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Here's Why It is Wise to Retain UDR Stock in Your Portfolio

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With a geographically-diverse portfolio and a superior product-mix of A/B quality properties in the urban and sub-urban markets, UDR Inc. UDR is well poised to bank on the rebounding residential real estate market. The company’s portfolio includes properties throughout the United States, including both coastal and sunbelt locations. This strategy of maintaining a diversified portfolio across various geographies and price points limits volatility and concentration risks, and helps the company generate steady operating cash flows.

The residential REIT continues to witness a sequential improvement in traffic, occupancy, rate growth, and collections in all of its markets, amid the favorable migration trends that are spurring demand in the suburban region.

Moreover, UDR’s focus on technological initiatives and process enhancements are anticipated to boost margin expansion and long-term profitability. The company’s Next Generation Operating Platform enables it to electronically interact with and provide service to residents and prospects throughout its diversified portfolio. This is likely to offer UDR a competitive edge over others.

The company is focused on its strategic priorities, such as a disciplined capital allocation, maintaining an investment-grade balance sheet, as well as cash-flow enhancement to support operational efficiency and dividend growth. As of Jun 30, 2021, UDR had $681.1 million of liquidity through a combination of cash and undrawn capacity on its credit facilities. In addition, UDR has no consolidated maturities until 2023, excluding the principal amortization and amounts on its commercial paper program and credit facility. This places the company well to sail through any negative externalities and capitalize on growth scopes.

Shares of this Zacks Rank #2 (Buy) company have outperformed the industry it belongs to in the past six months. Its shares have appreciated 22% compared with the industry’s growth of 18.5%.

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However, significant exposure to the urban residential assets, where the flexible working environment is still denting demand, might continue eroding the rental rates and occupancy levels.

Also, low mortgage rates have been driving the demand for existing and new-home purchases, mainly for the young-age cohorts, where homeownership rates have started to shoot up. This is expected to hurt the renter-housing demand.

Key Picks

The Zacks Consensus Estimate for BRT Apartments Corp.’s BRT ongoing-year FFO per share has been revised 19.2% upward over the past two months. The company flaunts a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for Equity Residential’s EQR 2021 FFO per share has moved 1.4% upward over the past month. The company currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Camden Property Trust’s CPT 2021 FFO per share has moved marginally north in the past month. The company currently carries a Zacks Rank of 2.

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


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Equity Residential (EQR) : Free Stock Analysis Report

United Dominion Realty Trust, Inc. (UDR) : Free Stock Analysis Report

BRT Apartments Corp. (BRT) : Free Stock Analysis Report

Camden Property Trust (CPT) : Free Stock Analysis Report

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