UDR Inc. (UDR), a leading multifamily real estate investment trust (REIT), reported fourth quarter 2009 FFO (fund from operations) of $45.5 million or 28 cents per share compared to $58.3 million or 40 cents per share in the year-earlier quarter. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
For full year 2009, UDR reported FFO of $189.6 million or $1.19 per share compared to $214.8 million or $1.50 per share in 2008. Rental revenues increased marginally during the fourth quarter 2009 to $150.1 million from $149.5 million in the year-ago quarter. For full year 2009, rental revenues increased to $602.9 million from $563.4 million in the previous year.
Occupancy in the same-store portfolio increased 90 basis points and 60 basis points during the fourth quarter and full year 2009, respectively, compared to the year-earlier periods. Although same-store occupancy remained relatively high at 95.5%, year-over-year same-store revenues and net operating income decreased 3.7% and 5.1%, respectively, during the quarter, primarily due to a 5.4% decline in rents. Same-store revenue and net operating income decreased 2.0% and 2.2%, respectively, during 2009 compared to the previous year, while same-store occupancy remained relatively high at 95.4%.
UDR made rapid strides during the quarter on automating its business, which resulted in a 9% decline in same-store marketing and advertising costs, reduced collection costs, and improved cash management through use of electronic payments. Furthermore, the company originated 62% move-ins during the quarter compared to 51% in the previous year due to the increased use of the resident Internet portal.
Currently, UDR has five active development projects and two redevelopment projects under construction, totaling 2,424 homes at a total cost of $421 million. The company anticipates delivering most of its projects in 2010.
During the quarter, UDR repaid a $240 million term loan due in February 2010. The repayment of the loan was made possible by a new term loan provided by a consortium of six banks, and by utilizing capacity of its $600 million unsecured bank credit facility. The new term loan carries a floating rate of 350 basis points over LIBOR, and is scheduled to mature in July 2012. In addition, the company prepaid $102 million in secured debt with an average interest rate of 5.5% due in 2010 and 2013.
Also during the quarter, UDR sold approximately 2.2 million shares at a weighted average net price of $15.78 each. Subsequent to the end of the quarter, the company sold 312,000 shares at a weighted average net price of $16.20 each, bringing the total number of shares issued under the equity offering program to 4.8 million at a weighted average net price of $15.24 each.
At year-end 2009, UDR had a liquidity of $732 million through a combination of cash and available capacity under its credit facility. Additionally, the company had a $3.2 billion of unencumbered asset base to raise more funds if required. UDR ended the quarter with 79% fixed-rate debt, a total blended interest rate of 4.5%, and a weighted average maturity of 5.8 years.
At year-end 2009, the company had a total debt of $3.4 billion and a fixed charge coverage ratio of 2.0x. UDR expects FFO for full year 2010 in the range of $1.00 to $1.07 per share.
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