UDR Announces First Quarter 2019 Results

April 30, 2019 ALE

DENVER–(BUSINESS WIRE)–UDR, Inc. (the “Company”) First Quarter 2019 Highlights:

Net income per share was $0.08, Funds from Operations (“FFO”) per
share was $0.51, FFO as Adjusted (“FFOA”) per share was $0.50, and
Adjusted Funds from Operations (“AFFO”) per share was $0.47.
Net income attributable to common stockholders was $23.5 million as
compared to $80.8 million in the prior year period. The decrease was
primarily due to lower gains on the sale of real estate.
Year-over-year same-store (“SS”) revenue, expense and net operating
income (“NOI”) growth was 3.8 percent, 3.0 percent and 4.1 percent,
respectively.
Acquired four apartment communities comprising 1,110 homes and two
development sites for a total cash outlay, including debt payoffs, of
$402.9 million.
Commenced a $25.0 million redevelopment of 10 Hanover Square, a
493-home community located in lower Manhattan, and a $10.5 million
redevelopment of Garrison Square, a 160-home community located in the
Back Bay neighborhood of Boston.
The UDR/MetLife Joint Venture commenced construction of Vitruvian West
Phase 2, a $64.0 million (at 100 percent), 366-home community located
in Addison, TX.
Issued approximately 4.35 million common shares through the Company’s
at-the-market equity program at a weighted average net price of $44.16
for proceeds of $192.2 million.

Subsequent to Quarter-End Highlights:

Acquired Rodgers Forge, a 498-home community located in Towson, MD,
for $86.4 million.
Entered into a contract to acquire Park Square, a 313-home community
located in King of Prussia, PA, for $108.5 million.
Invested in a Developer Capital Program (“DCP”) project located in
Oakland, CA with a total capital commitment of $27.3 million.


	Q1 2019	Q1 2018
Net income per common share, diluted	$0.08	$0.30
Conversion from GAAP share count	(0.008)	(0.028)
Net gain on the sale of depreciable real estate owned, including JVs	–	(0.237)
Cumulative effect of change in accounting principle	–	(0.007)
Depreciation and amortization, including JVs	0.420	0.413
Noncontrolling interests and preferred dividends	0.010	0.028
FFO per common share and unit, diluted	$0.51	$0.47
Promoted interest on settlement of note receivable, net of tax	(0.021)	–
Legal and other costs	0.011	–
Casualty-related charges/(recoveries), including JVs, net	0.001	0.003
FFOA per common share and unit, diluted	$0.50	$0.47
Recurring capital expenditures	(0.024)	(0.022)
AFFO per common share and unit, diluted	$0.47	$0.45

^{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 first quarter Supplemental Financial Information.}

Operations

In the first quarter, total revenue increased by $17.4 million
year-over-year, or 6.9 percent, to $270.7 million. This increase was
primarily attributable to growth in revenue from operating, lease-up and
acquisition communities.

In the first quarter, same-store NOI increased 4.1 percent
year-over-year, driven by same-store revenue growth of 3.8 percent and
same-store expense growth of 3.0 percent. Weighted average same-store
physical occupancy decreased by 10 basis points year-over-year to 96.8
percent. The first quarter annualized rate of turnover was 39.2 percent,
representing a 110 basis point decrease year-over-year.

Summary of Same-Store Results First Quarter 2019 versus First Quarter 2018

Region	Revenue Growth		Expense Growth/ (Decline)		NOI Growth		% of Same-Store NOI⁽¹⁾		Same–Store Occupancy⁽²⁾		Number of Same-Store Homes⁽³⁾

West	4.3	%	3.5	%	4.6	%	46.2	%	96.4	%	13,942
Mid-Atlantic	3.4	%	1.2	%	4.5	%	23.1	%	97.6	%	9,877
Southeast	4.3	%	3.6	%	4.6	%	13.0	%	96.7	%	7,683
Northeast	2.2	%	6.8	%	0.1	%	12.4	%	97.1	%	2,840
Southwest	3.4	%	(0.3	)%	6.1	%	5.3	%	96.5	%	3,617
Total	3.8	%	3.0	%	4.1	%	100.0	%	96.8	%	37,959

