DENVER--(UDR, Inc. (NYSE: UDR), a leading multifamily real estate investment trust, today announced its fourth quarter and full year 2011 results.)--
The Company generated Funds from Operations (FFO) of $80.2 million or $0.35 per diluted share for the quarter ended December 31, 2011, as compared to $53.4 million or $0.28 per diluted share in the fourth quarter of 2010. Excluding all one-time items, the Company’s fourth quarter 2011 FFO-Core would have been $0.34 per diluted share. See the reconciliation below for further detail.
For the twelve-months ended December 31, 2011, UDR generated FFO of $1.28 per diluted share as compared to $1.09 per diluted share for the twelve-months ended December 31, 2010. Excluding all one-time items, the Company’s 2011 FFO-Core would have been $1.28 per diluted share. See the reconciliation below for further detail.
|Q4 2011||Q4 2010||YTD 2011||YTD 2010|
|FFO- Core per diluted share||$||0.34||$||0.28||$||1.28||$||1.13|
|JV financing and acquisition fee||0.004||0.005||0.011||0.006|
|Costs associated with debt extinguishment||(0.002||)||-||(0.021||)||(0.007||)|
|Gain on sale of assets/marketable securities||0.014||-||0.046||-|
|FFO- Reported per diluted share||$||0.35||$||0.28||$||1.28||$||1.09|
A reconciliation of FFO to GAAP Net Income can be found on Attachment 2 of the Company’s fourth quarter Supplemental Financial Information.
Tom Toomey, UDR’s President and CEO stated, “We are pleased with the progress we made in further transitioning our portfolio in 2011, including $1.2 billion of acquisitions in New York City, a $500 million asset exchange that increased our presence in San Francisco and the Boston metro area, the expansion of our development and redevelopment pipeline by over $800 million and the disposition of $594 million of non-core assets. These transactions improved the Company’s portfolio by increasing our ownership interests in markets characterized by above-average job growth, low home affordability, below-average new supply risk and superior revenue growth and return prospects.” Mr. Toomey continued, “Driven by sound market fundamentals, a more advantageous geographic and asset mix and our robust operating and technology platforms, 2012 will be another strong year for UDR. As a result, the Board of Directors has approved a 10% increase in our annual common stock dividend to $0.88 per share for 2012.”
Same-store net operating income increased 7.7 percent year-over-year for the fourth quarter 2011 while same-store revenue increased 5.3 percent over the same period. Same-store physical occupancy decreased 40 basis points to 95.1 percent as compared to the prior year period. Same-store expenses increased 0.5 percent driven by an increase in utilities costs and real estate taxes. The rate of turnover increased to an annualized rate of 50 percent from 47 percent in the fourth quarter of 2010.
Summary Same-Store Results Fourth Quarter 2011 versus Fourth Quarter 2010
Revenue Growth/ Decline
Expense Growth/ Decline
NOI Growth/ Decline
|% of Same- Store Portfolio¹||Same-Store Occupancy2||Number of Same-Store Homes3|
1 Based on QTD 2011 NOI.
2 Average same-store occupancy for the quarter.
3 During the fourth quarter, 38,680 apartment homes, or approximately 82 percent of 47,343 total apartment homes, were classified as same-store. The Company defines same-store as all multifamily communities owned and stabilized for at least one year as of the beginning of the most recent quarter.
Sequentially, the Company’s same-store NOI increased by 2.3 percent driven by increased revenues of 0.2 percent and a 3.9 percent decrease in same-store expenses during the fourth quarter of 2011.
For the twelve-months ended December 31, 2011, the Company’s same-store revenue increased 4.1 percent as compared to the prior year while expenses increased 1.4 percent, resulting in a same-store NOI increase of 5.6 percent as compared to the prior year period. Year-over-year occupancy decreased by 20 basis points to 95.5 percent.
Summary Same-Store Results YTD 2011 versus YTD 2010
|Region||Revenue Growth/ Decline||Expense Growth/ Decline||NOI Growth/ Decline||% of Same- Store Portfolio¹||Same-Store Occupancy2||Number of Same-Store Homes3|
1 Based on YTD NOI.
2 Average same-store occupancy for YTD 2011.
3 During 2011, 37,869 apartment homes, or approximately 80 percent of 47,343 total apartment homes, were classified as same-store. The Company defines same-store as all multifamily communities owned and stabilized for at least one year as of the beginning of the most recent year.
