Toggle SGML Header (+)


Section 1: 8-K (8-K)

0000074208false00000742082019-10-292019-10-29

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): October 29, 2019

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 October 29, 2019, UDR, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 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 October 29, 2019.

 99.2

 Supplemental Financial Information dated October 29, 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.

 October 29, 2019

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

 

 

 

 

 

Image - Image1.jpeg

 

Exhibit 99.1

 

Press Release

 

 

 

 

DENVER, CO – October 29, 2019

 

 

Contact: Chris Van Ens

 

 

 

 

Phone:   720.348.7762

 

UDR ANNOUNCES THIRD QUARTER 2019 RESULTS

 

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

·

Net income per share was $0.09, Funds from Operations (“FFO”) per share was $0.53, FFO as Adjusted (“FFOA”) per share was $0.52, and Adjusted FFO (“AFFO”) per share was $0.48.

·

Net income attributable to common stockholders was $26.2 million as compared to $17.6 million in the prior year period. The increase was primarily due to higher gains on the sale of unconsolidated investments, the realization of a joint venture (“JV”) development success fee and net operating income (“NOI”) growth.

·

Year-over-year same-store (“SS”) revenue, expense and NOI growth was 3.7 percent, 3.1 percent and 3.9 percent, respectively.

·

The Company’s operating margin (property NOI divided by property rental income) was 70.5 percent as compared to 70.2 percent in the prior year period. The continued implementation of the Company’s Next Generation Operating Platform drove controllable operating margin expansion of 40 basis points year-over-year to 83.9 percent, and limited SS controllable expense growth to 1.2 percent year-over-year.

·

Approximately 5,700 SmartHome installations completed during the quarter (approximately 25,000 total installations completed as of quarter end).

·

Accretively grew the Company through three acquisitions with significant operating/investment upside in markets targeted for expansion at an all-in valuation of $540.6 million.

·

Simplified the Company’s structure by winding down the UDR/Kuwait Finance House (“KFH”) JV and entering into an agreement valued at $1.8 billion to halve the size of the UDR/MetLife JV in an accretive manner. The UDR/MetLife transaction is expected to close during the fourth quarter subject to customary closing conditions. Once complete, approximately 95 percent of the Company’s total NOI will be generated by non-JV sources.

·

Funded accretive external growth with premium valued equity capital by issuing approximately 9.7 million common shares at a weighted average net price of $46.42 for proceeds of $449.2 million.

·

Entered into a forward sales agreement under the Company’s at-the-market equity program for approximately 1.3 million common shares at an initial forward price per share of $47.68.  

·

Proactively took advantage of the low interest rate environment during the quarter, and subsequent to quarter end, by issuing an aggregate of $800.0 million of long-duration unsecured debt with a weighted average interest rate of 3.07 percent, and prepaying, or are in the process of prepaying, $700.0 million of higher-cost unsecured debt with a weighted average interest rate of 4.23 percent. The make-whole amount will total approximately $26.9 million, $5.4 million of which was realized in the third quarter. The Company’s pro-forma consolidated weighted average years to maturity, following the prepayments, will be 8.0 years versus 6.9 years at quarter end. 

·

Updates to  full-year 2019 earnings and same-store growth guidance ranges include:

o

Reduced net income per share guidance by $0.065 at the midpoint to $0.68 to $0.70.

o

Increased FFOA per share guidance by $0.005 at the midpoint to $2.07 to $2.09.

o

Tightened SS revenue guidance range to 3.50 to 3.90 percent.

o

Decreased SS expense guidance by 15 basis points at the midpoint to 2.40 to 2.80 percent.

o

Increased SS NOI guidance by 7.5 basis points at the midpoint to 4.00 to 4.40 percent.

