply ratio for multifamily housing, expectations concerning development and redevelopment activities, expectations on occupancy levels and rental rates, expectations concerning joint ventures and partnerships with third parties, 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 press release, 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 under the U.S. securities laws.

 

About UDR, Inc. 

UDR, Inc. (NYSE: UDR), an S&P 500 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, 2019, UDR owned or had an ownership position in 51,294 apartment homes including 878 homes under development. For over 47 years, UDR has delivered long-term value to shareholders, the best standard of service to residents and the highest quality experience for associates.  

 

 

7

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Section 3: EX-99.2 (EX-99.2)

udr_Ex99_2

Exhibit 99.2

Financial Highlights

 

UDR, Inc.

As of End of Fourth Quarter 2019

(Unaudited) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual Results

 

Actual Results

 

Guidance as of December 31, 2019

Dollars in thousands, except per share and unit

 

 

 

4Q 2019

 

YTD 2019

 

1Q 2020

 

Full-Year 2020

 

 

 

 

 

 

 

 

 

 

 

GAAP Metrics

 

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to UDR, Inc.

 

 

 

$97,959

 

$184,965

 

--

 

--

Net income/(loss) attributable to common stockholders

 

 

 

$96,928

 

$180,861

 

--

 

--

Income/(loss) per weighted average common share, diluted

 

 

 

$0.33

 

$0.63

 

$0.01 to $0.03

 

$0.12 to $0.16

 

 

 

 

 

 

 

 

 

 

 

Per Share Metrics

 

 

 

 

 

 

 

 

 

 

FFO per common share and unit, diluted

 

 

 

$0.46

 

$2.03

 

$0.52 to $0.54

 

$2.17 to $2.21

FFO as Adjusted per common share and unit, diluted

 

 

 

$0.54

 

$2.08

 

$0.53 to $0.55

 

$2.18 to $2.22

Adjusted Funds from Operations ("AFFO") per common share and unit, diluted

 

 

 

$0.48

 

$1.92

 

$0.50 to $0.52

 

$2.01 to $2.05

Dividend declared per share and unit

 

 

 

$0.3425

 

$1.37

 

$0.36

 

$1.44 (2)

 

 

 

 

 

 

 

 

 

 

 

Same-Store Operating Metrics

 

 

 

 

 

 

 

 

 

 

Revenue growth

 

 

 

3.3%

 

3.6%

 

--

 

2.70% - 3.70%

Expense growth

 

 

 

1.3%

 

2.5%

 

--

 

2.20% - 3.00%

NOI growth

 

 

 

4.1%

 

4.0%

 

--

 

2.90% - 3.90%

Physical Occupancy

 

 

 

96.9%

 

96.9%

 

--

 

96.9% - 97.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Metrics

 

 

 

Homes

 

Communities

 

% of Total NOI

 

 

Same-Store

 

 

 

38,177

 

123

 

77.3%

 

 

Stabilized, Non-Mature

 

 

 

4,853

 

13

 

11.2%

 

 

Acquired Communities

 

 

 

3,327

 

10

 

2.6%

 

 

Redevelopment

 

 

 

653

 

2

 

2.0%

 

 

Development, completed

 

 

 

-

 

-

 

-

 

 

Non-Residential / Other

 

 

 

N/A

 

N/A

 

1.4%

 

 

Joint Venture (includes completed Joint Venture developments) (3)

 

 

 

3,130

 

14

 

5.3%

 

 

Developer Capital Program - West Coast Development JV

 

 

 

276

 

1

 

0.2%

 

 

Total completed homes

 

 

 

50,416

 

163

 

100%

 

 

Under Development

 

 

 

878

 

3

 

-

 

 

Joint Venture Under Development

 

 

 

-

 

-

 

-

 

 

Total Quarter-end homes (3)(4)

 

 

 

51,294

 

166

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Metrics (adjusted for non-recurring items)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4Q 2019

 

4Q 2018

 

 

 

 

Consolidated Interest Coverage Ratio

 

 

 

5.0x

 

4.7x

 

 

 

 

Consolidated Fixed Charge Coverage Ratio

 

 

 

4.9x

 

4.6x

 

 

 

 

Consolidated Debt as a percentage of Total Assets

 

 

 

34.2%

 

31.2%

 

 

 

 

Consolidated Net Debt-to-EBITDAre

 

 

 

6.1x

 

5.0x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Picture 1


(1)

See Attachment 16 for definitions and other terms.

