Valued at a market cap of $11.7 billion, UDR, Inc. (UDR) is a multifamily residential real estate investment trust (REIT) that owns, operates, acquires, develops, and redevelops apartment communities across major U.S. metropolitan markets. The Highlands Ranch, Colorado-based company focuses on high-quality apartment homes in urban and suburban locations. Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and UDR fits the label perfectly, with its market cap exceeding ...

Core Insights - The article discusses the investment strategies focused on growth stocks and Real Estate Investment Trusts (REITs) for retirement planning [1] Group 1: Investment Focus - The emphasis is on real income-producing asset classes that provide reliable income, diversification, and inflation hedging opportunities [1] Group 2: Analyst Contributions - Philip Eric Jones is identified as a contributor to the investing group iREIT®+HOYA Capital, which features a team of analysts dedicated to the aforementioned asset classes [1]

Shares of UDR, Inc. ( UDR ) have been a poor performer over the past year, losing over 20% of their value. The apartment REIT has struggled with surprisingly weak rental conditions this year, a challenge that has plagued the sector, weakeningOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an article, just let me ...

Group 1 - UDR, Inc. has experienced a decline of over 20% in its share value over the past year [1] - The apartment REIT is facing challenges due to unexpectedly weak rental conditions, which have affected the entire sector [1]

Core Insights - Current market conditions suggest it is a favorable time to invest in Real Estate Investment Trusts (REITs) due to stable core and headline inflation rates at 3.0% [1] - A significant majority, 75% of investors, anticipate a decrease in the Fed Funds rate, which could further enhance the attractiveness of REIT investments [1] Investment Focus - The article emphasizes the importance of investing in income-producing asset classes, particularly REITs, which provide reliable income, diversification, and act as a hedge against inflation [1]

Core Insights - UDR reported better than expected same-store revenue growth of 2.6%, but faced slowed leasing conditions in Q3 2025 [1] - The apartment industry is experiencing a deceleration in rent growth due to various economic factors, including employment uncertainty and high levels of new housing supply [2] - UDR's Sun Belt market is lagging behind coastal markets due to increased new housing supply and economic uncertainty [3] Financial Performance - Year-over-year, UDR's expenses increased by 3.1% and net operating income (NOI) grew by 2.3% in Q3 [1] - Occupancy rates were strong at 96.6%, up 30 basis points from the previous year, while other income remained steady at 8.5% [6] - Same-store expenses increased by 3.1% year-over-year, attributed to real estate tax relief and insurance savings [6] Market Outlook - UDR forecasts flat same-store revenue earnings for 2026, which is below historic averages [3] - Despite challenging leasing conditions, UDR anticipates benefits from America's housing shortage and decreasing new supply across most markets [4] - The company experienced a nearly 300 basis point reduction in resident turnover, which helped unlock revenue and expense benefits [5]