 

 

1

“2019 has been an active and productive year for UDR. We have accretively grown through completed, or announced, acquisitions totaling $1.8 billion, continued to implement our Next Generation Operating Platform, simplified our business through numerous JV transactions and further enhanced our already strong balance sheet and liquidity position. The cumulative impact of these successes has set us up well for 2020 and beyond,” said Tom Toomey, UDR’s Chairman and CEO.

 

 

 

 

 

 

 

Q3 2019

Q3 2018

YTD 2019

YTD 2018

Net income per common share, diluted

$0.09

$0.07

$0.30

$0.44

Conversion from GAAP share count

(0.007)

(0.006)

(0.025)

(0.041)

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

(0.017)

-

(0.034)

(0.237)

Cumulative effect of change in accounting principle

-

-

-

(0.007)

Depreciation and amortization, including JVs

0.451

0.418

1.304

1.242

Noncontrolling interests and preferred dividends

0.010

0.009

0.033

0.047

FFO per common share and unit, diluted

$0.53

$0.49

$1.57

$1.44

Cost/(benefit) associated with debt extinguishment and other

0.020

0.002

0.020

0.002

Promoted interest on settlement of note receivable, net of tax

-

-

(0.021)

-

Legal and other costs

-

0.002

0.012

0.004

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

-

-

(0.017)

-

Unrealized gain on unconsolidated investments, net of tax

(0.010)

-

(0.011)

-

Joint venture development success fee

(0.012)

-

(0.012)

-

Severance costs and other restructuring expense

0.001

-

0.001

-

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

(0.006)

0.002

(0.004)

0.009

FFOA per common share and unit, diluted

$0.52

$0.49

$1.54

$1.46

Recurring capital expenditures

(0.042)

(0.050)

(0.107)

(0.116)

AFFO per common share and unit, diluted

$0.48

$0.44

$1.44

$1.34

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 third quarter Supplemental Financial Information.

 

Operations

In the third quarter, total revenue increased by $29.3 million year-over-year, or 11.0 percent, to $295.4 million. This increase was primarily attributable to growth in revenue from operating and acquisition communities.

In the third quarter, same-store NOI increased 3.9 percent year-over-year, driven by same-store revenue growth of 3.7 percent and same-store expense growth of 3.1 percent. Weighted average same-store physical occupancy increased by 10 basis points to 96.9 percent versus the prior year period. The third quarter annualized rate of turnover was flat year-over-year at 63.8 percent.

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

 

 

 

 

 

 

 

 

 

 

 

 

Region

Revenue Growth

Expense

Growth/

(Decline)

NOI Growth/

(Decline)

% of Same‑Store

NOI(1)

Same-Store

Occupancy(2)

Number of Same-Store Homes(3)

West

4.5%
2.9%
5.0%
46.6%
96.6%
13,942

Mid-Atlantic

3.4%
1.5%
4.3%
22.9%
97.2%
9,877

Southeast

3.2%
4.9%
2.5%
12.7%
97.0%
7,683

Northeast

2.6%
8.7%

(0.4)%

11.8%
97.1%
2,840

Southwest

2.4%

(2.3)%

5.6%
6.0%
96.9%
3,835

Total

3.7%
3.1%
3.9%
100.0%
96.9%
38,177

(1)Based on Q3 2019 SS NOI.

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

(3)During the third 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 third quarter, sequential same-store NOI declined by 0.5 percent, driven by same-store revenue growth of 1.1 percent and same-store expense growth of 5.1 percent. Weighted average same-store physical occupancy was flat sequentially at 96.9 percent.

 

2

Year-to-date, for the nine months ended September 30, 2019, total revenue increased by $68.2 million year-over-year, or 8.8 percent, to $847.4 million. This increase was primarily attributable to growth in revenue from operating and acquisition communities.

Year-to-date, for the nine months ended September 30, 2019, same-store NOI increased 4.0 percent year-over-year, driven by same-store revenue growth of 3.7 percent and same-store expense growth of 2.9 percent. Weighted average same-store physical occupancy remained at 96.9 percent versus the prior year period. The year-to-date annualized rate of turnover was 52.7 percent, representing a 10 basis point decline year-over-year.

