Toggle SGML Header (+)


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 8.01 Other Events.

On February 11, 2020, UDR, Inc. (the “Company”) issued a press release announcing its financial results for the year and quarter ended December 31, 2019. Certain selected financial results and related financial information of the Company from that press release are filed hereto as Exhibit 99.1 and incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 Ex. No.

    

 Description

 99.1

 Selected financial results and related financial information of the Company for the year and quarter ended December 31, 2019.

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 12, 2020

By:

 /s/ Joseph D. Fisher

 Joseph D. Fisher

 Senior Vice President and Chief Financial Officer

 (Principal Financial Officer)

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

udr_Ex99_1_Special_8K

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

The financial results and related financial information of UDR, Inc. (the “Company” or “UDR”) for the quarter and year ended December 31, 2019 are as follows:

 

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

 

 

 

 

 

 

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

Definitions and a reconciliation of FFO, FFOA and AFFO to GAAP Net income attributable to common stockholders can be found at the end of this filing.

 

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.

 

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.

2

 

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.

 

Development Activity

At the end of the fourth quarter, the Company’s development pipeline totaled $278.5 million and was 25 percent funded.  

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.

 

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.

 

3

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.

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 189
th consecutive quarterly dividend paid by the Company on its common stock.

 

The Company’s Board of Directors has announced a 2020 annualized dividend per share of $1.44, a 5.1 percent increase over 2019.

 

Forward-Looking Statements

 

Certain statements made in this filing 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 filing, 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.

 

4

Picture 2

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 definitions and reconciliations at the end of this filing.

(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.

5

Picture 3

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 definitions and reconciliations at the end of this filing.

(2)

See footnotes 2, 3, 4 and 5 on page 5.

(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.

6

Picture 1

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 definitions and reconciliations at the end of this filing.

(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.

7

Picture 4

UDR, Inc.

Operating Information

(Unaudited) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

 

Quarter Ended

Dollars in thousands

 

Homes

 

December 31, 2019

 

September 30, 2019

 

June 30, 2019

 

March 31, 2019

 

December 31, 2018

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Communities

 

38,177

 

$

244,118

 

$

244,860

 

$
242,222

 

$
239,004

 

$
236,291

Stabilized, Non-Mature Communities

 

4,853

 

 

35,784

 

 

29,621

 

22,010

 

16,114

 

10,032

Acquired Communities

 

3,327

 

 

8,345

 

 

 -

 

 -

 

 -

 

 -

Redevelopment Communities

 

653

 

 

7,703

 

 

6,979

 

7,487

 

7,883

 

8,081

Development Communities

 

 -

 

 

 -

 

 

 -

 

 -

 

 -

 

 -

Non-Residential / Other (2)

 

 -

 

 

6,795

 

 

7,548

 

6,120

 

4,259

 

6,626

Total

 

47,010

 

$

302,745

 

$

289,008

 

$
277,839

 

$
267,260

 

$
261,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Communities

 

 

 

$

68,105

 

$

70,698

 

$
67,266

 

$
68,071

 

$
67,239

Stabilized, Non-Mature Communities

 

 

 

 

10,240

 

 

8,890

 

6,357

 

4,658

 

3,186

Acquired Communities

 

 

 

 

2,515

 

 

 -

 

 -

 

 -

 

 -

Redevelopment Communities

 

 

 

 

3,085

 

 

3,170

 

2,575

 

2,651

 

2,570

Development Communities

 

 

 

 

 6

 

 

 2

 

 -

 

 -

 

 -

Non-Residential / Other (2)

 

 

 

 

3,558

 

 

2,599

 

2,530

 

2,859

 

2,930

Total (3)

 

 

 

$

87,509

 

$

85,359

 

$
78,728

 

$
78,239

 

$
75,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Communities

 

 

 

$

176,013

 

$

174,162

 

$
174,956

 

$
170,933

 

$
169,052

Stabilized, Non-Mature Communities

 

 

 

 

25,544

 

 

20,731

 

15,653

 

11,456

 

6,846

Acquired Communities

 

