News Column

UDR Announces Second Quarter 2014 Results

July 29, 2014

~ Reports Second Quarter AFFO per Share of $0.34 ~

DENVER--(BUSINESS WIRE)-- Second Quarter 2014 Highlights:

  • Funds from Operations (“FFO”) per share was $0.39 (+5% year-over-year), FFO as Adjusted per share was $0.39 (+11%), and AFFO per share was $0.34 (+10%).
  • Year-over-year same-store (“SS”) revenue and net operating income (“NOI”) growth for the quarter were 4.4 percent and 5.5 percent, respectively.
  • Sold two Tampa, FL communities with 677 homes for approximately $81 million. Subsequent to quarter end, sold a $50 million, 371-home community located in Orlando, FL. Combined, the sales were transacted at a wtd. avg. 5.6 percent cash flow cap rate.
  • Completed the redevelopment of 748 homes at 27 Seventy Five Mesa Verde in Orange County, CA for $78 million.
  • As previously announced, the Company increased its ownership interest from 12 percent to 50 percent in the final six operating communities in the UDR / MetLife I JV. These six communities were contributed to the UDR / MetLife II JV.
  • Paid down indebtedness outstanding on the Company's credit facility with the issuance of a $300 million, 10-year unsecured offering at a coupon of 3.75 percent.
  • Increased full-year 2014 earnings and SS growth and occupancy guidance:
  • FFO per share guidance increased by $0.04 and FFO as Adjusted and AFFO per share guidance increased by $0.01 at the midpoint.
  • SS revenue growth guidance: 3.75 to 4.25 percent (+12.5 bps at the midpoint).
  • SS expense growth guidance: 1.75 to 2.25 percent (-100 bps at the midpoint).
  • SS NOI growth guidance: 4.50 to 5.50 percent (+62.5 bps at the midpoint).
  • SS occupancy guidance: 96.5 percent (+50 bps).
           
                     
        Q2 2014   Q2 2013   YTD 2014   YTD 2013
    FFO per share   $0.39   $0.37   $0.75   $0.71
    Gain on sale of land - - (0.004) -
    Casualty-related (recoveries) / charges, net - (0.011) 0.002 (0.021)
    Other   0.001   -   0.001   -
    FFO as Adjusted per share   $0.39   $0.35   $0.74   $0.69
    Recurring capital expenditures   (0.042)   (0.046)   (0.067)   (0.072)
    AFFO per share   $0.34   $0.31   $0.68   $0.62


    A reconciliation of FFO, FFO as Adjusted and AFFO to GAAP Net Income attributable to UDR, Inc. can be found on Attachment 2 of the Company’s second quarter supplemental package.

    Operations

    Same-store NOI increased 5.5 percent year-over-year in the second quarter of 2014 driven by same-store revenue growth of 4.4 percent against a 1.7 percent increase in same-store expenses. Same-store physical occupancy was 96.8 percent as compared to 96.2 percent in the prior year period. The annualized rate of turnover increased 20 basis points year-over-year to 55.1 percent in the quarter.

    Summary of Same-Store Results Second Quarter 2014 versus Second Quarter 2013

    Region  

    Revenue

    Growth

     

    Expense

    Growth/

    (Decline)

     

    NOI

    Growth

     

    % of Same-

    Store

    Portfolio(1)

     

    Same-Store

    Occupancy(2)

     

    Number of

    Same-Store

    Homes(3)

               
    West 5.8% 2.2% 7.3% 39.5% 96.5% 11,847
    Mid-Atlantic 1.6% 2.1% 1.4% 24.5% 97.0% 8,986
    Southeast 4.7% (0.8)% 7.7% 15.5% 96.9% 8,467
    Northeast 4.6% (4.1)% 7.7% 13.3% 96.9% 2,387
    Southwest   5.2%   9.9%   2.4%   7.2%   97.3%   3,998
    Total   4.4%   1.7%   5.5%   100.0%   96.8%   35,685
      (1)   Based on Q2 2014 NOI.
    (2) Average same-store occupancy for the quarter.
    (3) During the second quarter, 35,685 apartment homes, or approximately 87 percent of 40,811 total consolidated apartment homes (versus 51,923 apartment homes inclusive of joint ventures and development pipeline homes upon completion), were classified as same-store. The Company defines QTD SS Communities as those communities stabilized for five full consecutive quarters. These communities were owned and had stabilized occupancy and operating expenses as of the beginning of the quarter in the prior year, there is no plan to conduct substantial redevelopment activities, and the community is not held for disposition within the current year.
     