 

Summary of Same-Store Results Year-To-Date 2019 versus Year-To-Date 2018

 

 

 

 

 

 

 

 

 

Region

Revenue Growth

Expense

Growth

NOI Growth

% of

Same-Store

NOI(1)

Same-Store

Occupancy(2)

Number of Same-Store Homes(3)

West

4.4%
2.9%
4.9%
46.6%
96.6%
13,942

Mid-Atlantic

3.2%
1.4%
4.0%
23.1%
97.4%
9,877

Southeast

3.8%
3.6%
3.9%
12.9%
96.9%
7,683

Northeast

2.4%
6.7%
0.5%
12.2%
97.1%
2,840

Southwest

2.8%
0.0%
4.8%
5.2%
97.0%
3,617

Total

3.7%
2.9%
4.0%
100.0%
96.9%
37,959

(1)Based on YTD 2019 NOI.

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

(3)For the nine months ended September 30, 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

 

During the quarter, the Company acquired:

·

The Commons at Windsor Gardens, a 914-home community in Norwood, MA, for $270.2 million or $295,600 per home. At the time of the acquisition, the community had average monthly revenue per occupied home of $1,850, occupancy of 96 percent and was 50 years old.

·

One William, a 185-home community in Englewood, NJ, for $83.6 million or $451,900 per home. At the time of the acquisition, the community had average monthly revenue per occupied home of $2,762, occupancy of 99 percent and was 1 year old.

 

Joint Venture Transactional Activity

 

During the quarter, the Company:

·

Acquired the 70 percent interest it did not already own in 1301 Thomas Circle, a 292-home community in Washington, DC, at an all-in valuation including closing costs of $186.8 million, or $639,700 per home, from the UDR/KFH JV. At the time of the acquisition, the community had average monthly revenue per occupied home of $3,440, occupancy of 98 percent and was 14 years old.

·

Sold its 30 percent interest in Portico, a 151-home community in Silver Spring, MD, to a third party at an all-in valuation of $43.5 million, or $288,100 per home.

·

The UDR/KFH JV was fully wound down upon the completion of these transactions.

 

In addition, the Company entered into an agreement with MetLife to:

·

Acquire 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 $557.0 million at UDR’s share; and,

·

Sell its approximately 50 percent ownership interest in five UDR/MetLife JV communities valued at $645.0 million, or $323.0 million at UDR’s share, to MetLife.

3

·

After accounting for the assumption of in-place debt totaling $540.0 million at fair-market value, the Company’s net cash outflow to complete the swap is expected to be approximately $105 million. The transaction is expected to close during the fourth quarter, subject to customary closing conditions and closing price adjustments. 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 third quarter, the Company’s development pipeline totaled $129.5 million at its pro-rata ownership interest 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 Cirrus, a 292-home community in Denver, CO. Cirrus has a total budgeted cost of $97.5 million, or $333,900 per home, and is expected to be completed during the first quarter of 2022.

 

Developer Capital Program (“DCP”) Activity

 

At the end of the third quarter, the Company’s DCP investments, including accrued return, totaled $264.4 million.

Capital Markets and Balance Sheet Activity

 

During the third quarter, the Company’s equity transactions were as follows:

·

Issued approximately 9.7 million shares at a weighted average net price of $46.42 for proceeds of approximately $449.2 million. Approximately 2.2 million of these shares were issued via the Company’s at-the-market equity program.

·

Entered into a forward sales agreement under the Company’s at-the-market equity program for approximately 1.3 million common shares at an initial forward price per share of $47.68, which will be adjusted at settlement to reflect the then-current federal funds rate and the amount of dividends paid to holders of UDR common stock over the term of the forward sales agreement. No shares under the forward sales agreement have been settled. The final date by which shares sold under the forward sales agreement must be settled is March 31, 2020.

