Market Overview

UDR Announces Second Quarter 2018 Results and Increases Full-Year Guidance Ranges

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UDR, Inc. (the "Company") Second Quarter 2018 Highlights:

  • Net income per share was $0.07, Funds from Operations ("FFO") per
    share was $0.49, FFO as Adjusted ("FFOA") per share was $0.49, and
    Adjusted Funds from Operations ("AFFO") per share was $0.45.
  • Net income attributable to common stockholders was $19.6 million as
    compared to $9.2 million in the prior year period. The increase was
    primarily due to higher income from operating properties.
  • Year-over-year same-store ("SS") revenue, expense and net operating
    income ("NOI") growth for the quarter were 3.4 percent, 2.9 percent
    and 3.5 percent, respectively.
  • Completed the construction of The Residences at Pacific City, a $350.0
    million, 516-home community located in Huntington Beach, CA.
  • 345 Harrison Street, the Company's 585-home, $366.5 million
    development project located in Boston ended the second quarter 59.3
    percent leased, just seven weeks after officially opening.
  • Increased full-year 2018 earnings and same-store growth guidance:
    • Increased net income per share guidance by $0.005 at the midpoint
      to $0.51 to $0.54.
    • Increased FFO per share guidance by $0.005 at the midpoint to
      $1.92 to $1.95.
    • Increased FFOA and AFFO per share guidance by $0.015 at the
      midpoints, to $1.93 to $1.96 and $1.78 to $1.81, respectively.
    • Increased SS revenue, expense and NOI growth guidance ranges by 25
      basis points at the midpoints to 3.0 to 3.5 percent.
      Q2 2018     Q2 2017     YTD 2018     YTD 2017  
Net income per common share, diluted     $ 0.07       $ 0.03       $ 0.37       $ 0.13  
Conversion from GAAP share count     (0.007 )     (0.003 )     (0.035 )     (0.012 )
Net gain on the sale of depreciable real estate owned - - (0.237 ) (0.043 )
Cumulative effect of change in accounting principle - - (0.007 ) -
Depreciation and amortization 0.412 0.414 0.825 0.815
Noncontrolling interests and preferred dividends       0.009         0.006         0.038         0.018  
FFO per common share and unit, diluted     $ 0.49       $ 0.45       $ 0.96       $ 0.90  
Cost/(benefit) associated with debt extinguishment and other - 0.015 - 0.020
Net gain on the sale of non-depreciable real estate owned - - - (0.005 )
Legal and other costs 0.002 - 0.002 -
Casualty-related charges/(recoveries), including JVs, net       0.003         0.004         0.006         0.003  
FFOA per common share and unit, diluted     $ 0.49       $ 0.47       $ 0.97       $ 0.92  
Recurring capital expenditures       (0.043 )       (0.036 )       (0.066 )       (0.059 )
AFFO per common share and unit, diluted     $ 0.45       $ 0.43       $ 0.90       $ 0.86  

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 second quarter Supplemental Financial Information.

Operations

In the second quarter, total revenue increased by $11.8 million
year-over-year, or 4.7 percent, to $259.7 million. This increase was
primarily attributable to growth in revenue from operating communities.

In the second quarter, same-store NOI increased 3.5 percent
year-over-year and was driven by same-store revenue growth of 3.4
percent and a 2.9 percent increase in same-store expenses. Weighted
average same-store physical occupancy increased by 30 basis points
year-over-year to 97.0 percent. The second quarter annualized rate of
turnover was 53.6 percent, representing a 200 basis point decline
year-over-year.

Summary of Same-Store Results Second Quarter 2018 versus Second
Quarter 2017

Region    

Revenue
Growth

   

Expense
Growth

   

NOI
Growth/
(Decline)

    % of

Same-Store

Portfolio(1)

    Same-Store

Occupancy(2)

   

Number of
Same-Store
Homes(3)

West     4.5%     0.6%     5.8%     44.3%     96.5%     13,942
Mid-Atlantic 2.6% 2.6% 2.6% 23.7% 97.5% 10,480
Northeast 0.9% 8.5% (2.0)% 15.3% 97.0% 3,493
Southeast 4.5% 2.2% 5.5% 12.2% 97.1% 7,683
Southwest     2.9%     4.9%     1.6%     4.5%     97.0%     3,313
Total     3.4%     2.9%     3.5%     100.0%     97.0%     38,911
(1)  

Based on Q2 2018 NOI.