Real Estate Portfolio - As of September 30, 2025, the consolidated real estate portfolio included 168 communities totaling 55,808 apartment homes[200] - The Same-Store Community apartment home population for the three months ended September 30, 2025, was 54,915, with an average occupancy of 96.6%[200] - The total carrying value of Same-Store Communities was approximately $15.6 billion, with a weighted average monthly income per occupied home of $2,605[202] - The Same-Store Communities segment represents those communities stabilized prior to July 1, 2024, and held as of September 30, 2025[205] - The Company has an ownership interest in 11,193 completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships[200] Development and Capital Expenditures - The Company is developing one wholly-owned community with a total of 300 apartment homes, none of which have been completed as of September 30, 2025[203] - Total capital expenditures for the nine months ended September 30, 2025, were $196.2 million, or $3,545 per stabilized home, compared to $191.3 million, or $3,458 per stabilized home in 2024[233] - The company had a development pipeline consisting of one wholly-owned community totaling 300 apartment homes with a budget of $133.6 million as of September 30, 2025[239] Financial Performance - Total revenue for the three months ended September 30, 2025, was $154.6 million, compared to $150.8 million for the same period in 2024, reflecting a growth of 2.5%[225] - Net income attributable to common stockholders for the nine months ended September 30, 2025, was $151,200,000 ($0.46 per diluted share), compared to $91,000,000 ($0.28 per diluted share) for the same period in 2024[258] - The Company reported a net income attributable to common stockholders of $39.2 million for the three months ended September 30, 2025, compared to $21.4 million in 2024[294] - Funds from Operations (FFO) attributable to common stockholders for the three months ended September 30, 2025, was $219.9 million, compared to $213.8 million in 2024[294] - Adjusted Funds from Operations (AFFO) for the nine months ended September 30, 2025, was $599.1 million, an increase from $586.4 million in 2024[295] Cash Flow and Liquidity - The Company expects to meet short-term liquidity requirements through net cash provided by property operations and borrowings under credit agreements[208] - The Company anticipates that proceeds from property operations will continue to be adequate to meet operating requirements and dividend payments[208] - For the nine months ended September 30, 2025, net cash provided by operating activities was $641.5 million, an increase from $636.3 million in the comparable period in 2024[229] - The company reported net cash provided by operating activities of $641,480,000 for the nine months ended September 30, 2025, compared to $636,312,000 in 2024[255] - The company incurred net cash used in financing activities of $(486,596,000) for the nine months ended September 30, 2025, compared to $(408,033,000) in 2024[255] Debt and Financing - The Company has a $1.3 billion unsecured revolving credit facility and a $350.0 million unsecured term loan, with the total commitments potentially increasing to $2.5 billion[213] - As of September 30, 2025, the Company had issued $340.0 million of commercial paper at a weighted average annualized rate of 4.32%, leaving $360.0 million of unused capacity[215] - The Company anticipates repaying approximately $129.2 million of secured debt and $340.0 million of unsecured debt maturing during the remainder of 2025[217] - As of September 30, 2025, the company had $1.3 billion of unused capacity under its Revolving Credit Facility[247] - The company is exposed to interest rate changes associated with its commercial paper program and unsecured credit facility, indicating potential refinancing risks[297] Operating Metrics - Total property NOI for the three months ended September 30, 2025, was $292.1 million, a 2.7% increase from $284.4 million in the same period of 2024[262] - Same-Store rental income increased by 2.6% to $414.7 million for the three months ended September 30, 2025, compared to $404.2 million in 2024[262] - NOI from Same-Store Communities increased by 2.3%, or $6.5 million, for the three months ended September 30, 2025, driven by a 2.6% increase in rental income[266] - Operating expenses for Same-Store Communities increased by 3.1% to $131.8 million for the three months ended September 30, 2025, compared to $127.9 million in 2024[262] - The operating margin for the three months ended September 30, 2025, was 68.2%, slightly down from 68.4% in 2024[268] Shareholder Activity - The Company did not sell any shares of common stock through its ATM program during the three and nine months ended September 30, 2025, with 14.0 million shares available for future issuance[210] - The Company repurchased 0.7 million shares at an average price of $38.37 per share for a total of approximately $25.0 million, and an additional 0.3 million shares at an average price of $36.14 per share for approximately $10.0 million in October 2025[212] - Weighted average number of common shares outstanding — basic for Q3 2025 was 330,668 thousand, compared to 329,421 thousand in Q3 2024, reflecting an increase of 0.4%[296] - Weighted average number of common shares outstanding — diluted for the nine months ended September 30, 2025 was 331,443 thousand, up from 329,755 thousand in the same period of 2024, representing a growth of 0.5%[296] - The company has a total of 353,484 thousand basic common shares outstanding for Q3 2025, slightly higher than 353,275 thousand in Q3 2024[296] Other Financial Metrics - The Company recognized a gain on the sale of real estate of $47.9 million for the nine months ended September 30, 2025, compared to $16.9 million in the same period of 2024[275] - Real estate depreciation and amortization decreased to $165.9 million for the three months ended September 30, 2025, from $170.3 million in 2024[277] - Other depreciation and amortization for the three months ended September 30, 2025, was $7.0 million, compared to $4.0 million in 2024, reflecting $3.3 million in software transition costs[281] - Interest income and other income for the three months ended September 30, 2025, decreased to $3.7 million from $6.2 million in 2024, attributed to lower interest income from reduced notes receivable balances[283] - The total impact of adjustments to FFO for the three months ended September 30, 2025, was $11.2 million, compared to $6.0 million in 2024[294] Market Risk - As of September 30, 2025, the company's market risk profile has not changed materially from the previous year, as reported in the Annual Report on Form 10-K for the year ended December 31, 2024[298]

Core Insights - UDR Inc. reported third-quarter 2025 funds from operations as adjusted (FFOA) per share of 65 cents, exceeding the Zacks Consensus Estimate of 63 cents and up from 62 cents in the prior-year quarter [1][9] - The company raised its 2025 FFOA midpoint per share guidance, reflecting positive performance in same-store net operating income (NOI) driven by higher effective blended lease rates [1][8] Financial Performance - Quarterly revenues from rental income were $429.3 million, slightly below the Zacks Consensus Estimate of $429.7 million, while total revenues reached $431.9 million, both showing over 2.5% year-over-year growth [2] - Same-store revenues increased by 2.6% year over year, while same-store expenses rose by 3.1%, resulting in a 2.3% improvement in same-store NOI [3] - The weighted average same-store physical occupancy was 96.6%, up 30 basis points year over year but down 30 basis points sequentially [4] Balance Sheet and Liquidity - As of September 30, 2025, UDR had $1.0 billion in liquidity, with total debt at $5.8 billion, of which only $485.9 million (8.9%) is maturing through 2026 [5] - The net debt-to-EBITDA ratio remained stable at 5.5X, with a weighted average interest rate of 3.4% and an average maturity of 4.6 years [6] Portfolio Activity - UDR has agreed to acquire a home community in suburban Metropolitan Washington, D.C., consisting of 406 apartment units for approximately $147 million, expected to close in the fourth quarter of 2025 [7] 2025 Guidance - For the fourth quarter of 2025, UDR expects FFOA per share in the range of 63-65 cents, with a full-year 2025 FFOA per share guidance raised to $2.53-$2.55, reflecting an increase from the previous guidance of $2.52 [8][10]

