UDR Inc. (UDR) continues to focus on its strategic priorities such as disciplined capital allocation, strong balance sheet position as well as cash flow enhancement to support dividend growth and operational efficiency.

UDR’s first-quarter 2014 funds from operations (:FFO) as adjusted of 36 cents per share surpassed the Zacks Consensus Estimate by a penny and the year-ago quarter figure by 2 cents. Results were driven by higher revenues, same-store net operating income and notable portfolio restructuring activity. Moreover, this residential real estate investment trust (:REIT) hiked its first-quarter dividend by 11%.

Going forward, we expect UDR to ride on the growth trajectory by leveraging on the improving U.S. apartment market fundamentals. In fact, the company has been continuously enhancing the overall quality of its portfolio to position itself well in upscale markets.Consequently, it intends to spend $100–$200 million for acquisition; $425–$475 million in developments and redevelopments; and dispose assets in the $350–$450 million range in 2014.

However, a huge development and redevelopment pipeline increases operational risks. Additionally, stiff competition from other housing alternatives and a weak Mid-Atlantic market remain our concerns.

For detailed insight into UDR, you can refer to our updated research report, which was issued on Jul 18, 2014.

Over the last 30 days, the Zacks Consensus Estimate for FFO per share for both 2014 and 2015 remained stable at $1.51 and $1.61, respectively. The stock currently has a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Investors interested in residential REITs may consider stocks like Avalonbay Communities Inc. (AVB), Equity LifeStyle Properties, Inc. (ELS) and Mid-America Apartment Communities Inc. (MAA). All of them have same rank as UDR.

Note: Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Read the Full Research Report on UDR
Read the Full Research Report on AVB
Read the Full Research Report on MAA
Read the Full Research Report on ELS


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