(2)

Weighted average same-store physical occupancy for the
quarter.

(3)

During the second quarter, 38,911 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 second quarter, sequential same-store NOI increased by 2.1
percent and was driven by same-store revenue growth of 1.4 percent and a
0.5 percent decline in same-store expenses. Weighted average same-store
physical occupancy increased by 10 basis points sequentially to 97.0
percent.

Year-to-date, for the six months ended June 30, 2018, total revenue
increased by $21.2 million year-over-year, or 4.3 percent, to $513.0
million. This increase was primarily attributable to growth in revenue
from operating communities.

Year-to-date, for the six months ended June 30, 2018, same-store NOI
increased 3.1 percent year-over-year and was driven by same-store
revenue growth of 3.2 percent and a 3.3 percent increase in same-store
expenses. Weighted average same-store physical occupancy increased by 30
basis points year-over-year to 96.9 percent. The year-to-date annualized
rate of turnover was 46.9 percent, representing a 160 basis point
decline year-over-year.

Summary of Same-Store Results Year-To-Date 2018 versus Year-To-Date
2017

Region    

Revenue
Growth

    Expense

Growth

    NOI Growth/

(Decline)

    % of

Same-Store

Portfolio(1)

    Same-Store

Occupancy(2)

   

Number of
Same-Store
Homes(3)

West     4.3%     1.2%     5.3%     44.0%     96.5%     13,698
Mid-Atlantic 2.5% 4.5% 1.6% 24.0% 97.5% 10,480
Northeast 0.7% 6.3% (1.6)% 15.7% 97.2% 3,493
Southeast 4.6% 1.1% 6.3% 12.4% 97.0% 7,683
Southwest     1.8%     7.2%     (1.6)%     3.9%     96.8%     2,923
Total     3.2%     3.3%     3.1%     100.0%     96.9%     38,277
(1)  

Based on YTD 2018 NOI.

(2)

Weighted average same-store physical occupancy for YTD 2018.

(3)

For the six months ended June 30, 2018, 38,277 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.

 

Development and Redevelopment Activity

At the end of the second quarter, the Company's development pipeline
totaled $810.5 million at its pro-rata ownership interest. Of this
total, 96 percent had been funded. All of the Company's development
communities were in lease-up as of the end of the second quarter. 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, construction was completed on The Residences at
Pacific City, a 516-home community located in Huntington Beach, CA with
an estimated cost to construct of $350.0 million. The UDR/MetLife Joint
Venture completed construction of Vision on Wilshire, a 150-home
community located in Los Angeles with an estimated cost to construct of
$129.0 million at 100 percent.

Developer Capital Program ("DCP") Activity

At the end of the second quarter, the Company's DCP investment,
including accrued return, totaled $179.2 million. Activity during the
quarter consisted of:

  • Completed the construction of Parallel, a 386-home community located
    in Anaheim, CA and CityLine II, a 155-home community located in
    Seattle. The Company's ownership interest and initial investment in
    the two communities averages 49 percent and totals $42.0 million,
    respectively.

Capital Markets and Balance Sheet Activity

Second quarter UDR/MetLife Joint Venture capital markets activity
included refinancing three construction loans into $191.6 million of
10-year, fixed-rate secured loans with a weighted average rate of 3.94
percent.

At June 30, 2018, the Company had approximately $771.1 million of
availability, through a combination of cash and undrawn capacity, on its
credit facilities.

