Why Invest In UDR, Inc.

Press Release

UDR Announces Third Quarter 2007 Results

Company Release - 11/5/2007 4:01 PM ET


UDR, Inc. (NYSE: UDR):

    --  Recorded quarterly FFO of $0.47, the highest in the Company's

    --  Achieved 8.5% same community net operating income growth, the
        best level of the year.

    --  Realized 66.4% same community operating margin, the highest in
        over 10 years.

    --  Reported 94.9% occupancy, the highest level in over a year.

    --  Exited two markets, Denver and Atlanta, selling 2,310 homes
        for $181 million.

    --  Hosted 1 million unique web visitors in the first nine months
        of 2007, reaching the million visitor milestone three months
        earlier than in 2006.

UDR, Inc. (NYSE: UDR) today reported Funds From Operations ("FFO") of $68.7 million for the quarter ended September 30, 2007, an increase of 14% versus $60.2 million for the same period a year ago. The results produced FFO of $0.47 per share (diluted), compared to FFO of $0.41 per share (diluted) for the same period a year ago.

"Today we reported another quarter of strong results as evidenced by 14.6% growth in FFO per share and 8.5% growth in same community net operating income," stated Thomas W. Toomey, President and Chief Executive Officer. "We registered our twelfth consecutive quarter of sequential same community revenue growth and our total income per occupied home grew to $971 per month. The strong same community results combined with significant progress in our $2.7 billion development and redevelopment programs confirm that we are executing our strategy and are on the right path to continue growing our net asset value."

Company Vision and Growth Strategies

Earlier this year, the Company announced a new vision and growth strategies. The vision is to be the innovative multi-family real estate investment of choice. Four strategies were identified to guide decision making and accelerate growth. The strategies are to:

    --  Strengthen our portfolio

    --  Create value with RE3 and other income streams

    --  Innovate with Operations 2.0

    --  Source low cost capital

Progress on these strategies is described below and will be discussed during the Company's November 6, 2007 conference call.

      Portfolio Operating Performance and Same Community Results
              Third Quarter 2007 vs. Third Quarter 2006

                                                            Total Same
                      Revenue Expense  NOI     % of Total    Community
       Region          Growth  Growth  Growth  Portfolio(a)  Homes(b)
--------------------- ------- ------- ------- ------------- ----------

Western                  7.9%    0.1%   11.6%         31.8%     13,720
Mid-Atlantic             5.6%    0.3%    8.3%         27.1%     16,535
Southeastern             0.7%   -0.5%    1.4%         21.4%     13,774
Southwestern             5.0%   -2.2%   10.5%         16.4%      9,213
Midwestern               6.7%  -10.3%   18.5%          3.3%      2,974
Total                    5.2%   -0.8%    8.5%        100.0%     56,216

(a) Based on YTD 2007 NOI
(b) During the third quarter, 56,216 apartment homes, or 82% of total
 apartment homes, were classified as same community. The Company
 defines same community as all multi-family communities owned and
 stabilized for at least one year as of the beginning of the most
 recent quarter.
                        Same Community Results
 ($ in thousands, except rents & fees and total income per occupied

                                      3rd Qtr '07 3rd Qtr '06 % Change
                                      ----------- ----------- --------
Rent and other income                   $158,345    $151,394      4.6%
Concessions                                1,904       2,598    -26.7%
Bad debt                                   1,068       1,086     -1.7%
Total income                             155,373     147,710      5.2%
Expenses                                  52,133      52,567     -0.8%
Net operating income                     103,240      95,143      8.5%

Total income per occupied home              $971        $925      5.0%
Rents & fees per occupied home               926         887      4.4%
Average physical occupancy                  94.9%       94.7%   20 bps
Operating margin                            66.4%       64.4%  200 bps
Resident credit loss, % of effective
 rent                                        0.7%        0.7%    0 bps

Comparing third quarter 2007 to third quarter 2006 on a same community basis, 90% of the mature markets generated positive revenue growth.

         Same Community Results, Quarter/Sequential Quarter
 ($ in thousands, except rents & fees and total income per occupied

                                      3rd Qtr '07 2nd Qtr '07 % Change
                                      ----------- ----------- --------
Rent and other income                   $158,345    $156,516      1.2%
Concessions                                1,904       2,689    -29.2%
Bad debt                                   1,068         931     14.7%
Total income                             155,373     152,896      1.6%
Expenses                                  52,133      52,801     -1.3%
Net operating income                     103,240     100,095      3.1%

Total income per occupied home              $971        $958      1.4%
Rents & fees per occupied home               926         913      1.4%
Average physical occupancy                  94.9%       94.6%   30 bps
Operating margin                            66.4%       65.5%   90 bps
Resident credit loss, % of effective
 rent                                        0.7%        0.6%   10 bps

Comparing third quarter 2007 to second quarter 2007 on a same community basis, revenue increased by 1.6%, representing the twelfth consecutive quarter of sequential growth.

