UDR(US:UDR)2020-05-07 20:25PART I — FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents the unaudited Q1 2020 consolidated financial statements for UDR, Inc. and its Operating Partnership UDR, INC. Consolidated Financial Statements UDR, Inc. reported Q1 2020 revenues of $321.5 million and net income of $4.2 million, with total assets growing to $9.69 billion UDR, Inc. Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total real estate owned, net | $8,545,527 | $8,470,748 | | Total assets | $9,691,105 | $9,636,472 | | Total liabilities | $5,393,582 | $5,228,493 | | Total stockholders' equity | $3,464,115 | $3,358,542 | | Total liabilities and equity | $9,691,105 | $9,636,472 | UDR, Inc. Consolidated Statement of Operations Highlights (in thousands, except per share data) | Income Statement Item | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Total revenues | $321,481 | $270,673 | | Operating income | $38,954 | $52,494 | | Net income attributable to common stockholders | $4,155 | $23,492 | | Diluted EPS | $0.01 | $0.08 | UDR, Inc. Consolidated Cash Flow Highlights (in thousands) | Cash Flow Item | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $135,456 | $137,333 | | Net cash used in investing activities | ($214,044) | ($459,749) | | Net cash provided by financing activities | $68,226 | $137,679 | UDR, INC. Notes to Consolidated Financial Statements Notes detail Q1 2020 property acquisitions, debt issuance, and a 3.0% increase in Same-Store NOI - In January 2020, the company acquired a 294-home community in Tampa, FL for $85.2 million and increased its ownership to 100% in a 276-home community in Hillsboro, OR for $21.6 million6768 - As of March 31, 2020, UDR owned 150 communities with 47,579 apartment homes and had an ownership interest in 5,134 homes through unconsolidated joint ventures66316 - In February 2020, the company issued an additional $200.0 million of its 3.20% senior unsecured medium-term notes due 2030, bringing the total aggregate principal amount to $600.0 million128 - Same-Store Net Operating Income (NOI) increased by 3.0% YoY for Q1 2020, driven by a 2.9% increase in rental income, while Non-Mature Communities/Other NOI grew by 152.3% primarily due to acquisitions in 2019376378383 UDR, Inc. Debt Summary (in thousands) | Debt Category | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Secured Debt, net | $1,144,201 | $1,149,441 | | Total Unsecured Debt, net | $3,740,937 | $3,558,083 | | Total Debt, net | $4,885,138 | $4,707,524 | UNITED DOMINION REALTY, L.P. Consolidated Financial Statements The Operating Partnership reported stable Q1 2020 net income of $24.1 million on $112.2 million of rental income United Dominion Realty, L.P. Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total real estate owned, net | $2,054,799 | $2,078,592 | | Total assets | $2,367,342 | $2,398,745 | | Total liabilities | $1,037,940 | $1,032,859 | | Total capital | $1,329,402 | $1,365,886 | United Dominion Realty, L.P. Consolidated Statement of Operations Highlights (in thousands, except per unit data) | Income Statement Item | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Rental income | $112,165 | $108,334 | | Operating income | $33,865 | $34,445 | | Net income attributable to OP unitholders | $24,118 | $23,946 | | Net income per weighted average OP Unit | $0.13 | $0.13 | UNITED DOMINION REALTY, L.P. Notes to Consolidated Financial Statements Notes show the Operating Partnership's portfolio of 52 communities and a 2.7% YoY increase in Same-Store NOI - As of March 31, 2020, the Operating Partnership's portfolio consisted of 52 communities with 16,434 apartment homes211 - The Operating Partnership is the guarantor on the General Partner's (UDR, Inc.) $1.1 billion unsecured revolving credit facility, $500 million commercial paper program, and over $3.4 billion in various medium-term notes251 - The Operating Partnership's Same-Store NOI for Q1 2020 increased 2.7% YoY to $77.1 million, driven by a 3.0% increase in rental income432437 - The Operating Partnership has notes payable to its General Partner (UDR, Inc.) totaling $635.7 million as of March 31, 2020256 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, liquidity, and the initial impact of COVID-19, including 95.5% April rent collection - The company is closely monitoring the impact of the COVID-19 pandemic; for April 2020, it collected 95.5% of billed monthly rents from multifamily residents309311 - Management believes its