The Company's total indebtedness at June 30, 2018 was $3.75 billion. The
Company ended the quarter with fixed-rate debt representing 85.0 percent
of its total debt, a weighted average interest rate of 3.7 percent and a
weighted average maturity of 4.8 years. The Company's consolidated
leverage was 33.4 percent versus 33.3 percent a year ago, its
consolidated net-debt-to-EBITDAre was 5.7x versus 5.8x a year ago and
its consolidated fixed charge coverage ratio was 4.6x 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 second quarter of
2018 in the amount of $0.3225 per share. The dividend will be paid in
cash on

July 31, 2018 to UDR common stock shareholders of record as of July 10,
2018. The second quarter 2018 dividend will represent the 183rd
consecutive quarterly dividend paid by the Company on its common stock.

Outlook

For the third quarter of 2018, the Company has established the
following earnings guidance ranges:

Net income per share       $0.08 to $0.10
FFO per share $0.48 to $0.50
FFO as Adjusted per share $0.48 to $0.50
AFFO per share $0.43 to $0.45
 

For the full-year 2018, the Company has increased its previously
provided earnings guidance ranges:

    Updated Guidance         Prior Guidance
Net income per share $0.51 to $0.54 $0.50 to $0.54
FFO per share $1.92 to $1.95 $1.91 to $1.95
FFO as Adjusted per share $1.93 to $1.96 $1.91 to $1.95
AFFO per share $1.78 to $1.81 $1.76 to $1.80
 

For the full-year 2018, the Company has increased its previously
provided same-store growth guidance ranges:

    Updated Guidance         Prior Guidance
Revenue 3.00% to 3.50% 2.50% to 3.50%
Expense 3.00% to 3.50% 2.50% to 3.50%
Net operating income 3.00% to 3.50% 2.50% to 3.50%
 

Additional assumptions for the Company's third quarter and full-year
2018 guidance can be found on Attachment 15 of the Company's second
quarter Supplemental Financial Information. A reconciliation of FFO per
share, FFO as Adjusted per share and AFFO per share to GAAP Net income
per share can be found on Attachment 16(D) of the Company's second
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 second quarter Supplemental Financial
Information.

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
July 31, 2018 to discuss second 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 August 31,
2018, by dialing 844-512-2921 for domestic and 412-317-6671 for
international and entering the confirmation number, 13681180, 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

Internet -- The full text of the earnings report and Supplemental
Financial Information will be available on the Company's website at ir.udr.com.

Mail -- For those without Internet access, the second quarter 2018
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.

Attachment 16(B)
 
UDR, Inc.
Definitions and Reconciliations
June 30, 2018
(Unaudited)
 
 
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 acquisition-related costs
and other non-comparable items including, but not limited to,
prepayment costs/benefits associated with early debt retirement,
gains or losses on sales of non-depreciable property and marketable
securities, deferred tax valuation allowance increases and
decreases, casualty-related expenses and recoveries, severance costs
and legal 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 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 on Attachment 2.
 
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 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
noncontrolling interests, unconsolidated partnerships and joint
ventures. This definition conforms with the National Association of
Real Estate Investment Trust's definition issued in April 2002. 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
on Attachment 2.
 
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.
 
Joint Venture Reconciliation at UDR's weighted average ownership
interest:
       
In thousands 2Q 2018 YTD 2018
Income/(loss) from unconsolidated entities $ (2,032 ) $ (3,709 )
Management fee 1,215 2,420
Interest expense 9,834 19,392
Depreciation 15,512 29,852
General and administrative 147 272
West Coast Development JV Preferred Return - Attachment 12(B) (1,041 ) (2,063 )
Developer Capital Program - Other (excludes Alameda Point Block 11) (1,862 ) (3,290 )
Other (income)/expense   331     498  
Total Joint Venture NOI at UDR's Ownership Interest $ 22,104   $ 43,372  
 
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 2.75% 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.
                   