⁽¹⁾		^{Based on Q1 2019 SS NOI.}
⁽²⁾		^{Weighted average same-store occupancy for the quarter.}
⁽³⁾		^{During the first quarter, 37,959 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 first quarter, sequential same-store NOI increased by 1.0
percent, driven by same-store revenue growth of 1.1 percent and
same-store expense growth of 1.3 percent. Weighted average same-store
physical occupancy was flat sequentially at 96.8 percent.

Development and Redevelopment Activity

At the end of the first quarter, the Company’s development pipeline
totaled $747.9 million at its pro-rata ownership interest and was 96
percent funded. 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.

The Company commenced one new development project during the first
quarter, Vitruvian West Phase 2, a 366-home community located in
Addison, TX. The community is being developed in a 50%/50% joint venture
with MetLife for a total budgeted cost of $64.0 million (at 100 percent)
and is expected to be completed in early 2021.

The Company commenced the redevelopments of 10 Hanover Square, a
493-home community located in lower Manhattan, and Garrison Square, a
160-home community located in the Back Bay neighborhood of Boston. Total
spend on the two projects is budgeted at $35.5 million with expected
completions in late 2020/early 2021.

DCP Activity

At the end of the first quarter, the Company’s DCP investment, including
accrued return, totaled $213.1 million.

As previously announced, the Company exercised its fixed price options
and acquired the approximately 51 percent interests it did not own in
Parallel, a 386-home community completed in 2018 and located in the
Platinum Triangle submarket of Anaheim, CA, and CityLine II, a 155-home
community completed in 2018 and located in suburban Seattle, WA, from
its West Coast Development Joint Venture. The cash outlay for the
acquisitions totaled $131.7 million and the Company’s blended all-in
investment in the two communities was $183.9 million. At the time of
acquisition, average revenue per occupied home was $2,045 at Parallel
and $2,083 at CityLine II.

Subsequent to quarter end, the Company committed to providing $27.3
million of capital to the 173-home Modera Lake Merritt multifamily
development located in Oakland, CA. The investment yields 9.0% on the
Company’s capital outstanding with profit participation upon sale of the
community.

Wholly-Owned Transactional Activity

As previously announced, the Company acquired:

Leonard Pointe, a 188-home community located in Brooklyn, NY, for
$132.1 million or $702,700 per home. At the time of the acquisition,
the community had average monthly revenue per occupied home of $3,515,
occupancy of 99 percent and was four years old.
Peridot Palms, a 381-home community located in St. Petersburg, FL, for
$98.3 million or $258,000 per home. At the time of the acquisition,
the community had average monthly revenue per occupied home of $1,785,
occupancy of 94 percent and was two years old.
500 Penn Street NE, a development site located in the Union Market
district of Washington, D.C., for $27.1 million.
1590 Grove Street, a development site located in the Sloan’s Lake
submarket of Denver, CO, for $13.7 million.

Subsequent to quarter end, the Company:

Acquired Rodgers Forge, a 498-home community located in Towson, MD,
for $86.4 million or $173,500 per home. At the time of the
acquisition, the community had average monthly revenue per occupied
home of $1,263, occupancy of 91 percent and underwent a significant
renovation in 2010.
Entered into a contract to acquire Park Square, a 313-home community
located in King of Prussia, PA, for $108.5 million or $346,600 per
home. The community had average monthly revenue per occupied home of
$1,897 and was one year old when the contract was executed. Park
Square is expected to close during the second quarter, subject to
customary closing conditions.

