UDR's Preliminary Quarterly Net Income Is $0.67 A Share, But Core Profit Only Hit The Top Of Guidance

UDR expects third-quarter net income of $0.67 per diluted share, against its earlier guidance of $0.13 to $0.15, according to preliminary, unaudited results furnished in an 8-K on Wednesday. The core measure, adjusted funds from operations, landed at $0.65, the top of its range rather than above it.

What the numbers say

The net income gap is largely a sales story. The reconciliation table shows a $190.1 million net gain on the sale of depreciable real estate in the quarter, which funds-from-operations measures strip out.

Adjusted funds from operations (a REIT's core profit measure) was $0.65 per share, the high end of the $0.63 to $0.65 guidance and level with $0.65 a year earlier. Plain funds from operations was $0.62, also flat on the year.

Full-year net income guidance moved to $1.58 to $1.60 per share from $1.03 to $1.11. Adjusted funds from operations guidance is now $2.54 to $2.56, from $2.49 to $2.57. The full-year funds-from-operations range slipped to $2.48 to $2.50 from $2.47 to $2.55, with the midpoint down $0.02.

Fourth-quarter guidance is $0.13 to $0.15 for net income and $0.63 to $0.65 for adjusted funds from operations.

Operations and asset sales

Same-store physical occupancy was a preliminary 96.5% in the third quarter, excluding the 19 communities headed to the Apollo venture. Including them it would be 96.6%. Blended lease rate growth was 2.0% excluding those communities, or 1.7% including them.

UDR sold two apartment communities, in Seattle and Nashville, with 412 homes combined, for gross proceeds of $183.0 million. It remains under contract to sell a 296-home community in the Washington, D.C. area for about $68.5 million.

It also bought a 483-home community in the Inland Empire and a 286-home one in Portland, as it winds down its debt and preferred equity portfolio, for an incremental cash outlay of $235.0 million.

The Apollo venture

In a separate release, UDR said it intends to form a joint venture with Apollo holding 19 communities, 7,059 homes, valued at about $2.0 billion. Apollo funds will put in $1.34 billion for roughly two-thirds. UDR keeps one-third, consolidates the venture and manages the properties for a fee.

The deal implies a capitalization rate of about 6.0%. UDR can repurchase Apollo's stake at an expected 7.00-7.50% fixed return for a finite period starting at the fifth anniversary of closing.

Chief Financial Officer Dave Bragg said the company expects the deal to be accretive to earnings and will use proceeds for higher-growth assets, general corporate purposes and debt reduction. UDR said 2026 net income and funds-from-operations per share are unaffected by the transaction.

What to watch

UDR will report final third-quarter results on November 2 and hold its call on November 3. The company cautioned that its review is not complete and the figures could change materially. The Apollo deal is expected to close on October 29. At Tuesday's close, shares were $34.41, up 1.68% for that session.

Final third-quarter figures are due November 2, and the Apollo closing is expected October 29.

Sources

• 8-K Filing — UDR, Inc. (UDR) — SEC EDGAR
• Exhibit udr-ex99d1.htm — UDR, Inc. 8-K exhibit — SEC EDGAR
• Exhibit udr-ex99d2.htm — UDR, Inc. 8-K exhibit — SEC EDGAR
• UDR, Inc. Raises Full-Year 2026 Guidance Ranges and Provides Preliminary Third Quarter 2026 Results — businesswire.com