·

Uses of realized, and expected, proceeds include the acquisitions outlined in this press release, future acquisitions and general corporate purposes. 

 

During and subsequent to the third quarter, the Company’s debt transactions were as follows:

·

Settled its late-June offering of $300.0 million, 10-year unsecured debt at an effective rate of 3.46 percent after accounting for previous hedging activities.

·

Issued $800.0 million of unsecured debt ($300.0 million qualifying as a “Green Bond”) with a weighted average years to maturity of 12.9 years and an effective rate of 3.07 percent. $400.0 million settled subsequent to quarter end.

·

Prepaid, or are in the process of prepaying, $700.0 million of unsecured debt with a weighted average rate of 4.23 percent. The make-whole amount will total approximately $26.9 million, $5.4 million of which was realized during the third quarter. The Company’s weighted average years to maturity will be 8.0 years following completion versus 6.9 years at quarter end.

·

Issued or refinanced $162.5 million of secured debt with a weighted average years to maturity of 10.2 years and an effective rate of 2.88 percent.

 

At September 30, 2019, the Company had approximately $1.1 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities.

4

The Company’s total indebtedness as of September 30, 2019 was $3.94 billion. The Company ended the quarter with fixed‑rate debt representing 96.0 percent of its total debt, a total blended interest rate of 3.63 percent and a weighted average years to maturity of 6.9 years. The Company’s consolidated leverage was 31.0 percent versus 33.7 percent a year ago, its consolidated net‑debt-to-EBITDAre was 5.5x versus 5.7x a year ago and its consolidated fixed charge coverage ratio was 4.7x versus 4.5x a year ago.

Dividend

 

As previously announced, the Company’s Board of Directors declared a regular quarterly dividend on its common stock for the third quarter of 2019 in the amount of $0.3425 per share. The dividend will be paid in cash on October 31, 2019 to UDR common stockholders of record as of October 10, 2019. The third quarter 2019 dividend will represent the 188th consecutive quarterly dividend paid by the Company on its common stock.

5

 

 

Outlook

 

For the fourth quarter of 2019, the Company has established the following earnings guidance ranges.

 

 

 

 

 

 

 

Net income per share

    

$0.36 to $0.38

 

 

    

 

 

 

 

 

 

 

 

FFO per share

 

$0.45 to $0.47

 

 

 

 

 

 

 

 

 

 

 

FFOA per share

 

$0.53 to $0.55

 

 

 

 

 

 

 

 

 

 

 

AFFO per share

 

$0.47 to $0.49

 

 

 

 

 

 

For the full-year 2019, the Company’s updated earnings per share guidance ranges are:

 

 

 

Updated Guidance

 

Prior Guidance

 

 

 

 

 

 

 

 

 

Net income per share

    

$0.68 to $0.70

 

$0.74 to $0.77

    

 

 

 

 

 

 

 

 

FFO per share

 

$2.03 to $2.05

 

$2.08 to $2.11

 

 

 

 

 

 

 

 

 

FFOA per share

 

$2.07 to $2.09

 

$2.06 to $2.09

 

 

 

 

 

 

 

 

 

AFFO per share

 

$1.91 to $1.93

 

$1.90 to $1.93

 

 

 

 

For the full-year 2019, the Company’s updated same-store guidance ranges are:

 

 

 

Updated Guidance

 

Prior Guidance

 

 

 

 

 

 

 

 

 

Revenue growth

    

3.50% to 3.90%

 

3.40% to 4.00%

    

 

 

 

 

 

 

 

 

Expense growth

 

2.40% to 2.80%

 

2.50% to 3.00%

 

 

 

 

 

 

 

 

 

Net operating income growth

 

4.00% to 4.40%

 

3.75% to 4.50%

 

 

 

 

 

 

 

 

 

Physical occupancy

 

96.8% to 97.0%

 

96.8% to 97.0%

 

 

 

Additional assumptions for the Company’s fourth quarter and full-year 2019 guidance can be found on Attachment 15 of the Company’s third 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 third 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 third quarter Supplemental Financial Information.

