United Dominion Realty Trust Q1 Earnings Call Highlights

Key Points

• UDR delivered solid operations with occupancy around the mid-96%–97% range, resident retention at an all-time high and renewal rate growth of 5.2%, driving 90 bps of same-store revenue growth while coastal markets like San Francisco and New York posted outsized lease gains.
• Management is executing a capital-allocation push around a stated public versus private market arbitrage, selling four assets for $362 million, receiving $139 million of DPE repayments, repurchasing $150 million of shares in 2026 ( $268 million since September), and adding Portland communities via the DPE program.
• Financials were in line with guidance—Q1 FFOA was $0.62 (midpoint) and Q2 FFOA is guided to $0.62–$0.64 (≈2% sequential increase)—and the company announced a shift to a monthly dividend to broaden its shareholder base.

United Dominion Realty Trust NYSE: UDR reported first-quarter 2026 results that management said were in line with expectations, supported by strong resident retention and a capital allocation strategy centered on what executives described as a rare disconnect between public and private apartment valuations.

On the call, Chairman, President and CEO Thomas Toomey said 2026 “is off to a solid start,” citing execution across operations and capital allocation. UDR maintained its full-year 2026 same-store and earnings guidance, which the company said it will reassess next quarter.

Operations: retention strength supports renewal pricing

Chief Operating Officer Mike Lacy said UDR entered the year with occupancy of 97% and used “real-time data to focus on total revenue and cash flow growth.” He reported year-over-year same-store revenue growth of 90 basis points in the quarter, with blended lease rate growth of 1.6%, occupancy in the mid-96% range, and “mid-single-digit” innovation income growth, which includes items such as community-wide Wi-Fi and package lockers.

Lacy highlighted resident retention as a key driver, calling it “at an all-time high” and saying retention was 300 basis points higher than the prior year. UDR posted renewal rate growth of 5.2%, which Lacy said was 70 basis points above a year ago and “nearly twice as high as the Q4 of 2025.” He also said income levels of new residents are stronger than the long-term average, which he framed as supportive of future renewal growth.

Looking into the second quarter, Lacy said revenue drivers were “trending as anticipated,” and UDR continued to expect second-quarter blended lease rate growth of 1.5% to 2% with occupancy in the mid-96% range. In April, Lacy said the strength from the first quarter continued “in that 1.6% range,” keeping the company on track with its first-half expectations.

By market, Lacy cited:

• San Francisco as the strongest revenue growth market in the portfolio, with blended lease rate growth of about 10% and occupancy in the high 97% range.
• New York delivering strong revenue growth with blended lease rate growth of about 7% and occupancy above 98%.
• Dallas showing the best momentum among Sun Belt markets, with occupancy approaching 97% and blended lease rate growth turning positive after improving by 570 basis points since the fourth quarter.

Lacy said coastal regions, representing about 75% of net operating income (NOI), continued to post the highest growth, citing April blended lease growth of about 2.1%. By contrast, he said some Sun Belt markets “retreat[ed] slightly” over the prior 30 days, with blended lease growth moving from about negative 1.5% in the first quarter to about negative 2.5% in April. In response to a question about the softness, Lacy said it was “more of a blip,” noting it was more specific to Florida than Texas, with Nashville also seeing a downtick.

On occupancy strategy, Lacy told analysts UDR typically allows occupancy to drift down in the second and third quarters as demand increases, then “drive it up a little bit higher” in the fourth quarter, suggesting only modest changes (around 10 to 20 basis points) from current levels.

Expenses: winter storms weighed on same-store cost growth

Lacy reported same-store expense growth of 4.4% in the quarter, which he said was elevated due to winter storms across the portfolio. He said that excluding approximately $1.4 million of incremental expenses tied to items such as snow removal and higher utility costs, same-store expense growth would have been about 100 basis points better and “just below the midpoint” of full-year expense guidance.

FFO and guidance: Q1 at midpoint, Q2 expected to rise sequentially

Chief Financial Officer Dave Bragg said first-quarter funds from operations, as adjusted (FFOA), was $0.62 per share, matching the midpoint of guidance. Bragg attributed the $0.02 sequential decline from the fourth quarter of 2025 primarily to a $0.03 decrease in NOI driven by higher expenses, partially offset by a $0.01 benefit from lower general and administrative costs.

