UDR Announces Fourth Quarter and Full Year 2012 Results
UDR Announces Fourth Quarter and Full Year 2012 Results
~ Provides 2013 Guidance ~
DENVER--(BUSINESS WIRE)-- Fourth Quarter 2012 Highlights:
- FFO per share was $0.31 (-11% year-over-year), FFO as Adjusted per share was $0.35 (+3%), and AFFO per share was $0.31 (+11%)
- Year-over-year same-store revenue and NOI growth were 5.7% and 7.3%, respectively
- Successfully navigated the aftermath of Hurricane Sandy
- Improved portfolio quality through an asset swap with MetLife; increased ownership interest in The Olivian, an A+ asset located in downtown Seattle
- Commenced construction on Pier 4, a 369-home high-rise located in Boston, MA
- Hired Tom Herzog as Chief Financial Officer.
Full-Year 2012 Highlights:
- FFO per share was $1.32 (+3% year-over-year), FFO as Adjusted per share was $1.35 (+5%), and AFFO per share was $1.18 (+10%)
- Full year same-store revenue and NOI growth were 5.3% and 6.6%, respectively
- Deleveraged our balance sheet via a $539 million secondary equity offering, $217 million of "At The Market" equity proceeds and $610 million of non-core asset sales
- Formed a second joint venture with MetLife valued at $1.4 billion at December 31, 2012
- Increased annual dividend per share to $0.88 (+10% year-over-year).
|Q4 2012||Q4 2011||FY 2012||FY 2011|
|FFO per share||$0.31||$0.35||$1.32||$1.28|
|Acquisition-related costs (including JVs)||0.002||0.006||0.011||0.028|
|JV financing and acquisition fee||-||(0.004)||-||(0.011)|
|Cost/(benefit) associated with debt extinguishment||-||0.002||(0.001)||0.021|
|Redemption of preferred stock||-||-||0.011||0.001|
|Gain on sale of TRS property/marketable securities||-||(0.014)||(0.031)||(0.046)|
|Hurricane-related charges, net||0.035||-||0.037||-|
|FFO as Adjusted per share||$0.35||$0.34||$1.35||$1.28|
|Recurring capital expenditures||(0.036)||(0.059)||(0.167)||(0.208)|
|AFFO per share||$0.31||$0.28||$1.18||$1.07|
Same-store net operating income increased 7.3 percent year-over-year in the fourth quarter of 2012 while same-store revenue increased 5.7 percent over the same period. Same-store physical occupancy increased 60 basis points to 95.8 percent as compared to the prior year period. Same-store expenses increased 2.3 percent driven by an increase in real estate taxes. The annualized rate of turnover remained constant at 48 percent.
Summary of Same-Store Results Fourth Quarter 2012 versus Fourth Quarter 2011
% of Same-
|1||Based on QTD 2012 NOI.|
|2||Average same-store occupancy for the quarter.|
|3||During the fourth quarter, 36,889 apartment homes, or approximately 88 percent of 41,571 total apartment homes, were classified as same-store. The Company defines same-store as all multifamily communities owned and stabilized for at least one year as of the beginning of the most recent quarter.|
Sequentially, the Company's same-store NOI increased by 3.3 percent on revenue growth of 0.7 percent and a 4.7 percent decrease in expenses during the fourth quarter of 2012.
For the twelve-months ended December 31, 2012, the Company's same-store revenue increased 5.3 percent as compared to the prior year period while expenses increased 2.8 percent, resulting in a same-store NOI increase of 6.6 percent. Year-over-year occupancy increased by 10 basis points to 95.7 percent. The rate of turnover increased 180 basis points to 55% for the full-year 2012.
