UDR, Inc. — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. This filing reports full-year results, not standalone fourth-quarter results. UDR is a U.S. multifamily REIT; at year-end it owned 168 consolidated communities with 55,550 completed homes across 21 markets, plus interests in 10,045 homes through unconsolidated ventures and partnerships.
Financial performance and key metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $1.628 billion | $1.517 billion |
| Net income attributable to common stockholders | $439.5 million; $1.34 diluted per share | $82.5 million; $0.26 diluted per share |
| Total property NOI | $1.115 billion, up 7.1% | $1.040 billion |
| Same-Store rental income | $1.491 billion, up 5.6% | $1.411 billion |
| Same-Store NOI | $1.038 billion, up 6.0% | $978.9 million |
| Net cash from operating activities | $832.7 million | $820.1 million |
| Net cash used in investing activities | $289.1 million | $929.5 million |
| Net cash from/(used in) financing activities | $(538.9) million | $111.2 million |
- Common-stockholder net income rose sharply, primarily because of $351.2 million in real estate disposition gains, compared with $25.5 million in 2022. The 2023 amount includes a $325.9 million gain on contributing four communities to a joint venture and a $25.3 million gain on a property sale.
- Same-Store operating margin was 69.6%, versus 69.3% in 2022. Same-Store physical occupancy averaged 96.7%, down 0.1 percentage point; monthly income per occupied home rose 5.7% to about $2,501.
- FFO per diluted share and unit was $2.45; FFO as adjusted was $2.47 and AFFO was $2.21. These are non-GAAP supplemental measures and should not be treated as GAAP earnings or cash available for distribution.
- Total assets were $11.37 billion and total liabilities were $6.42 billion at year-end. Net real estate carrying value was $9.76 billion.
- Debt, net of financing costs and other adjustments, was $5.80 billion: $1.28 billion secured and $4.52 billion unsecured. Weighted-average interest rate was 3.40%, with 5.6 years weighted-average maturity. Approximately 86% of real estate by gross book value was unencumbered.
- Cash and cash equivalents were $2.9 million, with $31.9 million of restricted cash. Available facilities included $1.3 billion undrawn under the revolving credit facility, excluding letters of credit, and $70.4 million under the working-capital facility. Commercial paper outstanding was $408.1 million at a 5.7% year-end rate.
- Common dividends declared were $1.68 per share, up 10.5% from 2022; $1.64 per share was paid during 2023. The company paid $539.9 million of common-stockholder distributions.
Material changes versus 2022
- Revenue increased 7.3%, primarily from rent growth, acquisitions, and completed developments, partly offset by dispositions. Same-Store NOI growth was 6.0%, versus 4.9% in 2022.
- Interest expense increased to $180.9 million from $155.9 million, mainly due to higher average rates and higher debt balances. Total debt, net, rose from $5.49 billion to $5.80 billion.
- Capital expenditures excluding development increased 29.8% to $303.7 million, including higher major renovations and NOI-enhancing improvements.
- Cash used in investing declined to $289.1 million from $929.5 million, largely reflecting fewer acquisitions, higher real estate sale proceeds, and lower development and joint-venture investment spending.
- In 2023 UDR acquired six Texas communities for approximately $354.6 million, contributed four communities to a new venture for cash proceeds of about $247.9 million, and sold a Hillsboro, Oregon community for $78.6 million.
Outlook, risks, and unusual items
- Management provided no specific numerical 2024 earnings, rent-growth, or occupancy guidance in the supplied filing text. It cautioned that 2024 revenue growth could be affected by recessionary conditions, lower occupancy, concessions, new supply, bad debt, and other factors.
- UDR expected to meet near-term liquidity needs through property operating cash flow, credit facilities, and commercial paper; longer-term needs may be funded through operations, secured or unsecured borrowing, securities issuance, and property dispositions. The company reported compliance with debt covenants.
- 2024 scheduled debt maturities were approximately $521.3 million, including $97.6 million secured and $423.7 million unsecured. UDR said it anticipated funding these with operations, financing, asset-sale proceeds, or credit facilities.
- Two wholly owned developments totaling 415 homes were under way at year-end, with a $187.5 million budget and $160.4 million invested; completion was estimated for the second quarter of 2024.
- Key risks include concentration in major markets (73.3% of 2023 NOI came from eight markets), rent regulation and tenant-protection laws, new multifamily supply, inflation and operating costs, higher interest rates and refinancing, development execution, insurance and severe-weather losses, and counterparty or joint-venture risks.
- UDR disclosed a consolidated class action and a District of Columbia lawsuit involving RealPage, a vendor. The company said it could not determine ultimate liability for legal matters, but did not expect ordinary-course claims, net of insurance or other provisions, to materially affect results.
- Other notable items include a $24.3 million loss on consolidating a preferred-equity investment, and gains and losses tied to SmartRent and other technology investments. No impairment of real estate or other-than-temporary impairment of unconsolidated investments was recorded in 2023.
- UDR reported effective disclosure controls and internal control over financial reporting; Ernst & Young issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- How much of the 2023 earnings increase reflects recurring operations versus the $351.2 million disposition gains and investment-related items; compare GAAP earnings with FFO, FFOA, and AFFO.
- Whether Same-Store rent growth can continue amid concessions, bad debt, new supply, and expense growth, particularly in UDR’s concentrated markets.
- The refinancing and funding plan for the $521.3 million of 2024 maturities, and subsequent debt balances, borrowing costs, and facility availability.
- Whether the two developments meet the stated completion timing and budget, and whether lease-up achieves expected rent and occupancy levels.
- Developments in the RealPage litigation, preferred-equity and mezzanine investments, and the collectability and repayment timing of notes receivable, which rose to $228.8 million.
- Future dividend coverage and sustainability, considering operating cash flow, recurring capital needs, debt service, and REIT distribution requirements.