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UDR, Inc. (UDR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4: FFO as Adjusted (FFOA) per share was $0.63 (in line with guidance midpoint), while GAAP FFO per share was $0.48 due to a $37.3M non-cash reserve on the 1300 Fairmount loan; AFFO was $0.54 . Same-store revenue/expense/NOI growth were +2.5%/+3.4%/+2.1% YoY; occupancy improved to 96.8% sequentially (+50 bps) .
  • 2025 outlook: FFO/FFOA per share $2.45–$2.55; same-store revenue +1.25–3.25%, expenses +2.75–4.25%, NOI +0.50–3.00%; Q1’25 FFO/FFOA $0.60–$0.62 .
  • Strategic themes: higher occupancy as the company leaned into an “occupancy-first” strategy exiting 2024; continued innovation (Wi‑Fi monetization, AI-based fraud screening, CRM migration to Funnel) to drive other income and retention; balance sheet positioned with >$1B liquidity and only ~10% of consolidated debt maturing through 2026 .
  • Potential stock catalysts: signs of Sunbelt supply moderation in H2’25; innovation-led other income growth; reduced DPE risk after moving largest exposure (1300 Fairmount) to nonaccrual and reserving, plus pending tech investment sale converting $43M notes into equity .

What Went Well and What Went Wrong

  • What Went Well

    • “Fourth quarter and full year FFOA per share results met guidance expectations, while same-store results exceeded our guidance midpoints” .
    • Occupancy strategy executed: occupancy rose each month in Q4; company entered 2025 above 97%, with renewals in the mid‑4% range and underlying market rent growth turning positive sequentially .
    • Innovation/other income: continued rollout of property-wide Wi‑Fi, lockers, and CX program expected to add 65 bps to 2025 same-store revenue ($10–15M), with 60% of 2025 growth “already baked” from prior work .

  • What Went Wrong

    • Non-cash reserve on 1300 Fairmount ($37.3M; ~$0.10/sh) drove Q4 GAAP FFO to $0.48 (below guidance), though FFOA was in line; the investment is on nonaccrual and expected to reduce 2025 income by $8M ($0.02/sh) .
    • Same-store expense growth outpaced revenue (+3.4% vs +2.5% YoY), pressuring NOI to +2.1% YoY; certain coastal and Sunbelt markets saw expense or regulatory drags (e.g., Monterey rent control and reimbursements) .
    • Sunbelt pricing pressure persists near-term; blended rent growth expected to be lighter in H1’25 and improve in H2 as supply moderates (Sunbelt still elevated vs coasts) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($M)$415.3 $420.2 $422.7
Net Income per diluted share$0.08 $0.06 ($0.02)
FFO per diluted share$0.60 $0.60 $0.48
FFOA per diluted share$0.62 $0.62 $0.63
AFFO per diluted share$0.55 $0.54 $0.54
Same-Store Revenue Growth YoY2.5% 1.2% 2.5%
Same-Store Expense Growth YoY3.7% 2.0% 3.4%
Same-Store NOI Growth YoY2.0% 0.8% 2.1%
Same-Store Occupancy96.8% 96.3% 96.8%
Effective Blended Lease Rate Growth2.4% 1.8% -0.5%
Same-Store Operating Margin68.9% 68.4% 69.2%

Guidance and actual vs guidance (Q4 2024):

  • Q4’24 FFO per share $0.48 vs $0.61–$0.63 guidance (miss; driven by non-cash loan reserve) .
  • Q4’24 FFOA per share $0.63 vs $0.62–$0.64 (in line) .
  • Q4’24 AFFO per share $0.54 vs $0.56–$0.58 (slight miss) .

Regional same-store performance (Q4 2024 YoY):

RegionRevenueExpenseNOIOccupancy
West3.1% 5.9% 2.2% 96.9%
Mid-Atlantic4.5% 3.1% 5.1% 97.1%
Northeast3.2% 3.9% 2.9% 96.7%
Southeast0.5% 3.9% (1.1)% 96.9%
Southwest0.0% 0.9% (0.5)% 96.7%
Other0.7% (1.0)% 1.5% 96.5%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income per shareQ1 2025N/A$0.24–$0.26 New
FFO per shareQ1 2025N/A$0.60–$0.62 New
FFOA per shareQ1 2025N/A$0.60–$0.62 New
Net Income per shareFY 2025N/A$0.56–$0.66 New
FFO per shareFY 2025N/A$2.45–$2.55 New
FFOA per shareFY 2025N/A$2.45–$2.55 New
Same-Store RevenueFY 2025N/A+1.25% to +3.25% New
Same-Store ExpenseFY 2025N/A+2.75% to +4.25% New
Same-Store NOIFY 2025N/A+0.50% to +3.00% New
Annual Dividend2025N/A$1.72 (1.2% increase) New
Dispositions (at share)FY 2025N/A$215–$415M New
Acquisitions (at share)FY 2025N/A$0–$200M New
Capex (Recurring/NOI Enh/Redv)FY 2025N/A$220–$260M New
Interest Expense (FFOA basis)FY 2025N/A$185–$195M New
G&AFY 2025N/A$70–$80M New