Capital Markets and Balance Sheet Activity

During the first quarter:

The Company issued approximately 4.35 million common shares through
its at-the-market equity program at a weighted average net price of
$44.16 for proceeds of $192.2 million. Proceeds will be used for the
acquisitions outlined in this press release and general corporate
purposes.
The UDR/MetLife Joint Venture refinanced a $71.8 million loan at 4.40
percent with a $58.6 million secured loan at 3.77 percent.

At March 31, 2019, the Company had approximately $1.0 billion of
liquidity through a combination of cash and undrawn capacity on its
credit facilities.

The Company’s total indebtedness at March 31, 2019 was $3.6 billion. The
Company ended the quarter with fixed-rate debt representing 92.4 percent
of its total debt, a total blended interest rate of 3.7 percent and a
weighted average maturity of 5.5 years. The Company’s consolidated
leverage was 30.6 percent versus 33.1 percent a year ago, its
consolidated net-debt-to-EBITDAre was 5.3x versus 5.8x a year ago and
its consolidated fixed charge coverage ratio was 4.8x versus 4.5x a year
ago.

Dividend

As previously announced, the Company’s Board of Directors declared a
regular quarterly dividend on its common stock for the first quarter of
2019 in the amount of $0.3425 per share. The dividend was paid in cash
on April 30, 2019 to UDR common stockholders of record as of April 9,
2019. The first quarter 2019 dividend represented the 186^th
consecutive quarterly dividend paid by the Company on its common stock.

Outlook

For the second quarter of 2019, the Company has established the
following earnings guidance ranges:

Net income per share

$0.08 to $0.10

FFO per share

$0.50 to $0.52

FFOA per share

$0.50 to $0.52

AFFO per share

$0.45 to $0.47

For the full-year 2019, the Company revised its net income per
share guidance. No changes were made to the other previously provided
earnings guidance ranges:

Net income per share

$0.36 to $0.40

FFO per share

$2.05 to $2.09

FFOA per share

$2.03 to $2.07

AFFO per share

$1.87 to $1.91

For the full-year 2019, no changes were made to the Company’s
previously provided same-store growth and occupancy guidance ranges:

		Revenue growth									3.00% to 4.00%
		Expense growth									2.75% to 3.75%
		Net operating income growth									3.25% to 4.25%
		Physical Occupancy									96.8% to 97.0%

Additional assumptions for the Company’s second quarter and full-year
2019 guidance can be found on Attachment 15 of the Company’s first
quarter Supplemental Financial Information. A reconciliation of FFO per
share, FFOA per share and AFFO per share to GAAP Net income per share
can be found on Attachment 16(D) of the Company’s first 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 first 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
May 1, 2019 to discuss first 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 June 1, 2019,
by dialing 844-512-2921 for domestic and 412-317-6671 for international
and entering the confirmation number, 13689377, 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

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

Attachment 16(B)

UDR, Inc.
Definitions and Reconciliations
March
31, 2019
(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 other non-comparable items including, but not
limited to, acquisition-related costs, prepayment costs/benefits
associated with early debt retirement, impairment write-downs or gains
and losses on sales of real estate or other assets incidental to the
main business of the Company and income taxes directly associated with
those gains and losses, casualty-related expenses and recoveries,
severance costs and legal and other 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 related to the main business of
the Company or of investments in non-consolidated investees that are
directly attributable to decreases in the fair value of depreciable real
estate held by the investee, gains and losses from sales of depreciable
real estate related to the main business of the Company and income taxes
directly associated with those gains and losses, plus real estate
depreciation and amortization, and after adjustments for noncontrolling
interests, and the Company’s share of unconsolidated partnerships and
joint ventures. This definition conforms with the National Association
of Real Estate Investment Trust’s definition issued in April 2002 and
restated in November 2018. 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	1Q 2019
Income/(loss) from unconsolidated entities	$	49
Management fee		1,221
Interest expense		10,322
Depreciation		15,674
General and administrative		132
West Coast Development JV Preferred Return – Attachment 12(B)		(276	)
Developer Capital Program – Other (excludes Alameda Point Block 11)		(3,972	)
Other (income)/expense		(81	)
Total Joint Venture NOI at UDR’s Ownership Interest	$	23,069