Strengthen our Portfolio

The Company is concentrating its apartment communities in markets where job growth expectations are above the national average, home affordability is low, and the demand/supply ratio for multi-family housing is favorable. Third quarter activity included:

    --  Exiting Colorado and Georgia, selling 884 homes in two Denver
        communities and selling 1,426 homes in six Atlanta
        communities. The total sales price for the homes was $181
        million, producing a gain of $72.9 million. At the time of
        sale, these communities were 96.8% occupied with average
        monthly rent of $743 per home. The Atlanta sale demonstrated
        the value creation of the Company's kitchen and bath
        renovation program. The Company invested $4.4 million in the
        program, or an average of $8,765 per home, upgrading 35% of
        the homes over the past two years. These homes realized
        average monthly rent 13.7% higher than non-renovated homes.
        The Company estimates that the kitchen and bath program
        produced $10.8 million of additional sales proceeds, resulting
        in $6.4 million of value creation.

    --  The acquisition of The Kensley Apartments, a gated community
        with 300-apartment homes in Jacksonville, Florida. The
        community was purchased for $34 million and is located in
        close proximity to an existing property, providing economies
        of scale. The homes average 913 square feet and generate
        average market rent of $920 per home. The community was
        completed in 2004.

The Company has finished redevelopment of four communities, representing complete renovation of 1,536 homes at an average incremental investment of $35,080 per home. Current quarter annualized net operating income at these communities is $10.9 million, up 58% from pre-renovated net operating income. The incremental pro forma return on the capital invested for renovations ranges between 8.5% and 11.5%.

Redevelopment activity is underway at eight additional communities at a budgeted cost of $138 million. Annualized third quarter net operating income at these communities was $10.0 million. The Company believes post-renovated stabilized annual net operating income at these communities will increase by 126% to a total of $22.6 million.

Create Value with RE3 and Other Income Streams

In the first quarter of 2007, the Company established RE3 to focus on development, land entitlement and short-term hold investments.

In September, the Company added to its future development pipeline by purchasing property in the Dupont Circle neighborhood of Washington, D.C., for $30.5 million. The 40,000-square-foot site at 2400 14th Street, NW will be developed as a residential/retail property, including more than 250 apartment homes and approximately 16,000 square feet of retail space.

Development activity commenced in Addison, Texas, where an assemblage of 100 acres was completed in the second quarter. The city of Addison has approved doubling the density to over 5,500 homes and zoning for 500,000 square feet of retail and office space. The Company anticipates that the development will be completed in conjunction with one or more institutional investors.

"Our development team continues to do an outstanding job of locating prime locations in targeted markets, following through on entitlements and zoning, and on executing our strategy of growing RE3," stated W. Mark Wallis, Senior Executive Vice President. "We have built a $2.7 billion development and redevelopment pipeline that will deliver $400 to $500 million of homes annually for the next several years."

Construction of 620 homes in three new communities representing an investment of $81.4 million will be complete by the end of 2007. Leasing at these new developments is meeting underwritten pro forma projections.

Gains on property sales contributed $0.07 to third quarter FFO. In September, RE3 sold a 400-home community in San Ramon, California, for $100.5 million. The property was purchased by the Company for $90 million in June 2006. At the time of sale, occupancy was 96.5%.

"I'm extremely pleased with our sales execution during a volatile environment," continued Wallis. "We realized proceeds of $281 million from the Atlanta, Denver and San Ramon sales. These funds are being reinvested in new developments and redevelopments in attractive growth markets."

Innovate with Operations 2.0

The Company demonstrated progress implementing its new operating model, Operations 2.0, that is focused on growing operating income through automation and improving the ease of doing business with the Company.

In July, a redesigned web site was launched using new, customer-centric web technology. The new site improves the ease of doing business online through features such as click-to-chat, enhanced mapping, furniture arranger, additional pricing options and mobile web accessibility. In the first month following the launch, the Company experienced the highest unique visitor traffic in its history. Nearly 40% of third quarter leasing was done via the internet, up from 29% in the same period last year. These initiatives helped reduce customer acquisition costs by 37% versus last year.

