DENVER--(Business Wire)--
UDR, Inc. (NYSE: UDR):
-- Achieved 16th consecutive quarter of same community revenue
growth, up 4.4 percent year-over-year and up 1.2 percent
sequentially
-- Delivered 7.1 percent same community net operating income
(NOI) growth
-- Completed $125 million of acquisitions in the second quarter
and another $160 million during July, utilizing exchange funds
from the March, 2008 portfolio sale
-- Delivered a new development community with 320 homes
-- Completed redevelopment of 672 homes at two communities
-- Achieved 170 basis-point improvement in operating margin, to
69.2 percent
UDR, Inc. (NYSE: UDR) today reported Funds from Operations ("FFO")
of $49.8 million, or $0.36 per diluted share, for the quarter ended
June 30, 2008, versus $66.3 million, or $0.45 per diluted share, for
the same period a year ago. Comparing year-over-year results, growth
in same store net operating income was offset by lower income due to
the March 3, 2008 sale of 25,684 apartment homes for $1.7 billion and
lower contribution from gains on sales in RE(3). Second quarter 2007
FFO included $6.8M or $0.05 per share in gains on sales in RE(3).
"Today's results continue to demonstrate the benefits of our
portfolio transformation which concentrated our holdings in newer
communities with higher rents and lower capital requirements," said
Thomas W. Toomey, President and Chief Executive Officer of UDR. "We
have reinvested $850 million of the $1.7 billion sales proceeds into
targeted markets. Total monthly income per home is approaching $1,200,
and the average age of the portfolio is 15 years. Fifty percent of
second quarter same store net operating income was generated from
Pacific Coast communities which grew their net operating income by an
average of 9.5 percent over last year."
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Operating Performance and Same-community Results
Second Quarter 2008 vs. Second Quarter 2007
----------------------------------------------------------------------
Revenue Expense NOI % of Same-community
Region Growth Growth Growth Portfolio(a)
--------------------------- ------- ------- ------ -------------------
Western 6.8% 0.7% 9.5% 50.1%
Mid-Atlantic 3.5% -0.3% 5.2% 23.4%
Southeastern 0.0% -4.8% 2.8% 22.5%
Southwestern 7.4% -3.1% 13.6% 4.0%
----------------------------------------------------------------------
Total 4.4% -1.2% 7.1% 100.0%
======================================================================
(a) Based on YTD 2008 NOI.
The Company defines same-community as all multifamily communities
owned and stabilized for at least one year as of the beginning of the
most recent quarter. Of UDR's 43,045 wholly owned apartment homes,
32,898, or 76%, qualify as same-community homes.
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Same-community Results
Second Quarter 2008 vs. Second Quarter 2007
($ in thousands, except rents & fees and total income per occupied
home)
------------------------------------------------------------------
2nd Qtr 2nd Qtr
'08 '07 Change (%)
---------- ---------- --------------
Rent and other income $111,001 $108,425 2.4
Concessions 229 1,982 -88.4
Bad debt 394 670 -41.2
----------------------------------------------------------------------
Total income 110,378 105,773 4.4
Expenses 33,995 34,424 -1.2
----------------------------------------------------------------------
Net operating income $ 76,383 $ 71,349 7.1
======================================================================
Total income per occupied home $ 1,179 $ 1,131 4.2
Average physical occupancy (%) 94.9 94.6 30 bps
Operating margin (%) 69.2 67.5 170 bps
Resident credit loss, % of
effective rent 0.4 0.6 20 bps
Comparing second quarter 2008 to second quarter 2007 on a same-
community basis, 86% of the mature markets generated revenue growth.
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Same-community Results
Second Quarter 2008 vs. First Quarter 2008
($ in thousands, except rents & fees and total income per occupied
home)
----------------------------------------------------------------------
2nd Qtr 1st Qtr
'08 '08 Change (%)
---------- ---------- --------------
Rent and other income $111,001 $109,843 1.1
Concessions 229 380 -39.7
Bad debt 394 418 -5.7
----------------------------------------------------------------------
Total income 110,378 109,045 1.2
Expenses 33,995 34,241 -0.7
----------------------------------------------------------------------
Net operating income $ 76,383 $ 74,804 2.1
======================================================================
Total income per occupied home $ 1,179 $ 1,169 0.9
Average physical occupancy (%) 94.9 94.6 30 bps
Operating margin (%) 69.2 68.6 60 bps
Resident credit loss, % of
effective rent 0.4 0.4 0 bps
Comparing second quarter 2008 to first quarter 2008 on a same-
community basis, 77% of the mature markets generated revenue growth.
