UDR Inc. (UDR), a leading multifamily real estate investment trust (REIT), reported fourth quarter 2010 FFO (fund from operations) of $53.4 million or 28 cents per share compared to $47.1 million or 29 cents in the year-earlier quarter. Fund from operations, 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. The reported FFO per share was in line with the Zacks Consensus Estimate.
For full year 2010, the company reported FFO of $192.8 million or $1.09 per share compared to $184.6 million or $1.16 in the previous year. Excluding non-recurring items, FFO for fiscal 2010 was $1.13 per share compared to $1.22 in 2009.
Total revenues during the quarter were $168.0 million compared to $149.6 million in the prior-year quarter. Total revenues in the reported quarter beat the Zacks Consensus Estimate of $165 million. For full year 2010, UDR reported total revenues of $632.2 million versus $600.7 million in the previous year.
Same-store occupancy remained relatively high at 95.6% during the quarter. Same-store revenues and net operating income increased 1.7% and 1.3% respectively, during the quarter compared to year-ago quarter. For full year 2010, same-store occupancy was 95.7%, while same-store revenues and net operating income decreased 0.9% and 1.7% respectively, compared to 2009.
The company completed the development of Signal Hill, a 360-home community in Woodbridge, which was 78% leased at quarter-end. UDR also completed the redevelopment of Highlands of Marin community (92% leased) in California. During the quarter, the company commenced the development of 823 homes in 4 communities for $313 million. For full year 2010, the company completed nearly $600 million of investment activity in accordance with its strategic plan to own properties in markets, which are characterized by low home affordability and superior growth prospects.
At year-end 2010, UDR had a liquidity of $864 million through a combination of cash and available capacity under its credit facility. Additionally, the company had an unencumbered asset base of $3.8 billion to raise more funds if required.
At year-end 2010, the company had a total debt of $3.6 billion and a fixed charge coverage ratio of 2.3x. UDR ended the quarter with 71% fixed-rate debt at a total blended interest rate of 4.2% and a weighted average debt maturity of 5.7 years. For full year 2011, UDR expects FFO in the range of $1.20 to $1.25 per share.
We maintain our ‘Neutral’ rating on the stock, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ recommendation. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for Equity Residential (EQR), one of the competitors of UDR.
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