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UDR has projected its full-year 2026 adjusted funds from operations (FFO) below market expectations after reporting that operating expenses continued to rise faster than rental income growth during the second quarter. The apartment-focused REIT recorded modest revenue growth but faced higher property-related costs and a slight decline in occupancy. The company operates nearly 60,000 rental homes across the United States and, like many residential landlords, continues to face pressure from increased apartment supply, slower rent growth and elevated interest rates affecting the multifamily housing market.
Multifamily real estate investment trust UDR has forecast its full-year 2026 adjusted funds from operations (FFO) below analysts' expectations after higher operating expenses continued to weigh on earnings despite growth in rental revenue.
The Highlands Ranch, Colorado-based REIT, which has ownership interests in nearly 60,000 rental homes across the United States, reported that its second-quarter revenue increased 1.8% year-on-year. However, operating expenses rose at a faster pace of 2.6% during the same period, highlighting continued cost pressures on the business.
The company also reported a slight decline in same-store physical occupancy, which fell by 0.2 percentage points compared with the corresponding quarter last year. The occupancy dip reflects the competitive environment in the U.S. apartment market, where an increase in newly completed residential properties has intensified competition for tenants.
For the full year, UDR expects adjusted FFO, a key performance measure used by real estate investment trusts to assess operating performance, to range between USD 2.49 and USD 2.57 per share. The midpoint of this guidance is below the average analyst estimate of USD 2.54 per share, according to LSEG data.
During the quarter ended June 30, the company reported total revenue of USD 425.4 million, broadly in line with market expectations.
The broader U.S. multifamily residential sector has been facing a challenging operating environment over the past several quarters. Apartment landlords have been dealing with slower rental growth as a large number of newly completed housing units enter the market. At the same time, rising operating expenses, including maintenance, insurance and financing costs, along with higher interest rates, have continued to put pressure on profitability across the sector.
Source PTI
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