(2)

Annualized for 2020.

(3)

Joint venture NOI is based on UDR's share.  Homes and communities at 100%.

(4)

Excludes 2,341 homes that are part of the Developer Capital Program – Other as described in Attachment 12(B).

 

1

Picture 9

Attachment 1

 

UDR, Inc.

Consolidated Statements of Operations

(Unaudited) (1)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

 

December 31,

In thousands, except per share amounts

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

Rental income

 

$
302,745

 

$
264,732

 

$
1,138,138

 

$
1,035,105

Joint venture management and other fees (2)

 

2,073

 

2,935

 

14,055

 

11,754

Total revenues

 

304,818

 

267,667

 

1,152,193

 

1,046,859

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Property operating and maintenance

 

47,245

 

42,949

 

178,947

 

169,078

Real estate taxes and insurance

 

40,264

 

34,371

 

150,888

 

133,912

Property management

 

8,703

 

7,280

 

32,721

 

28,465

Other operating expenses

 

2,800

 

3,952

 

13,932

 

12,100

Real estate depreciation and amortization

 

143,464

 

106,469

 

501,257

 

429,006

General and administrative

 

14,531

 

10,955

 

51,533

 

46,983

Casualty-related charges/(recoveries), net

 

1,316

 

(243)

 

474

 

2,121

Other depreciation and amortization

 

1,713

 

1,616

 

6,666

 

6,673

Total operating expenses

 

260,036

 

207,349

 

936,418

 

828,338

 

 

 

 

 

 

 

 

 

Gain/(loss) on sale of real estate owned

 

 -

 

65,897

 

5,282

 

136,197

Operating income

 

44,782

 

126,215

 

221,057

 

354,718

 

 

 

 

 

 

 

 

 

Income/(loss) from unconsolidated entities (3) (4)

 

118,486

 

36

 

137,873

 

(5,055)

Interest expense

 

(37,124)

 

(35,334)

 

(141,323)

 

(130,869)

Cost associated with debt extinguishment and other

 

(23,311)

 

(2,892)

 

(29,594)

 

(3,299)

Total interest expense

 

(60,435)

 

(38,226)

 

(170,917)

 

(134,168)

Interest income and other income/(expense), net (5)

 

2,406

 

1,660

 

15,404

 

6,735

 

 

 

 

 

 

 

 

 

Income/(loss) before income taxes

 

105,239

 

89,685

 

203,417

 

222,230

Tax (provision)/benefit, net (3) (5)

 

(2)

 

(70)

 

(3,838)

 

(688)

 

 

 

 

 

 

 

 

 

Net Income/(loss)

 

105,237

 

89,615

 

199,579

 

221,542

Net (income)/loss attributable to redeemable noncontrolling interests in the OP and DownREIT Partnership (6)

 

(7,235)

 

(7,396)

 

(14,426)

 

(18,215)

Net (income)/loss attributable to noncontrolling interests

 

(43)

 

(80)

 

(188)

 

(221)

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to UDR, Inc.