6

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 October 30, 2019 to discuss third quarter results.

 

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 November 30, 2019, by dialing 844-512-2921 for domestic and 412-317-6671 for international and entering the confirmation number, 13695016, 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.  

 

7

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, our ability to close the transaction with MetLife Investment Management on the terms and timing described in this press release, 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 September 30, 2019, UDR owned or had an ownership position in 52,070 apartment homes including 658 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.

 

 

8

(Back To Top)

Section 3: EX-99.2 (EX-99.2)

udr_Ex99_2

Exhibit 99.2

Financial Highlights

 

UDR, Inc.

As of End of Third Quarter 2019

(Unaudited) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actual Results

 

Actual Results

 

Guidance as of September 30, 2019

Dollars in thousands, except per share and unit

 

 

 

3Q 2019

 

YTD 2019

 

4Q 2019

 

Full-Year 2019

 

 

 

 

 

 

 

 

 

 

 

GAAP Metrics

 

 

 

 

 

 

 

 

 

 

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

 

 

 

$27,204

 

$87,326

 

--

 

--

Net income/(loss) attributable to common stockholders

 

 

 

$26,173

 

$84,253

 

--

 

--

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

 

 

 

$0.09

 

$0.30

 

$0.36 to $0.38

 

$0.68 to $0.70

 

 

 

 

 

 

 

 

 

 

 

Per Share Metrics

 

 

 

 

 

 

 

 

 

 

FFO per common share and unit, diluted

 

 

 

$0.53

 

$1.57

 

$0.45 to $0.47

 

$2.03 to $2.05

FFO as Adjusted per common share and unit, diluted

 

 

 

$0.52

 

$1.54

 

$0.53 to $0.55

 

$2.07 to $2.09

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

 

 

 

$0.48

 

$1.44

 

$0.47 to $0.49

 

$1.91 to $1.93

Dividend declared per share and unit

 

 

 

$0.3425

 

$1.0275

 

$0.3425

 

$1.37 (2)

 

 

 

 

 

 

 

 

 

 

 

Same-Store Operating Metrics

 

 

 

 

 

 

 

 

 

 

Revenue growth

 

 

 

3.7%

 

3.7%

 

--

 

3.50% - 3.90%

Expense growth

 

 

 

3.1%

 

2.9%

 

--

 

2.40% - 2.80%

NOI growth

 

 

 

3.9%

 

4.0%

 

--

 

4.00% - 4.40%

Physical Occupancy

 

 

 

96.9%

 

96.9%

 

--

 

96.8% - 97.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Metrics

 

 

 

Homes

 

Communities

 

% of Total NOI

 

 

Same-Store

 

 

 

38,177

 

123

 

76.9%

 

 

Stabilized, Non-Mature

 

 

 

3,149

 

9

 

7.5%

 

 

Acquired Communities

 

 

 

1,704

 

4

 

1.7%

 

 

Redevelopment

 

 

 

653

 

2

 

1.7%

 

 

Development, completed

 

 

 

-

 

-

 

-

 

 

Non-Residential / Other

 

 

 

N/A

 

N/A

 

2.2%

 

 

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

 

 

 

7,453

 

29

 

9.9%

 

 

Developer Capital Program - West Coast Development JV

 

 

 

276

 

1

 

0.1%

 

 

Total completed homes

 

 

 

51,412

 

168

 

100%

 

 

Under Development

 

 

 

292

 

1

 

-

 

 

Joint Venture Under Development

 

 

 

366

 

1

 

-

 

 

Total Quarter-end homes (3)(4)

 

 

 

52,070

 

170

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Metrics (adjusted for non-recurring items)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q 2019

 

3Q 2018

 