    Sequentially, second quarter results followed typical seasonal trends with the Company’s same-store NOI increasing by 2.8 percent on revenue growth of 1.8 percent and a 0.3 percent decrease in expenses.

    For the six months ended June 30, 2014, the Company’s same-store revenue increased 4.5 percent as compared to the prior year. Same-store expenses increased 2.1 percent year-over-year resulting in a same-store NOI increase of 5.5 percent as compared to the prior year period in 2013. Year-over-year same-store physical occupancy increased by 50 basis points to 96.5 percent.

    Summary of Same-Store Results YTD 2014 versus YTD 2013

    Region  

    Revenue

    Growth

     

    Expense

    Growth/

    (Decline)

     

    NOI

    Growth

     

    % of Same-

    Store

    Portfolio(1)

     

    Same-Store

    Occupancy(2)

     

    Number of

    Same-Store

    Homes(3)

               
    West 6.2% 2.5% 7.7% 40.9% 96.0% 11,847
    Mid-Atlantic 1.4% 3.3% 0.5% 25.3% 96.7% 8,986
    Southeast 4.8% (0.5)% 7.6% 16.3% 96.8% 8,467
    Northeast 4.4% (1.0)% 6.4% 10.0% 96.9% 1,879
    Southwest   5.3%   5.2%   5.4%   7.5%   97.0%   3,998
    Total   4.5%   2.1%   5.5%   100.0%   96.5%   35,177
      (1)   Based on YTD 2014 NOI.
    (2) Average same-store occupancy for YTD 2014.
    (3) During the six months ended June 30, 2014, 35,177 apartment homes, or approximately 86 percent of 40,811 total consolidated apartment homes, were classified as same-store. The Company defines YTD SS Communities as those communities stabilized for two full consecutive calendar years. These communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year, there is no plan to conduct substantial redevelopment activities, and the community is not held for disposition within the current year.
     


    Development and Redevelopment Activity

    At the end of the second quarter, the Company’s under construction and recently completed development pipeline totaled $1.1 billion and was expected to produce a weighted average spread between estimated stabilized construction yields and current market cap rates near the midpoint of the Company’s 150 to 200 basis point targeted range. The total pipeline was 72 percent funded. Of the remaining $671 million in development projects left to complete, $183 million is expected to be completed in 2014, $326 million in 2015 and the remainder in 2016.

    During the second quarter, the Company completed the $78 million redevelopment of 748 homes at 27 Seventy Five Mesa Verde, a 964-home community located in Orange County, CA. Redevelopment work continued at View 34 (formerly known as Rivergate) in New York, NY where an additional 232 homes were completed during the quarter at an incremental aggregate cost of $6.7 million.

    Transactional Activity

    During the quarter, the Company disposed of two communities containing 677 homes in Tampa, FL for approximately $81 million. Subsequent to the end of the quarter, the Company sold a $50 million, 371-home community located in Orlando, FL. Combined, the three sales were transacted at a weighted average 5.6 percent cash flow cap rate, had an average monthly revenue per occupied home of $1,119 in the second quarter of 2014 and were 20 years old on average.

    Joint Venture / Partnership Investment Activity

    As previously announced, on April 21, 2014, the Company increased its ownership interest in the final six operating communities in the UDR / MetLife I Joint Venture from 12 percent to 50 percent. The six communities were contributed to the UDR / MetLife II Joint Venture. These condo-quality communities represent a mix of high-rise, mid-rise and garden style product, are primarily located in the Company’s coastal core markets, and had an aggregate market value of approximately $505 million based on a 4.8% cap rate on estimated 2014 NOI. Each of the communities was built between 2008 and 2010.

    Debt attributable to the six operating communities totaled $284 million, carried an average interest rate of 4.8 percent and an average term of 7.4 years at the time of the transaction. Additional details relating to the transaction can be found in the Company’s first quarter earnings release on the Company’s website at www.udr.com.

    Capital Markets

    As previously announced, on June 17, 2014, the Company issued $300 million of 3.75 percent, 10-year senior unsecured notes under its existing shelf registration statement. The notes will mature on July 1, 2024 and have a yield to maturity of 3.79 percent. Net proceeds from the issuance were used to pay down indebtedness outstanding on the Company's credit facility. Additional details related to the senior unsecured notes can be found in the press release dated June 17, 2014 on the Company’s website at www.udr.com.