 

97,959

 

82,139

 

184,965

 

203,106

Distributions to preferred stockholders - Series E (Convertible)

 

(1,031)

 

(971)

 

(4,104)

 

(3,868)

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to common stockholders

 

$
96,928

 

$
81,168

 

$
180,861

 

$
199,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income/(loss) per weighted average common share - basic:

 

$ 0.33

 

$ 0.30

 

$ 0.63

 

$ 0.74

Income/(loss) per weighted average common share - diluted:

 

$ 0.33

 

$ 0.30

 

$ 0.63

 

$ 0.74

 

 

 

 

 

 

 

 

 

Common distributions declared per share

 

$0.3425

 

$0.3225

 

$ 1.37

 

$ 1.29

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

293,107

 

270,107

 

285,247

 

268,179

Weighted average number of common shares outstanding - diluted

 

294,073

 

270,755

 

286,015

 

269,483


(1)

See Attachment 16 for definitions and other terms.

(2)

During the twelve months ended December 31, 2019, UDR earned a development success fee of approximately $3.8 million as a result of meeting specific return thresholds.

(3)

During the twelve months ended December 31, 2019, UDR recorded net unrealized gains on unconsolidated technology investments, net of tax, of approximately $3.3 million.  The estimated tax provision on the net unrealized gains for the twelve months ended December 31, 2019, was approximately $1.3 million. 

(4)

In August 2019, UDR announced that it had entered into an agreement with MetLife to acquire the approximately 50% ownership interest not previously owned in 10 UDR/MetLife operating communities with 3,327 homes, one development community and four land parcels valued at $1.1 billion, or $564 million at UDR’s share, and to sell its approximately 50% ownership interest in five UDR/MetLife operating communities with 1,001 homes, valued at $646 million, or $323 million at UDR’s share, to MetLife.  The transaction closed during the fourth quarter of 2019.  UDR recognized gains of $114.9 million on the disposition of the five UDR/MetLife JV operating communities.

(5)

During the twelve months ended December 31, 2019, UDR earned a promoted interest of $8.5 million on the payment of a promissory note receivable from a multifamily technology company.  The estimated tax provision on the payment was approximately $2.0 million.

(6)

Due to the quarterly calculation of noncontrolling interests, the sum of the quarterly amounts will not equal the annual totals.

 

2

Picture 9

Attachment 2

 

UDR, Inc.

Funds From Operations

(Unaudited) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

December 31,

 

 

December 31,

In thousands, except per share and unit amounts

 

2019

 

2018

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to common stockholders

 

$

96,928

 

$

81,168

 

$

180,861

 

$

199,238

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

143,464

 

 

106,469

 

 

501,257

 

 

429,006

Noncontrolling interests

 

 

7,278

 

 

7,476

 

 

14,614

 

 

18,436

Real estate depreciation and amortization on unconsolidated joint ventures

 

 

12,454

 

 

16,040

 

 

57,954

 

 

61,871

Cumulative effect of change in accounting principle

 

 

 -

 

 

 -

 

 

 -

 

 

(2,100)

Net gain on the sale of unconsolidated depreciable property (2)

 

 

(114,897)

 

 

 -

 

 

(125,407)

 

 

 -

Net gain on the sale of depreciable real estate owned

 

 

 -

 

 

(65,897)

 

 

 -

 

 

(136,197)

Funds from operations ("FFO") attributable to common stockholders and unitholders, basic

 

$

145,227

 

$

145,256

 

$

629,279

 

$

570,254

 

 

 

 

 

 

 

 

 

 

 

 

 

  Distributions to preferred stockholders - Series E (Convertible) (3)

 

 

1,031

 

 

971

 

 

4,104

 

 

3,868

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO attributable to common stockholders and unitholders, diluted

 

$

146,258

 

$

146,227

 

$

633,383

 

$

574,122

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per weighted average common share and unit, basic 

 

$

0.46

 

$

0.49

 

$

2.04

 

$

1.95

FFO per weighted average common share and unit, diluted

 

$

0.46

 

$

0.49

 

$

2.03

 

$

1.93

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares and OP/DownREIT Units outstanding - basic

 

 

315,004

 

 

294,661

 

 

308,020

 

 

292,727

Weighted average number of common shares, OP/DownREIT Units, and common stock

 

 

 

 

 

 

 

 

 

 

 

 

   equivalents outstanding - diluted

 