Improving the Company’s operational efficiency, while increasing resident satisfaction, are the compelling factors for our continued investment in technology. The Company’s technology platform has gained acceptance and recognition from our residents as shown by the following utilization rates:
|Established Technology Initiatives:||December 2011||December 2010|
|Resident payments received via ACH||77||%||79||%|
|Service requests entered through MyUDR.com||79||%||79||%|
|Move-ins initiated via an internet source||57||%||62||%|
|Renewals completed electronically||86||%||81||%|
Development and Redevelopment Activity
As previously announced during the fourth quarter of 2011, the Company acquired land for its Village at Bella Terra development project in Huntington Beach, CA. The newly started community is projected to include 467 homes, cost $150 million and be completed in the second quarter of 2013.
In addition, the Company acquired a land parcel adjacent to its Vitruvian ParkSM development in Addison, TX for $4.7 million and a land parcel adjacent to its Garrison Square community in the Boston metro area for $4.6 million.
Joint Venture Investment Activity
As previously announced on December 21, 2011, the Company and its joint venture partner Kuwait Finance House (“KFH”) acquired 1301 Thomas Circle in Washington, D.C. for $153.8 million. The 292-home apartment community is located in the Logan Circle neighborhood near the 14th Street Corridor, is within minutes of the Mt. Vernon Square and McPherson Metro Stations and is near UDR’s wholly-owned Andover House community. The 10-story community was completed in 2006, is well-amenitized, has a 256-space parking garage and had an average monthly income per occupied home of $2,740 at the time of acquisition. Additional details related to the transaction can be found in the December 21, 2011 press release on the Company’s website at www.udr.com.
Following the purchase of 1301 Thomas Circle, there remained approximately $169 million of investment capacity under the terms of the joint venture agreement.
During the fourth quarter of 2011, the Company sold nine communities containing 2,331 homes for $275.4 million in total gross proceeds, bringing full-year 2011 asset dispositions to $593.9 million. At the time of the fourth quarter dispositions, total income per occupied home for the communities sold averaged $1,065 per month. The fourth quarter dispositions were located in a variety of markets including the Eastern Shore of Maryland, Raleigh, the East Bay area of San Francisco, the Inland Empire, San Diego, Houston and San Antonio.
Capital Markets Activity
During the fourth quarter of 2011, the Company completed a number of debt related activities aimed at managing its near term maturities and capital costs.
As previously announced, on October 25, 2011, the Company entered into a new $900 million unsecured revolving credit facility, replacing its prior $600 million facility. The new facility has an initial term of four years, includes a one-year extension option and contains an accordion feature that allows the Company to increase the facility to $1.35 billion.
Based on the Company’s credit ratings at the time of closing, the credit facility carried an interest rate equal to LIBOR plus a spread of 122.5 basis points and a facility fee of 22.5 basis points.
Coinciding with the closing of the new revolving credit facility, the Company amended and re-priced its $250 million unsecured term loan due in January 2016. The term loan was re-priced to LIBOR plus 142.5 basis points from LIBOR plus 200 basis points and its underlying covenants were aligned with those of UDR’s new revolving credit facility. Additional details related to these debt activities can be found in the October 25, 2011 press release on the Company’s website at www.udr.com.
In addition, the Company prepaid a $100.0 million secured mortgage at par in November. The mortgage had an interest rate of 6.78 percent and was originally due in May of 2012.
In the fourth quarter of 2011, the Company raised $15.5 million of equity through the sale of approximately 630 thousand shares at a weighted average net price of $24.67 per share under its “At the Market” equity offering program. In 2011, the Company raised a total of $989 million of equity from a combination of “At the Market” proceeds, a secondary offering completed in July and the issuance of operating partnership units.
At December 31, 2011, UDR had $738.7 million in availability through a combination of cash and undrawn capacity on its credit facilities. Potential sources of additional capital include the Company’s $5.0 billion of unencumbered assets (on a historical non-depreciated cost basis), 7.4 million shares available for issuance under its “At the Market” equity offering program in addition to $400 to $600 million in expected dispositions in 2012.