    As of the end of the second quarter, the Company had no outstanding 2014 debt maturities that could not be extended at the Company’s option.

    Subsequent to the end of the second quarter on July 16, 2014, the Company received proceeds totaling $36 million from the prepayment of a “B” note it held. This resulted in a net gain of approximately $8.4 million, or $0.03 of FFO per share, which will be recognized in the third quarter of 2014. The gain has a positive impact on the Company’s full-year 2014 FFO per share guidance but no effect on FFO as Adjusted or AFFO per share expectations.

    Balance Sheet

    At June 30, 2014, the Company had $650 million in availability through a combination of cash and undrawn capacity on its credit facility.

    The Company’s total indebtedness at June 30, 2014 was $3.7 billion. The Company ended the quarter with fixed-rate debt representing 83 percent of its total debt, a total blended interest rate of 3.9 percent and a weighted average maturity of 4.7 years. The Company’s leverage was 40.5 percent versus 38.6 percent a year ago, net debt-to-EBITDA was 6.9x, flat versus a year ago and fixed charge coverage was 3.6x versus 3.1x a year ago.

    Dividend

    As previously announced, the Company’s Board of Directors declared a regular quarterly dividend on its common stock for the second quarter of 2014 in the amount of $0.26 per share. The dividend will be paid in cash on July 31, 2014 to UDR common stock shareholders of record as of July 10, 2014. The second quarter 2014 dividend will represent the 167th consecutive quarterly dividend paid by the Company on its common stock.

    On an annualized declared basis, the Company’s $1.04 per share 2014 dividend represents an 11 percent increase versus 2013.

    Outlook

    For the third quarter of 2014, the Company has established the following guidance ranges:

     

    Current

     
    FFO per share $0.39 to $0.41
     
    FFO as Adjusted per share $0.36 to $0.38
     
    AFFO per share $0.31 to $0.33
     


    For the full-year 2014, the Company has increased its earnings guidance ranges primarily as the result of better-than-expected operations. FFO per share guidance also benefited from the net gain associated with the recent prepayment of a “B” note held by the Company. Below are the full-year guidance ranges:

     

    Revised

         

    Previous

     
    FFO per share $1.52 to $1.56$1.47 to $1.53
     
    FFO as Adjusted per share $1.49 to $1.53$1.47 to $1.53
     
    AFFO per share $1.32 to $1.36$1.30 to $1.36
     


    For the full-year 2014, the Company has increased its same-store growth guidance ranges and occupancy expectation. Below are the full-year guidance ranges:

     

    Revised

         

    Previous

     
    Revenue 3.75% to 4.25% 3.50% to 4.25%
     
    Expense 1.75% to 2.25% 2.75% to 3.25%
     
    Net operating income 4.50% to 5.50% 3.75% to 5.00%
     
    Physical occupancy 96.5% 96.0%
     


    Additional assumptions for the Company’s third quarter and full-year 2014 guidance can be found on Attachment 15 of the Company’s second quarter Supplemental Financial Information.

    Supplemental Information

    The Company offers Supplemental Financial Information that provides details on the financial position and operating results of the Company which is available on the Company's website at www.udr.com.

    Conference Call and Webcast Information

    UDR will host a webcast and conference call at 1:00 p.m. Eastern Time on July 29, 2014 to discuss second quarter results. The webcast will be available on UDR's website at www.udr.com. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.

    To participate in the teleconference dial 888-481-2877 for domestic and 719-457-2648 for international and provide the following conference ID number: 2761211.

    A replay of the conference call will be available through August 28, 2014, by dialing 888-203-1112 for domestic and 719-457-0820 for international and entering the confirmation number, 2761211, when prompted for the pass code.

    A replay of the call will be available for 30 days on UDR's website at www.udr.com.

    Full Text of the Earnings Report and Supplemental Data

    Internet -- The full text of the earnings report and Supplemental Financial Information will be available on the Company’s website at www.udr.com.

    Mail -- For those without Internet access, the second quarter 2014 earnings report and Supplemental Financial Information will be available by mail or fax, on request. To receive a copy, please call UDR Investor Relations at 720-348-7762.

     
    Attachment 16(B)
                 
     
    UDR, Inc.
    Definitions and Reconciliations
    June 30, 2014

    (Unaudited)
     
    Funds From Operations ("FFO"): The Company defines FFO as net income (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate or of investments in non-consolidated investees that are driven by measurable decreases in the fair value of depreciable real estate held by the investee, gains (or losses) from sales of depreciable property, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust's definition issued in April 2002. In the computation of diluted FFO, OP units, unvested restricted stock, stock options, and the shares of Series E Cumulative Convertible Preferred Stock are dilutive; therefore, they are included in the diluted share count.
     