 

318,981

 

 

298,321

 

 

311,799

 

 

297,042

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of adjustments to FFO:

 

 

 

 

 

 

 

 

 

 

 

 

  Cost associated with debt extinguishment and other

 

$

23,311

 

$

2,994

 

$

29,594

 

$

3,476

  Promoted interest on settlement of note receivable, net of tax (2)

 

 

 -

 

 

 -

 

 

(6,482)

 

 

 -

  Legal and other costs (4)

 

 

 -

 

 

434

 

 

3,660

 

 

1,622

  Net gain on the sale of non-depreciable real estate owned

 

 

 -

 

 

 -

 

 

(5,282)

 

 

 -

  Unrealized (gain)/loss on unconsolidated investments, net of tax (2)

 

 

73

 

 

 -

 

 

(3,300)

 

 

 -

  Joint venture development success fee (2)

 

 

 -

 

 

 -

 

 

(3,750)

 

 

 -

  Severance costs and other restructuring expense

 

 

116

 

 

114

 

 

390

 

 

114

  Casualty-related charges/(recoveries), net

 

 

1,463

 

 

(191)

 

 

636

 

 

2,364

  Casualty-related charges/(recoveries) on unconsolidated joint ventures, net

 

 

50

 

 

 -

 

 

(374)

 

 

 -

 

 

$

25,013

 

$

3,351

 

$

15,092

 

$

7,576

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO as Adjusted attributable to common stockholders and unitholders, diluted

 

$

171,271

 

$

149,578

 

$

648,475

 

$

581,698

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO as Adjusted per weighted average common share and unit, diluted

 

$

0.54

 

$

0.50

 

$

2.08

 

$

1.96

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring capital expenditures

 

 

(18,101)

 

 

(12,516)

 

 

(51,246)

 

 

(46,915)

AFFO attributable to common stockholders and unitholders, diluted

 

$

153,170

 

$

137,062

 

$

597,229

 

$

534,783

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per weighted average common share and unit, diluted

 

$

0.48

 

$

0.46

 

$

1.92

 

$

1.80


(1)

See Attachment 16 for definitions and other terms.

(2)

See footnotes 2, 3, 4 and 5 on Attachment 1.

(3)

Series E preferred shares are dilutive for purposes of calculating FFO per share for the three and twelve months ended December 31, 2019 and December 31, 2018.  Consequently, distributions to Series E preferred stockholders are added to FFO and the weighted average number of shares are included in the denominator when calculating FFO per common share and unit, diluted.

(4)

During 1Q19, UDR adopted ASU No. 2016-02, Leases (codified as ASC 842), which changed how UDR recognizes costs incurred to obtain resident and retail leases.  Prior to adoption, UDR deferred and amortized over the lease term certain direct leasing costs.  Under the updated standard, only those direct costs that are incremental to the arrangement may be deferred and any direct costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained (“non-incremental costs”) shall be expensed as incurred.  The standard also provided a practical expedient whereby an entity need not reassess direct costs for any pre-existing leases upon adoption.  As such, the adoption of the standard resulted in UDR expensing any new non-incremental costs as incurred and continuing to amortize the pre-existing non-incremental costs deferred upon adoption over the remaining lease terms.  The impact for the twelve months ended December 31, 2019 for the amortization expense related to the pre-existing non-incremental costs was $1.1 million, which is backed out for FFO as Adjusted in Legal and other costs.

3

Picture 9

 

Attachment 3

 

UDR, Inc.