 

 

 

Consolidated Interest Coverage Ratio

 

 

 

4.8x

 

4.7x

 

 

 

 

Consolidated Fixed Charge Coverage Ratio

 

 

 

4.7x

 

4.5x

 

 

 

 

Consolidated Debt as a percentage of Total Assets

 

 

 

31.0%

 

33.7%

 

 

 

 

Consolidated Net Debt-to-EBITDAre

 

 

 

5.5x

 

5.7x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C:\Users\bmaas\Desktop\3Q19 Financial Highlights.JPG


(1)

See Attachment 16 for definitions and other terms.

(2)

Annualized for 2019.

(3)

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

(4)

Excludes 2,082 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

 

Nine Months Ended

 

 

September 30,

 

September 30,

In thousands, except per share amounts

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

Rental income

 

$
289,008

 

$
263,256

 

$
835,393

 

$
770,373

Joint venture management and other fees (2)

 

6,386

 

2,888

 

11,982

 

8,819

Total revenues

 

295,394

 

266,144

 

847,375

 

779,192

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Property operating and maintenance

 

46,869

 

44,090

 

131,702

 

126,129

Real estate taxes and insurance

 

38,490

 

34,352

 

110,624

 

99,541

Property management

 

8,309

 

7,240

 

24,018

 

21,185

Other operating expenses

 

2,751

 

3,314

 

11,132

 

8,148

Real estate depreciation and amortization

 

127,391

 

107,881

 

357,793

 

322,537

General and administrative

 

12,197

 

11,896

 

37,002

 

36,028

Casualty-related charges/(recoveries), net

 

(1,088)

 

678

 

(842)

 

2,364

Other depreciation and amortization

 

1,619

 

1,682

 

4,953

 

5,057

Total operating expenses

 

236,538

 

211,133

 

676,382

 

620,989

 

 

 

 

 

 

 

 

 

Gain/(loss) on sale of real estate owned

 

 -

 

 -

 

5,282

 

70,300

Operating income

 

58,856

 

55,011

 

176,275

 

228,503

 

 

 

 

 

 

 

 

 

Income/(loss) from unconsolidated entities (3)

 

12,713

 

(1,382)

 

19,387

 

(5,091)

Interest expense

 

(36,240)

 

(33,994)

 

(104,199)

 

(95,535)

(Cost)/benefit associated with debt extinguishment and other

 

(6,283)

 

(407)

 

(6,283)

 

(407)

Total interest expense

 

(42,523)

 

(34,401)

 

(110,482)

 

(95,942)

Interest income and other income/(expense), net (4)

 

1,875

 

1,188

 

12,998

 

5,075

 

 

 

 

 

 

 

 

 

Income/(loss) before income taxes

 

30,921

 

20,416

 

98,178

 

132,545

Tax (provision)/benefit, net (3) (4)

 

(1,499)

 

(158)

 

(3,836)

 

(618)

 

 

 

 

 

 

 

 

 

Net Income/(loss)

 

29,422

 

20,258

 

94,342

 

131,927

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

 

(2,162)

 

(1,616)

 

(6,871)

 

(10,819)

Net (income)/loss attributable to noncontrolling interests

 

(56)

 

(32)

 

(145)

 

(141)

 

 

 

 

 

 

 

 

 

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

 

27,204

 

18,610

 

87,326

 

120,967

Distributions to preferred stockholders - Series E (Convertible)

 

(1,031)

 

(971)

 

(3,073)

 

(2,897)

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to common stockholders

 

$
26,173

 

$
17,639

 

$
84,253

 

$
118,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$ 0.09

 

$ 0.07

 

$ 0.30

 

$ 0.44

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

 

$ 0.09

 

$ 0.07

 

$ 0.30

 

$ 0.44

 

 

 

 

 

 

 

 

 

Common distributions declared per share

 

$0.3425

 

$0.3225

 

$1.0275

 

$0.9675

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic

 

288,706

 

267,727

 

282,598

 

267,529

Weighted average number of common shares outstanding - diluted

 

289,529

 

268,861

 

283,292

 

269,020

(1)

See Attachment 16 for definitions and other terms.

