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UDR, Inc. (UDR)·Q2 2025 Earnings Summary

Executive Summary

  • Results were solid with modest growth and improved outlook: GAAP diluted EPS $0.11 (+38% YoY), FFO/share $0.61 (+2% YoY), and FFO as Adjusted (FFOA)/share $0.64 (+3% YoY); total revenue was $425.4M (+2.4% YoY) .
  • Versus S&P Global consensus, revenue modestly beat ($425.4M vs $422.2M*), while GAAP EPS modestly missed ($0.11 vs $0.122*); management highlighted a three-cent sequential FFOA/share increase driven by better same‑store NOI and interest collections .
  • Guidance raised for FY25 FFOA/share to $2.49–$2.55 (midpoint +$0.02) and for same‑store revenue/NOI (higher) and expenses (lower); FY25 GAAP EPS and FFO/share ranges were trimmed (midpoints −$0.05) to reflect updated assumptions .
  • Operating KPIs were favorable: same‑store occupancy ~96.9%, blended lease rate growth 2.8% (renewals +5.0%; new +0.3%), and annualized turnover down to 41.2% (from 45.4%) .
  • Potential stock catalysts: raised FY FFOA and same‑store growth guidance, continued West/East Coast momentum (notably San Francisco/DC), and disciplined balance sheet (5.5x net debt/EBITDAre, ~ $1.1B liquidity) .

What Went Well and What Went Wrong

What Went Well

  • Same-store outperformance: Q2 same-store revenue +2.5%, expenses +1.7%, NOI +2.9%, all better than initial expectations; occupancy near 97% and resident turnover down ~350 bps YoY supported results .
  • Regional strength: West and East Coasts led performance; San Francisco and Seattle cited as top performers; West Coast blended lease rate growth 4.2% with low supply (1%–1.5% of stock) supporting favorable dynamics .
  • Guidance raised on key measures: FY25 FFOA/share midpoint up $0.02 (to $2.52) and same‑store revenue/NOI raised; COO: “Same‑Store revenue, expense, and NOI growth…was stronger than expected…” .

What Went Wrong

  • Sunbelt lag: Year-to-date same-store revenue slightly negative in Sunbelt due to elevated supply; blended lease spreads only around flat in Q2 (improving sequentially but still behind coasts) .
  • GAAP EPS vs Street: GAAP diluted EPS of $0.11 was modestly below S&P Primary EPS consensus of ~$0.122*, despite better revenue; management emphasizes FFO/FFOA as core REIT metrics .
  • Expense mix pressures within controllables: Personnel and R&M saw pressure from Wi‑Fi rollout costs and remediation items; management expects some controllables to moderate, while non‑controllables (taxes/insurance) could be less favorable in 2H .

Financial Results

Headline Metrics vs Prior Periods

MetricQ2 2024Q1 2025Q2 2025
Total Revenues ($M)$415.3 $421.9 $425.4
GAAP Diluted EPS ($)$0.08 $0.23 $0.11
FFO/share, diluted ($)$0.60 $0.58 $0.61
FFOA/share, diluted ($)$0.62 $0.61 $0.64
Same-Store NOI Growth % (YoY)——2.9%
Same-Store Operating Margin %68.8% 68.2% 69.0%

Actuals vs S&P Global Consensus (Q2 2025)

MetricActualS&P Consensus*Surprise
Revenue ($M)$425.4 $422.2*+$3.2M – Beat
GAAP EPS (Primary EPS) ($)$0.11 $0.122*−$0.012 – Miss

Values marked with * retrieved from S&P Global.