    Activities of our taxable REIT subsidiary (TRS), RE3, include development and land entitlement. From time to time, we develop and subsequently sell a TRS property which results in a short-term use of funds that produces a profit that differs from the traditional long-term investment in real estate for REITs. We believe that the inclusion of these TRS gains in FFO is consistent with the standards established by NAREIT as the short-term investment is incidental to our main business. TRS gains on sales, net of taxes, are defined as net sales proceeds less a tax provision and the gross investment basis of the asset before accumulated depreciation.
     
    Management considers FFO a useful metric for investors as the Company uses FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company's activities in accordance with GAAP. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs. A reconciliation from net income attributable to UDR, Inc. to FFO is provided on Attachment 2.
     
    Held For Disposition Communities: The Company defines Held for Disposition Communities as those communities that were held for sale as of the end of the most recent quarter.
     
    Interest Coverage Ratio: The Company defines Interest Coverage Ratio as net income, excluding the impact of interest expense, real estate depreciation and amortization of wholly owned and joint venture communities, other depreciation and amortization, noncontrolling interests, net gain on the sale of depreciable property, RE3 income tax, divided by total interest.
     
    Management considers interest coverage ratio a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its debt obligations as well as compare leverage against that of its peer REITs. A reconciliation of the components that comprise interest coverage ratio is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.
     
    Joint Venture Reconciliation at UDR's Weighted Average Pro-Rata Ownership Interest
     
    In thousandsQ2 2014YTD 2014
    Income/(loss) from unconsolidated entities $(428)$(3,993)
    Management fee 9631,834
    Interest expense 7,82214,803
    Depreciation 8,86119,528
    General and administrative 204286
    Other income/expense   (349)   (747)
    Total Joint Venture NOI at UDR's Pro-Rata Ownership Interest$17,073   $31,711  
     
    JV Return on Equity ("ROE"): The Company defines JV ROE as the pro rata share of property NOI plus property and asset management fee revenue less interest expense, divided by the average of beginning and ending equity capital for the quarter.
     
    Management considers ROE a useful metric for investors as it provides a widely used measure of how well the Company is investing its capital on a leveraged basis.
     
    JV Return on Invested Capital ("ROIC"): The Company defines JV ROIC as the pro rata share of property NOI plus property and asset management fee revenue divided by the average of beginning and ending invested capital for the quarter.
     
    Management considers ROIC a useful metric for investors as it provides a widely used measure of how well the Company is investing its capital on an unleveraged basis.
     
    Net Debt to EBITDA: The Company defines net debt to EBITDA as total debt net of cash and cash equivalents divided by EBITDA. EBITDA is defined as net income, excluding the impact of interest expense, real estate depreciation and amortization of wholly owned and other joint venture communities, other depreciation and amortization, noncontrolling interests, net gain on the sale of depreciable property, and RE3 income tax.
     
    Management considers net debt to EBITDA a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its debt obligations as well as compare leverage against that of its peer REITs. A reconciliation between net income and EBITDA is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.
     
    Net Operating Income (“NOI”): The Company defines NOI as rental income less direct property rental expenses. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense which is calculated as 2.75% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations, and land rent.
     
    Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization and is a widely used input, along with capitalization rates, in the determination of real estate valuations. A reconciliation from net income attributable to UDR, Inc. to NOI is provided below.
     
    In thousandsQ2 2014   Q1 2014   4Q 20133Q 2013   2Q 2013
    Net income/(loss) attributable to UDR, Inc.$30,007 $ 18,361 $ 36,700 $ 3,188 $ 5,192
    Property management 5,527 5,345 5,233 5,168 5,123
    Other operating expenses 2,162 1,926 1,925 1,776 1,800
    Real estate depreciation and amortization 88,876 88,533 88,301 83,738 84,595
    Interest expense 31,691 32,884 33,360 30,939 30,803
    Casualty-related (recoveries)/charges, net - 500 - (6,460 ) (2,772 )
    General and administrative 12,530 11,994 11,532 11,364 9,866
    Tax provision/(benefit), net (includes valuation adjustment) (2,190) (3,329 ) 15 (2,658 ) (2,683 )
    Income/(loss) from unconsolidated entities 428 3,565 (5,666 ) 3,794 (515 )
    Interest and other income, net (1,426) (1,415 ) (1,328 ) (829 ) (1,446 )
    Joint venture management and other fees (2,747) (3,687 ) (3,095 ) (3,207 ) (3,217 )
    Other depreciation and amortization 1,193 1,080 3,281 1,176 1,138
    (Income)/loss from discontinued operations, net of tax (18) (24,294 ) - - (830 )
    (Gain)/loss on sale of real estate owned, net of tax (26,709) 87 (41,376 ) (884 ) -
    Net income/(loss) attributable to noncontrolling interests   1,079       651       1,302     47       162  
    Total consolidated NOI$140,403     $ 132,201     $ 130,184   $ 127,152     $ 127,216  
                                                 
