Q3 2023 Earnings Summary
Reported on Oct 27, 2023 (After Market Close)
Pre-Earnings Price$31.56Last close (Oct 27, 2023)
Post-Earnings Price$31.56Last close (Oct 27, 2023)
Price Change
$0.00(0.00%)
- UDR's diversified portfolio, with a balanced mix of A and B quality properties, has historically insulated the company during downturns and provides opportunities for growth through redevelopment and operational efficiencies. The company continues to see value in its B-quality properties, which can offer more margin upside when brought onto their operating platform.
- The company's innovative initiatives, such as rolling out their Internet program, are expected to significantly increase other income. They are achieving incremental revenue of $50 per month per apartment home at a nearly 75% margin, which is anticipated to contribute 50 basis points of other income growth next year. This additional income is considered resilient and "pretty sticky in nature," enhancing overall earnings even as rent growth moderates.
- UDR's strong liquidity and investment-grade balance sheet position the company to be opportunistic in capital deployment, including potential accretive transactions with its joint venture partner. The company is actively seeking transactions at mid to high 5% cap rates, where they can layer on their platform to achieve an additional 10% upside in NOI, plus recurring fee income, making the effective yield compelling and driving forward accretion.
- Elevated apartment supply has led to increased concessions and pressure on lease growth rates, particularly in markets like Denver and Philadelphia, where concessions have increased to 2 to 3 weeks recently.
- UDR expects a below-average trend in blended lease rate growth and revenue in 2024 due to elevated supply and potentially lower demand, indicating that next year's rent growth may be challenged.
- Bad debt reserves have increased by $900,000 in the quarter, with the net accounts receivable reserve reaching $9 million, suggesting potential challenges in collections and higher uncollectible amounts.
Research analysts covering UDR.