Segment/Region Same-Store (YoY) – Q2 2025

RegionSS RevenueSS ExpenseSS NOIOccupancy
West3.1% 0.2% 4.2% 96.9%
Mid-Atlantic4.6% 2.6% 5.5% 97.0%
Northeast3.6% 5.5% 2.6% 97.2%
Southeast(0.3)% 0.8% (0.8)% 96.4%
Southwest(0.8)% (2.1)% 0.0% 97.0%
Other Markets1.3% 1.6% 1.2% 96.4%

KPIs and Operating Drivers (Q2 2025)

KPIQ2 2024Q2 2025Notes
Weighted Avg Same-Store Occupancy96.8% 96.9% +10 bps YoY
Effective Blended Lease Rate Growth—2.8% New: +0.3%; Renewal: +5.0%
Effective New Lease Rate Growth—0.3%
Effective Renewal Lease Rate Growth—5.0%
Annualized Turnover45.4% 41.2% −420 bps YoY

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPS (diluted)FY 2025$0.56–$0.66 $0.53–$0.59 Lowered (midpoint −$0.05)
FFO/share (diluted)FY 2025$2.45–$2.55 $2.42–$2.48 Lowered (midpoint −$0.05)
FFOA/share (diluted)FY 2025$2.45–$2.55 $2.49–$2.55 Raised (midpoint +$0.02)
Same-Store Revenue GrowthFY 20251.25%–3.25% 1.75%–3.25% Raised (midpoint +25 bps)
Same-Store Expense GrowthFY 20252.75%–4.25% 2.50%–3.50% Lowered (midpoint −50 bps)
Same-Store NOI GrowthFY 20250.50%–3.00% 1.50%–3.00% Raised (midpoint +50 bps)
GAAP EPS (diluted)Q3 2025—$0.11–$0.13 New
FFO/share (diluted)Q3 2025—$0.61–$0.63 New
FFOA/share (diluted)Q3 2025—$0.62–$0.64 New
DividendFY 2025$1.72 annualized $1.72 annualized (reaffirmed) Maintained

Why the changes: management cited better-than-expected same-store trends (revenue drivers: blended rents, occupancy, other income; expenses benefited from taxes/insurance), offset by adjustments that trimmed GAAP EPS/FFO ranges while raising FFOA and same-store growth .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Customer Experience & RetentionStarting 2025 “position of strength”: occupancy >97%, mid‑4% renewals, innovation driving other income; turnover improvement ~300 bps YoY in Q1 .Turnover −420 bps YoY; continued 10% other income growth; supports higher same-store revenue/NOI guidance .Improving retention and monetization continue.
Supply/Demand & Seasonality2024 had high supply; 2025 guide assumed easing pressures; Q1: reaffirmed FY ranges .Coasts outperform; Sunbelt still pressured but improving; expects blends to moderate in 2H vs seasonal norms; 2026 recovery varies by market .Coasts strong; Sunbelt gradual recovery.
Regional PerformanceQ4’24 momentum in West and Mid‑Atlantic; entered 2025 with favorable setup .West and Northeast strong (SF, Seattle); DC steady with ~97% OCC and +3% blended; LA small exposure with stable OCC; Sunbelt flat to improving .Coastal momentum strengthening.
Debt & Preferred Equity (DPE)End‑2024 DPE 9.9% WACR; reserve taken on 1300 Fairmount; warned of −$0.02/share 2025 impact .Consolidated Broadridge (ex‑1300 Fairmount); recognized ~$4M interest; two new preferred equity investments at 12.0% and 11.25%; targeting safer recap deals; DPE ~2–2.5% of FFOA .De‑risking DPE, monetizing, moderate contribution.
Balance Sheet/Liquidity4Q’24 net debt/EBITDAre 5.5x; ~$1.1B liquidity .2Q’25 net debt/EBITDAre 5.5x; ~ $1.1B liquidity; limited maturities through 2026; will refi as needed; CP ~$250–300M maintained .Stable, IG metrics intact.
Technology & PropTechOngoing investments; other income initiatives .Funnel CRM transition driving write‑offs (software transition costs); proptech funds 20%+ IRR on closed investments; tech spending seen as offensive capability; Wi‑Fi costs elevated near‑term .Continued tech focus with some non‑GAAP add‑backs.

