Yahoo Finance UDR Inc (UDR) Q1 2024 Earnings Call Transcript Highlights: A Robust Start with Strategic Growth ...
Same-Store Revenue Growth: Q1 year-over-year increase of 3.1%
Same-Store NOI Growth: Q1 year-over-year increase of 1.2%
Sequential Same-Store Revenue Growth: Q1 increase of 0.4%
Blended Lease Rate Growth: Q1 growth of 0.8%
Occupancy Rate: Strong at 97.1%
Same-Store Expense Growth: Q1 year-over-year increase of 7.5%
FFO as Adjusted Per Share: Q1 reported at $0.61
Guidance for FFOA Per Share: Q2 expected to be $0.60 to $0.62
Full Year Same-Store Growth Guidance: Reaffirmed for 2024
Full Year FFOA Per Share Guidance: Increased by $0.02
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
UDR Inc (NYSE:UDR) reported a strong start to 2024, with employment creation and apartment absorption rates exceeding expectations, which bodes well for future rent growth.
Renting remains significantly more affordable than owning in UDR Inc (NYSE:UDR)'s markets, enhancing demand for rental units.
UDR Inc (NYSE:UDR) has seen positive momentum across all key operating metrics, including traffic, leasing activity, occupancy, and pricing power.
The company has continued to innovate, particularly in customer experience improvements, which have contributed to higher retention rates and operational efficiencies.
UDR Inc (NYSE:UDR) has maintained a strong balance sheet with ample liquidity and low leverage, positioning it well for future investments and financial stability.
Negative Points
UDR Inc (NYSE:UDR) faces challenges from a volatile and elevated interest rate environment, which could impact pricing and concessions, especially with the high level of new supply expected in 2024.
Despite strong early performance, the company remains cautious and has not revised its full-year guidance, indicating potential uncertainty in market conditions.
UDR Inc (NYSE:UDR) reported higher year-over-year same-store expense growth, primarily driven by significant increases in certain markets due to factors like increased taxes and utilities.
The Sunbelt markets, while performing in line with expectations, continue to experience elevated levels of new supply, which could pressure performance in these regions.
There are ongoing concerns about the potential impact of macroeconomic factors, such as job market fluctuations and interest rate changes, on the multifamily housing market.
Q & A Highlights
Q: What were UDR Inc's expectations for same-store revenue growth compared to the actual 3.1% achieved in the first quarter? A: Michael D. Lacy - UDR, Inc. - SVP of Operations: UDR's actual same-store revenue growth of 3.1% in the first quarter was slightly above expectations. The company had anticipated a lower growth rate, but the actual results were bolstered by approximately 20 basis points higher than the start of the year, with April and May trending about 100 basis points higher than the original business plan. This translates to an additional $8 million in revenue, or about 50 basis points.
Q: How did occupancy and other income perform relative to UDR's initial expectations? A: Michael D. Lacy - UDR, Inc. - SVP of Operations: Occupancy in the first quarter was about 10 to 20 basis points higher than expected. As for other income, it performed exceptionally well, being 10% above the previous year and continuing the same trend in April. This performance was 200 to 300 basis points higher than initially anticipated, driven largely by successful team initiatives.
Q: Can you provide insights into the renewal rates sent out for May and June and any indicators of turnover trends? A: Michael D. Lacy - UDR, Inc. - SVP of Operations: Renewal rates for May and June were sent out at around 3.8%, with July seeing about 4.5% growth. UDR is becoming more aggressive with renewals while pushing market rents to compress the difference between new and renewal rates. The company expects this strategy to drive total revenue growth ahead of expectations.
Q: What trends are driving the improvement in lease rate growth into May, and how is UDR managing occupancy while pushing for higher renewal rates? A: Michael D. Lacy - UDR, Inc. - SVP of Operations: Strength in lease rate growth is primarily coming from coastal markets, particularly the West Coast, with significant contributions from Seattle and San Francisco due to employer-enforced return-to-office mandates and increased office leasing activity. UDR is managing to maintain high occupancy while pushing rental rates by leveraging strong demand and strategic market positioning.
Q: How are the Sunbelt markets performing given the concerns about new supply, and what are the expectations for these markets moving forward? A: Michael D. Lacy - UDR, Inc. - SVP of Operations: Sunbelt markets, which comprise about 25% of UDR's NOI, are performing in line with expectations despite elevated new supply levels. Concessions in these markets have stabilized, and occupancy remains healthy. UDR remains cautious but notes improving trends and stronger job growth, which could potentially bolster demand and absorption rates.
Q: What impact do macroeconomic indicators like job and wage growth have on UDR's performance indicators? A: Michael D. Lacy - UDR, Inc. - SVP of Operations: Strong macroeconomic indicators, particularly robust job and wage growth, have positively influenced UDR's key performance metrics, including occupancy and rental rate growth. These factors have allowed UDR to operate with high occupancy and push rental rates, maintaining rent income levels in the low 20% range.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
