UDR Announces Third Quarter 2018 Results and Increases Full-Year Guidance Ranges

DENVER–(BUSINESS WIRE)–UDR, Inc. (the “Company”) Third Quarter 2018 Highlights:

• Net income per share was $0.07, Funds from Operations (“FFO”) per
  share was $0.49, FFO as Adjusted (“FFOA”) per share was $0.49, and
  Adjusted Funds from Operations (“AFFO”) per share was $0.44.
• Net income attributable to common stockholders was $17.6 million as
  compared to $15.3 million in the prior year period. The increase was
  primarily due to higher income from operating properties.
• Year-over-year same-store (“SS”) revenue, expense and net operating
  income (“NOI”) growth for the quarter were 3.8 percent, 3.5 percent
  and 3.9 percent, respectively.
• The Company’s $808.5 million pro-rata share of development projects in
  lease-up continued to realize strong demand, ending the third quarter
  at a weighted average 77.9 percent leased.
• Invested in three Developer Capital Program (“DCP”) projects for a
  total commitment of $73.1 million. The communities are located in
  Philadelphia, PA, Orlando, FL, and Santa Monica, CA.
• Entered into a contract to sell Circle Towers, a 46 year old, 604-home
  community located in Fairfax County, VA, for $160.0 million. The
  transaction is scheduled to close during the fourth quarter subject to
  customary closing conditions.
• Subsequent to quarter end, issued $300.0 million of 10-year unsecured
  debt at an effective 4.27 percent coupon and intends to use the
  proceeds to prepay $195.8 million of 5.28 percent secured debt
  originally scheduled to mature in October and December 2019 and for
  general corporate purposes.
• Increased and/or tightened full-year 2018 earnings and same-store
  growth guidance ranges:
  • Increased net income per share guidance by $0.18 at the midpoint
    to $0.70 to $0.71.
  • Increased FFOA per share guidance by $0.01 at the midpoint to
    $1.95 to $1.96.
  • Tightened AFFO per share guidance to $1.79 to $1.80.
  • Increased SS revenue, expense and NOI growth guidance ranges by 25
    basis points at the low-ends to 3.25 to 3.50 percent.

			Q3 2018					Q3 2017					YTD 2018					YTD 2017
Net income per common share, diluted			$	0.07				$	0.06				$	0.44				$	0.18
Conversion from GAAP share count				(0.006	)				(0.005	)				(0.041	)				(0.017	)
Net gain on the sale of depreciable real estate owned				–					(0.008	)				(0.237	)				(0.051	)
Cumulative effect of change in accounting principle				–					–					(0.007	)				–
Depreciation and amortization				0.418					0.411					1.242					1.225
Noncontrolling interests and preferred dividends				0.009					0.008					0.047					0.025
FFO per common share and unit, diluted			$	0.49				$	0.46				$	1.44				$	1.37
Cost/(benefit) associated with debt extinguishment and other				0.002					–					0.002					0.020
Acquisition-related costs/(fees)				–					0.001					–					0.001
Net gain on the sale of non-depreciable real estate owned				–					–					–					(0.005	)
Legal and other costs				0.002					–					0.004					–
Casualty-related charges/(recoveries), including JVs, net				0.002					0.007					0.009					0.010
FFOA per common share and unit, diluted			$	0.49				$	0.47				$	1.46				$	1.39
Recurring capital expenditures				(0.050	)				(0.043	)				(0.116	)				(0.102	)
AFFO per common share and unit, diluted			$	0.44				$	0.43				$	1.34				$	1.29

^{A reconciliation of FFO, FFOA and AFFO to GAAP Net income
attributable to common stockholders can be found on Attachment 2 of the
Company’s third quarter Supplemental Financial Information.}

Operations

In the third quarter, total revenue increased by $15.1 million
year-over-year, or 6.0 percent, to $266.1 million. This increase was
primarily attributable to growth in revenue from operating and lease-up
communities.

In the third quarter, same-store NOI increased 3.9 percent
year-over-year, driven by same-store revenue growth of 3.8 percent and
same-store expense growth of 3.5 percent. Weighted average same-store
physical occupancy increased by 30 basis points year-over-year to 96.9
percent. The third quarter annualized rate of turnover was 63.4 percent,
representing a 40 basis point increase year-over-year.

