Monday, self-administered equity real estate investment trust UDR, Inc. (UDR), reported a drop in funds from operations for the third quarter, reflecting a non-cash equity loss related to investments in two of its single-asset unconsolidated joint ventures, as well as charge associated with the premium on a tender offer. UDR also slashed its FFO guidance for the fiscal year 2009, citing the uncertain global economy, credit market volatility and job losses in key markets.
The Highlands Ranch, Colorado-based company reported a third quarter net loss available to common stockholders of $40.78 million or $0.27 per share, compared to a loss of $9.78 million or $0.07 per share last year.
Loss from continuing operations available to common stockholders for the quarter was $40.36 million or $0.27 per share, compared to a loss of $17.10 million or $0.12 per share in the year-ago quarter.
Funds from operations or FFO for the recent quarter plunged to $28.80 million or $0.18 per share from $47.93 million or $0.32 per share in the year-earlier quarter.
Results for the quarter include a non-cash equity loss of $16.0 million or $0.10 per share related to the company's investment in two of its single-asset unconsolidated joint ventures, and a $0.02 per share charge associated with the premium on a tender offer for $37.5 million of the its bonds maturing in 2024. Results also exclude the negative $0.01 per share effect of the implementation of FASB ASC Subtopic 470-20.
Adjusted FFO for the quarter decreased to $29.76 million or $0.19 per share from FFO of $49.60 million or $0.33 per share in the same quarter last year.
Excluding the one-time charge for the premium on the bond tender, the equity loss on the Bellevue assets and the impact of ASC Subtopic 470-20, FFO-Core per share would have been $0.31, compared to $0.30 per share in the year-ago period.
On average, 19 analysts polled by Thomson Reuters expected the company to earn $0.30 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the previous second quarter, the company reported a net loss available to common stockholders of $14.86 million or $0.10 per share, compared to a loss of $3.87 million or $0.03 per share in the previous year.
Funds from operations for the quarter rose to $56.3 million or $0.35 per share from $49.8 million or $0.33 per share in the year-ago quarter. On an adjusted basis, funds from operations declined to $53.65 million or $0.34 per share from $48.15 million or $0.32 per share last year.
Rental income for the third quarter under review rose to $150.31 million from $147.41 million in the same quarter last year. Street analysts had a consensus revenue estimate of $149.03 million for the third quarter.
In the preceding second quarter, rental income increased to $151.84 million from $139.95 million last year.
Non-property loss for the latest third quarter was $15.13 million, compared to non-property income of $8.90 million in the prior-year quarter. Total rental expenses for the quarter was $57.42 million, compared to $57.05 million last year, while other expenses increased to $118.12 million from $116.37 million in the prior-year quarter.
The company's same-store physical occupancy increased 60 basis points to 95.6% year-over-year, while same-store expenses were down 1.6% from last year, owing to tight expense controls, allowing UDR to maintain a 67% operating margin substantially in line with the year-earlier quarter. Same-store net operating income declined 3.7% year-over-year.
In the third quarter, 64% of move-ins were originated through an internet source, compared to 53% in year-earlier quarter.
UDR indicated that it does not intend to start additional development projects in 2009 and did not complete any dispositions during the quarter.
At September 30, 2009, UDR had capacity of more than $1 billion in a combination of cash and undrawn capacity on its credit facilities, giving it ample flexibility to meet its capital needs for debt maturities and development activities through 2011. Total indebtness at September 30, 2009 was $3.3 billion.
Looking ahead to the full year 2009, UDR now expects FFO earnings in the range of $1.14 - $1.20 per share, compared to earlier issued forecast of $1.23 - $1.35 per share. Analysts currently anticipate the company to earn $1.27 per share for the full year.
Amongst others in the sector, Denver, Colorado-based real estate investment manager Apartment Investment & Management Co. (AIV), is slated to release its third quarter results on Friday, October 30, before market open. On average, 15 analysts currently estimate the company to earn $0.39 for the quarter.
For the nine-month period, net loss available to common shareholders was $71.06 million or $0.48 per share, compared to net income avilable to common shareholders of $706.85 million or $5.08 per share in the same period last year. Loss from continuing operations for nine months was $68.32 million or $0.50 per share, compared to a loss of $45.18 million or $0.71 per share last year.
FFO for the nine-month period decreased to $137.45 million or $0.86 per share from $151.48 million or $0.99 per share in the corresponding period last year. Adjusted FFO for the period dropped to $144.13 million or $0.90 per share from $156.49 million or $1.02 per share in the same period last year.
UDR closed Mondays regular trading at $15.63, up $0.43 or 2.83%, on a volume of 3.10 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $6.73 - $19.86, with a three-month average volume of 3.23 million shares. In after hours, the stock lost $0.06 or 0.38%, trading at $15.57.
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