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UDR, Inc. (UDR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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UDR, Inc. (UDR)

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Intrinsic Value (DCF)

Current$37.08
→
Intrinsic$24.98
-33%
$11.35$24.98$50.90
Market implies 14% growth for 5 years
Current price reflects execution expectations above 8% growth — not unreasonable for quality businesses.
At $37, the market prices in 14% annual cash flow growth — a moderate expectation aligned with historical trends (8%).
Range: Bear $11 → Bull $51. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →4%6%8%10%
8%$33$38$43$48
10%$18$22$25$29
12%$10$13$15$18
14%$5$7$9$11

Bull Case

  • Bull case ($51) offers 37% upside at 10% growth, 9% discount
  • Conservative 8% growth assumption is achievable based on track record

Bear Case

  • Bear case ($11) implies 69% downside at 6% growth, 12% discount
  • Price reflects 14% growth expectations vs 8% historical — high bar to clear
  • Trading 33% above base case — execution must exceed assumptions to justify
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5-Year FFO Projection

Year 1$847.86M
Year 2$915.69M
Year 3$988.95M
Year 4$1.07B
Year 5$1.15B
Terminal$16.97B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$785.06MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is UDR stock undervalued or overvalued?
🔴 OVERVALUED

UDR trades at $37.08 vs. our DCF-derived intrinsic value of $24.98, implying -33% downside. Using a 10.0% WACC and 8.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($40.90) suggests limited upside.

What is UDR's intrinsic value?

Using a 5-year DCF model: Base FCF of $785M, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $6.01B net debt and dividing by 0.33B shares: Bear $13.08 | Base $24.98 | Bull $40.90. Current price $37.08 implies -33% to base case.

How is UDR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($14.26B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.2x.