Summary of Same-Store Results Full-Year 2012 versus Full-Year 2011
% of Same-
|1||Based on YTD NOI.|
|2||Average same-store occupancy for YTD 2012.|
|3||During 2012, 33,823 apartment homes, or approximately 81 percent of 41,571 total apartment homes, were classified as same-store. The Company defines same-store as all multifamily communities owned and stabilized for at least one year as of the beginning of the most recent year.|
Development and Redevelopment Activity
The Company commenced construction of its Pier 4 development located in the South Boston Seaport area of downtown Boston, MA. Prior to commencement, the Company acquired the remaining 2% ownership interest in Pier 4 from its former joint venture partner. The community will consist of 369 homes and 11,000 square feet of retail space, has an estimated construction cost of $218 million and is expected to be completed in the second quarter of 2015.
In 2012, the Company spent a total of $400 million towards the completion of its $1.3 billion development and redevelopment pipeline.
Joint Venture Investment Activity
As previously announced on October 29, 2012, the Company exchanged its ownership interests in four operating communities and two land parcels in its UDR/MetLife I joint venture, in addition to $10 million in cash, for an increased ownership interest in The Olivian, an A-quality high-rise building located in downtown Seattle that is valued at $126.3 million. The Company now owns 50 percent of The Olivian. As such, the community was contributed to the UDR/MetLife II joint venture. The Olivian has a 4.5 percent, $63.4 million loan with a term of 7 years. Debt on the four operating communities and two land parcels in which UDR exchanged out of totaled $134.7 million, carried a weighted average interest rate of 3.5 percent and had a term of 7 years. The Company continues to fee manage the four operating communities it exchanged out of.
At December 31, 2012, the Company had $913 million in availability through a combination of cash and undrawn capacity on its credit facilities.
The Company's total indebtedness at December 31, 2012 was $3.4 billion. The Company ended the fourth quarter with fixed-rate debt representing 87 percent of its total debt, a total blended interest rate of 4.4 percent and a weighted average maturity of 4.5 years. The Company's leverage at year-end 2012 was 38.7% versus 45.8% a year ago. The Company's net debt-to-EBITDA, adjusted for non-recurring items, was 7.0 times at year-end 2012 versus 8.6 times a year ago.
Post Quarter Activity
On January 28, 2013, the Company acquired the remaining 7.5% ownership interest in its 399 Fremont land parcel located in the Rincon Hill neighborhood of San Francisco, CA from its joint venture partner. The total cost of the land parcel was $52.2 million.
As previously announced, the Company's Board of Directors declared and paid a regular quarterly dividend on its common stock for the fourth quarter of 2012 in the amount of $0.22 per share. The dividend was paid in cash on January 31, 2013 to UDR common stock shareholders of record as of January 10, 2013. The annualized dividend paid represented a yield of 3.7% on its payment date of January 31st. This dividend represented the 161st consecutive quarterly dividend paid by the Company on its common stock.
For the first quarter of 2013, the Company has established the following guidance:
- FFO per share: $0.31 to $0.33
- FFO as Adjusted per share: $0.31 to $0.33
- AFFO per share: $0.27 to $0.29
For the full-year 2013, the Company has established the following guidance:
- FFO per share: $1.35 to $1.41
- FFO as Adjusted per share: $1.33 to $1.39
- AFFO per share: $1.17 to $1.23
Below are the primary same-store assumptions for the Company's full-year 2013 guidance:
- Revenue: 4.00% to 5.00%
- Expense: 2.75% to 3.25%
- Net operating income: 4.25% to 6.00%
- Physical occupancy: 95.5%
Additional assumptions for the Company's full-year 2013 guidance can be found in Attachment 15 of the Company's Fourth Quarter 2012 Earnings Supplement available on its website at www.udr.com.
The Company's Fourth Quarter 2012 Earnings Supplement that provides details on the financial position and operating results of the Company is available on the Company's website at www.udr.com.
Conference Call and Webcast Information
UDR will host a webcast and conference call at 1:00 p.m. EST on February 5, 2013 to discuss fourth quarter and full-year results. A webcast will be available on UDR's website at www.udr.com. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
To participate in the teleconference dial 877-941-9205 for domestic and 480-629-9771 for international and provide the following conference ID number: 4588175.
