Balanced Risk-Reward at UDR - Analyst Blog

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On Apr 11, 2014, we issued an updated research report on UDR Inc. UDR – a multifamily apartment real estate investment trust (REIT).

On Feb 4, UDR reported its fourth-quarter 2013 financial results. The company's fourth-quarter FFO as adjusted came in at 35 cents per share, which missed the Zacks Consensus Estimate due to higher operating expenses. Nevertheless, it came in line with the year-ago figure, thanks to higher total revenues.

UDR's continuous initiative to upgrade the overall portfolio quality by developing and redeveloping properties in core operating markets and divesting non-core assets, position it well in upscale markets and enhance its growth prospects. Also, the echo boomers population continues to raise the demand for apartments.

Furthermore, the company continues to focus on its strategic priorities such as disciplined capital allocation, a strong and flexible balance sheet position as well as cash flow enhancement to support dividend growth. Accordingly, recently, UDR rewarded shareholders with an 11% hike in its quarterly dividend, which boosts investors' confidence.

However, a huge development and redevelopment pipeline increases operational risks. Additionally, stiff competition from other housing alternatives and a weak Mid-Atlantic market remain our concerns. Also, rising interest rates could affect UDR's cost of debt, its financials and dividend payout.

Over the last 60 days, the Zacks Consensus Estimate for FFO per share remained flat at $1.49 for 2014. For 2015, it move north by 2 cents to $1.60. The stock currently has a Zacks Rank #2 (Buy).

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UDR is scheduled to report its first-quarter 2014 results on Apr 29. The Zacks Consensus Estimate for FFO per share for the quarter is pegged at 35 cents, representing a year over year growth of 4.17%.

Stocks That Warrant a Look

Investors interested in the REIT industry may consider stocks like Sotherly Hotels Inc. SOHO, Strategic Hotels & Resorts, Inc. BEE and W. P. Carey Inc. WPC. All these stocks have a Zacks Rank #1 (Strong Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.



STRATEGIC HOTEL BEE: Free Stock Analysis Report

SOTHERLY HOTELS SOHO: Get Free Report

UDR INC UDR: Free Stock Analysis Report

WP CAREY INC WPC: Free Stock Analysis Report

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