UDR - Embedded Expectations Analysis - 2021 04 30
UDR, Inc. (UDR:USA) currently trades near historical highs relative to UAFRS-based (Uniform) assets, with a 2.0x Uniform P/B. At these levels, the market has bullish expectations for the firm, and management is confident about their new leasing technologies, property sales strategy, and cost reductionsSpecifically, management is confident their new technologies are beneficial to their leasing process and resident satisfaction, that they utilize their value-creation mechanism by recycling property sales proceeds into accretive uses such as higher-rent acquisitions, and that they improved how they report ESG accomplishments to their stakeholders. Moreover, they are confident they are doing a lot of qualitative work in identifying investment opportunities, most of their anticipated headcount reductions have already occurred in anticipation of the full Platform 1.0 rollout, and that they intend to move forward with their eviction process for nonpayers to try and recoup some cash flow
UDR is a real estate investment trust that owns, operates, acquires, renovates, develops, redevelops, disposes of, and manages multifamily apartment communities generally located in markets located throughout the United States. In addition, the company has an ownership interest in completed or to-be-completed apartment homes through unconsolidated joint ventures or partnerships, including apartment homes owned by entities in which the company hold preferred equity investments. The company's operating partnership, United Dominion Realty, L.P., has a consolidated real estate portfolio that includes communities located in several markets.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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