This story was originally published on Multifamily Dive. To receive daily news and insights, subscribe to our free daily Multifamily Dive newsletter. In early 2025, UDR prepared for the typical fourth-quarter slowdown well in advance by shifting approximately 25% of its Q4 lease expirations into higher-demand months in 2026, Chief Operating Officer Mike Lacy said on the REIT’s earnings call on Feb. 11.  In late Q3, demand weakened beyond mere seasonality, which led UDR to build occupancy to nearly 97%. Wh ...

Financial Data and Key Metrics Changes - The company reported core FFO for the quarter of $2.16 per diluted share, aligning with the midpoint of third quarter guidance [16] - The net debt to EBITDA ratio was 4.2 times, with outstanding debt approximately 91% fixed at an effective rate of 3.8% [17][18] - Adjustments to guidance included lowering the midpoint of effective rent growth to negative 0.4% and total same store revenue guidance to negative 0.05% [19] Business Line Data and Key Metrics Changes - Average physical occupancy improved to 95.6%, a 20 basis point increase from the second quarter [10] - New lease-over-lease pricing improved to -5.2%, while renewal lease-over-lease performance was +4.5%, leading to a blended pricing of positive 0.3% [10] - The company completed 2,090 interior unit upgrades, achieving rent increases of $99 above non-upgraded units [13] Market Data and Key Metrics Changes - Demand across markets remains healthy, with occupancy levels increasing 450 basis points over the past five quarters [4] - The Mid Atlantic region outperformed relative to the portfolio, with strong performance noted in Richmond and Washington D.C. [11] - The trailing twelve-month starts in the region were at 1.8% of inventory, half the historical norm, indicating a decline in new supply [4][67] Company Strategy and Development Direction - The company is focusing on high-demand, high-growth markets and significant redevelopment opportunities, with plans to start construction on six to eight projects over the next six quarters [8] - The company aims to capitalize on situations where developers face equity challenges, allowing for acquisitions at compelling bases [7][43] - The strategy includes a balanced approach between external growth through development and internal investments to improve existing portfolio margins [42] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for an acceleration of the recovery cycle in 2026, driven by declining new deliveries and strong demand fundamentals [9][27] - The job market is expected to be softer in 2026, but the administration's focus on job growth could provide support [26] - The company anticipates continued strong collections and occupancy, with demographic trends favoring renting over home purchases [5][9] Other Important Information - The company amended its revolving credit facility, increasing capacity from $1.25 billion to $1.5 billion and extending maturity to January 2030 [18] - The company is experiencing a competitive advantage due to its access to capital and development expertise in a constrained equity environment [7] - The company is actively pursuing technology initiatives to drive efficiencies and improve margins [8] Q&A Session Summary Question: Recent pricing trends on new leases - Management noted that new lease pricing declined less than normal from Q2 to Q3, with typical seasonal trends observed [23][24] Question: Thoughts on 2026 earnings and contribution from other income - Management indicated that demand fundamentals for 2026 appear similar to 2025, with expectations for a decline in supply and potential for improved lease rates [25][26] Question: Changes in expense guidance for 2026 - Management highlighted favorable trends in real estate taxes and insurance, projecting normal growth rates for these expenses [31] Question: Concessions in development markets - Concessions were reported to be slightly higher in Q3 compared to Q2, with typical concessions ranging from half a month to a month free [33] Question: Lease-up cadence for development properties - Management acknowledged that leasing velocity has been slower than expected, but rents remain in line with original performance [36] Question: Capital allocation and development yields - Management emphasized a focus on generating compounded earnings growth and maintaining a steady dividend, with selective capital deployment in development opportunities [41][42]