Summary of Same-Store Results Third Quarter 2018 versus Third Quarter 2017
Region			Revenue Growth				Expense Growth/ (Decline)				NOI Growth/ (Decline)				% of Same-Store Portfolio(1)				Same-Store Occupancy(2)				Number of Same-Store Homes(3)
West			4.4	%			(0.0	)%			6.0	%			45.4	%			96.5	%			13,942
Mid-Atlantic			3.3	%			4.1	%			3.0	%			22.3	%			97.2	%			9,876
Northeast			1.7	%			6.8	%			(0.6	)%			15.2	%			97.3	%			3,493
Southeast			5.8	%			9.3	%			4.3	%			12.7	%			96.9	%			7,683
Southwest			2.2	%			1.1	%			3.0	%			4.4	%			97.2	%			3,313
Total			3.8	%			3.5	%			3.9	%			100.0	%			96.9	%			38,307

(1)		Based on Q3 2018 SS NOI.
(2)		Weighted average same-store physical occupancy for the quarter.
(3)		During the third quarter, 38,307 apartment homes 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, were not in process of any substantial redevelopment activities, and were not held for disposition.

In the third quarter, sequential same-store NOI decreased by 0.2
percent, driven by same-store revenue growth of 1.2 percent and
same-store expense growth of 4.9 percent. Weighted average same-store
physical occupancy decreased by 10 basis points sequentially to 96.9
percent.

Year-to-date, for the nine months ended September 30, 2018, total
revenue increased by $36.3 million year-over-year, or 4.9 percent, to
$779.2 million. This increase was primarily attributable to growth in
revenue from operating and lease-up communities.

Year-to-date, for the nine months ended September 30, 2018, same-store
NOI increased 3.4 percent year-over-year, driven by same-store revenue
growth of 3.4 percent and same-store expense growth of 3.4 percent.
Weighted average same-store physical occupancy increased by 30 basis
points year-over-year to 96.9 percent. The year-to-date annualized rate
of turnover was 52.5 percent, representing a 100 basis point decrease
year-over-year.

Summary of Same-Store Results Year-To-Date 2018 versus Year-To-Date 2017
Region			Revenue Growth				Expense Growth				NOI Growth/ (Decline)				% of Same-Store Portfolio(1)				Same–Store Occupancy(2)				Number of Same-Store Homes(3)
West			4.3	%			0.8	%			5.6	%			44.8	%			96.5	%			13,698
Mid-Atlantic			2.8	%			4.5	%			2.0	%			22.8	%			97.4	%			9,876
Northeast			1.0	%			6.5	%			(1.3	)%			15.8	%			97.2	%			3,493
Southeast			5.0	%			3.7	%			5.6	%			12.7	%			97.0	%			7,683
Southwest			1.6	%			4.8	%			(0.4	)%			3.9	%			96.9	%			2,923
Total			3.4	%			3.4	%			3.4	%			100.0	%			96.9	%			37,673

(1)		Based on YTD 2018 SS NOI.
(2)		Weighted average same-store physical occupancy for YTD 2018.
(3)		For the nine months ended September 30, 2018, 37,673 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, were not in process of any substantial redevelopment activities, and were not held for disposition.

Development Activity

At the end of the third quarter, the Company’s development pipeline
totaled $808.5 million at its pro-rata ownership interest, and was 98
percent funded. All of the Company’s development communities were in
lease-up as of the end of the third quarter. The development pipeline is
currently expected to produce a weighted average spread between
stabilized yields and current market cap rates of 150 to 200 basis
points.

DCP Activity

At the end of the third quarter, the Company’s DCP investment, including
accrued return, totaled $222.7 million. Activity during the quarter
consisted of:

• Investment in three DCP projects for a total capital commitment of
  $73.1 million. The communities are located in Philadelphia, PA,
  Orlando, FL, and Santa Monica, CA, will include 867 homes and have a
  weighted average yield and term to maturity of 10.0 percent and 4.9
  years.

Transaction Activity

During the quarter, the Company entered into a contract to sell Circle
Towers, a 46 year old, 604-home community located in Fairfax County, VA,
for $160.0 million or $264,900 per home. During the third quarter the
community had a weighted average monthly revenue per occupied home of
$2,049. The transaction is scheduled to close during the fourth quarter
subject to customary closing conditions.

Capital Markets and Balance Sheet Activity

Balance sheet activity during the third quarter included:

• The Company amended and restated its $1.1 billion revolving credit
  facility and its $350.0 million term loan outstanding under the same
  agreement. The amendment extends the maturity dates on the revolver
  and term loan to January and September 2023, respectively. In
  addition, the spread over LIBOR was reduced by 7.5 basis points and
  5.0 basis points for the revolver and term loan, respectively.
• The Company refinanced $79.1 million of consolidated secured debt with
  a weighted average rate of 5.04 percent within its DownREIT
  partnership that was originally scheduled to mature in 2018 and 2019
  into an $80.0 million secured 10-year fixed-rate loan at a rate of
  4.08 percent.
• Third quarter UDR/MetLife Joint Venture capital markets activity
  included refinancing the construction loan associated with Vitruvian
  West into a $41.3 million secured 10-year fixed-rate loan at a rate of
  4.12 percent.

