Despite challenging macroeconomic conditions, UDR Inc. (UDR), a leading multifamily real estate investment trust (REIT), reported relatively modest third quarter results with an increase in rental revenues and comparatively high same-store occupancy rates at 95.6%. Although rental revenues during the quarter increased to $150.3 million from $147.4 million in the year-ago period, year-over-year same-store revenues and net operating income decreased 3% and 3.7%, respectively.
During the quarter, UDR reported FFO (fund from operations) of $29.8 million or 19 cents per share compared to $49.6 million or 33 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. The decrease in FFO was primarily due to non-cash equity loss on an unconsolidated JV and loss relating to a debt tender offer. Excluding the one-time items, FFO during the quarter was 31 cents compared to 30 cents in the year-earlier quarter.
UDR made rapid strides during the quarter on automating its business, which resulted in a 7% decline in same-store marketing and advertising costs, reduced collection costs, and improved cash management through use of electronic payments. Furthermore, the company originated 64% move-ins during the quarter compared to 53% in the previous year, due to the increased use of the resident internet portal.
Currently, UDR has six active development projects and two redevelopment projects under construction, totaling 2,666 homes at a total cost of $405 million. The company anticipates delivering most of its projects in the next fiscal year. However, the company does not plan to start any new development projects in 2009. The company bought a 289-home community in Dallas during the quarter for $28.3 million under its pre-sale agreement.
During the quarter, UDR obtained a $200 million 10-year secured credit facility from Fannie Mae at a blended interest rate of 5.28%. The company utilized the proceeds to repay all of its 2010 secured debt. The company also sold approximately 2.3 million shares at a weighted average price of $14.89 each. In addition, UDR formed a $450 million joint venture with Kuwait Finance House to invest in key markets in the U.S.
At quarter end, UDR had a liquidity of over $1 billion 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. By the end of the quarter, UDR had a total debt of $3.3 billion and a fixed charge coverage ratio of 2.1x. In accordance with the current uncertainty in the market, UDR has revised its guidance for 2009, and currently expects FFO in the range of $1.14 to $1.20 per share. 
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