Consolidated Balance Sheets

(Unaudited) (1)

 

 

 

 

 

 

 

 

December 31,

 

December 31,

In thousands, except share and per share amounts

 

2019

 

2018

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

Real estate owned:

 

 

 

 

Real estate held for investment

 

$
12,532,324

 

$
10,196,159

Less: accumulated depreciation

 

(4,131,330)

 

(3,654,160)

Real estate held for investment, net

 

8,400,994

 

6,541,999

Real estate under development

 

 

 

 

(net of accumulated depreciation of $23 and $0)

 

69,754

 

 -

Total real estate owned, net of accumulated depreciation

 

8,470,748

 

6,541,999

 

 

 

 

 

Cash and cash equivalents

 

8,106

 

185,216

Restricted cash

 

25,185

 

23,675

Notes receivable, net

 

153,650

 

42,259

Investment in and advances to unconsolidated joint ventures, net

 

588,262

 

780,869

Operating lease right-of-use assets (2)

 

204,225

 

 -

Other assets

 

186,296

 

137,710

Total assets

 

$
9,636,472

 

$
7,711,728

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

Secured debt

 

$
1,149,441

 

$
601,227

Unsecured debt

 

3,558,083

 

2,946,560

Operating lease liabilities (2)

 

198,558

 

 -

Real estate taxes payable

 

29,445

 

20,608

Accrued interest payable

 

45,199

 

38,747

Security deposits and prepaid rent

 

48,353

 

35,060

Distributions payable

 

109,382

 

97,666

Accounts payable, accrued expenses, and other liabilities

 

90,032

 

76,343

Total liabilities

 

5,228,493

 

3,816,211

 

 

 

 

 

Redeemable noncontrolling interests in the OP and DownREIT Partnership

 

1,018,665

 

972,740

 

 

 

 

 

Equity:

 

 

 

 

Preferred stock, no par value; 50,000,000 shares authorized

 

 

 

 

2,780,994 shares of 8.00% Series E Cumulative Convertible issued

 

 

 

 

and outstanding (2,780,994 shares at December 31, 2018)

 

46,200

 

46,200

14,691,274 shares of Series F outstanding (15,802,393 shares

 

 

 

 

at December 31, 2018)

 

 1

 

 1

Common stock, $0.01 par value; 350,000,000 shares authorized

 

 

 

 

294,588,305 shares issued and outstanding (275,545,900 shares at December 31, 2018)

 

2,946

 

2,755

Additional paid-in capital

 

5,781,975

 

4,920,732

Distributions in excess of net income

 

(2,462,132)

 

(2,063,996)

Accumulated other comprehensive income/(loss), net

 

(10,448)

 

(67)

Total stockholders' equity

 

3,358,542

 

2,905,625

Noncontrolling interests

 

30,772

 

17,152

Total equity

 

3,389,314

 

2,922,777

Total liabilities and equity

 

$
9,636,472

 

$
7,711,728

(1)

See Attachment 16 for definitions and other terms.

(2)

During 1Q19, UDR adopted ASU No. 2016-02, Leases (codified as ASC 842).  The updated standard required lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets (with certain exceptions provided by the standard).  The standard also provided a transition option that permitted entities to not recast the comparative periods presented when transitioning to the standard.  Given that UDR elected the transition option, there are no comparable balances as of December 31, 2018.

 

4

Picture 9

Attachment 4(A)

 

UDR, Inc.

Selected Financial Information

(Unaudited) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

Common Stock and Equivalents

 

 

 

 

 

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

 

 

 

 

 

 

 

 

294,340,740

 

275,239,072

Restricted shares

 

 

 

 

 

 

 

 

 

247,565

 

306,828

Total common shares

 

 

 

 

 

 

 

 

 

294,588,305

 

275,545,900

Restricted unit and common stock equivalents

 

 

 

 

 

 

 

 

 

766,926

 

385,088

Operating and DownREIT Partnership units

 

 

 

 

 

 

 

 

 

20,061,283

 

22,800,064

Class A Limited Partnership units

 

 

 

 

 

 

 

 

 

1,751,671

 

1,751,671

Series E cumulative convertible preferred shares (2)

 

 

 

 

 

 

 

 

 

3,010,843

 

3,010,843

Total common shares, OP/DownREIT units, and common stock equivalents

 

 

 

 

 

 

 

 

 

320,179,028

 

303,493,566