strong balance sheet and liquidity profile position it well to weather the economic challenges posed by the COVID-19 pandemic312 UDR, Inc. MD&A Management discusses lower net income but strong NOI growth of 18.9% and a rise in FFOA per share to $0.54 - Net income attributable to common stockholders decreased to $4.2 million in Q1 2020 from $23.5 million in Q1 2019, mainly due to a $43.0 million increase in depreciation expense370375 - Total property NOI increased by $35.8 million (18.9%) YoY, driven by contributions from newly acquired communities and a 3.0% increase in Same-Store NOI370376 - In February 2020, UDR issued $200.0 million of 3.20% senior unsecured medium-term notes due 2030 for net proceeds of approximately $211.3 million329357 FFO, FFOA, and AFFO per Share (Diluted) | Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | FFO per Share | $0.53 | $0.51 | | FFOA per Share | $0.54 | $0.50 | | AFFO per Share | $0.51 | $0.47 | United Dominion Realty, L.P. MD&A The Operating Partnership reports stable net income of $24.1 million and a 3.1% increase in total property NOI - Net income attributable to OP unitholders was stable at $24.1 million ($0.13 per unit) in Q1 2020, compared to $23.9 million in Q1 2019428 - Total property NOI increased 3.1% to $81.6 million, supported by a 2.7% increase in Same-Store NOI432 - The Operating Partnership had no acquisitions or dispositions in Q1 2020 and has no debt maturing for the remainder of the year411417 - The OP is exposed to interest rate risk on $27.0 million of its own variable rate debt422 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate and refinancing risks, with no material changes from the 2019 Annual Report - The Company and Operating Partnership are exposed to interest rate risk from variable rate debt and refinancing risk446 - There have been no material changes to market risk since the year-ended December 31, 2019 Form 10-K filing447 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes - Based on an evaluation as of March 31, 2020, the CEO and CFO concluded that disclosure controls and procedures are effective at a reasonable assurance level450 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls451 PART II — OTHER INFORMATION Item 1. Legal Proceedings The company is involved in routine litigation not expected to have a material adverse effect on its financial results - The Company is party to various claims and litigation arising in the ordinary course of business but does not expect them to have a material adverse effect on its financial position or results454 Item 1A. Risk Factors Key risks include the COVID-19 pandemic, geographic concentration, debt refinancing, and maintaining REIT status - The COVID-19 pandemic is a primary risk, potentially affecting rental revenue, occupancy, tenant rent payment ability, and development projects456457 - The company faces geographic concentration risk, with approximately 51.4% of its Q1 2020 NOI generated from communities in four metropolitan areas462 - Risks related to indebtedness include insufficient cash flow for debt service, refinancing risk, rising interest costs, and potential disruptions in financial markets521524532 - The company is subject to tax risks, including the potential for adverse consequences if UDR fails to qualify as a REIT537545 - Operational risks include potential liability from environmental contamination, compliance costs with the ADA, and cybersecurity breaches487495512 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales or share repurchases occurred in Q1 2020, though shares were withheld for employee tax obligations - During Q1 2020, the company did not issue any common stock upon redemption of OP Units563 - No shares were repurchased under the company's publicly announced share repurchase programs during Q1 2020564 - A total of 58,611 shares were repurchased from employees to cover tax obligations from vested restricted stock, at an average price of $47.78 per share565 Item 3. Defaults Upon Senior Securities The company reports no defaults upon its senior securities - None567 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable568 Item 5. Other Information The company reports no other information for this item - None569 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including governance documents and SOX certifications - Lists filed exhibits, including corporate governance documents, debt instruments, and required CEO/CFO certifications570572