Udr, Inc. · NYSE:UDR
Udr — Q4 2023 Earnings Presentation
29 slides from Udr's earnings presentation, Feb 7, 2024
Slide 1: Fourth Quarter and Full-Year 2023 Earnings Presentation
One Upland Boston, MA Fourth Quarter and Full-Year 2023 Earnings Presentation FEBRUARY 2024
Slide 2: Disclaimer and Forward-Looking Statements
DISCLAIMER AND FORWARD-LOOKING STATEMENTS This presentation, which the Company intends to provide on an annual basis in conjunction with its initial guidance outlook, is complementary to the Company’s conference call to discuss its Fourth Quarter and Full-Year 2023 earnings results, taking place on
Slide 3: Featured Speakers
FEATURED SPEAKERS Tom Toomey Joe Fisher Mike Lacy Chairman and CEO President and CFO SVP, Operations 3 Source: Company documents.
Slide 4: Key Takeaways
KEY TAKEAWAYS 1 Fourth Quarter and Full-Year 2023 FFOA per share and same-store results met guidance expectations 2 Resilient economic backdrop, but new supply expected to weigh on 2024 core growth 3 Investments in innovation expected to drive future incremental NOI 4 Maintaining capital light strat
Slide 5: Recent Results
RECENT RESULTS 4Q and FY 2023 FFOA per share and same-store results met guidance; January operating results improved sequentially Metric 4Q 2023 FY 2023 Vs. Guidance Midpoint FFOA per share $0.63 $2.47 In-Line Year-Over-Year (“YOY”) Growth 3% 6% YOY Same-Store Growth(1) Revenue 2.5% 6.2% In-Line Exp
Slide 6: Recent Transaction Activity
RECENT TRANSACTION ACTIVITY Accretion from JV acquisition; enhanced liquidity via two dispositions 4Q23 JV Acquisition 4Q23 DCP Acquisition 4Q23 Disposition 1Q24 Disposition One Upland Residences at Lake Merritt The Arbory Crescent Falls Church Price: $114.3 million Value: $67.0 million Price: $78.6
Slide 7: 2024 Macro Outlook
2024 MACRO OUTLOOK Positive demand and economic growth offset by increased supply 2024 YOY Market Rent Growth Forecast UDR Consensus ~1% 1.7% Positives Negatives YOY GDP Growth (0% to 1%) Economic Uncertainty YOY Job (0% to 1%) and Wage (2% to 3%) Growth Elevated Multifamily Supply Deliveries Lower
Slide 8: Sector Outlook
SECTOR OUTLOOK(1) Demographics, affordability, and demand/supply factors continue to support rentership Steady Rent-to-Income Ratio (“R/I”) Attractive Relative Affordability Median resident R/I ratio in the low/mid-20% range 55% to 60% less expensive to rent than own across UDR markets (25% improvem
Slide 9: Supply Outlook – Big Picture
SUPPLY OUTLOOK – BIG PICTURE Record levels of new multifamily deliveries expected in 2024, before trending lower towards historical averages by 2H 2025 National Multifamily Deliveries UDR Market Multifamily Deliveries Units % of Stock Units % of Stock 160,000 0.8% 70,000 0.8% 60,000 120,000 0.6% 0.6
Slide 10: Supply Outlook – Impact to UDR Markets
SUPPLY OUTLOOK – IMPACT TO UDR MARKETS All U.S. regions face new deliveries roughly 2x historical levels 2024 Supply By Region 6% 2024 Forecast 2000-2019 Annual Average as a % of Existing Stock Multifamily Supply 4% 2% 0% Sunbelt East Coast / West Coast Mid-Atlantic 2024 Supply as % of Existing Stoc
Slide 11: 2024 Outlook
2024 OUTLOOK(1) Impact of record supply and above-trend same-store expense growth leads to a 2% YOY decline in FFOA per share at the midpoint 1Q 2024 FY 2023 Metric FY 2024 Outlook Outlook Actual FFOA per share $0.60 to $0.62 $2.36 to $2.48 $2.47 YOY Growth at Midpoint 1.7% (2.0)% - Same Store Growt
Slide 12: Full-Year 2024 FFOA per Share Guidance
FULL-YEAR 2024 FFOA PER SHARE GUIDANCE YOY decrease driven by (1) flat SSNOI growth, (2) lower DCP earnings contribution(1), (3) higher interest expense, and (4) higher G&A Drivers of Annual FFOA Per Share (1) Includes a potential $0.02 per share impact from assuming ownership of a DCP development,
Slide 13: First Quarter 2024 FFOA per Share Guidance
FIRST QUARTER 2024 FFOA PER SHARE GUIDANCE Sequential decrease driven by (1) elevated SSEXP growth, (2) higher interest expense, and (3) higher G&A Drivers of Sequential FFOA Per Share 13 Source: Company documents.