In thousands 2Q 2018 1Q 2018 4Q 2017   3Q 2017 2Q 2017
Net income/(loss) attributable to UDR, Inc. $ 20,601 $ 81,756 $ 69,280 $ 16,190 $ 10,157
Property management 7,057 6,888 6,878 6,827 6,728
Other operating expenses 2,825 2,009 3,050 1,950 2,369
Real estate depreciation and amortization 106,520 108,136 109,401 107,171 108,450
Interest expense 31,598 29,943 34,211 30,095 33,866
Casualty-related charges/(recoveries), net 746 940 586 2,056 1,191
General and administrative 12,373 11,759 11,590 12,467 11,434
Tax provision/(benefit), net 233 227 (1,065 ) 127 366
(Income)/loss from unconsolidated entities 2,032 1,677 (19,666 ) (1,819 ) 1,426
Interest income and other (income)/expense, net (1,128 ) (2,759 ) (548 ) (481 ) (515 )
Joint venture management and other fees (3,109 ) (2,822 ) (2,764 ) (2,827 ) (3,321 )
Other depreciation and amortization 1,684 1,691 1,648 1,585 1,567
(Gain)/loss on sale of real estate owned, net of tax - (70,300 ) (41,272 ) - -
Net income/(loss) attributable to noncontrolling interests   1,843     7,469     6,347       1,380     905  
Total consolidated NOI $ 183,275   $ 176,614   $ 177,676     $ 174,721   $ 174,623  
 

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, 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 June 30, 2018, UDR owned or had an ownership position in
49,464 apartment homes including 1,334 homes under development or in its
Developer Capital Program – West Coast Development Joint Venture. For
over 46 years, UDR has delivered long-term value to shareholders, the
best standard of service to residents and the highest quality experience
for associates.

               
Attachment 1
 
UDR, Inc.
Consolidated Statements of Operations
(Unaudited) (1)
 
Three Months Ended Six Months Ended
June 30, June 30,
In thousands, except per share amounts     2018     2017     2018     2017
 
REVENUES:
Rental income $ 256,634 $ 244,658 $ 507,117 $ 485,929
Joint venture management and other fees   3,109     3,321     5,931     5,891  
Total revenues   259,743     247,979     513,048     491,820  
 
OPERATING EXPENSES:
Property operating and maintenance 41,452 40,612 82,039 80,212
Real estate taxes and insurance 31,907 29,423 65,189 59,611
Property management 7,057 6,728 13,945 13,363
Other operating expenses 2,825 2,369 4,834 4,060
Real estate depreciation and amortization 106,520 108,450 214,656 213,482
General and administrative 12,373 11,434 24,132 24,509
Casualty-related charges/(recoveries), net 746 1,191 1,686 1,693
Other depreciation and amortization   1,684     1,567     3,375     3,175  
Total operating expenses   204,564     201,774     409,856     400,105  
 
Operating income 55,179 46,205 103,192 91,715
 
Income/(loss) from unconsolidated entities (2) (2,032 ) (1,426 ) (3,709 ) 9,772
 
Interest expense (31,598 ) (29,548 ) (61,541 ) (58,571 )
(Cost)/benefit associated with debt extinguishment and other   -     (4,318 )   -     (5,834 )
Total interest expense (31,598 ) (33,866 ) (61,541 ) (64,405 )
Interest income and other income/(expense), net   1,128     515     3,887     942  
 
Income/(loss) before income taxes and gain/(loss) on sale of real
estate owned
22,677 11,428 41,829 38,024
Tax (provision)/benefit, net   (233 )   (366 )   (460 )   (698 )
 
Income/(loss) from continuing operations 22,444 11,062 41,369 37,326
Gain/(loss) on sale of real estate owned, net of tax   -     -     70,300     2,132  
 
Net income/(loss) 22,444 11,062 111,669 39,458
Net (income)/loss attributable to redeemable noncontrolling
interests in the OP and DownREIT Partnership
(1,813 ) (854 ) (9,203 ) (3,192 )
Net (income)/loss attributable to noncontrolling interests   (30 )   (51 )     (109 )   (142 )
 
Net income/(loss) attributable to UDR, Inc. 20,601 10,157 102,357 36,124
Distributions to preferred stockholders - Series E (Convertible)   (971 )   (929 )   (1,926 )   (1,858 )
 
Net income/(loss) attributable to common stockholders $ 19,630   $ 9,228   $ 100,431   $ 34,266  
 
 
Income/(loss) per weighted average common share - basic: $ 0.07 $ 0.03 $ 0.38 $ 0.13
Income/(loss) per weighted average common share - diluted: $ 0.07 $ 0.03 $ 0.37 $ 0.13
 
Common distributions declared per share $ 0.3225 $ 0.3100 $ 0.6450 $ 0.6200
 
Weighted average number of common shares outstanding - basic 267,311 266,972 267,428 266,881
Weighted average number of common shares outstanding - diluted 268,890 268,859 269,002 268,742

(1)

 

See Attachment 16 for definitions and other terms.