Note: Q3’24 included updated FY’24 guidance (raised FFOA and same-store ranges) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Occupancy strategyQ2: 96.8% OCC; blended +2.4% . Q3: 96.3% OCC; blended +1.8% .Built occupancy in Q4; maintained >97% into 2025; renewals mid‑4% .Improving occupancy; seasonal rate recovery H2’25 .
Innovation/other incomeQ2: Other income robust; raised FY’24 guidance . Q3: OI initiatives continued; raised FY’24 guidance again .Wi‑Fi/lockers/CX add 65 bps to 2025 ss-rev ($10–$15M); 60% baked in .Positive; durable OI growth.
AI/Tech stackNoted innovation culture in Q2/Q3 releases .CRM transition to Funnel; AI fraud screening reduced bad debt; higher deposits/credit scores .Expanding adoption.
Supply/macroQ2: near-record absorption; supply elevated . Q3: supply still high; 2024–25 transition .Peak deliveries mid‑2024; trending below averages in H2’25; Sunbelt ~4% of inventory but down ~1/3 YoY .H2’25 easing supply; 2026 better.
RegulatoryQ2/Q3: standard ESG, no acute items .Monterey Peninsula rent control and utility reimbursement constraints a drag (West Coast) .Headwind localized.
DPE riskQ2/Q3: DPE active; Junction impairment in Q3 .1300 Fairmount reserved ($37.3M), nonaccrual; largest risk addressed; two watchlist (~$40M) .Risk reduced; monitored.

Management Commentary

  • “Fourth quarter and full year 2024 FFOA per share results met guidance expectations, while same-store results exceeded our guidance midpoints.” (Tom Toomey) .
  • “Thus far in 2025, we have maintained occupancy above 97%...renewal lease rate growth remains healthy in the mid‑4% range.” (Joe Fisher) .
  • “Our 2025 same-store revenue guidance ranges from 1.25% to 3.25%, with a midpoint of 2.25%.” (Mike Lacy) .
  • “Only 10% of our total consolidated debt matures through 2026...combined with more than $1 billion of liquidity.” (Joe Fisher) .
  • “AI-based detection measures...have seen benefits in recent bad debt trends.” (Mike Lacy) .

Q&A Highlights

  • Blended rent cadence and regional dispersion: H1’25 ~1.4–1.8% vs H2’25 ~2.8–3.2%; East/West Coast blends ~2.5–3%; Sunbelt 0.6–0.9% with more other-income growth (10–12%) .
  • Concessions: trending down to sub‑1 week as occupancy is prioritized; plan to shift focus to rent push into leasing season .
  • Investments: JV with LaSalle re‑engaged; DPE paydowns; potential 2–3 new developments (high‑5s to 6% yields); OP unit deals remain a tool .
  • Other income durability: ~$180M line; Wi‑Fi at ~$70 charge/$20 cost; continued pipeline with CX “flywheel” approach (margin accretive) .
  • Regional/Regulatory specifics: Monterey Peninsula rent control and reimbursement rules a ~$2–3M 2025 drag; plan for submeter installs to recapture in 2026–27 .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 and prior two quarters was unavailable due to a data access limit at the time of this analysis; as a result, we could not provide a formal beat/miss versus consensus for revenue/FFO/EPS. We will update on request once access to S&P Global is restored.
  • Company-context comparisons: Q4 FFOA per share matched the company’s guidance midpoint; GAAP FFO missed guidance due to the non-cash reserve; AFFO slightly below guidance .

Key Takeaways for Investors

  • Execution: FFOA in line and same-store outperformance despite high 2024 supply; occupancy now >97% supports rate recapture into peak season .
  • 2025 set-up: Revenue/NOI growth guided to modestly accelerate vs 2024; H2’25 should benefit from easing supply, especially in Sunbelt, while coasts remain steadier .
  • Innovation-driven alpha: Other income/CX initiatives provide tangible revenue lift (~65 bps to ss-rev) with attractive margins (e.g., Wi‑Fi), enhancing resiliency vs macro cycles .
  • Balance sheet resilience: >$1B liquidity; only ~10% debt maturities through 2026; covenant headroom intact .
  • DPE de-risking: Largest exposure (1300 Fairmount) reserved and on nonaccrual; watchlist limited (~$40M); reduces tail risk to FFOA .
  • Regional mix matters: East/Mid-Atlantic lead growth; West mixed due to localized regulation; Sunbelt improves in H2’25 but remains supply-sensitive near term .
  • Near-term trading lens: Expect focus on H2’25 rent cadence, Sunbelt supply slippage, and evidence of sustained other income contribution as key stock drivers .

Additional Reference Press Releases (Q4 2024 window)

  • January 6, 2025 Business Update: Preliminary FFOA $0.63; occupancy and same-store results above guidance midpoints; 1300 Fairmount reserve flagged ahead of earnings .
  • Dividend and capital markets updates: 2025 dividend annualized to $1.72 (+1.2%); select Q1’25 dispositions closed (Leonard Pointe, One William) .