Financial Data and Key Metrics Changes - For Q3 2025, same-store revenue and NOI growth were 2.6% and 2.3% respectively, exceeding consensus expectations [12][19] - FFOA per share was $0.65, surpassing previous guidance, leading to an increase in full-year 2025 FFOA per share guidance to a range of $2.53 to $2.55 [23][24] - Year-over-year same-store expense growth was 3.1%, better than expectations, driven by favorable real estate tax growth and insurance savings [13][14] Business Line Data and Key Metrics Changes - Blended lease rate growth was 0.8%, with renewal rate growth at 3.3% and new lease rate growth at -2.6% [12] - Annualized resident turnover improved by nearly 300 basis points compared to the prior year, contributing to revenue and expense benefits [12] - Other income growth was strong at 8.5%, driven by continued innovation and value-add services [13] Market Data and Key Metrics Changes - Coastal markets performed well, with same-store revenue growth of approximately 4%, while Sunbelt markets lagged with slightly negative revenue growth [16][19] - The East Coast had a weighted average occupancy of 96.7% and blended lease rate growth of 2% year to date [17] - The West Coast showed strong momentum with a 96.7% occupancy and 3% blended lease rate growth year to date [18] Company Strategy and Development Direction - The company focuses on data-driven capital allocation and operational innovation to enhance cash flow growth and shareholder value [6][9] - UDR aims to leverage its investment-grade balance sheet and substantial liquidity for future growth opportunities [9][27] - The company is committed to corporate stewardship and sustainability, as evidenced by its seventh annual Corporate Responsibility Report [9] Management's Comments on Operating Environment and Future Outlook - Management noted a deceleration in rent growth due to employment uncertainty, slower household formation, and high levels of new supply [5][20] - Despite current challenges, management remains optimistic about long-term fundamentals in the apartment industry, citing a structural under-housing issue in the U.S. [5][11] - The company plans to adjust its operating strategy to maximize cash flow and leverage its innovative culture for growth [20] Other Important Information - The company welcomed Rick Clark as a new board member, enhancing its board refreshment process [10] - UDR has a strong liquidity position with over $1 billion available as of September 30 [27] - The company repurchased approximately 930,000 shares at an average price of $37.70, reflecting a commitment to shareholder returns [24] Q&A Session Summary Question: Can you walk through the assumptions for a flat earn-in for 2026? - Management indicated that the flat earn-in assumes blended lease rates of approximately -1% to -2% in Q4, with regional variations expected [30][34] Question: What is driving variability in rate growth compared to peers? - Management attributed variability to consumer sentiment, job growth, and supply dynamics, particularly in the Sunbelt markets [37][39] Question: Are there concerns about retention rates given current job market conditions? - Management expressed confidence in retention rates, citing a significant reduction in turnover due to enhanced customer experience initiatives [92][93]

Financial Performance - Net Income per diluted share was $0.12 in 3Q 2025, a 100% increase compared to $0.06 in 3Q 2024[8] - FFO per diluted share was $0.62 in 3Q 2025, a 3% increase compared to $0.60 in 3Q 2024[8] - FFOA per diluted share was $0.65 in 3Q 2025, a 5% increase compared to $0.62 in 3Q 2024[8] - The company raised its full-year 2025 guidance for Net Income and FFOA per diluted share by $0.02 to a midpoint of $0.58 and $2.54, respectively[11] - Total revenue increased by $11.7 million YOY, or 2.8%, to $431.9 million in 3Q 2025[12] Same-Store Results - Same-Store revenue grew by 2.6% YOY in 3Q 2025[9] - Same-Store expense increased by 3.1% YOY in 3Q 2025[9] - Same-Store NOI grew by 2.3% YOY in 3Q 2025[9] - Physical occupancy for Same-Store communities was 96.6% in 3Q 2025, a 0.3% increase YOY[16] - The company updated its full-year 2025 Same-Store revenue growth guidance to 2.20% to 2.60%, a 0.10% decrease from the prior midpoint[11] Capital Activities - The company repurchased approximately 651 thousand shares of its common stock for $25.0 million during 3Q 2025 and an additional 277 thousand shares for $10.0 million subsequent to quarter-end[9] - The company extended the maturity date of its $350.0 million senior unsecured term loan from January 31, 2027, to January 31, 2029[9] - Total indebtedness as of September 30, 2025, was $5.8 billion, with $485.9 million, or 8.9%, maturing through 2026[24]