     


    Forward-Looking Statements

    Certain statements made in this press release may constitute “forward-looking statements.” Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement, due to a number of factors, which include, but are not limited to, unfavorable changes in the apartment market, changing economic conditions, the impact of inflation/deflation on rental rates and property operating expenses, expectations concerning availability of capital and the stabilization of the capital markets, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments, redevelopments and lease-ups on schedule, expectations on job growth, home affordability and demand/supply ratio for multifamily housing, expectations concerning development and redevelopment activities, expectations on occupancy levels, expectations concerning the joint ventures with third parties, expectations that automation will help grow net operating income, expectations on annualized net operating income and other risk factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time, including the Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q. Actual results may differ materially from those described in the forward-looking statements. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release, and the Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in the Company's expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required under the U.S. securities laws.

    This press release and these forward-looking statements include UDR’s analysis and conclusions and reflect UDR’s judgment as of the date of these materials. UDR assumes no obligation to revise or update to reflect future events or circumstances.

    About UDR, Inc.

    UDR, Inc. (NYSE:UDR), an S&P 400 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate properties in targeted U.S. markets. As of June 30, 2014, UDR owned or had an ownership position in 51,923 apartment homes including 1,321 homes under development. For 42 years, UDR has delivered long-term value to shareholders, the best standard of service to residents and the highest quality experience for associates. Additional information can be found on the Company's website at www.udr.com.

     
    Attachment 1
           
     
    UDR, Inc.

    Consolidated Statements of Operations (1)

    (Unaudited)
     
    Three Months EndedSix Months Ended
    June 30,June 30,
    In thousands, except per share amounts   2014     2013     2014     2013  
     
    REVENUES:
    Rental income (2)$200,959 $ 186,285 $395,311 $ 368,246
    Joint venture management and other fees   2,747     3,217     6,434     6,140  
    Total revenues   203,706     189,502     401,745     374,386  
     
    OPERATING EXPENSES:
    Property operating and maintenance 36,840 36,153 73,560 70,974
    Real estate taxes and insurance 23,716 22,916 49,147 46,208
    Property management 5,527 5,123 10,872 10,127
    Other operating expenses 2,162 1,800 4,088 3,436
    Real estate depreciation and amortization 88,876 84,595 177,409 167,493
    Acquisition costs - - 102 -
    General and administrative 12,530 9,866 24,422 19,342
    Casualty-related (recoveries)/charges, net - (2,772 ) 500 (5,793 )
    Other depreciation and amortization   1,193     1,138     2,273     2,284  
    Total operating expenses   170,844     158,819     342,373     314,071  
     
    Operating income32,862 30,683 59,372 60,315
     
    Income/(loss) from unconsolidated entities (428) 515 (3,993) (2,287 )
     
    Interest expense (31,499) (30,625 ) (64,383) (61,606 )
    Other debt (charges)/benefits, net (3)   (192)   (178 )   (192)   (178 )
    Total Interest expense (31,691) (30,803 ) (64,575) (61,784 )
    Interest and other income/(expense), net   1,426     1,446     2,841     2,462  
     
    Income/(loss) before income taxes and discontinued operations2,169 1,841 (6,355) (1,294 )
    Tax benefit/(provision), net   2,190     2,683     5,519     4,656  
     
    Income/(loss) from continuing operations4,359 4,524 (836) 3,362
    Income/(loss) from discontinued operations, net of tax (4)   18     830     (69)   1,683  
     
    Income/(loss) before gain/(loss) on sale of real estate owned4,377 5,354 (905)

     

    5,045
    Gain/(loss) on sale of real estate owned, net of tax (4)   26,709     -     51,003     -  
     
