UDR(US:UDR)2022-02-10 02:50Financial Data and Key Metrics Changes - UDR reported fourth quarter FFOA per share of $0.54, achieving the high end of previously provided guidance, supported by strong same-store revenue growth and accretive transactions [45][46] - Full year 2022 FFOA per share guidance range is $2.22 to $2.30, representing a more than 12% increase from the full year 2021 result of $2.01 [47][51] - Total shareholder return for 2021 was over 61%, extending the track record of outperforming peers and all REIT return indices [11] Business Line Data and Key Metrics Changes - Same-store cash revenue grew 3% sequentially in Q4 2021, with year-over-year same-store cash revenue and NOI growth of 9% and 11.4%, respectively [23][24] - Effective blended lease rate growth was 11.7%, accelerating sequentially by 350 basis points compared to Q3 [24] - Weighted average occupancy was 97.1%, up 100 basis points year-over-year, with annualized turnover declining by more than 650 basis points [24] Market Data and Key Metrics Changes - January occupancy increased to 97.4%, with blended rate growth accelerating to over 13% [25] - Market rents increased approximately 2% at the start of 2022, with loss-to-lease holding steady at 11% [25][40] - Growth potential rents are up 5% to 6% on average compared to pre-COVID levels, with stable rent income ratios in the low 20% range [40] Company Strategy and Development Direction - UDR plans to continue identifying targeted accretive opportunities, focusing on under-managed acquisitions, DCP investments, and development opportunities [17][18] - The company aims to leverage its Next Gen operating platform and advanced AI data science to drive growth opportunities and cost savings [16][28] - UDR's strategy includes maintaining a self-service business model to enhance customer service and reduce operating expenses [9][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued robust apartment rental demand and pricing power, citing favorable fundamentals [15][19] - The company expects FFOA per share growth of over 12% and dividend growth of 5% in 2022 [19] - Management acknowledged potential challenges from regulatory restrictions and delinquent residents but remains optimistic about capturing market pricing in 2023 [37][41] Other Important Information - UDR completed $1.5 billion in acquisitions in 2021, funded through attractively priced equity [10][52] - The company has a strong liquidity position of $1.4 billion and a low weighted average interest rate of 2.8% [56][57] - UDR's ESG initiatives have been recognized, achieving a score of 86 from GRESB, highlighting its commitment to sustainability [12][64] Q&A Session Summary Question: What does the pipeline look like for external growth opportunities? - Management indicated that the pipeline has become lighter at year-end, focusing on finding accretive deals in desirable markets [60][61] Question: How are you thinking about the cost and return on ESG programs? - Management emphasized a commitment to science-based targets and refining long-term actions based on carbon footprint and regulatory constraints [64][66] Question: What is embedded in guidance regarding market rent growth? - Management expects effective blended rate growth of approximately 6.5% to 7.5% for the year, with higher growth anticipated in the first half [34][72] Question: Can you discuss the capital side and cap rates? - Management noted that cap rates have decreased to a range of 3.5% to 4%, with strong demand for multifamily assets driving this trend [62][82] Question: What are the expectations for expenses in 2022? - Management expects controllable operating expense growth to be limited to 2% to 3%, aided by efficiencies from the Next Gen operating platform [94][96]