Management Commentary

  • “A resilient employment market, continued personal income growth, favorable relative affordability for apartments, and our operating competitive advantages led to strong results…we are raising full‑year 2025 FFOA per diluted share and Same‑Store growth guidance expectations.” – Tom Toomey, CEO .
  • “Same‑Store revenue, expense, and NOI growth in the second quarter was stronger than expected…year‑to‑date annualized resident turnover being 350 basis points better than a year ago…Same‑Store occupancy remaining near 97 percent.” – Mike Lacy, COO .
  • “Q2 FFOA/share is $0.64, exceeding the high end of guidance…two pennies from same‑store NOI outperformance and one penny from collection of previously unaccrued interest.” – Joe Fisher, President & CIO .
  • Balance sheet: net debt/EBITDAre 5.5x, >$1.1B liquidity, only ~$532M maturing through 2026; intent to refinance and maintain CP levels; do not lever up in this environment .

Q&A Highlights

  • Blended lease growth/seasonality: Management expects lower renewal asks in 2H given muted market rent gains; guidance raise driven by 1H execution with ~80% of revenue “baked”; 3Q blends slightly better than 4Q per typical seasonality, but below historical norms .
  • Regional spread narrowing: Coasts still stronger; Sunbelt blends moved toward flat in Q2 and improving; spread between coasts and Sunbelt narrowed from ~450 bps in Q1 to ~400 bps in Q2 .
  • Los Angeles snapshot: Small exposure (~3% NOI); Q2 occupancy ~96%–97%, concessions ~1–1.5 weeks, blends around flat recently due to localized supply .
  • Expense puts/takes: Controllables elevated by Wi‑Fi rollout ($0.7M), remediation ($0.4M) and higher incentive comp; non‑controllables (taxes/insurance) favorable in 1H but expected to be less favorable in 2H .
  • DPE lessons: Shift to recap focus, tighter timelines (no extensions), better scenario analysis; aim to keep DPE to ~2%–2.5% of FFOA and avoid outsized risk .

Estimates Context

  • Revenue beat and EPS miss versus S&P Global consensus: revenue $425.4M vs $422.2M* (+0.8%); GAAP diluted EPS $0.11 vs Primary EPS consensus $0.122* (−$0.012). Management outperformed internal guidance on FFOA/share ($0.64 vs $0.61–$0.63) .
  • Estimate breadth: 9 estimates for both revenue and EPS for Q2 2025* (S&P Global).
  • Implications: Modest top‑line beat with GAAP EPS under consensus underscores REIT accounting dynamics (depreciation/one‑offs); investors should focus on FFOA/share, which exceeded the high end of guidance and underpins the raised FY FFOA/same‑store outlook .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • FFOA/share beat and raised FY FFOA/same‑store guidance point to resilient core operations; watch execution on 2H blends as seasonality moderates .
  • Coastal markets are the earnings engine (SF, Seattle, DC) while Sunbelt is stabilizing; narrowing spread suggests improving 2026 setup if supply continues to abate .
  • KPI momentum—higher occupancy, lower turnover, growing other income—supports continued NOI growth into 2H despite more conservative renewal asks .
  • Balance sheet provides flexibility: limited near‑term maturities, ~5.5x net debt/EBITDAre, and ~$1.1B liquidity support opportunistic capital allocation (JV acquisitions, disciplined DPE recaps) .
  • Non‑GAAP add‑backs (legal, software transition, casualty) are elevated near‑term but tied to episodic items (RealPage, CRM transition); monitor normalization into 2026 .
  • Tactical trades: Lean long exposure to coastal‑weighted multifamily REITs; near‑term catalysts include sustained West/East strength, DPE monetizations, and incremental FY25/26 guidance clarity .

Additional Items This Quarter

  • Leadership: Dave Bragg appointed CFO effective July 24, 2025; Joe Fisher remains President & CIO .
  • Capital recycling/DPE: Fully redeemed NY preferred equity (~$54.8M proceeds) and funded new preferred equity in SF ($13.0M at 12.0%) and post‑quarter in Orlando ($23.8M at 11.25%) .
  • Dividend: $0.43/share declared for Q2; FY25 annualized dividend $1.72 reaffirmed .

Citations: Press release and 8‑K: Q2 results, guidance, KPIs, balance sheet . Q2 earnings call transcript: strategy, regional color, expenses, DPE, guidance context . Prior quarters: Q1’25 and Q4’24 press releases for comps and trend analysis .

Values marked with * retrieved from S&P Global.