UDR Set to Announce Q1 Results: What Could Be in Store for the Stock?

UDR Inc. UDR, a premier multifamily real estate investment trust (REIT), is set to announce its first-quarter 2025 results after the closing bell on April 30. While its quarterly results are likely to reflect growth in revenues, funds from operations (FFO) per share might remain unchanged.

In the last reported quarter, this Denver, CO-based residential REIT came up with an FFO as adjusted per share of 63 cents, in line with the Zacks Consensus Estimate. Results reflected year-over-year growth in same-store revenues. However, a rise in property operating and maintenance and interest expenses acted as dampeners.

In the last four quarters, UDR’s FFO as adjusted per share met the Zacks Consensus Estimate on three occasions and surpassed on the other, the average surprise being 0.41%. The graph below depicts the surprise history of the company:

United Dominion Realty Trust, Inc. Price and EPS Surprise

United Dominion Realty Trust, Inc. price-eps-surprise | United Dominion Realty Trust, Inc. Quote

Let’s see how things have shaped up before this announcement.

US Apartment Market in Q1

The first quarter of 2025 brought a wave of strong apartment demand, offering a lift to occupancy and rent growth as the supply surge begins to wane. Per RealPage data, from January through March 2025, more than 138,000 market-rate apartment units were absorbed nationally. This marks the highest first-quarter demand on record in the RealPage data set covering more than three decades. Combined with the robust demand seen over the last three quarters of 2024, annual absorption reached nearly 708,000 units — essentially matching the absorption from the early 2022 demand boom.

Demand in the year-ending first quarter of 2025 exceeded concurrent supply. Though nearly 577,000 units were delivered in the said period — just shy of last quarter’s record high of about 589,000 units — annual supply volume is forecasted to decline in the coming months, indicating that the construction cycle may have peaked.

Occupancy rose modestly to 95.2% in March, the highest reading since October 2022. While still within long-term norms, the uptick provides confidence that the rental market is not materially oversupplied. Rent growth has also regained traction. Effective rents rose 0.75% in March and 1.1% in the year-ending March 2025 — the highest 12-month reading since June 2023. All of the nation’s 50 largest apartment markets recorded rent increases on a monthly basis, signaling broad-based strength. The average effective rent was $1,848.

However, the recovery is regionally uneven. The Midwest and Rust Belt regions led annual rent gains, with cities like Kansas City, MO, Chicago, IL, and Pittsburgh, PA, outperforming. In contrast, high-supply Sun Belt metros, such as Austin, TX, and Phoenix, AZ, continued to experience rent cuts. However, these markets saw monthly rent growth in March, suggesting momentum is returning ahead of the prime leasing season.

UDR: Factors to Consider

UDR holds a geographically diversified portfolio of A/B quality properties located in both urban and suburban markets across key U.S. regions, including the coasts and the Sunbelt. Leveraging its Next Generation Operating Platform, the company remains focused on enhancing technology and operational efficiency to better manage costs and drive margin expansion through improved digital engagement and resident services. A solid balance sheet is likely to have supported the company’s ability to pursue growth opportunities.

However, elevated rental unit supply in select markets has heightened competition, leading to softer rent growth and weighing on quarterly performance. Additionally, elevated interest expenses may have further constrained results.

Projections for UDR

Per UDR’s March investor presentation, key operating metrics are tracking in line with the guidance shared during the fourth quarter earnings call, with the first quarter of 2025 showing sequential gains in both blended lease rate growth and occupancy. 

The Zacks Consensus Estimate for quarterly revenues is currently pegged at $421.73 million. This indicates a 2.44% year-over-year rise. 

For the first quarter, we estimate weighted average same-store physical occupancy at 97.0%, up 20 basis points sequentially. Moreover, our estimate for same-store net operating income growth is currently pegged at 2.6%. We expect interest expenses to grow marginally year over year in the first quarter. 

UDR expects first-quarter 2025 FFO as adjusted per share in the range of 60-62 cents. 

Before the first-quarter earnings release, the company’s activities were inadequate to gain analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO as adjusted per share has remained unrevised at 61 cents in the past two months. This suggests no change year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Here is What Our Quantitative Model Predicts for UDR:

Our proven model does not conclusively predict a surprise in terms of FFO per share for UDR this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here. 

UDR currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.05%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — Welltower Inc. WELL and Camden Property Trust CPT — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Welltower, scheduled to report quarterly numbers on April 28, has an Earnings ESP of +1.69% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Camden Property Trust is slated to report quarterly numbers on May 1. CPT has an Earnings ESP of +0.26% and carries a Zacks Rank of 3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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