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Overview
During the second quarter, key initiatives were completed in the
areas of strengthening the Company's portfolio, redevelopment,
development and operations. Progress is described below and will also
be discussed during the Company's August 5, 2008 conference call.
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Strengthen Our Portfolio
----------------------------------------------------------------------
In the second quarter and early in the third quarter, the Company
acquired 1,001 homes in four communities:
Community Location Acq. Year # Appx. % Occ.
Built Homes Mo. Rent 6/30/08
Mesa Verde Villas Costa Mesa, CA May
(PineBrook II) '08 1975 296 $1,760 94%
Hearthstone at Everett, WA May
Merrill Creek '08 2000 220 $1,200 94%
Almaden Lake San Jose, CA July
Village '08 1999 250 $1,650 92%
Island Square Mercer Island, WA July
'08 2007 235 $2,000 87%
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"These communities strengthen our presence in West Coast markets
and are an excellent fit with our acquisition criteria -- which
targets urban, infill locations with strong job growth, low single
home affordability, located close to public transportation," said Mark
Wallis, Senior Executive Vice President of UDR. "Mesa Verde Villas is
located between two existing UDR communities, Pine Brook Village and
Villa Venetia, and we expect this acquisition to create value
immediately through operating efficiencies in leasing staff,
maintenance staff and purchasing. Hearthstone at Merrill Creek is
strategically located at the north end of Seattle's Technology
Corridor, in close proximity to major employers such as Boeing, TRW
Aeronautical Systems, Fluke Corporation, and Campbell's Soup. Island
Square is a new mixed-use community located on Mercer Island, minutes
from both downtown Seattle and Bellevue. Almaden Lake Village is
adjacent to light rail with access to major employers including
Google, Yahoo, eBay, Apple, Intel and Adobe," Wallis added.
The total purchase price for the four communities was $284.8
million. The purchases were completed using exchange funds from the
previously announced, March 3, 2008 portfolio sale.
Redevelopment Update
During the second quarter of 2008, the Company completed
redevelopment of 672 homes at two communities, including Wellington
Place at Manassas, VA and Ellicott Grove (formerly Dominion Great
Oaks) in Baltimore, MD. The Company invested $25.8 million renovating
these communities and expects to grow average monthly rent by nearly
$270 per month above pre-redevelopment rents, grow stabilized NOI by
37 percent and create an estimated $26.9 million of value, net of
costs. The incremental pro forma return on the capital invested ranges
between 6.6 percent and 7.8 percent.
As of June 30, 2008, the Company's redevelopment pipeline included
three communities with 756 apartment homes. Total redevelopment
investment by the company in these properties is expected to be
approximately $35.0 million, with $17.9 million invested as of June
30, 2008.
Development Update
During the second quarter, UDR completed a 320-home community in
Houston at a total cost of $21.1 million, or $66,075 per home. Tiburon
is currently 80.4 percent leased at an average monthly rent of $931.
The development was completed with an expected yield to cost of 6.8%.
At June 30, 2008, the Company's development and redevelopment
activities totaled $2.6 billion. Approximately 6 percent is completed
and in lease up, 53 percent is under construction, and 41 percent
represents future development opportunities and contains operating
properties generating NOI. The Company has discretion to commence
development or continue operating those properties depending on market
conditions.
Operations Update
The Company reported solid year-over-year improvements in
same-store community results including:
-- a 7.1 percent increase in net operating income to $76.4
million;
-- a 4.4 percent increase in revenues to $110.4;
-- a 1.2 percent reduction in expenses to $34.0 million;
-- a 4.2 percent increase in average monthly revenue per occupied
home to $1,179;
-- a 30 basis point increase in occupancy to 94.9 percent; and
-- a 170 basis point improvement in operating margin to 69.2
percent.
Nineteen of the Company's 22 markets posted year-over-year revenue
growth, with ten of these markets exceeding 5 percent growth and two
of these markets exceeding 10 percent growth.
UDR continued its mobile marketing efforts with the introduction
of Quick Response bar code technology now displayed on the UDR.com
homepage and in print marketing materials. Since the Company's mobile
online apartment reservations capability
(http://udrapartments.mobi) was launched on the Internet in April
2008, over 4,700 apartment page views have been recorded and 41
apartment leads have been generated at a zero
cost-of-acquisition. Overall, 46 percent of second quarter move-ins
was initiated via the Internet, an 8 percent year-over-year increase.