Subsequent to quarter end, the Company issued $300.0 million of 10-year
unsecured debt at a 4.40 percent coupon. Proceeds are intended to be
used to prepay $195.8 million of 5.28 percent secured debt originally
scheduled to mature in October and December 2019 and for general
corporate purposes. The Company had previously entered into a hedging
instrument that lowered the effective coupon on the unsecured issuance
to 4.27 percent.

At September 30, 2018, the Company had approximately $710.1 million of
availability, through a combination of cash and undrawn capacity, on its
credit facilities.

The Company’s total indebtedness at September 30, 2018 was $3.8 billion.
The Company ended the quarter with fixed-rate debt representing 84.4
percent of its total debt, a weighted average interest rate of 3.6
percent and a weighted average maturity of 4.9 years. The Company’s
consolidated leverage was 33.7 percent versus 33.5 percent a year ago,
its consolidated net-debt-to-EBITDAre was 5.7x versus 5.9x a year ago
and its consolidated fixed charge coverage ratio was 4.5x versus 4.4x a
year ago.

Dividend

As previously announced, the Company’s Board of Directors declared a
regular quarterly dividend on its common stock for the third quarter of
2018 in the amount of $0.3225 per share. The dividend will be paid in
cash on October 31, 2018 to UDR common stock shareholders of record as
of October 10, 2018. The third quarter 2018 dividend will represent the
184^th consecutive quarterly dividend paid by the Company on
its common stock.

Outlook

For the fourth quarter of 2018, the Company has established the
following earnings guidance ranges:

		Net income per share					$0.26 to $0.27
		FFO per share					$0.48 to $0.49
		FFO as Adjusted per share					$0.49 to $0.50
		AFFO per share					$0.45 to $0.46

For the full-year 2018, the Company has revised its previously
provided earnings guidance ranges:

							Updated Guidance			Prior Guidance
		Net income per share					$0.70 to $0.71			$0.51 to $0.54
		FFO per share					$1.92 to $1.93			$1.92 to $1.95
		FFO as Adjusted per share					$1.95 to $1.96			$1.93 to $1.96
		AFFO per share					$1.79 to $1.80			$1.78 to $1.81

For the full-year 2018, the Company has increased its previously
provided same-store growth guidance ranges:

							Updated Guidance			Prior Guidance
		Revenue					3.25% to 3.50%			3.00% to 3.50%
		Expense					3.25% to 3.50%			3.00% to 3.50%
		Net operating income					3.25% to 3.50%			3.00% to 3.50%

Additional assumptions for the Company’s third quarter and full-year
2018 guidance can be found on Attachment 15 of the Company’s third
quarter Supplemental Financial Information. A reconciliation of FFO per
share, FFO as Adjusted per share and AFFO per share to GAAP Net income
per share can be found on Attachment 16(D) of the Company’s third
quarter Supplemental Financial Information. Non-GAAP financial measures
and other terms, as used in this earnings release, are defined and
further explained on Attachments 16(A) through 16(D), “Definitions and
Reconciliations,” of the Company’s third 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 ir.udr.com.

Conference Call and Webcast Information

UDR will host a webcast and conference call at 1:00 p.m. Eastern time on
October 30, 2018 to discuss third quarter results. The webcast will be
available on UDR’s website at ir.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 877-705-6003 for domestic and
201-493-6725 for international. A passcode is not necessary.

A replay of the conference call will be available through November 30,
2018, by dialing 844-512-2921 for domestic and 412-317-6671 for
international and entering the confirmation number, 13683794, when
prompted for the passcode.

A replay of the call will also be available for 30 days on UDR’s website
at ir.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 ir.udr.com.

Mail — For those without Internet access, the third quarter 2018
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
September
30, 2018
(Unaudited)

Funds from Operations as Adjusted (“FFO as Adjusted”) attributable to
common stockholders and unitholders: The Company defines FFO as
Adjusted attributable to common stockholders and unitholders as FFO
excluding the impact of acquisition-related costs and other
non-comparable items including, but not limited to, prepayment
costs/benefits associated with early debt retirement, gains or losses on
sales of non-depreciable property and marketable securities, deferred
tax valuation allowance increases and decreases, casualty-related
expenses and recoveries, severance costs and legal costs.