UDR’s total indebtedness at December 31, 2011 was $3.9 billion. The Company ended the fourth quarter with fixed-rate debt representing 73 percent of its total debt, a total blended interest rate of 4.0 percent and a weighted average maturity of 4.4 years. UDR’s fixed charge coverage ratio (adjusted for non-recurring items) was 2.6 times at year-end 2011 versus 2.3 times a year ago.
Post Quarter Activity
Joint Venture Investment Activity
On January 12, 2012, UDR formed a second real estate joint venture with MetLife (UDR/MetLife II) wherein each party owns a 50 percent interest in a $1.3 billion portfolio of 12 operating communities containing 2,528 apartment homes.
The 12 operating communities in the joint venture include seven communities from the Company’s first real estate joint venture with MetLife (UDR/MetLife I) formed on November 8, 2010, while the remaining five communities were newly acquired by UDR/MetLife II. The newly acquired communities, collectively known as Columbus Square, are recently developed, high-rise apartment buildings located on the Upper West Side of Manhattan and were purchased for $630 million. Additional details related to the transaction can be found in the January 12, 2012 press release on the Company’s website at www.udr.com.
With the closing of UDR/MetLife II, the original joint venture between the parties, UDR/MetLife I, now comprises 19 operating communities containing 3,930 homes as well as 10 vacant land parcels. Historical cost of the venture is $1.8 billion and the Company’s weighted average ownership interest in the UDR/MetLife I operating communities is now 12.6 percent and 4.0 percent for the land parcels in the venture.
Capital Markets Activity
On January 5, 2012, the Company priced a ten-year, $400 million offering of 4.625 percent senior unsecured notes under its existing shelf registration. The notes will mature on January 10, 2022. This offering fulfills the Company’s full-year 2012 guidance for $400 million in new debt issuances. A portion of this offering was used to repay $100 million of 5 percent unsecured debt originally due in January 2012. Additional details related to the transaction can be found in the January 5, 2012 press release on the Company’s website at www.udr.com.
In addition, the Company prepaid a $30.6 million mortgage at par in January 2012 that was secured by its 21 Chelsea community in Manhattan.
In January 2012, the Company raised $29.1 million of equity through the sale of approximately 1.2 million shares at a weighted average net price of $24.68 per share under its “At the Market” equity offering program.
|Full year 2012 guidance is as follows:|
|FFO per diluted share||$1.37 to $1.43|
|Dividend per share||$0.88|
|Number of homes||38,680|
|Revenue growth||5.0% to 6.0%|
|Expense growth||3.0% to 3.5%|
|Net operating income growth||6.0% to 7.5%|
|G&A expenses ($M)||$32 to $34|
|Recurring capital expenditures||$1,150/stabilized home|
|Transactional Activity ($M):||Range||Completed(1)|
|Dispositions||$400 to $600|
|Join venture investments, net||$290||$290|
|Financing Activity ($M):||Range||Completed(1)|
|(1) As of February 6, 2012|
|FFO Per Share GAAP Reconciliation|
|All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team. The following is a reconciliation from forecasted FFO per share to GAAP net loss per share:|
|Forecasted 2012 FFO Guidance per Diluted Share||$1.37||$1.43|
|Conversion to GAAP Share Count||(0.09)||(0.09)|
|Forecasted 2012 GAAP Net Loss per Diluted Share||($0.51)||($0.45)|
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 www.udr.com.
Conference Call and Webcast Information
UDR will host a webcast and conference call at 11:00 a.m. EST on February 6, 2012 to discuss fourth quarter results. A webcast will be available on UDR’s website at www.udr.com. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
To participate in the teleconference dial 800-762-8779 for domestic and 480-629-9771 for international and provide the following conference ID number: 4501829.
A replay of the conference call will be available through February 20, 2012, by dialing 800-406-7325 for domestic and 303-590-3030 for international and entering the confirmation number, 4501829, when prompted for the pass code.
A replay of the call will be available for 90 days on UDR’s website at www.udr.com.
Full Text of the Earnings Report and Supplemental Data
Internet -- The full text of the earnings report and Supplemental Financial Information will be available on the Company’s website at www.udr.com.