    Net income/(loss)31,086 5,354 50,098

     

    5,045
    Net (income)/loss attributable to redeemable noncontrolling interests in the OP (1,077) (159 ) (1,724) (114 )
    Net (income)/loss attributable to noncontrolling interests   (2)   (3 )   (6)   (7 )
     
    Net income/(loss) attributable to UDR, Inc.30,007 5,192 48,368 4,924
    Distributions to preferred stockholders - Series E (Convertible)   (931)   (931 )   (1,862)   (1,862 )
     
    Net income/(loss) attributable to common stockholders$29,076   $ 4,261   $46,506   $ 3,062  
     
    Income/(loss) per weighted average common share - basic:
    Income/(loss) from continuing operations attributable to common stockholders $0.12 $ 0.01 $0.19 $ 0.01
    Income/(loss) from discontinued operations attributable to common stockholders $0.00 $ 0.00 $0.00 $ 0.01
    Net income/(loss) attributable to common stockholders $0.12 $ 0.02 $0.19 $ 0.01
     
    Income/(loss) per weighted average common share - diluted:
    Income/(loss) from continuing operations attributable to common stockholders $0.12 $ 0.01 $0.18 $ 0.01
    Income/(loss) from discontinued operations attributable to common stockholders $0.00 $ 0.00 $0.00 $ 0.01
    Net income/(loss) attributable to common stockholders $0.12 $ 0.02 $0.18 $ 0.01
     
    Common distributions declared per share $0.260 $ 0.235 $0.520 $ 0.470
     
    Weighted average number of common shares outstanding - basic 250,255 249,985 250,216 249,951
    Weighted average number of common shares outstanding - diluted 252,191 251,406 252,091 251,353
     
     
     
    (1) See Attachment 16 for definitions and other terms.
    (2) Three and six months ended June 30, 2013 are impacted by $1.1 million and $2.5 million of lost rent due to business interruption related to Hurricane Sandy, respectively.
    (3) Includes prepayment penalties, write-off of deferred financing costs and unamortized discounts/premiums on early debt extinguishment.
    (4) Effective January 1, 2014, UDR prospectively adopted Accounting Standards Update (“ASU”) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, for all communities not previously sold or classified as held for sale. ASU 2014-08 incorporates into the definition of a discontinued operation a requirement that a disposition represent a strategic shift in an entity’s operations, which resulted in UDR no longer classifying the sale of communities as a discontinued operation.
                     

     

    Attachment 2
           
     
    UDR, Inc.

    Funds From Operations (1)

    (Unaudited)
     
    Three Months EndedSix Months Ended
    June 30,June 30,
    In thousands, except per share amounts     2014       2013       2014       2013  
     
    Net income/(loss) attributable to UDR, Inc.$30,007 $ 5,192 $48,368 $ 4,924
     
    Distributions to preferred stockholders (931) (931 ) (1,862) (1,862 )
    Real estate depreciation and amortization, including discontinued operations 88,876 85,131 177,409 168,573
    Noncontrolling interests 1,079 162 1,730 121
    Real estate depreciation and amortization on unconsolidated joint ventures 8,861 5,943 19,528 14,948
    Net (gain)/loss on the sale of depreciable property, excluding TRS   (26,709)   -     (49,883)   -  
    Funds from operations ("FFO"), basic$101,183   $ 95,497   $195,290   $ 186,704  
     
    Distributions to preferred stockholders - Series E (Convertible) 931 931 1,862 1,862
           
    FFO, diluted$102,114   $ 96,428   $197,152   $ 188,566  
     
    FFO per common share, basic$0.39   $ 0.37   $0.75   $ 0.72  
    FFO per common share, diluted$0.39   $ 0.37   $0.75   $ 0.71  
     
    Weighted average number of common shares and OP Units outstanding - basic   259,571     259,309     259,533     259,303  
    Weighted average number of common shares, OP Units, and common stock
    equivalents outstanding - diluted   264,543     263,766     264,444     263,741  
     
    Impact of adjustments to FFO:
    Acquisition-related costs (including joint ventures) $- $ - $102 $ -
    Joint venture financing and acquisition fees - (218 ) - (218 )
    Costs/(benefit) associated with debt extinguishment and tender offer 192 178 192 178
    Gain on sale of land - - (1,120) -
    Casualty-related (recoveries)/charges, net (2)   -     (2,772 )   500     (5,606 )
    $192   $ (2,812 ) $(326) $ (5,646 )
           