The Company completed activating its Level One Call Center during
the quarter. This provides 24x7 access to a representative who can
provide information to potential residents and assure that no call
from a prospect, customer or resident is unanswered.
Capital Markets Update
During the second quarter of 2008, the company repurchased 963,200
of its outstanding common shares at an average price of $23.65 per
share, or $22.8 million in the aggregate, under its previously
announced share repurchase program. Total shares repurchased in the
first six months of 2008 were 5.75 million at an average price of
$23.47 per share.
The Company also repurchased $35 million of outstanding unsecured
UDR senior notes at a discount to par value, representing a 6.32
percent yield to maturity, recognizing net gains of $1.2 million in
FFO.
On July 1, 2008, the Company announced that its Board of Directors
declared the following dividends:
-- a regular quarterly dividend on its common stock for the
second quarter of 2008 in the amount of $0.33 per share,
payable on July 31, 2008 to UDR common stock shareholders of
record as of July 11, 2008;
-- a regular quarterly dividend on its Series E Preferred Stock
for the second quarter of 2008 in the amount of $0.3322 per
share. The preferred dividend is payable on July 31, 2008 to
Series E preferred stock shareholders of record as of July 11,
2008; and
-- a regular quarterly dividend on its Series G Preferred Stock
for the period of April 30, 2008 to, but not including, July
30, 2008 in the amount of $0.421875 per share, payable on July
30, 2008 to Series G preferred stock shareholders of record as
of July 11, 2008.
2008 Guidance
For full year 2008, the Company reaffirms estimated FFO of $1.50
to $1.55 per diluted share (excluding potential gains on sales from
its RE(3) subsidiary). Same-store growth expectations are reaffirmed
including revenue growth of 4.0 to 4.5 percent, expense growth of 3.0
to 3.5 percent, and net operating income growth of 5.0 to 5.5 percent.
All guidance is based on the current expectations and judgment of the
Company's management team.
UDR Los Angeles Property Tour Scheduled for November 18, 2008
UDR and Essex Property Trust plan to host a Los Angeles property
tour on Tuesday, November 18, 2008, prior to the NAREIT Annual
Convention on November 19 - 21 in San Diego, California. Company
management will host a lunch and tour two communities in Marina del
Rey, California. Additional information will be made available on the
Investor Relations section of the UDR Website at www.udr.com.
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Conference Call Information
----------------------------------------------------------------------
Date: Aug. 5, 2008
Time: 1:00 p.m. Eastern Time
To Participate in the Telephone Conference Call:
----------------------------------------------------------------------
Dial in at least five minutes prior to start time.
Domestic: 800-240-4186
International: 303-262-2191
If you have any questions, please contact:
Rebecca Winning: 720-283-6121
E-mail: rwinning@udr.com
Conference Call Playback:
----------------------------------------------------------------------
Domestic: 800-405-2236
International: 303-590-3000
Passcode: 11116518#
The playback can be accessed through Aug. 12, 2008.
Webcast and Podcast:
----------------------------------------------------------------------
The conference call will also be available on UDR's website at
www.udr.com. To listen to a live broadcast, go to the site at least
15 minutes prior to the scheduled start time in order to register,
download and install any necessary audio software. A replay and
downloadable podcast of the call will also be available for 90 days
on UDR's website.
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Full Text of the Earnings Report and Supplemental Data
-- Internet -- The full text of the earnings report and
supplemental data will be available immediately following the
earnings release to the wire services on Aug. 4, 2008 at the
UDR website, at
http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=103025
-- Mail -- For those without Internet access, the second quarter
2008 earnings release will be available by mail or fax, on
request. To receive a copy, please call UDR Investor Relations
at 720-283-6121.
About UDR, Inc.
UDR, Inc. (NYSE:UDR), an S&P 400 company, is a leading multifamily
real estate investment trust (REIT) 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, 2008, UDR
owned 43,045 apartment homes and had 4,991 homes under development and
another 1,133 homes under contract for development in its pre-sale
program. For over 35 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.