This month the Company plans to launch a new Spanish-language site, marketing to Latino Americans, the nation's fastest-growing ethnic group. The site will offer over 4,000 Spanish translated web pages and include apartments for rent search resources. It will be found at http://es.udr.com and will also be found on any web-enabled mobile device.

Source Low Cost Capital

The Company's fourth strategy is to leverage operating, financial and investment platforms to attract low cost capital alternatives.

In July, the Company amended its existing $500 million unsecured revolving credit facility increasing it to $600 million and extending its maturity to July 2012. Under certain circumstances, the Company may increase the facility to $750 million. Based on current credit ratings, the credit facility carries an interest rate equal to LIBOR plus a spread of 47.5 basis points, which represents a 10 basis point reduction to the previous unsecured revolver.

In November, the Company established a $650 million joint venture with a large domestic institutional partner. The venture will own a portfolio of 3,690 stabilized homes located in nine multi-family communities in Austin, Dallas and Houston, Texas, and another 320 homes currently under development in Dallas. In addition to this $350 million initial pool of assets, the joint venture contains a $300 million expansion feature for future acquisitions. At closing the venture secured a $232 million, seven year, interest only, 5.61% non-recourse mortgage on the properties and a $22 million six year, interest only, 5.55% non-recourse mortgage to be funded upon completion of the homes under development. The Company realized proceeds of approximately $330 million for the properties and the Company retained a 20% interest in the venture. In addition to the upfront proceeds, the Company has the opportunity for future proceeds after certain IRR hurdles are achieved.

Earnings Guidance

The Company believes that financial results for 2007 will be affected by international, national and regional economic trends and events, credit market volatility, the acquisition and/or disposition of apartment communities, portfolio repositioning, financing activities, and other factors. The Company believes the current street consensus estimate of $0.50 FFO per share for the fourth quarter of 2007 is reasonable assuming a contribution of $0.07 to $0.08 in FFO per share in gains on sales in its RE3 subsidiary. While the Company is currently negotiating several sales transactions, there can be no assurance that these transactions will close in the fourth quarter and that the gains will occur. All guidance is based on the current expectations and judgment of the Company's management team.

Supplemental Information

The Company offers Supplemental Information that provides details regarding the financial position and operating results of the Company. This Supplemental Information is available on the Company's website at:


    Conference Call Information

    Date: November 6, 2007

    Time: 1:00 p.m. Eastern Time

    To Participate in the Telephone Conference Call:

    Domestic: 800-218-0204

    International: 303-262-2075

    If you have any questions, please contact:

    Gloria Price: 720-283-6132

    E-mail: gprice@udr.com

Conference Call Playback can be accessed through November 13, 2007:

    Domestic: 800-405-2236

    International: 303-590-3000

    Passcode: 11098224#

    Webcast and Podcast:

The conference call will also be available on UDR's website at www.udr.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay and downloadable podcast of the call will also be available for 90 days on UDR's website.

About UDR, Inc.

UDR, Inc. (NYSE: UDR) is a leading multi-family real estate investment trust (REIT) 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, 2007, UDR owned 68,617 apartment homes and had 6,491 homes under development and another 1,108 homes under contract for development in its pre-sale program. For over 30 years, UDR has delivered long-term value to shareholders, the best standard of service to residents, and the highest quality experience for associates. An S&P 400 company, UDR is the third largest apartment REIT in the nation. Additional information can be found on the Company's website at www.udr.com.

Statements contained in this press release, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the Company's use of words such as, "expects," "plans," "estimates," "projects," "intends," "believes," and similar expressions that do not relate to historical matters. Such forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, 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 competition and competitive pricing, acquisitions or new developments not achieving anticipated results, delays in completing developments and lease-ups on schedule, expectations on job growth, home affordability and demand/supply ratio for multi-family housing, expectations concerning redevelopment activities, expectations on occupancy levels, expectations concerning the Texas joint venture, expectations that automation will help grow net operating income, expectations on post-renovated stabilized annual operating income, exceptions 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. All forward-looking statements in this press release are made as of today, based upon information known to management as of the date hereof. The Company assumes no obligation to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized.