A replay of the conference call will be available through March 7, 2013, by dialing 800-406-7325 for domestic and 303-590-3030 for international and entering the confirmation number, 4588175, when prompted for the pass code.
A replay of the call will be available for 90 days on UDR's website at www.udr.com.
Full Text of the Earnings Report and Supplemental Data
Internet -- The full text of the earnings report and Supplemental Financial Information will be available on the Company's website at www.udr.com.
Mail -- For those without Internet access, the fourth quarter 2012 earnings report and Supplemental Financial Information will be available by mail or fax, on request. To receive a copy, please call UDR Investor Relations at 720-348-7762.
Definitions and Reconciliations
Adjusted Funds From Operations ("AFFO"): The Company defines AFFO as FFO As Adjusted less recurring capital expenditures.
Management considers AFFO a useful metric for investors as it is more indicative of the Company's recurring operational cash flow than FFO As Adjusted. A reconciliation between FFO As Adjusted and AFFO is provided on Attachment 2 of the Company's Fourth Quarter 2012 Earnings Supplement.
Funds From Operations ("FFO"): The Company defines FFO as net income (computed in accordance with GAAP) excluding the impact of impairment write-downs of depreciable real estate or of investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, gains (or losses) from sales of depreciable property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust's definition issued in April 2002.
Management considers FFO a useful metric for investors as the Company uses FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of the Company's activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs. A reconciliation between Net Income and FFO is provided on Attachment 2 of the Company's Fourth Quarter 2012 Earnings Supplement.
Funds From Operations as Adjusted: The Company defines FFO as Adjusted as FFO excluding the impact of acquisition-related costs and other non-recurring items including, but not limited to, prepayment costs/benefits associated with early debt retirement, gains on sales of marketable securities and taxable REIT subsidiary property, storm-related expenses, severance costs and legal costs.
Management considers FFO As Adjusted a useful metric for investors as it is more indicative of the Company's recurring operational FFO than FFO. FFO As Adjusted excludes non-recurring items which, if included, result in less comparability between companies and across time periods. A reconciliation from FFO to FFO As Adjusted is provided on Attachment 2 of the Company's Fourth Quarter 2012 Earnings Supplement.
Net Debt to EBITDA: The Company defines net debt to EBITDA as total debt net of cash and cash equivalents divided by EBITDA. EBITDA is defined as net income, excluding the impact of interest expense, real estate depreciation and amortization of wholly owned and other joint venture communities, other depreciation and amortization, minority interests, net gain on the sale of depreciable property, and RE3 income tax.
Management considers net debt to EBITDA a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company's ability to service its debt obligations as well as compare leverage against that of its peer REITs. A reconciliation between net income and EBITDA is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.
Net Operating Income ("NOI"): The Company defines NOI as rental income less direct property rental expenses. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense which is calculated as 2.75% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations, and land rent.
Management considers NOI a useful metric for investors as it is a more meaningful representation of a community's continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization and is a widely used input, along with capitalization rates, in the determination of real estate valuations. A reconciliation of Net Income to NOI is provided below.
|In thousands||4Q 12|
|4Q 11||YTD 12||YTD 11|
|Net Income/(loss) attributable to UDR, Inc.||$||(12,300||)||$||(9,031||)||$||46,498||$||212,177||$||20,023|
|Other operating expense||1,464||1,467||1,582||5,748||5,990|
|General and administrative||9,641||8,710||11,567||40,723||41,087|
|Tax benefit for RE3, net||(2,974||)||(2,960||)||(5,820||)||(8,752||)||(5,647||)|
|Other depreciation and amortization||1,092||1,078||919||4,105||3,931|
|Income from discontinued operations||(156||)||1,133||(74,340||)||(263,339||)||(143,810||)|
|Net loss/(income) attributable to non-controlling interests||(655||)||(645||)|