Mail -- For those without Internet access, the fourth quarter 2011 earnings report and Supplemental Financial Information will be available by mail or fax, on request. To receive a copy, please call UDR Investor Relations at 720-348-7762.
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. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement, due to a number of factors, which include, but are not limited to, unfavorable changes in the apartment market, changing economic conditions, the impact of inflation/deflation on rental rates and property operating expenses, expectations concerning availability of capital and the stabilization of the capital markets, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments, redevelopments and lease-ups on schedule, expectations on job growth, home affordability and demand/supply ratio for multifamily housing, expectations concerning development and redevelopment activities, expectations on occupancy levels, expectations concerning the Vitruvian ParkSM development, expectations concerning the joint ventures with KFH and MetLife, 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.
This release and these forward-looking statements include UDR’s analysis and conclusions and reflect UDR’s judgment as of the date of these materials. UDR assumes no obligation to revise or update to reflect future events or circumstances.
About UDR, Inc.
UDR, Inc. (NYSE: UDR), an S&P 400 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate properties in targeted U.S. markets. As of December 31, 2011, UDR owned or had an ownership position in 60,465 apartment homes including 2,626 homes under development. For over 39 years, UDR has delivered long-term value to shareholders, the best standard of service to residents, and the highest quality experience for associates. Additional information can be found on the Company’s website at www.udr.com.
|Consolidated Statements of Operations|
Three Months Ended
Twelve Months Ended
|December 31,||December 31,|
|In thousands, except per share amounts||2011||2010||2011||2010|
|Rental income||$ 187,999||$ 152,396||$ 691,263||$ 574,084|
|Real estate taxes and insurance||22,776||18,376||84,007||70,762|
|Repair and maintenance||9,843||8,571||37,155||32,386|
|Administrative and marketing||4,227||3,964||15,411||14,643|
|Other operating expenses||1,580||1,465||5,990||5,773|
|Loss from unconsolidated entities||(2,092)||(1,447)||(6,352)||(4,204)|
|Gain on sale of investments||1,396||4,725||7,069||4,725|
|Interest and other income (1)||3,406||2,049||10,353||7,777|
|Real estate depreciation and amortization||97,975||74,842||356,011||275,615|
|Amortization of convertible debt premium||-||776||1,077||1,204|
|Other debt charges (2)||550||83||4,602||3,530|
|General and administrative||5,747||10,597||35,440||39,845|
|Other depreciation and amortization||919||1,088||3,931||4,843|
|Loss from continuing operations||(22,805)||(30,042)||(111,636)||(115,804)|
|Income from discontinued operations||70,923||725||132,221||9,216|
|Consolidated net income/(loss)||48,118||(29,317)||20,585||(106,588)|
|Net (income)/loss attributable to non-controlling interests||(1,620)||861||(562)||3,689|
|Net income/(loss) attributable to UDR, Inc.||46,498||(28,456)||20,023||(102,899)|
|Distributions to preferred stockholders - Series E (Convertible)||(931)||(932)||(3,724)||(3,726)|
|Distributions to preferred stockholders - Series G||(1,377)||(1,437)||(5,587)||(5,762)|
|(Premium)/discount on preferred stock repurchases, net||-||-||(175)||25|
|Net income/(loss) attributable to common stockholders||$ 44,190||$ (30,825)||$ 10,537||$ (112,362)|
|Earnings/(loss) per weighted average common share - basic and diluted:|
|Loss from continuing operations available to common stockholders||($0.12)||($0.17)||($0.60)||($0.73)|
|Income from discontinued operations||$0.33||$0.00||$0.66||$0.06|
|Net Income/(loss) attributable to common stockholders||$0.20||($0.17)||$0.05||($0.68)|
|Common distributions declared per share||$0.2150||$0.185||$0.800||$0.730|
|Weighted average number of common shares outstanding - basic and diluted||217,823||180,743||201,294||165,857|
(1) Includes $3.2 million and $1.7 million of management fees from joint ventures during the three months ended December 31, 2011 and 2010 and $9.6 million and $3.2 million during the twelve months ended December 31, 2011 and 2010.