(2)

During the six months ended June 30, 2017, UDR exercised its
fixed price option to acquire CityLine, a West Coast Development
JV community in Seattle, WA, and recorded a $12.2 million gain on
consolidation.

 
               
Attachment 2
 
UDR, Inc.
Funds From Operations
(Unaudited) (1)
 
Three Months Ended Six Months Ended
June 30, June 30,
In thousands, except per share and unit amounts     2018     2017     2018     2017
 
Net income/(loss) attributable to common stockholders $ 19,630 $ 9,228 $ 100,431 $ 34,266
 
Real estate depreciation and amortization 106,520 108,450 214,656 213,482
Noncontrolling interests 1,843 905 9,312 3,334
Real estate depreciation and amortization on unconsolidated joint
ventures
15,512 14,497 29,852 28,264

Cumulative effect of change in accounting principle (2)

- - (2,100 ) -
Net gain on the sale of unconsolidated depreciable property - - - (12,158 )
Net gain on the sale of depreciable real estate owned   -     -     (70,300 )   (552 )
Funds from operations ("FFO") attributable to common stockholders
and unitholders, basic
$ 143,505   $ 133,080   $ 281,851   $ 266,636  
 

Distributions to preferred stockholders - Series E (Convertible)
(3)

971 929 1,926 1,858
       
FFO attributable to common stockholders and unitholders, diluted $ 144,476   $ 134,009   $ 283,777   $ 268,494  
 
FFO per common share and unit, basic $ 0.49   $ 0.46   $ 0.97   $ 0.91  
FFO per common share and unit, diluted $ 0.49   $ 0.45   $ 0.96   $ 0.90  
 
Weighted average number of common shares and OP/DownREIT Units
outstanding - basic
  291,885     291,836     291,968     291,794  
Weighted average number of common shares, OP/DownREIT Units, and
common stock
equivalents outstanding - diluted   296,475     296,751     296,553     296,683  
 
Impact of adjustments to FFO:
Cost/(benefit) associated with debt extinguishment and other $ - $ 4,318 $ - $ 5,834
Net gain on the sale of non-depreciable real estate owned (4) - - - (1,580 )
Legal and other costs 625 - 625 -
Casualty-related charges/(recoveries), net 806 1,191 1,815 1,693
Casualty-related charges/(recoveries) on unconsolidated joint
ventures, net
  -     -     -     (881 )
$ 1,431   $ 5,509   $ 2,440   $ 5,066  
       
FFO as Adjusted attributable to common stockholders and
unitholders, diluted
$ 145,907   $ 139,518   $ 286,217   $ 273,560  
 
FFO as Adjusted per common share and unit, diluted $ 0.49   $ 0.47   $ 0.97   $ 0.92  
 
Recurring capital expenditures   (12,781 )   (10,682 )   (19,450 )   (17,473 )
AFFO attributable to common stockholders and unitholders, diluted $ 133,126   $ 128,836   $ 266,767   $ 256,087  
 
AFFO per common share and unit, diluted $ 0.45   $ 0.43   $ 0.90   $ 0.86  

(1)

 

See Attachment 16 for definitions and other terms.

(2)

During 1Q18, UDR adopted ASU No. 2016 01, Financial
Instruments – Overall (Subtopic 825-10), Recognition and
Measurement of Financial Assets and Financial Liabilities
. The
updated standard requires certain equity securities to be measured
at fair value on the balance sheet, with changes in fair value
recognized in net income. The adoption of the standard resulted in
UDR recording a gain of $2.1 million in Interest income and other
income/(expense), net on the Consolidated Statements of
Operations. As such, the cumulative effect of the change in
accounting principle is backed out for FFO.

