UDR Inc. Earnings Call Nuggets: Sequential Same-Store Revenue Growth, Asset Sales

On Monday, UDR Inc. (NYSE:UDR) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what executives shared with investors and analysts.

Sequential Same-Store Revenue Growth

David Bragg – Zelman: Maybe just touching on that last point made by Jerry, could you talk a little bit more about comparing this year to last year. It looks like, when we think about sequential same-store revenue growth, you were the same in the first quarter of this year as last year, but to get to your year-over-year revenue growth guidance it seems as though you need to outperform the sequential numbers that you achieved in 2Q, 3Q and 4Q of last year. Is that the plan?

Jerry A. Davis – SVP, Property Operations: Yeah, Dave. I think we’ll definitely do that in 2Q and 3Q. We see the revenue growth rate increasing in both second quarter and probably in third quarter, maybe leveling off in third, but then by the time we get to fourth quarter the year-over-year growth will be comparable to what it was this quarter. But yes, we feel good about the business. We are looking at renewals in April, that were at about 6.7%, we expect the next two months to come out right around 6.5%, and we’re optimistic about where we’re at. Also today, our occupancy is at 96.1% and we spend a good portion of the first quarter firming up that occupancy, so we would really be in place to drive rents in this peak season.

David Bragg – Zelman: Other question is on the land parcel purchased in San Francisco. Could you provide some more details on that; number of units, total cost expected, yield on today’s rents, potential start date?

Harry G. Alcock – SVP, Asset Management: Dave this is Harry. It’s a fully entitled land site that’s adjacent to a property that we own in a very good area in San Francisco, in Rincon Hill. It’s a fully entitled site. Once we get through the city and have more details, we’ll report on it at that time.

David Bragg – Zelman: And one last question if I may, could you just revisit the expected needs for equity over the balance of the year, I seem to pick up in your intro comments that you might use ATM further for additional deleveraging but then there was a comment about tying it to acquisitions, so assuming no further – or no acquisitions over the balance of the year, should we expect any equity issuance?

David L. Messenger – SVP and CFO: Dave, this is Dave. And Tom follow-up, but if you go through my script then when we look at our capital sources and uses, through the balance of the year we don’t have any additional equity in place, but with the share price increasing, it has throughout the year, we have an ATM in place. We’re always looking at opportunistically issuing equity under that program. We used it in the first quarter, and paid off some debt. I think that we would continue to look at that as an opportunity and an alternative for us as we go through the balance of the year.

Thomas W. Toomey – President and CEO: Mr. Bragg, I wouldn’t have anything to add to that.

Asset Sales

Eric Wolfe – Citi: This is Eric here with Michael. I just want to make sure I understood your comments on guidance. You said that the timing in the asset sales were contemplated in guidance, but yet you’re already above the top end in terms of the level of dispositions. I’m just trying to put those two together and understand whether there is going to be more dilution from asset sales than was originally in your guidance?

David L. Messenger – SVP and CFO: The asset sales that we had in guidance $400 million to $600 million and obviously we have $610 million in there today. Those are the sales that we’re looking to have closed. We’ll always have stuff listed in the marketplace. But, I think, if you go back to our four quarter call, we had talked about getting those sale done in the first half of the year, and so that timing was contemplated, when we put out our guidance of $1.37 to $1.43 for 2012, and so right now, yeah, we’re $10 million over the guidance range, but that $10 million is not enough to reconfigure the guidance range at this point.

Eric Wolfe – Citi: Then also you talked about the accelerating activity you are seeing in new lease rates, I was just wondering if you could provide some detail on how things trended from January all the way through April just so we can get a sense for how those rates are coming in and going in the peak leasing season?

Jerry A. Davis – SVP, Property Operations: In January and February, both months new leases were coming in at about 1.7%. In March, it jumped up to 2.6%. In April, it was right around 3%. The one thing I would add though is when you look at that 3% that’s for our same-store. If you blended in our wholly-owned non-stabilized non-same-stores which is predominantly our New York portfolio, as well as a few others, those new leases would have been up 3.7% in April, which should be on my same-store.

Eric Wolfe – Citi: Then I guess just based on guidance, you’d expect that to sort of trend up into the 4s through the peak leasing season just given where your numbers are in terms of same-store revenue?

Jerry A. Davis – SVP, Property Operations: Yeah. I think, it could go 4s. We’re hopeful with if traffic continues to be strong, and if there is some job gain in our markets it may get a hair above that, but I think, 4s are pretty reasonable.