Attachment 1

                Consolidated Statements of Operations

                               Three Months Ended   Nine Months Ended
                                  September 30,       September 30,
                               ------------------- -------------------
 In thousands, except per
  share amounts                  2007      2006      2007      2006
 ------------------------------------------------- -------------------

 Rental income                 $183,065  $170,393  $534,994  $497,490

 Rental expenses:
      Real estate taxes and
       insurance                 21,130    19,188    63,718    60,191
      Personnel                  16,593    16,311    50,525    48,048
      Utilities                  10,519     9,597    29,757    28,642
      Repair and maintenance     10,881    10,839    30,649    29,303
      Administrative and
       marketing                  5,087     5,190    14,770    15,122
      Property management         5,212     5,126    15,359    15,211
      Other operating expenses      321       308       946       907
                               --------- --------- --------- ---------
                                 69,743    66,559   205,724   197,424
 Non-property income:
      Sale of technology
       investment                     -       796         -       796
      Other income                  372       451     1,546     2,352
                               --------- --------- --------- ---------
                                    372     1,247     1,546     3,148
 Other expenses:
      Real estate depreciation
       and amortization          64,831    57,471   189,487   164,738
      Interest                   46,110    47,068   133,075   137,969
      General and
       administrative             8,720     7,381    28,150    20,981
      Other depreciation and
       amortization                 831       816     2,584     2,203
                               --------- --------- --------- ---------
                                120,492   112,736   353,296   325,891

 Loss before minority
  interests and discontinued
  operations                     (6,798)   (7,655)  (22,480)  (22,677)
 Minority interests of outside
  partnerships                      (45)      (33)     (111)      (87)
 Minority interests of
  unitholders in operating
  partnerships                      587       795     1,946     2,179
                               --------- --------- --------- ---------
 Loss before discontinued
  operations, net of minority
  interests                      (6,256)   (6,893)  (20,645)  (20,585)
 Income from discontinued
  operations, net of minority
  interests (A)                  85,085    66,245   138,003   124,130
                               --------- --------- --------- ---------
 Net income                      78,829    59,352   117,358   103,545
 Distributions to preferred
  stockholders - Series B             -    (2,911)   (4,819)   (8,733)
 Distributions to preferred
  stockholders - Series E
  (Convertible)                    (931)     (931)   (2,794)   (2,794)
 Distributions to preferred
  stockholders - Series G        (2,328)        -    (3,113)        -
 Premium on preferred stock
  repurchases                         -         -    (2,261)        -
                               --------- --------- --------- ---------
 Net income available to
  common stockholders           $75,570   $55,510  $104,371   $92,018
                               ========= ========= ========= =========

 Earnings per weighted average
  common share - basic and
    Loss from continuing
     operations available to
     common stockholders, net
     of minority interests       ($0.07)   ($0.08)   ($0.25)   ($0.24)
    Income from discontinued
     operations, net of
     minority interests           $0.63     $0.50     $1.03     $0.93
    Net income available to
     common stockholders          $0.56     $0.42     $0.78     $0.69

 Common distributions declared
  per share                     $0.3300   $0.3125   $0.9900   $0.9375

 Weighted average number of
  common shares outstanding -
  basic                         133,854   133,712   134,362   133,660
 Weighted average number of
  common shares outstanding -
  diluted                       133,854   133,712   134,362   133,660

(A) Discontinued operations represents all properties sold since
 January 1, 2005 and properties that are currently classified as held
 for disposition at September 30, 2007. Gains on sales are included in
 discontinued operations.



 Attachment 2

                        Funds From Operations

                                Three Months Ended  Nine Months Ended
                                  September 30,       September 30,
                                ------------------ -------------------
 In thousands, except per share
  amounts                         2007      2006     2007      2006
 ------------------------------------------------- -------------------

 Net income                      $78,829  $59,352  $117,358  $103,545

 Continuing Operations:
    Distributions to preferred
     stockholders                 (3,259)  (3,842)  (10,726)  (11,527)
    Real estate depreciation
     and amortization             64,831   57,471   189,487   164,738
    Minority interests of
     unitholders in operating
     partnerships                   (587)    (795)   (1,946)   (2,179)
    Contribution of
     unconsolidated joint
     ventures                          3        -       306         -

 Discontinued Operations:
    Real estate depreciation         (41)   4,379     3,779    14,824
    Minority interests             4,914    4,303     7,970     8,064
    Net gains on the sale of
     land and depreciable
     property                    (86,804) (65,669) (137,256) (114,497)
    RE3 gain on sales, net of
     taxes                         9,872    4,105    21,038    19,109
                                --------- -------- --------- ---------
 Funds from operations ("FFO")
  - basic                        $67,758  $59,304  $190,010  $182,077
                                ========= ======== ========= =========