(2)

During the three months ended September 30, 2019, UDR earned a development success fee of approximately $3.8 million as a result of meeting specific return thresholds.

(3)

During the three and nine months ended September 30, 2019, UDR recorded unrealized gains on unconsolidated technology investments, net of tax, of approximately $3.1 million and $3.4 million, respectively.  The estimated tax provision on the unrealized gains for the three and nine months ended September 30, 2019, were approximately $1.2 million and $1.3 million, respectively. 

(4)

During the nine months ended September 30, 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.

 

2

Picture 9

Attachment 2

 

UDR, Inc.

Funds From Operations

(Unaudited) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

In thousands, except per share and unit amounts

 

2019

 

2018

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to common stockholders

 

$

26,173

 

$

17,639

 

$

84,253

 

$

118,070

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate depreciation and amortization

 

 

127,391

 

 

107,881

 

 

357,793

 

 

322,537

Noncontrolling interests

 

 

2,218

 

 

1,648

 

 

7,016

 

 

10,960

Real estate depreciation and amortization on unconsolidated joint ventures

 

 

14,615

 

 

15,979

 

 

45,500

 

 

45,831

Cumulative effect of change in accounting principle

 

 

 -

 

 

 -

 

 

 -

 

 

(2,100)

Net gain on the sale of unconsolidated depreciable property

 

 

(5,259)

 

 

 -

 

 

(10,510)

 

 

 -

Net gain on the sale of depreciable real estate owned

 

 

 -

 

 

 -

 

 

 -

 

 

(70,300)

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

 

$

165,138

 

$

143,147

 

$

484,052

 

$

424,998

 

 

 

 

 

 

 

 

 

 

 

 

 

  Distributions to preferred stockholders - Series E (Convertible) (2)

 

 

1,031

 

 

971

 

 

3,073

 

 

2,897

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO attributable to common stockholders and unitholders, diluted

 

$

166,169

 

$

144,118

 

$

487,125

 

$

427,895

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per weighted average common share and unit, basic 

 

$

0.53

 

$

0.49

 

$

1.58

 

$

1.46

FFO per weighted average common share and unit, diluted

 

$

0.53

 

$

0.49

 

$

1.57

 

$

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

310,917

 

 

292,285

 

 

305,666

 

 

292,075

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

 

 

 

 

 

 

 

 

 

 

 

 

   equivalents outstanding - diluted

 

 

314,751

 

 

296,430

 

 

309,371

 

 

296,577

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of adjustments to FFO:

 

 

 

 

 

 

 

 

 

 

 

 

Cost/(benefit) associated with debt extinguishment and other

 

$

6,283

 

$

482

 

$

6,283

 

$

482

Promoted interest on settlement of note receivable, net of tax (3)

 

 

 -

 

 

 -

 

 

(6,482)

 

 

 -

Legal and other costs (4)

 

 

 -

 

 

563

 

 

3,660

 

 

1,188

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

 

 

 -

 

 

 -

 

 

(5,282)

 

 

 -

Unrealized gain on unconsolidated investments, net of tax (3)

 

 

(3,144)

 

 

 -

 

 

(3,373)

 

 

 -

Joint venture development success fee (3)

 

 

(3,750)

 

 

 -

 

 

(3,750)

 

 

 -

Severance costs and other restructuring expense

 

 

274

 

 

 -

 

 

274

 

 

 -

Casualty-related charges/(recoveries), net

 

 

(1,088)

 

 

740

 

 

(827)

 

 

2,555

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

 

 

(651)

 

 

 -

 

 

(424)

 

 

 -

 

 

$

(2,076)

 

$

1,785

 