 

 

 

5,830

 

 

 -

 

 -

 

 -

 

 -

Redevelopment Communities

 

 

 

 

4,618

 

 

3,809

 

4,912

 

5,232

 

5,511

Development Communities

 

 

 

 

(6)

 

 

(2)

 

 -

 

 -

 

 -

Non-Residential / Other (2)

 

 

 

 

3,237

 

 

4,949

 

3,590

 

1,400

 

3,696

Total

 

 

 

$

215,236

 

$

203,649

 

$
199,111

 

$
189,021

 

$
185,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Communities

 

 

 

 

72.1%

 

 

71.1%

 

72.2%

 

71.5%

 

71.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Physical Occupancy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same-Store Communities

 

 

 

 

96.9%

 

 

96.9%

 

96.9%

 

96.8%

 

96.8%

Stabilized, Non-Mature Communities

 

 

 

 

96.0%

 

 

94.2%

 

91.1%

 

89.8%

 

82.7%

Acquired Communities

 

 

 

 

95.5%

 

 

 -

 

 -

 

 -

 

 -

Redevelopment Communities

 

 

 

 

93.2%

 

 

89.9%

 

93.1%

 

96.6%

 

97.4%

Development Communities

 

 

 

 

 -

 

 

 -

 

 -

 

 -

 

 -

Other (4)

 

 

 

 

 -

 

 

 -

 

 -

 

 -

 

 -

Total

 

 

 

 

96.6%

 

 

96.5%

 

96.4%

 

96.5%

 

96.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sold and Held for Disposition Communities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 -

 

$

 -

 

$

 -

 

$
624

 

$
662

 

$
3,702

Expenses (3)

 

 

 

 

 -

 

 

 -

 

 -

 

 -

 

1,395

Net Operating Income/(Loss)

 

 

 

$

 -

 

$

 -

 

$
624

 

$
662

 

$
2,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

47,010

 

$

215,236

 

$

203,649

 

$
199,735

 

$
189,683

 

$
187,412

(1)

See definitions and reconciliations at the end of this filing.

(2)

Primarily non-residential revenue and expense and straight-line adjustment for concessions.

(3)

The summation of Total expenses and Sold and Held for Disposition Communities expenses above agrees to the summation of property operating and maintenance and real estate taxes and insurance expenses on the Consolidated Statement of Operations above.

(4)

Includes occupancy of Sold and Held for Disposition Communities.

8

 

UDR, Inc.

Definitions and Reconciliations

(Unaudited)

 

Acquired Communities:  The Company defines Acquired Communities as those communities acquired by the Company, other than development and redevelopment activity, that did not achieve stabilization as of the most recent quarter.

 

Adjusted Funds from Operations ("AFFO") attributable to common stockholders and unitholders:  The Company defines AFFO as FFO as Adjusted attributable to common stockholders and unitholders less recurring capital expenditures on consolidated communities that are necessary to help preserve the value of and maintain functionality at our communities.

 

Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company's operational performance than FFO or FFO as Adjusted.  AFFO is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance.  The Company believes that net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to AFFO.  Management believes that AFFO is a widely recognized measure of the operations of REITs, and presenting AFFO will enable investors to assess our performance in comparison to other REITs.  However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not always be comparable to AFFO calculated by other REITs.  AFFO should not be considered as an alternative to net income/(loss) (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.  A reconciliation from net income/(loss) attributable to common stockholders to AFFO is provided above.

 

Controllable Expenses:  The Company refers to property operating and maintenance expenses as Controllable Expenses.

 

Controllable Operating Margin:  The Company defines Controllable Operating Margin as (i) rental income less Controllable Expenses (ii) divided by rental income. Management considers Controllable Operating Margin a useful metric as it provides investors with an indicator of the Company’s ability to limit the growth of expenses that are within the control of the Company.

 

Development Communities:  The Company defines Development Communities as those communities recently developed or under development by the Company, that are currently majority owned by the Company and have not achieved stabilization as of the most recent quarter.