Slide 14: Balance Sheet Strength and Robust Liquidity
BALANCE SHEET STRENGTH AND ROBUST LIQUIDITY Minimal near-term debt maturities (1) Forward Debt Maturity Schedule ($ in millions) $1,000 Unsecured Debt Secured Debt $800 Only 13% of consolidated debt outstanding maturing $600 $19.8B Common Equity $400 $200 $0 2024 2025 2026 2027 2028 2029 2030 2031 2
Slide 15: 2024 Same-Store Revenue Growth
2024 SAME-STORE REVENUE GROWTH Primary variable is the magnitude and cadence of blended lease rate growth Components of 2024 SSREV Growth 3.0% High: 3.0% Driven by further rollout of building-wide Wi-Fi, 2.5% enhanced amenity offerings, package lockers, etc. 2.0% 0.7% average blended rate growth (vs
Slide 16: 2024 Same-Store Revenue Growth Ranges, by Region
2024 SAME-STORE REVENUE GROWTH RANGES, BY REGION Coastal markets (~75% of UDR NOI) expected to deliver highest growth Top growth markets: Boston, DC, Orange County, Los Angeles Bottom growth markets: Austin, Nashville, San Francisco, San Diego 5% High: 4.0% 4% High: 3.0% High: 3.0% 3% 2% High: 1.0%
Slide 17: 2024 Same-Store Expense Growth
2024 SAME-STORE EXPENSE GROWTH 2024 SSEXP Growth, by Category Organic SSEXP growth would be ~120bps lower when excluding: High: 20.0% 20% • $3.7M one-time payroll tax credit received in 1Q 2023; Personnel expense growth would otherwise be 2% to 5% • $2.0M expected 2024 costs for property-wide WiFi;
Slide 18: Conclusion
CONCLUSION 1 Success = focus on Customers, Associates, and Investors 2 Diversification + Ops Excellence + Innovation = Full Cycle Investment 3 Technology, talent, and innovation to drive future incremental NOI 4 Capital light approach; maintain liquidity and balance sheet flexibility 18 Source: Comp
Slide 19: Definitions and Reconciliations
APPENDIX DEFINITIONS AND RECONCILIATIONS FEBRUARY 2024
Slide 20: Definitions and Reconciliations A-2
DEFINITIONS AND RECONCILIATIONS A-2 Acquired Communities: The Company defines Acquired Communities as those communities acquired by the Company, other than development and redevelopment activity, that did not achieve stabilization as of the most recent quarter. Adjusted Funds from Operations (“AFFO”
Slide 21: Definitions and Reconciliations A-3
DEFINITIONS AND RECONCILIATIONS A-3 Controllable Expenses: The Company refers to property operating and maintenance expenses as Controllable Expenses. Controllable Operating Margin: The Company defines Controllable Operating Margin as (i) rental income less Controllable Expenses (ii) divided by rent
Slide 22: Definitions and Reconciliations A-4
DEFINITIONS AND RECONCILIATIONS A-4 Effective New Lease Rate Growth: The Company defines Effective New Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior resident effective rent for the prior lease term on
Slide 23: Definitions and Reconciliations A-5
DEFINITIONS AND RECONCILIATIONS A-5 Funds From Operations (“FFO”) attributable to common stockholders and unitholders: The Company defines FFO attributable to common stockholders and unitholders as net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding im
Slide 24: Definitions and Reconciliations A-6
DEFINITIONS AND RECONCILIATIONS A-6 Net Operating Income (“NOI”): The Company defines NOI as rental income less direct property rental expenses. Rental income represents gross market rent and other revenues less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real est
Slide 25: Definitions and Reconciliations A-7
DEFINITIONS AND RECONCILIATIONS A-7 QTD Same-Store Communities: The Company defines QTD Same-Store Communities as those communities Stabilized for five full consecutive quarters. These communities were owned and had stabilized operating expenses as of the beginning of the quarter in the prior year,
Slide 26: Definitions and Reconciliations A-8
DEFINITIONS AND RECONCILIATIONS A-8 2024 Guidance: All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team. The following reconciles from GAAP Net income/(loss) per share for the first quarter of 2024 and full-year 2024 to forecas
Slide 27: Definitions and Reconciliations A-9
DEFINITIONS AND RECONCILIATIONS A-9 Quarter Ended Coverage Ratios December 31, 2023 Net income/(loss) $ 35,961 Adjustments: Interest expense, including debt extinguishment and other associated costs 47,347 Real estate depreciation and amortization 170,643 Other depreciation and amortization 4,397 Ta
Slide 28: Definitions and Reconciliations A-10
DEFINITIONS AND RECONCILIATIONS A-10 Three Months Ended Twelve Months Ended December 31, December 31, In thousands, except per share and unit amounts 2023 2022 2023 2022 Net income/(loss) attributable to common stockholders $ 31,764 $ 43,425 $ 439,505 $ 82,512 Real estate depreciation and amortizati
Slide 29: Investor Relations Contact
Investor Relations Contact: Trent Trujillo ttrujillo@udr.com 720.283.6135 29