(3)

Series E preferred shares are dilutive for purposes of
calculating FFO per share. 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)

The GAAP gain for the six months ended June 30, 2017 is $2.1
million, of which $1.6 million is FFO gain related to the sale of
land parcels. The FFO gain is backed out for FFO as Adjusted.

 
       
Attachment 3
 
UDR, Inc.
Consolidated Balance Sheets
(Unaudited) (1)
 
June 30, December 31,
In thousands, except share and per share amounts     2018     2017
 
 
ASSETS
 
Real estate owned:
Real estate held for investment $ 9,940,707 $ 9,584,716
Less: accumulated depreciation   (3,518,824 )   (3,326,312 )
Real estate held for investment, net 6,421,883 6,258,404
Real estate under development
(net of accumulated depreciation of $592 and $3,854)   335,665     588,636  
Total real estate owned, net of accumulated depreciation 6,757,548 6,847,040
 
Cash and cash equivalents 1,055 2,038
Restricted cash 29,857 19,792
Notes receivable, net 40,709 19,469
Investment in and advances to unconsolidated joint ventures, net 739,910 720,830
Other assets   138,279     124,104  
Total assets $ 7,707,358   $ 7,733,273  
 
LIABILITIES AND EQUITY
 
Liabilities:
Secured debt $ 799,815 $ 803,269
Unsecured debt 2,952,297 2,868,394
Real estate taxes payable 21,972 18,349
Accrued interest payable 38,201 33,432
Security deposits and prepaid rent 34,519 31,916
Distributions payable 95,131 91,455
Accounts payable, accrued expenses, and other liabilities   74,344     102,956  
Total liabilities 4,016,279 3,949,771
 
Redeemable noncontrolling interests in the OP and DownREIT
Partnership
922,329 948,138
 
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, 2017) 46,200 46,200
15,804,393 shares of Series F outstanding (15,852,721 shares
at December 31, 2017) 1 1
Common stock, $0.01 par value; 350,000,000 shares authorized
267,667,437 shares issued and outstanding (267,822,069 shares at
December 31, 2017)
2,677 2,678
Additional paid-in capital 4,639,147 4,651,205
Distributions in excess of net income (1,929,124 ) (1,871,603 )
Accumulated other comprehensive income/(loss), net   (1,407 )   (2,681 )
Total stockholders' equity 2,757,494 2,825,800
Noncontrolling interests   11,256     9,564  
Total equity   2,768,750     2,835,364  
Total liabilities and equity $ 7,707,358   $ 7,733,273  

(1) See Attachment 16 for definitions and other terms.

       
 
Attachment 4(C)
 
UDR, Inc.
Selected Financial Information
(Dollars in Thousands)
(Unaudited) (1)
 
Quarter Ended
Coverage Ratios                   June 30, 2018
 
Net income/(loss) $ 22,444
 
Adjustments:
Interest expense, including costs associated with debt extinguishment 31,598
Real estate depreciation and amortization 106,520
Other depreciation and amortization 1,684
Income tax provision/(benefit), net 233
Adjustments to reflect the Company's share of EBITDAre of
unconsolidated joint ventures
  25,346  
EBITDAre $ 187,825  
 
 
Casualty-related charges/(recoveries), net 806
Legal and other costs 625
(Income)/loss from unconsolidated entities 2,032
Adjustments to reflect the Company's share of EBITDAre of
unconsolidated joint ventures
(25,346 )
Management fee expense on unconsolidated joint ventures   (1,215 )
Consolidated EBITDAre - adjusted for non-recurring items $ 164,727  
 
Annualized consolidated EBITDAre - adjusted for non-recurring items $ 658,908  
 
Interest expense, including costs associated with debt extinguishment 31,598
Capitalized interest expense   3,603  
Total interest $ 35,201
 