 

Estimated Quarter of Completion:  The Company defines Estimated Quarter of Completion of a development or redevelopment project as the date on which construction is expected to be completed, but it does not represent the date of stabilization.

 

Funds from Operations as Adjusted ("FFO as Adjusted") attributable to common stockholders and unitholders:  The Company defines FFO as Adjusted attributable to common stockholders and unitholders as FFO excluding the impact of other non-comparable items including, but not limited to, acquisition-related costs, prepayment costs/benefits associated with early debt retirement, impairment write-downs or gains and losses on sales of real estate or other assets incidental to the main business of the Company and income taxes directly associated with those gains and losses, casualty-related expenses and recoveries, severance costs and legal and other costs.

 

Management believes that FFO as Adjusted is useful supplemental information regarding our operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. FFO as Adjusted is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance.  The Company believes that net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to FFO as Adjusted.  However, other REITs may use different methodologies for calculating FFO as Adjusted or similar FFO measures

9

and, accordingly, our FFO as Adjusted may not always be comparable to FFO as Adjusted or similar FFO measures calculated by other REITs.  FFO as Adjusted should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity.  A reconciliation from net income attributable to common stockholders to FFO as Adjusted is provided above.

 

Funds from Operations ("FFO") attributable to common stockholders and unitholders:  The Company defines FFO attributable to common stockholders and unitholders as net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate related to the main business of the Company or of investments in non-consolidated investees that are directly attributable to decreases in the fair value of depreciable real estate held by the investee, gains and losses from sales of depreciable real estate related to the main business of the Company and income taxes directly associated with those gains and losses, plus real estate depreciation and amortization, and after adjustments for noncontrolling interests, and the Company’s share of unconsolidated partnerships and joint ventures.  This definition conforms with the National Association of Real Estate Investment Trust's definition issued in April 2002 and restated in November 2018.  In the computation of diluted FFO, if OP Units, DownREIT Units, unvested restricted stock, unvested LTIP Units, stock options, and the shares of Series E Cumulative Convertible Preferred Stock are dilutive, they are included in the diluted share count.

 

Management considers FFO a useful metric for investors as the Company uses 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 flow as a measure of the Company's activities in accordance with GAAP.  FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs.  A reconciliation from net income/(loss) attributable to common stockholders to FFO is provided above.

 

Held For Disposition Communities: The Company defines Held for Disposition Communities as those communities that were held for sale as of the end of the most recent quarter.

 

Net Operating Income (“NOI”):  The Company defines NOI as rental income less direct property rental expenses. Rental income represents gross market rent and other revenues less adjustments for concessions, vacancy loss and bad debt.  Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense which is calculated as 2.875% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations, and land rent. 

 

Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization and is a widely used input, along with capitalization rates, in the determination of real estate valuations.  A reconciliation from net income attributable to UDR, Inc. to NOI is provided below.

 

10

 

 

 

 

 

 

 

 

 

 

In thousands

4Q 2019

3Q 2019

2Q 2019

 

1Q 2019

4Q 2018

 

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

$
97,959
$
27,204

$

35,619

 

$

24,503

$
82,139

 

Property management

8,703

8,309

 

8,006

 

 

7,703

7,280

 

Other operating expenses

2,800

2,751

 

2,735

 

 

5,646

3,952

 

Real estate depreciation and amortization

143,464

127,391

 

117,934

 

 

112,468

106,469

 

Interest expense

60,435

42,523

 

34,417

 

 

33,542

38,226

 

Casualty-related charges/(recoveries), net

1,316

(1,088)

 

246

 

 

 -

(243)

 

General and administrative

14,531

12,197

 

12,338

 

 

12,467

10,955

 

Tax provision/(benefit), net

 2

1,499

 

125

 

 

2,212

70

 

(Income)/loss from unconsolidated entities

(118,486)

(12,713)

 

(6,625)

 

 

(49)

(36)

 

Interest income and other (income)/expense, net

(2,406)

(1,875)

 

(1,310)

 

 

(9,813)

(1,660)

 

Joint venture management and other fees