UDR, Inc. 10-Q Filing Summary
Business Context and Reporting Period
Company: UDR, Inc. (Self-administered REIT owning, acquiring, renovating, developing, and managing apartment communities nationwide).
Reporting Period: Quarter and nine months ended September 30, 2009.
Portfolio Status: As of September 30, 2009, the portfolio consisted of 164 communities with 45,249 apartment homes across 10 states and the District of Columbia. Same-community physical occupancy averaged 95.6% for the quarter.
Key Financial Metrics
| Metric (Nine Months Ended Sep 30, 2009) | Value (in thousands) |
|---|---|
| Total Revenues | $463,378 |
| Net Loss Attributable to UDR, Inc. | $(62,663) |
| Net Loss Attributable to Common Stockholders | $(71,063) |
| Funds from Operations (FFO) - Diluted | $137,446 |
| Net Cash Provided by Operating Activities | $189,650 |
| Total Debt (Secured + Unsecured) | $3,275,046 |
| Cash and Cash Equivalents | $24,954 |
| Weighted Average Shares Outstanding (Diluted) | 149,048 |
Material Changes vs. Prior Period
- Net Income/Loss: The Company reported a net loss of $62.7 million for the nine months ended September 30, 2009, compared to net income of $713.1 million in the same period of 2008. This significant decline is primarily due to a drastic reduction in gains from the sale of depreciable property (down from $787.1 million in 2008 to $2.5 million in 2009) and a $16.0 million non-cash impairment charge on unconsolidated joint ventures.
- Operating Performance: Property Net Operating Income (NOI) increased slightly by 0.4% to $294.3 million for the nine-month period, driven by stable occupancy and expense management, despite a 1.0% decrease in rental income for same communities.
- Debt Structure: Total debt decreased from $3.26 billion at year-end 2008 to $3.28 billion at September 30, 2009, though the mix shifted. The Company repurchased $238.9 million of unsecured debt, realizing a $9.8 million gain, while increasing secured debt borrowings by $434.9 million to fund development and acquisitions.
- Capital Expenditures: Total capital expenditures decreased 35.6% to $65.2 million compared to $101.1 million in the prior year, reflecting a strategic shift away from major renovations and revenue-enhancing improvements.
Guidance, Outlook, and Risks
- Outlook: Management expects to meet short-term liquidity requirements through operating cash flows and credit facilities. Long-term needs will be met via secured/unsecured borrowings, equity issuance, and property dispositions. No significant disposition activity is expected for the remainder of 2009.
- Joint Venture Consolidation: Subsequent to the reporting period, the Company agreed to increase its guarantee to 100% of project debt for a Bellevue, Washington joint venture. Consequently, the Company will consolidate this venture (approx. $96 million assets, $70.5 million debt) in the fourth quarter of 2009.
- Equity Program: The Company initiated an "At the Market" equity distribution program, selling 2.27 million shares for net proceeds of approximately $33.0 million during the quarter.
- Risks: Key risks include unfavorable apartment market conditions affecting occupancy and rents, refinancing risk due to debt maturities, and potential inability to access capital markets. The Company also faces risks related to development costs and environmental liabilities.
Investor Verification Checklist
- Impairment Charges: Verify the details and recoverability of the $16.0 million non-cash charge related to Bellevue, Washington joint ventures.
- Debt Maturities: Review the schedule of debt maturities, specifically the $290 million of unsecured debt due in 2010 and the refinancing strategy for these obligations.
- Joint Venture Consolidation: Assess the impact of the upcoming consolidation of the Bellevue joint venture on the balance sheet and leverage ratios in Q4 2009.
- Discontinued Operations: Confirm that the significant gains in 2008 were indeed from discontinued operations and understand the current pipeline for future property sales.
- Liquidity Position: Monitor the utilization of the $1.4 billion Fannie Mae secured credit facilities and the $600 million unsecured credit facility to ensure adequate liquidity for development and operations.