UDR Inc. (UDR), a leading multifamily real estate investment trust (REIT), reported third quarter 2010 FFO (fund from operations) of $46.9 million or 27 cents per share compared to $28.8 million or 18 cents 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. The reported FFO per share was in line with the Zacks Consensus Estimate.
Excluding certain non-recurring items, recurring FFO during the quarter was 28 cents per share. Total revenues during the quarter were $159.8 million compared to $149.8 million in the prior-year quarter. Total revenues in the reported quarter exceeded the Zacks Consensus Estimate of $157 million.
Same-store occupancy remained relatively high at 95.7% during the quarter. Same-store revenues and net operating income both increased 0.1% year over year, the first such increase recorded by the company since the first quarter of 2009.
UDR made rapid strides during the quarter on automating its business and completed the roll-out of its electronic renewal initiative, providing its residents with the option to renew their leases online. This resulted in a decline in same-store marketing and advertising costs, reduced collection costs, and improved cash management through the use of electronic payments. Furthermore, the company originated 65% move-ins during the quarter compared to 63% in the previous year due to the increased use of the resident Internet portal.
The company completed 10 wholly-owned projects during the quarter, totaling 3,180 homes at a total cost of $526.6 million. Currently, UDR has 2 active development projects and 3 redevelopment projects under construction, totaling 1,574 homes at an estimated total cost of $228.9 million.
During the quarter, UDR purchased five operating communities totaling 1,374 apartment homes for $412 million. The new communities have an average home size of 968 square feet. In addition, the company also acquired a 2-acre land parcel for $23.6 million in the Mission Bay neighborhood of San Francisco, California. During the quarter, UDR sold Pacific Palms, a 149-home community in California, for $21.2 million.
UDR sold 239,000 shares during the quarter at a weighted average net price of $21.04, raising approximately $5 million cash. The company also completed a public offering of 18.4 million shares at $20.35 each, raising net proceeds of $359 million, the bulk of which was utilized to repay debt.
During the quarter, UDR completed various debt-related transactions that reduced its short-term debt maturities by $214 million. At quarter-end, UDR had a liquidity of $793 million through a combination of cash and available capacity under its credit facility. Additionally, the company had an unencumbered asset base of $3.6 billion to raise more funds if required. At quarter-end, the company had a total debt of $3.5 billion and a fixed charge coverage ratio of 2.1x. UDR ended the quarter with 73% fixed-rate debt at a total blended interest rate of 4.3% and a weighted average debt maturity of 5.7 years.
For full year 2010, UDR reiterated its earlier FFO guidance in the range of $1.07 to $1.11 per share. We maintain our Neutral rating on the stock, which presently has a Zacks #3 Rank translating into a short-term Hold recommendation.
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