Statements contained in this press release, which are not
historical facts, are forward-looking statements, as the term is
defined in the Private Securities Litigation Reform Act of 1995. You
can identify these forward-looking statements by the Company's use of
words such as, "expects," "plans," "estimates," "projects," "intends,"
"believes," and similar expressions that do not relate to historical
matters. Such forward-looking statements are subject to risks and
uncertainties which can cause actual results to differ materially from
those currently anticipated, 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 competition and
competitive pricing, acquisitions or new developments not achieving
anticipated results, delays in completing developments and lease-ups
on schedule, expectations on job growth, home affordability and
demand/supply ratio for multi-family housing, expectations concerning
development and redevelopment activities, expectations on occupancy
levels, expectations concerning the Vitruvian Park project, including
expectations that the Company will be able to secure one of more
institutional investor-partners, expectations that automation will
help grow net operating income, expectations on post-renovated
stabilized annual operating income, exceptions 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. All forward-looking
statements in this press release are made as of today, based upon
information known to management as of the date hereof. The Company
assumes no obligation to update or revise any of its forward-looking
statements even if experience or future changes show that indicated
results or events will not be realized.
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Attachment 1
-------------------------------
UDR
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
In thousands, except per share
amounts 2008 2007 2008 2007
-------------------------------------------------- -------------------
Rental income $138,834 $123,689 $264,399 $245,095
Rental expenses:
Real estate taxes and
insurance 15,785 15,139 29,284 29,623
Personnel 11,890 10,441 23,532 21,558
Utilities 6,705 5,296 13,684 12,314
Repair and maintenance 7,363 6,590 14,059 13,124
Administrative and
marketing 3,279 3,265 6,517 6,315
Property management 3,818 3,401 7,271 6,740
Other operating
expenses 1,020 314 2,024 625
--------- --------- --------- ---------
49,860 44,446 96,371 90,299
Non-property income:
Other income 9,324 3,546 14,842 8,558
--------- --------- --------- ---------
9,324 3,546 14,842 8,558
Other expenses:
Real estate
depreciation and
amortization 62,507 47,730 114,942 92,200
Interest (net of gains
on debt extinguishment
of $1.2 million, $0,
$6.3 million and $0,
respectively) 36,706 38,230 72,497 77,956
General and
administrative 9,931 9,670 19,700 19,562
Other depreciation and
amortization 944 802 1,873 1,524
--------- --------- --------- ---------
110,088 96,432 209,012 191,242
Loss before minority interests
and discontinued operations (11,790) (13,643) (26,142) (27,888)
Minority interests of outside
partnerships (38) (37) (97) (67)
Minority interests of
unitholders in operating
partnerships 468 1,103 1,594 2,137
--------- --------- --------- ---------
Loss before discontinued
operations, net of minority
interests (11,360) (12,577) (24,645) (25,818)
Income from discontinued
operations, net of minority
interests (1) 12,225 19,273 750,769 64,347
--------- --------- --------- ---------
Net income 865 6,696 726,124 38,529
Distributions to preferred
stockholders - Series B - (1,908) - (4,819)
Distributions to preferred
stockholders - Series E
(Convertible) (931) (931) (1,862) (1,862)
Distributions to preferred
stockholders - Series G (2,278) (785) (4,556) (785)
Premium on preferred stock
repurchases - (2,261) - (2,261)
--------- --------- --------- ---------
Net income available to common
stockholders $ (2,344) $ 811 $719,706 $ 28,802
========= ========= ========= =========
Earnings per weighted average common share - basic and diluted:
Loss from continuing
operations available to
common stockholders, net
of minority interests ($0.12) ($0.13) ($0.24) ($0.27)
Income from discontinued
operations, net of
minority interests $ 0.10 $ 0.14 $ 5.80 $ 0.48
Net income available to
common stockholders ($0.02) $ 0.01 $ 5.56 $ 0.21
Common distributions declared
per share $ 0.3300 $ 0.3300 $ 0.6600 $ 0.6600
Weighted average number of
common shares outstanding -
basic 127,436 134,727 129,550 134,620
Weighted average number of
common shares outstanding -
diluted 127,436 134,727 129,550 134,620
(1) Discontinued operations represents all properties sold and
properties that are currently classified as held for disposition at
June 30, 2008, except for nine operating properties sold to a joint
venture in the fourth quarter of 2007 that have been included in
continuing operations in accordance with the provisions of FAS 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" and
EITF No. 03-13.