(2) Write-off of deferred financing costs on early debt extinguishment, including $0 and $599 write-off of convertible debt premium for the three and twelve months ended December 31, 2010.
|Funds From Operations|
|Three Months Ended||Twelve Months Ended|
|December 31,||December 31,|
|In thousands, except per share amounts||2011||2010||2011||2010|
|Net income/(loss) attributable to UDR, Inc.||$ 46,498||$ (28,456)||$ 20,023||$ (102,899)|
|Distributions to preferred stockholders||(2,308)||(2,369)||(9,311)||(9,488)|
|Real estate depreciation and amortization, including discontinued operations||98,513||81,922||370,343||303,446|
|Real estate depreciation and amortization on unconsolidated joint ventures||2,983||2,323||11,631||5,698|
|Net gain on the sale of depreciable property in discontinued operations, excluding RE3||(68,045)||(49)||(123,217)||(4,048)|
|(Premium)/discount on preferred stock repurchases, net||-||-||(175)||25|
|Funds from operations ("FFO") - basic||$ 79,261||$ 52,510||$ 269,856||$ 189,045|
|Distribution to preferred stockholders - Series E (Convertible)||931||932||3,724||3,726|
|Funds from operations - diluted||$ 80,192||$ 53,442||$ 273,580||$ 192,771|
|FFO per common share - basic||$ 0.35||$ 0.28||$ 1.29||$ 1.10|
|FFO per common share - diluted||$ 0.35||$ 0.28||$ 1.28||$ 1.09|
|Weighted average number of common shares and OP Units outstanding - basic||227,248||186,041||208,896||171,569|
Weighted average number of common shares, OP Units, and common stock equivalents outstanding - diluted
FFO is defined as net income (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate or of investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, gains (or losses) from sales of depreciable property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust's definition issued in April 2002. UDR considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of UDR's activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs.
RE3 gain on sales, net of taxes, is defined as net sales proceeds less a tax provision and the gross investment basis of the asset before accumulated depreciation. We consider FFO with RE3 gain on sales, net of taxes, to be a meaningful supplemental measure of performance because the short-term use of funds produce profits which differ from the traditional long-term investment in real estate for REITs.
|Consolidated Balance Sheets|
|December 31,||December 31,|
|In thousands, except share and per share amounts||2011||2010|
|Real estate owned:|
|Real estate held for investment||$||7,825,725||$||6,198,667|
|Less: accumulated depreciation||(1,831,157||)||(1,505,626||)|
|Real estate under development|
|(net of accumulated depreciation of $570 and $0)||248,176||97,912|
|Real estate held for disposition|
|(net of accumulated depreciation of $0 and $132,700)||-||452,068|
|Total real estate owned, net of accumulated depreciation||6,242,744||5,243,021|
|Cash and cash equivalents||12,503||9,486|
|Deferred financing costs, net||30,068||27,267|
|Investment in unconsolidated joint ventures||213,040||148,057|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Secured debt - real estate held for disposition||-||154,924|
|Real estate taxes payable||13,397||14,585|
|Accrued interest payable||23,208||20,889|
|Security deposits and prepaid rent||35,516||26,046|
|Deferred fees and gains on the sale of depreciable property||29,100||28,943|
|Accounts payable, accrued expenses, and other liabilities||95,485||105,925|
|Redeemable non-controlling interests in operating partnership||236,475||119,057|
Preferred stock, no par value; 50,000,000 shares authorized
2,803,812 shares of 8.00% Series E Cumulative Convertible issued and outstanding (2,803,812 shares at December 31, 2010)
3,264,362 shares of 6.75% Series G Cumulative Redeemable issued and outstanding (3,405,562 shares at December 31, 2010)
Common stock, $0.01 par value; 250,000,000 shares authorized
219,650,225 shares issued and outstanding (182,496,330 shares at December 31, 2010)
|Additional paid-in capital||3,340,470||2,450,141|
|Distributions in excess of net income||(1,142,895||)||(973,864||)|
|Accumulated other comprehensive loss, net||(13,902||)||(3,469||)|
|Total stockholders' equity||2,314,050||1,606,343|
|Total liabilities and stockholders' equity||$||6,721,354||$||5,529,540|