UDR beats Q3 estimates and raises guidance after $2 billion Apollo deal

UDR, a major real estate investment trust that owns thousands of apartment homes across the country, just reported third-quarter results with adjusted funds from operations of $0.65 per share, beating analysts' estimates. The strong numbers arrived just weeks after the Highlands Ranch, Colorado-based landlord announced a massive $2 billion joint venture with Apollo Global Management, the giant private equity firm.

UDR Chief Operating Officer Mike Lacy said the company's same-store revenue growth of 1.8% was driven by 2% blended lease rate growth. Third-quarter results reflected better late-quarter leasing trends as compared to recent years, according to Lacy. Resident retention hit a Q3 record of 52%, up 370 basis points from a year earlier.

Red-hot San Francisco led the way for UDR in the quarter, posting 9% year-over-year revenue growth and occupancy above 97%. New York City also had a strong Q3 with 5.1% revenue growth, followed by Philadelphia at 3.5%. On the opposite end of the spectrum, supply-heavy Austin, Texas, saw revenue decline by 3.4% as new construction weighed on the market.

RelatedUPS beats quarterly expectations and raises full-year revenue guidance to $92.6 billion

Across its entire portfolio, UDR raised its same-store net operating income guidance by 37.5 basis points and lowered expense guidance to 2.9%. UDR Chief Executive Officer Tom Toomey told investors that the strategic partnership with Apollo hit for the cycle, increasing access to equity capital while reducing leverage.

In addition to the Apollo deal, UDR expanded its joint venture with LaSalle Investment Management to approximately $958.3 million by contributing a property in Nashville. The landlord also sold apartment properties in Seattle and Nashville with a combined 412 units for $183 million.