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Attachment 2
------------------------------
UDR
Funds From Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
In thousands, except per share
amounts 2008 2007 2008 2007
----------------------------------------------------------------------
Net income $ 865 $ 6,696 $ 726,124 $ 38,529
Distributions to preferred
stockholders (3,209) (3,624) (6,418) (7,466)
Real estate depreciation
and amortization,
including discontinued
operations 62,507 64,317 114,942 128,477
Minority interest,
including discontinued
operations 376 1 49,159 1,697
Real estate depreciation
and amortization on
unconsolidated joint
ventures 1,317 693 2,062 835
Net gains on the sale of
depreciable property,
excluding RE3 (13,027) (2,762) (780,989) (39,819)
--------- --------- ---------- ---------
Funds from operations ("FFO")
- basic $ 48,829 $ 65,321 $ 104,880 $122,253
========= ========= ========== =========
Distribution to preferred
stockholders - Series E
(Convertible) 931 931 1,862 1,862
--------- --------- ---------- ---------
Funds from operations -
diluted $ 49,760 $ 66,252 $ 106,742 $124,115
========= ========= ========== =========
Weighted average number of
common shares and OP Units
outstanding - basic 136,324 142,493 138,476 142,603
Weighted average number of
common shares, OP Units, and
common stock equivalents
outstanding - diluted 139,853 148,114 141,948 148,623
FFO per common share - basic $ 0.36 $ 0.46 $ 0.76 $ 0.86
========= ========= ========== =========
FFO per common share - diluted$ 0.36 $ 0.45 $ 0.75 $ 0.84
========= ========= ========== =========
FFO is defined as net income (computed in accordance with GAAP),
excluding gains (or losses) from sales of depreciable property,
premiums or original issuance costs associated with preferred stock
redemptions, 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.
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Attachment 3
---------------------------------------------------------------------
UDR
Consolidated Balance Sheets
(Unaudited)
In thousands, except share and per share June 30, December 31,
amounts 2008 2007
----------------------------------------------------------------------
ASSETS
Real estate owned:
Real estate held for investment $4,977,957 $4,129,460
Less: accumulated depreciation (935,369) (821,991)
----------- ------------
4,042,588 3,307,469
Real estate under development
(net of accumulated depreciation of $511
and $963) 327,564 343,768
Real estate held for disposition
(net of accumulated depreciation of
$12,876 and $548,805) 45,019 929,545
----------- ------------
Total real estate owned, net of accumulated
depreciation 4,415,171 4,580,782
Cash and cash equivalents 1,412 3,219
Restricted cash 8,515 6,295
Deferred financing costs, net 32,308 34,136
Notes receivable 224,776 12,655
Investment in unconsolidated joint ventures 48,177 48,264
Funds held in escrow from IRC Section 1031
exchanges pending the acquisition of real
estate 231,795 56,217
Other assets 71,812 54,636
Other assets - real estate held for
disposition 2,180 4,917
----------- ------------
Total assets $5,036,146 $4,801,121
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $1,206,817 $ 910,611
Secured debt - real estate held for
disposition - 227,325
Unsecured debt 2,012,727 2,364,740
Real estate taxes payable 16,246 8,808
Accrued interest payable 23,736 27,999
Security deposits and prepaid rent 28,270 21,897
Distributions payable 47,548 49,152
Deferred gains on the sale of depreciable
property 28,814 28,690
Accounts payable, accrued expenses, and other
liabilities 36,928 51,989
Other liabilities - real estate held for
disposition 2,147 28,468
----------- ------------
Total liabilities 3,403,233 3,719,679
Minority interests 103,656 62,049
Stockholders' equity
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, 2007) 46,571 46,571
5,400,000 shares of 6.75% Series G
Cumulative Redeemable issued and
outstanding (5,400,000 shares at December
31, 2007) 135,000 135,000
Common stock, $0.01 par value; 250,000,000
shares authorized 128,320,888 shares issued
and outstanding (133,317,706 shares at
December 31, 2007) 1,283 1,333
Additional paid-in capital 1,494,239 1,620,541
Distributions in excess of net income (148,608) (783,238)
Accumulated other comprehensive
income/(loss), net 772 (814)
----------- ------------
Total stockholders' equity 1,529,257 1,019,393
----------- ------------
Total liabilities and stockholders' equity $5,036,146 $4,801,121
=========== ============
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UDR, Inc.
Larry Thede, 720-283-2450
ir@udr.com
www.udr.com
Copyright Business Wire 2008