    FFO as Adjusted, diluted$102,306   $ 93,616   $196,826   $ 182,920  
     
    FFO as Adjusted per common share, diluted$0.39   $ 0.35   $0.74   $ 0.69  
     
    Recurring capital expenditures   (11,096)   (12,224 )   (17,697)   (18,986 )
    AFFO$91,210   $ 81,392   $179,129   $ 163,934  
     
    AFFO per common share, diluted$0.34   $ 0.31   $0.68   $ 0.62  
     
     
     
     
    (1) See Attachment 16 for definitions and other terms.
    (2) 2014 adjustment relates to estimated damages at our Rosebeach community in California as a result of the earthquake in March 2014. 2013 adjustment primarily represents the portion of Hurricane Sandy insurance recoveries in 2013 that relate to the $9.3 million in charges added back to FFO as Adjusted in 4Q 2012. The difference between the casualty-related recoveries reflected on the Consolidated Statements of Operations and the adjustment above represents the amount of 2013 business interruption recoveries during 2013. The business interruption insurance recoveries are offset by lost rental revenues from the business interruption in 2013.
     
     
    Attachment 3
       
     
    UDR, Inc.

    Consolidated Balance Sheets
     
     
    June 30,December 31,
    In thousands, except share and per share amounts     2014       2013  
    (unaudited) (audited)
     
    ASSETS
     
    Real estate owned:
    Real estate held for investment $7,957,185 $ 7,723,844
    Less: accumulated depreciation   (2,290,008)   (2,200,815 )
    Real estate held for investment, net 5,667,177 5,523,029
    Real estate under development
    (net of accumulated depreciation of $0 and $1,411) 275,819 466,002
    Real estate held for disposition
    (net of accumulated depreciation of $49,816 and $6,568)   54,533     10,152  
    Total real estate owned, net of accumulated depreciation 5,997,529 5,999,183
     
    Cash and cash equivalents 26,816 30,249
    Restricted cash 23,334 22,796
    Funds held in escrow from IRC Section 1031 exchanges 30,275 -
    Deferred financing costs, net 25,545 26,924
    Notes receivable, net 44,248 83,033
    Investment in and advances to unconsolidated joint ventures, net 612,688 507,655
    Other assets   171,970     137,882  
    Total assets $6,932,405   $ 6,807,722  
     
    LIABILITIES AND EQUITY
     
    Liabilities:
    Secured debt $1,402,731 $ 1,442,077
    Unsecured debt 2,345,063 2,081,626
    Real estate taxes payable 16,543 13,847
    Accrued interest payable 29,160 32,279
    Security deposits and prepaid rent 30,802 27,203
    Distributions payable 68,556 61,907
    Accounts payable, accrued expenses, and other liabilities   89,566     118,682  
    Total liabilities 3,982,421 3,777,621
     
    Redeemable noncontrolling interests in the OP 266,589 217,597
     
    Equity:
    Preferred stock, no par value; 50,000,000 shares authorized
    2,803,812 shares of 8.00% Series E Cumulative Convertible issued
    and outstanding (2,803,812 shares at December 31, 2013) 46,571 46,571
    Common stock, $0.01 par value; 350,000,000 shares authorized
    251,492,420 shares issued and outstanding (250,749,665 shares at December 31, 2013) 2,515 2,507
    Additional paid-in capital 4,114,566 4,109,765
    Distributions in excess of net income (1,478,814) (1,342,070 )
    Accumulated other comprehensive income/(loss), net   (2,305)   (5,125 )
    Total stockholders' equity 2,682,533 2,811,648
    Noncontrolling interests   862     856  
    Total equity   2,683,395     2,812,504  
    Total liabilities and equity $6,932,405   $ 6,807,722  
                     
     
    Attachment 4(C)
         
     
    UDR, Inc.