For the second quarter, Bragg guided to FFOA of $0.62 to $0.64 per share, with the $0.63 midpoint implying an approximately 2% sequential increase. He said the expected increase was driven by higher NOI and “accretion from share repurchases funded by dispositions.”

Capital allocation: dispositions, buybacks, and Portland acquisitions via DPE

Management emphasized capital allocation activity aimed at capturing what Bragg described as a wide “public versus private market arbitrage opportunity.” He said the company is seeking to sell “lower growth assets” in private markets and buy back UDR shares, which he characterized as representing a “superior growth portfolio” at a discount in public markets.

Bragg detailed several actions taken in early 2026:

• Asset sales: UDR sold four apartment communities in Baltimore, Denver, Seattle, and Tampa for gross proceeds of $362 million.
• DPE repayments: The company received about $139 million from the full repayment of two debt and preferred equity (DPE) investments.
• Share repurchases: UDR repurchased $150 million of shares in 2026, bringing total repurchases since September to $268 million.
• Portland accessions: Through the DPE program, UDR gained access to two communities in Portland, Oregon, with a 232-home community acquired in April and a second expected to follow in the coming months.

On disposition pricing, Bragg said the sold assets had an average age of 38 years and higher-than-average capital expenditure needs, and that they screened as inferior to the retained portfolio on UDR’s internal metrics. He said bidding was “pretty deep and competitive,” with pricing within a few percentage points of expectations and a “market cap rate in the mid 5% range.”

For the Portland community acquired in April, Bragg characterized the current yield as “around 5%,” with expectations for a stabilized yield “in the high 5% range” after operational improvements. In a separate discussion, management said it anticipates a “high 5% stabilized yield” on the Portland communities. COO Mike Lacy said Portland occupancy is above 97% with blended lease rates in the 2% to 3% range and that adding the assets “effectively double[s] the size of the market” for UDR. Lacy also said the company believes it can improve controllable operating margin by 300 to 400 basis points over 12 to 18 months through staffing efficiencies, vendor consolidation, and other income initiatives.

Bragg said the DPE portfolio is declining as repayments occur and as share repurchases are viewed as offering better risk-adjusted returns. He suggested that with a DPE balance in the “high $300 million range” at the end of the first quarter, it could be “towards $300 million or so” by year-end.

Bragg also provided an update on development, saying UDR’s Riverside, California, project known as 3099 Iowa is ahead of schedule and under budget, with initial occupancy now expected in the fourth quarter of 2026 rather than the first quarter of 2027.

Monthly dividend and regulatory backdrop

Toomey said UDR announced a transition to a monthly dividend, calling the company “the first residential REIT to do so.” He tied the move to efforts to diversify capital sources and broaden the shareholder base, particularly toward “high-net worth investors, family office, and institutional products who collectively value frequent cash distributions.”

Bragg added the shift is part of a broader effort to appeal to retail shareholders, including increased outreach and marketing efforts. Toomey pointed to UDR’s “53 straight years of dividends” totaling “nearly $9 billion” and cited the “relatability and transparency of the apartment industry” as supportive of the strategy.

On the regulatory front, Senior Vice President Christopher Van Ens said the company is actively engaged with local owner groups and trade partners to oppose a proposed statewide rent control measure in Massachusetts expected to appear on the November ballot. Van Ens said UDR had contributed “around a half a million dollars” to the initiative so far and indicated that amount could increase. Bragg said uncertainty has reduced transaction volume in Boston and has had “an adverse impact on pricing.”

Van Ens also said UDR is monitoring tenant-friendly initiatives in locations including Salinas, California; New York City; and Washington, D.C., and that the company’s governmental affairs team tracks developments at the federal, state, and local levels.

Toomey closed by reiterating optimism about long-term apartment fundamentals, citing “resilient demand” and a “shrinking future multifamily supply pipeline,” while noting the company is only four months into the year and will revisit guidance next quarter.

About United Dominion Realty Trust NYSE: UDR

United Dominion Realty Trust NYSE: UDR is a publicly traded real estate investment trust specializing in the ownership, management, acquisition, development and redevelopment of multifamily apartment communities. The company's core focus is on Class A and Class A–plus residential properties, offering a diverse portfolio designed to meet the evolving needs of renters. UDR employs a full-service management platform to oversee daily operations, property maintenance, leasing, and resident services, ensuring consistency and quality across its holdings.

UDR's business activities encompass ground-up development, strategic property redevelopment, and selective acquisitions.

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