UDR, Inc. Q1 FY2026 earnings call

2026 off to solid start with first quarter results in line with expectations due to strong execution. Operations: leveraged real-time data for total revenue and cash flow growth, high resident retention (all-time high) with renewal rate growth of 5.2%. Capital allocation: sold four assets using proceeds for share repurchases and acquiring assets, transitioned to monthly dividend as first residential REIT, maintaining full year 2026 same store and earnings guidance. Mike Lacey covered same store results, operating trends, and strategic positioning; Dave Bragg covered first quarter results, second quarter guidance, transactions, capital markets activity, balance sheet, and liquidity.

Revenue drivers played out as anticipated with occupancy at 97% in Q1, year-over-year same store revenue growth of positive 90 basis points, blended lease rate growth of 1.6%, occupancy in mid-96% range, mid-single-digit innovation income growth. Same store expense growth was 4.4% due to winter storms but would have been ~100 basis points better if normalizing. Second quarter revenue drivers trending as anticipated with blended lease rate growth expected to be between 1.5%-2% and occupancy in mid-96% range. Regional markets: San Francisco had strong revenue growth with ~10% blended lease rate growth and high 97% occupancy; New York had ~7% blended lease rate growth and occupancy above 98%; Dallas had approaching 97% occupancy and positive blended lease rate growth after improvement from 4Q.

Maintaining full year 2026 same store and earnings guidance, reassessing next quarter. Second quarter FFOA per share guidance range is $0.62 to $0.64. Full year 2026 guidance assumes first half blended lease rate growth same as second half at 1.5% to 2%.

Discussion of risks related to regulatory environment, such as Massachusetts proposed statewide rent control measure, and potential impact on Boston portfolio; also mention of uncertainty in some markets affecting transaction volume and pricing.

Q: In terms of occupancy, would expect to drive it higher in back half of year or adjusted full year targets?

A: Mike Lacey said typically let occupancy come down in 2nd and 3rd quarter, then may inch it up a little.

Q: Talk about April trends, new, renewal, blended rate growth?

A: Mike Lacey said blended growth started year strong, 2nd quarter strength continued in 1.6% range, coastal regions had highest growth, Sunbelt markets had slight retreat.

Q: Talk about debt and preferred book future payoffs?

A: Dave Bragg said DPE book on decline this year with Portland opportunity, successful paybacks, and market competitiveness.

Q: Trends between A vs B properties or urban vs suburban?

A: Mike Lacey said varies by market, West Coast doing better than East Coast and Sunbelt, specific markets like San Francisco and Boston have different A/B and urban/suburban impacts.

Q: Risk of shrinking enterprise too much from dispositions?

A: Dave Bragg said disposition effort centered on public-private market disconnect playbook, will remain disciplined sellers.

Q: Quantify impact of portfolio lease realignment strategy on same store revenue?

A: Mike Lacey said every 1% of blends could be ~$7M to bottom line over 12 months.

Q: Competitive disadvantage if consolidation among large peers?

A: Tom Toomey said apartment industry is fragmented, focus on excellence in operations, capital allocation, innovation.

Q: Decision to go monthly dividend?

A: Tom Toomey and Dave Bragg said to diversify capital sources and shareholder base, appeal to high net worth, family office, institutional products.

Q: Turnover and rent growth?

A: Tom Toomey and Mike Lacey said low turnover leads to more cash flow, reduced turnover from customer experience project.

Q: Competing with private REITs for high net worth?

A: Dave Bragg and Tom Toomey said REITs have liquidity and transparency, educate marketplace on REIT investing virtues.

Q: Sunbelt lease rate growth moderating in April?

A: Mike Lacey said more of a blip, specific to some markets, expectation of market rents moving back up.

Q: Risk to Boston portfolio from Massachusetts rent control?

A: Christopher Van ens said early in process, engaged with groups, contributed funds, uncertainty had adverse impact on price.

Q: San Francisco market and macro noise?

A: Mike Lacey said continued strength due to low supply, return to office, migration, low rent-to-income ratios.

Q: Potential development opportunities?

A: Dave Bragg said existing sites adjacent to operating assets, stick build/podium, returns above 6% if activated.

Q: Cap rates on dispositions and Portland asset?

A: Dave Bragg said dispositions had mid-5% cap rate, Portland asset yield around 5% now, high-5% stabilized yield expected.

Q: Positive aspects of Portland market?

A: Christopher Van ens and Mike Lacey said strong job forecasts, wage growth, low supply, analytics show outsized rent and cash flow growth.

Q: Regulatory impact on business?

A: Christopher Van ens and Tom Toomey said focused on tenant-friendly initiatives, in-depth governmental affairs team monitors changes.