    Selected Financial Information (1)

    (Unaudited)
     
    Quarter Ended
    Coverage Ratios           June 30, 2014
     
    Net income/(loss) attributable to UDR, Inc.$ 30,007
     
    Adjustments (includes continuing and discontinued operations):
    Interest expense 31,691
    Real estate depreciation and amortization 88,876
    Real estate depreciation and amortization on unconsolidated joint ventures 8,861
    Other depreciation and amortization 1,193
    Noncontrolling interests 1,079
    Income tax expense/(benefit) (2,230)
    EBITDA $ 159,477
     
    Gain/(loss) on sale of real estate owned, net of tax (26,709)
    EBITDA - adjusted for non-recurring items $ 132,768
     
    Annualized EBITDA - adjusted for non-recurring items $ 531,072
     
    Interest expense $ 31,691
    Capitalized interest expense 4,915
    Total interest $ 36,606
     
    Preferred dividends $ 931
     
    Total debt $ 3,747,794
    Cash 26,816
    Cash held by qualified intermediary related to completed 1031 exchange (2) 49,217
    Net debt $ 3,671,761
     
     
    Interest Coverage Ratio4.36x
     
    Fixed Charge Coverage Ratio4.25x
     
     
    Interest Coverage Ratio - adjusted for non-recurring items3.65x
     
    Fixed Charge Coverage Ratio - adjusted for non-recurring items3.56x
     
    Net Debt-to-EBITDA, adjusted for non-recurring items6.9x
     
                 
     
    Debt Covenant Overview
     
    Unsecured Line of Credit Covenants (3)   Required   Actual   Compliance
     
    Maximum Leverage Ratio =60.0% 41.6% Yes
    Minimum Fixed Charge Coverage Ratio =1.5 2.8 Yes
    Maximum Secured Debt Ratio =40.0% 19.7% Yes
    Minimum Unencumbered Pool Leverage Ratio =150.0% 287.4% Yes
     
     
    Senior Unsecured Note Covenants (4)   Required   Actual   Compliance
     
    Debt as a percentage of Total Assets =60.0% 40.5% Yes
    Consolidated Income Available for Debt Service to Annual Service Charge =1.5 3.3 Yes
    Secured Debt as a percentage of Total Assets =40.0% 15.1% Yes
    Total Unencumbered Assets to Unsecured Debt =150.0% 271.2% Yes
     
     
    Securities Ratings   Debt   Preferred   Outlook
     
    Moody's Investors Service Baa2 Baa3 Positive
    Standard & Poor's BBB BB+ Stable
     
     
     
     
     
     
    (1) See Attachment 16 for definitions and other terms.
    (2) Cash held by qualified intermediary relates to UDR's proceeds from the sale of a community on June 30, 2014 that was remitted to UDR on July 1, 2014. The amount is classified as a receivable within Other Assets on the Consolidated Balance Sheet as of June 30, 2014.
    (3) As defined in our credit agreement dated October 25, 2011 as amended June 6, 2013.
    (4) As defined in our indenture dated November 1, 1995 as amended, supplemented or modified from time to time.
         
     
    Attachment 16(D)
       
     
    UDR, Inc.

    Definitions and Reconciliations

    June 30, 2014

    (Unaudited)
     
    All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team. The following reconciles from GAAP net income/(loss) per share for full year 2014 and third quarter of 2014 to forecasted FFO, FFO as Adjusted and AFFO per share:
     
     
    Full Year 2014
    Low   High
     
    Forecasted earnings per diluted share $ 0.23 $ 0.27
    Conversion from GAAP share count (0.08 ) (0.08 )
    Net (gain)/loss on the sale of depreciable property, excluding TRS (0.19 ) (0.19 )
    Depreciation 1.51 1.51
    Noncontrolling Interests 0.01 0.01
    Preferred Dividends   0.01       0.01  
    Forecasted FFO per diluted share$1.49     $1.53  
    TRS gains from asset sales (0.01 ) (0.01 )
    Acquisition, debt extinguishment, casualty and other costs   0.01       0.01  
    Forecasted FFO as Adjusted per diluted share$1.49     $1.53  
    Recurring capital expenditures   (0.17 )     (0.17 )
    Forecasted AFFO per diluted share$1.32     $1.36  
     
     
     
    3Q 2014
    Low   High
     
    Forecasted earnings per diluted share $ - $ 0.02
    Conversion from GAAP share count (0.02 ) (0.02 )
    Net (gain)/loss on the sale of depreciable property, excluding TRS - -
    Depreciation 0.38 0.38
    Noncontrolling Interests - -
    Preferred Dividends   -       -  
    Forecasted FFO per diluted share$0.36     $0.38  
    TRS gains from asset sales - -
    Acquisition, debt extinguishment, casualty and other costs   -       -  
    Forecasted FFO as Adjusted per diluted share$0.36     $0.38  
    Recurring capital expenditures   (0.05 )     (0.05 )
    Forecasted AFFO per diluted share$0.31     $0.33  
                     
     





    UDR, Inc.

    Chris Van Ens, 720-348-7762

    Source: UDR, Inc.


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