    Distribution to preferred
     stockholders - Series E
     (Convertible)                   931      931     2,794     2,794

                                --------- -------- --------- ---------
 Funds from operations -
  diluted                        $68,689  $60,235  $192,804  $184,871
                                ========= ======== ========= =========

 Weighted average number of
  common shares and OP Units
  outstanding - basic            141,311  142,437   142,167   142,400
 Weighted average number of
  common shares, OP Units, and
  common stock equivalents
  outstanding - diluted          146,502  148,104   147,592   147,896

 FFO per common share - basic      $0.48    $0.42     $1.34     $1.28
                                ========= ======== ========= =========
 FFO per common share - diluted    $0.47    $0.41     $1.31     $1.25
                                ========= ======== ========= =========

FFO is defined as net income (computed in accordance with GAAP),
 excluding gains (or losses) from sales of depreciable property,
 premiums or original issuance costs associated with preferred stock
 redemptions, 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. UDR considers 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 flows as a measure of UDR's
 activities in accordance with generally accepted accounting
 principles and is not necessarily indicative of cash available to
 fund cash needs.

RE3 gain on sales, net of taxes, is defined as net sales proceeds less
 a tax provision and the gross investment basis of the asset before
 accumulated depreciation. We consider FFO with RE3 gain on sales, net
 of taxes, to be a meaningful supplemental measure of performance
 because the short-term use of funds produce profits which differ from
 the traditional long-term investment in real estate for REITs.



 Attachment 3

                     Consolidated Balance Sheets

                                            September 30, December 31,
 In thousands, except share and per share
  amounts                                       2007          2006
 ------------------------------------------ --------------------------


 Real estate owned:
  Real estate held for investment             $5,536,554   $5,233,714
   Less: accumulated depreciation             (1,368,335)  (1,183,632)
                                            ------------- ------------
                                               4,168,219    4,050,082
  Real estate under development (net of
   accumulated depreciation of $721 and
   $527)                                         320,898      203,786
  Real estate held for disposition (net of
   accumulated depreciation of $9,936 and
   $69,568)                                       41,298      312,527
                                            ------------- ------------
  Total real estate owned, net of
   accumulated depreciation                    4,530,415    4,566,395
 Cash and cash equivalents                         2,353        2,143
 Restricted cash                                   5,883        5,602
 Deferred financing costs, net                    37,788       35,160
 Notes receivable                                  6,500       10,500
 Investment in unconsolidated joint
  ventures                                        28,431        5,850
 Other assets                                     54,870       37,004
 Other assets - real estate held for
  disposition                                      8,358       13,221
                                            ------------- ------------
  Total assets                                $4,674,598   $4,675,875
                                            ============= ============


 Secured debt                                 $1,213,129   $1,182,919
 Unsecured debt                                2,225,498    2,155,866
 Real estate taxes payable                        40,449       24,592
 Accrued interest payable                         28,651       34,347
 Security deposits and prepaid rent               29,471       24,357
 Distributions payable                            49,705       46,936
 Accounts payable, accrued expenses, and
  other liabilities                               39,040       55,037
 Other liabilities - real estate held for
  disposition                                      1,702        7,733
                                            ------------- ------------
  Total liabilities                            3,627,645    3,531,787

 Minority interests                               59,247       88,833

 Stockholders' equity
  Preferred stock, no par value; 50,000,000
   shares authorized 0 shares of 8.60%
   Series B Cumulative Redeemable issued
   and outstanding (5,416,009 shares at
   December 31, 2006)                                  -      135,400
  2,803,812 shares of 8.00% Series E
   Cumulative Convertible issued and
   outstanding (2,803,812 shares at
   December 31, 2006)                             46,571       46,571
  5,400,000 shares of 6.75% Series G
   Cumulative Redeemable issued and
   outstanding (0 shares at December 31,
   2006)                                         135,000            -
  Common stock, $0.01 par value;
   250,000,000 shares authorized
   134,328,648 shares issued and
   outstanding (135,029,126 shares at
   December 31, 2006)                              1,343        1,350
  Additional paid-in capital                   1,644,905    1,682,809
  Distributions in excess of net income         (840,113)    (810,875)
                                            ------------- ------------
  Total stockholders' equity                     987,706    1,055,255
                                            ------------- ------------
  Total liabilities and stockholders'
   equity                                     $4,674,598   $4,675,875
                                            ============= ============


Source: UDR, Inc.

Contact: UDR, Inc. Larry Thede, 720-283-2450 ir@udr.com www.udr.com