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 2.875% 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	1Q 2019			4Q 2018			3Q 2018			2Q 2018			1Q 2018
Net income/(loss) attributable to UDR, Inc.	$	24,503		$	82,139		$	18,610		$	20,601		$	81,756
Property management		7,703			7,280			7,240			7,057			6,888
Other operating expenses		5,646			3,952			3,314			2,825			2,009
Real estate depreciation and amortization		112,468			106,469			107,881			106,520			108,136
Interest expense		33,542			38,226			34,401			31,598			29,943
Casualty-related charges/(recoveries), net		–			(243	)		678			746			940
General and administrative		12,467			10,955			11,896			12,373			11,759
Tax provision/(benefit), net		2,212			70			158			233			227
(Income)/loss from unconsolidated entities		(49	)		(36	)		1,382			2,032			1,677
Interest income and other (income)/expense, net		(9,813	)		(1,660	)		(1,188	)		(1,128	)		(2,759	)
Joint venture management and other fees		(2,751	)		(2,935	)		(2,888	)		(3,109	)		(2,822	)
Other depreciation and amortization		1,656			1,616			1,682			1,684			1,691
(Gain)/loss on sale of real estate owned, net of tax		–			(65,897	)		–			–			(70,300	)
Net income/(loss) attributable to noncontrolling interests		2,099			7,476			1,648			1,843			7,469
Total consolidated NOI	$	189,683		$	187,412		$	184,814		$	183,275		$	176,614

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 March 31, 2019, UDR owned or had an ownership position in
49,795 apartment homes including 366 homes under development. For over
46 years, UDR has delivered long-term value to shareholders, the best
standard of service to residents and the highest quality experience for
associates.


Attachment 1

UDR, Inc.
Consolidated Statements of Operations
(Unaudited) ⁽¹⁾

	Three Months Ended
	March 31,
In thousands, except per share amounts	2019			2018

REVENUES:
Rental income	$	267,922		$	250,483
Joint venture management and other fees		2,751			2,822
Total revenues		270,673			253,305

OPERATING EXPENSES:
Property operating and maintenance		41,939			40,587
Real estate taxes and insurance		36,300			33,282
Property management		7,703			6,888
Other operating expenses		5,646			2,009
Real estate depreciation and amortization		112,468			108,136
General and administrative		12,467			11,759
Casualty-related charges/(recoveries), net		–			940
Other depreciation and amortization		1,656			1,691
Total operating expenses		218,179			205,292

Gain/(loss) on sale of real estate owned		–			70,300
Operating income		52,494			118,313

Income/(loss) from unconsolidated entities		49			(1,677	)
Interest expense		(33,542	)		(29,943	)
Interest income and other income/(expense), net⁽²⁾		9,813			2,759

Income/(loss) before income taxes		28,814			89,452
Tax (provision)/benefit, net⁽²⁾		(2,212	)		(227	)

Net Income/(loss)		26,602			89,225
Net (income)/loss attributable to redeemable noncontrolling interests in the OP and DownREIT Partnership		(2,057	)		(7,390	)
Net (income)/loss attributable to noncontrolling interests		(42	)		(79	)

Net income/(loss) attributable to UDR, Inc.		24,503			81,756
Distributions to preferred stockholders – Series E (Convertible)		(1,011	)		(955	)

Net income/(loss) attributable to common stockholders	$	23,492		$	80,801

Income/(loss) per weighted average common share – basic:	$	0.08		$	0.30
Income/(loss) per weighted average common share – diluted:	$	0.08		$	0.30

Common distributions declared per share	$	0.3425		$	0.3225

Weighted average number of common shares outstanding – basic		277,002			267,546
Weighted average number of common shares outstanding – diluted		277,557			269,208

Contacts

UDR, Inc.
Chris Van Ens, 720.348.7762

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