Preferred dividends $ 971
 
Total debt $ 3,752,112
Cash   (1,055 )
Net debt $ 3,751,057  
 
 
Consolidated Interest Coverage Ratio - adjusted for non-recurring
items
4.7x
 
Consolidated Fixed Charge Coverage Ratio - adjusted for
non-recurring items
4.6x
 
Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring
items
5.7x
           
 
Debt Covenant Overview          
 
Unsecured Line of Credit Covenants (2)       Required   Actual   Compliance
 
Maximum Leverage Ratio ≤60.0%

34.1%(2)

Yes
Minimum Fixed Charge Coverage Ratio ≥1.5x 3.8x Yes
Maximum Secured Debt Ratio ≤40.0% 12.9% Yes
Minimum Unencumbered Pool Leverage Ratio ≥150.0% 352.8% Yes
 
 
Senior Unsecured Note Covenants (3)       Required   Actual   Compliance
 
Debt as a percentage of Total Assets ≤65.0%

33.5%(3)

Yes
Consolidated Income Available for Debt Service to Annual Service
Charge
≥1.5x 5.1x Yes
Secured Debt as a percentage of Total Assets ≤40.0% 7.1% Yes
Total Unencumbered Assets to Unsecured Debt ≥150.0% 296.0% Yes
 
 
Securities Ratings       Debt   Preferred   Outlook   Commercial Paper
 
Moody's Investors Service Baa1 Baa2 Stable P-2
Standard & Poor's BBB+ BBB- Stable A-2
 
                     
 
Gross % of
Number of 2Q 2018 NOI (1) Carrying Value Total Gross
Asset Summary   Homes   ($000s)   % of NOI   ($000s)   Carrying Value
 
Unencumbered assets 32,075 $ 152,386 83.1% $ 8,560,221 83.3%
Encumbered assets 8,105 30,889 16.9% 1,716,743 16.7%
40,180 $ 183,275 100.0% $ 10,276,964 100.0%

(1)

 

See Attachment 16 for definitions and other terms.

(2)

As defined in our credit agreement dated October 20, 2015.

(3)

As defined in our indenture dated November 1, 1995 as
amended, supplemented or modified from time to time.

 
 
Attachment 16(D)
   
UDR, Inc.
Definitions and Reconciliations
June 30, 2018
(Unaudited)
 
All guidance is based on current expectations of future economic
conditions and the judgment of the Company's management team. The
following reconciles from GAAP Net income/(loss) per share for full
year 2018 and third quarter of 2018 to forecasted FFO, FFO as
Adjusted and AFFO per share and unit:
                     
Full-Year 2018
Low High
 
Forecasted net income per diluted share $ 0.51 $ 0.54
Conversion from GAAP share count (0.04 ) (0.04 )
Net gain on the sale of depreciable real estate owned (0.24 ) (0.24 )
Depreciation 1.65 1.65
Cumulative effect of change in accounting principle (0.01 ) (0.01 )
Noncontrolling interests 0.04 0.04
Preferred dividends   0.01     0.01  
Forecasted FFO per diluted share and unit $ 1.92   $ 1.95  
Disposition-related FFO - -
Cost associated with debt extinguishment - -
Casualty-related charges/(recoveries)   0.01     0.01  
Forecasted FFO as Adjusted per diluted share and unit $ 1.93   $ 1.96  
Recurring capital expenditures   (0.15 )   (0.15 )
Forecasted AFFO per diluted share and unit $ 1.78   $ 1.81  
 
 
 
3Q 2018
Low High
 
Forecasted net income per diluted share $ 0.08 $ 0.10
Conversion from GAAP share count (0.01 ) (0.01 )
Depreciation 0.41 0.41
Noncontrolling interests - -
Preferred dividends   -     -  
Forecasted FFO per diluted share and unit $ 0.48   $ 0.50  
Disposition-related FFO - -
Cost associated with debt extinguishment - -
Casualty-related charges/(recoveries)   -     -  
Forecasted FFO as Adjusted per diluted share and unit $ 0.48   $ 0.50  
Recurring capital expenditures   (0.05 )   (0.05 )
Forecasted AFFO per diluted share and unit $ 0.43   $ 0.45  
 

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