$

(9,921)

 

$

4,225

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO as Adjusted attributable to common stockholders and unitholders, diluted

 

$

164,093

 

$

145,903

 

$

477,204

 

$

432,120

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.52

 

$

0.49

 

$

1.54

 

$

1.46

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring capital expenditures

 

 

(13,177)

 

 

(14,949)

 

 

(33,145)

 

 

(34,399)

AFFO attributable to common stockholders and unitholders, diluted

 

$

150,916

 

$

130,954

 

$

444,059

 

$

397,721

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per weighted average common share and unit, diluted

 

$

0.48

 

$

0.44

 

$

1.44

 

$

1.34


(1)

See Attachment 16 for definitions and other terms.

(2)

Series E preferred shares are dilutive for purposes of calculating FFO per share for the three and nine months ended September 30, 2019 and September 30, 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.

(3)

See footnotes 2, 3 and 4 on Attachment 1.

(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 nine months ended September 30, 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)

 

 

 

 

 

 

 

 

September 30,

 

December 31,

In thousands, except share and per share amounts

 

2019

 

2018

 

 

 

 

 

ASSETS

 

 

 

 

Real estate owned:

 

 

 

 

Real estate held for investment

 

$
11,542,550

 

$
10,196,159

Less: accumulated depreciation

 

(4,000,608)

 

(3,654,160)

  Real estate held for investment, net

 

7,541,942

 

6,541,999

Real estate under development

 

 

 

 

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

 

21,845

 

 -

Total real estate owned, net of accumulated depreciation

 

7,563,787

 

6,541,999

 

 

 

 

 

Cash and cash equivalents

 

1,895

 

185,216

Restricted cash

 

21,646

 

23,675

Notes receivable, net

 

37,899

 

42,259

Investment in and advances to unconsolidated joint ventures, net

 

791,180

 

780,869

Operating lease right-of-use assets (2)

 

135,889

 

 -

Other assets

 

145,301

 

137,710

Total assets

 

$
8,697,597

 

$
7,711,728

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Secured debt

 

$
600,624

 

$
601,227

Unsecured debt

 

3,335,273

 

2,946,560

Operating lease liabilities (2)

 

130,135

 

 -

Real estate taxes payable

 

42,031

 

20,608

Accrued interest payable

 

27,577

 

38,747

Security deposits and prepaid rent

 

36,382

 

35,060

Distributions payable

 

108,939

 

97,666

Accounts payable, accrued expenses, and other liabilities

 

72,680

 

76,343

Total liabilities

 

4,353,641

 

3,816,211

 

 

 

 

 

Redeemable noncontrolling interests in the OP and DownREIT Partnership

 

1,072,181

 

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

14,986,275 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

 

 

 

 

292,948,423 shares issued and outstanding (275,545,900 shares at December 31, 2018)

 

2,929

 

2,755

Additional paid-in capital

 

5,702,782

 

4,920,732

Distributions in excess of net income

 

(2,496,328)

 

(2,063,996)

Accumulated other comprehensive income/(loss), net

 

(9,022)

 

(67)

Total stockholders' equity

 

3,246,562

 

2,905,625

Noncontrolling interests

 

25,213

 

17,152

Total equity

 

3,271,775

 

2,922,777

Total liabilities and equity

 

$
8,697,597

 

$
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 requires 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 provides a transition option that permits 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

Common Stock and Equivalents

 

 

 

 

 

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

 

 

 

 

 

 

 

 

292,698,929

 

275,239,072

Restricted shares

 

 

 

 

 

 

 

 

 

249,494

 

306,828

Total common shares

 

 

 

 

 

 

 

 

 

292,948,423

 

275,545,900

Restricted unit and common stock equivalents

 

 

 

 

 

 

 

 

 

676,266

 

385,088

Operating and DownREIT Partnership units

 

 

 

 

 

 

 

 

 

20,364,283

 

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