Management believes that FFO as Adjusted is useful supplemental
information regarding our operating performance as it provides a
consistent comparison of our operating performance across time periods
and allows investors to more easily compare our operating results with
other REITs. FFO as Adjusted is not intended to represent cash flow or
liquidity for the period, and is only intended to provide an additional
measure of our operating performance. The Company believes that net
income/(loss) attributable to common stockholders is the most directly
comparable GAAP financial measure to FFO as Adjusted. However, other
REITs may use different methodologies for calculating FFO as Adjusted or
similar FFO measures and, accordingly, our FFO as Adjusted may not
always be comparable to FFO as Adjusted or similar FFO measures
calculated by other REITs. FFO as Adjusted should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indication of financial performance, or as an alternative to cash flows
from operating activities (determined in accordance with GAAP) as a
measure of our liquidity. A reconciliation from net income attributable
to common stockholders to FFO as Adjusted is provided on Attachment 2.

Funds from Operations (“FFO”) attributable to common stockholders and
unitholders: The Company defines FFO attributable to common
stockholders and unitholders as net income/(loss) attributable to common
stockholders (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 noncontrolling interests,
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, if
OP Units, DownREIT Units, unvested restricted stock, unvested LTIP
units, stock options, and the shares of Series E Cumulative Convertible
Preferred Stock are dilutive, they are included in the diluted share
count.

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/(loss) attributable to common
stockholders 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.

Joint Venture Reconciliation at UDR’s weighted average ownership
interest:

In thousands					3Q 2018					YTD 2018
Income/(loss) from unconsolidated entities					$	(1,382	)			$	(5,091	)
Management fee						1,236					3,656
Interest expense						10,425					29,817
Depreciation						15,979					45,831
General and administrative						134					406
West Coast Development JV Preferred Return – Attachment 12(B)						(1,064	)				(3,127	)
Developer Capital Program – Other (excludes Alameda Point Block 11)						(2,809	)				(6,099	)
Other (income)/expense						230					728
Total Joint Venture NOI at UDR’s Ownership Interest					$	22,749				$	66,121

Net Operating Income (“NOI”): The Company defines NOI as rental
income less direct property rental expenses. Rental income represents
gross market rent and other revenues 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 thousands			3Q 2018					2Q 2018					1Q 2018					4Q 2017					3Q 2017
Net income/(loss) attributable to UDR, Inc.			$	18,610				$	20,601				$	81,756				$	69,280				$	16,190
Property management				7,240					7,057					6,888					6,878					6,827
Other operating expenses				3,314					2,825					2,009					3,050					1,950
Real estate depreciation and amortization				107,881					106,520					108,136					109,401					107,171
Interest expense				34,401					31,598					29,943					34,211					30,095
Casualty-related charges/(recoveries), net				678					746					940					586					2,056
General and administrative				11,896					12,373					11,759					11,590					12,467
Tax provision/(benefit), net				158					233					227					(1,065	)				127
(Income)/loss from unconsolidated entities				1,382					2,032					1,677					(19,666	)				(1,819	)
Interest income and other (income)/expense, net				(1,188	)				(1,128	)				(2,759	)				(548	)				(481	)
Joint venture management and other fees				(2,888	)				(3,109	)				(2,822	)				(2,764	)				(2,827	)
Other depreciation and amortization				1,682					1,684					1,691					1,648					1,585
(Gain)/loss on sale of real estate owned, net of tax				–					–					(70,300	)				(41,272	)				–
Net income/(loss) attributable to noncontrolling interests				1,648					1,843					7,469					6,347					1,380
Total consolidated NOI			$	184,814				$	183,275				$	176,614				$	177,676				$	174,721

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. Such statements
involve known and unknown risks, uncertainties and other factors which
may cause our actual results, performance or achievements to be
materially different from the results of operations or plans expressed
or implied by such forward-looking statements. Such factors include,
among other things, unfavorable changes in the apartment market,
changing economic conditions, the impact of inflation/deflation on
rental rates and property operating expenses, expectations concerning
the availability of capital and the stability of the capital markets,
the impact of competition and competitive pricing, acquisitions,
developments and redevelopments not achieving anticipated results,
delays in completing developments and redevelopments, delays in
completing lease-ups on schedule or at expected rent and occupancy
levels, expectations on job growth, home affordability and demand/supply
ratio for multifamily housing, expectations concerning development and
redevelopment activities, expectations on occupancy levels and rental
rates, expectations concerning joint ventures and partnerships 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.

About UDR, Inc.

UDR, Inc. (NYSE: UDR),
an S&P 500 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 September 30, 2018, UDR owned or had an ownership
position in 49,464 apartment homes including 932 homes under development
or in its Developer Capital Program – West Coast Development Joint
Venture.

Contacts

UDR, Inc.
Chris Van Ens, 720-348-7762

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