• Same-Store Revenue Growth: 1.2% year-over-year in Q3.
• Same-Store NOI Growth: 0.8% year-over-year in Q3.
• Blended Lease Rate Growth: 1.8% in Q3, with renewal rate growth over 5% and new lease rate growth approximately -2%.
• Occupancy Rate: Averaged 96.3% in Q3, ending at 96.5%.
• Resident Turnover: 55% annualized, 200 basis points below prior year.
• Other Income Growth: Approximately 5% in Q3.
• Same-Store Expense Growth: 2% year-over-year in Q3.
• FFO as Adjusted Per Share: $0.62 in Q3.
• Full Year 2024 FFOA Per Share Guidance: $2.47 to $2.49.
• Liquidity: Over $1 billion as of September 30.
• Net Debt-to-EBITDAre: 5.6x at quarter end.

• Warning! GuruFocus has detected 12 Warning Signs with UDR.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• UDR Inc (NYSE:UDR) raised its full-year FFOA per share guidance for the third time this year, indicating strong financial performance.
• The company has successfully implemented value-add initiatives, contributing to high single-digit revenue growth and enhancing same-store revenue.
• UDR Inc (NYSE:UDR) maintains an investment-grade balance sheet with substantial liquidity, positioning it well for future growth opportunities.
• The company has seen a significant improvement in resident retention, reducing turnover costs and enhancing cash flow growth.
• UDR Inc (NYSE:UDR) has been recognized for its leadership in environmental, social, and governance (ESG) goals, showcasing its commitment to sustainability.

Negative Points

• The company experienced a negative new lease rate growth of approximately 2% in the third quarter.
• Occupancy rates were slightly lower than historical averages, attributed to strategic implementation of AI screening and fraud identification tools.
• The Sunbelt markets, comprising 25% of UDR Inc (NYSE:UDR)'s NOI, continue to lag behind coastal markets due to elevated new supply.
• The company faces macroeconomic uncertainties, including interest rate fluctuations and election-related volatility, which are beyond its control.
• UDR Inc (NYSE:UDR) has seen a decline in effective new lease rate growth, stabilizing at a negative 5% range from September to October.

Q & A Highlights

Q: How do you expect other income growth to contribute to 2025 compared to 2024? A: Michael Lacy, Senior Vice President - Property Operations, stated that while the 5% growth in Q3 was lower than expected, they anticipate returning to an 8% growth range for the rest of the year. For 2025, they expect similar growth, driven by initiatives like the WiFi rollout, which could double the NOI from $5 million in 2024.

Q: What is the outlook for the Debt and Preferred Equity Program in 2025? A: Joseph Fisher, President and CFO, mentioned that they expect to maintain the balance of the program, with opportunities primarily in operating recapitalizations. They have renamed the program to reflect a shift towards stabilized operating assets.

Q: Can you clarify the stability in Sunbelt markets and expectations for lease rate growth? A: Michael Lacy explained that while Sunbelt markets have seen occupancy improvements, lease rate growth has decelerated. They expect stability and potential pricing power to return by mid-2025, with blends expected to be flat through Q4 2024.

Q: How does UDR plan to manage capital allocation, particularly regarding stock buybacks? A: Joseph Fisher indicated that while stock buybacks are not currently prioritized, they are focusing on joint venture acquisitions and OP unit transactions. They aim to deploy capital in areas that align with market opportunities and strategic goals.

Q: What are the expectations for turnover and its impact on expenses in 2025? A: Michael Lacy highlighted the success of the customer experience project, which has reduced turnover and is expected to continue improving. They anticipate that reduced turnover will positively impact expenses, with every saved move-out translating to approximately $5,000 in savings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.