Why Invest In UDR, Inc.

Press Release

UDR Announces Second Quarter 2008 Results

Company Release - 8/4/2008 8:48 PM ET

DENVER--(BUSINESS WIRE)--

UDR, Inc. (NYSE: UDR):

    --  Achieved 16th consecutive quarter of same community revenue
        growth, up 4.4 percent year-over-year and up 1.2 percent
        sequentially

    --  Delivered 7.1 percent same community net operating income
        (NOI) growth

    --  Completed $125 million of acquisitions in the second quarter
        and another $160 million during July, utilizing exchange funds
        from the March, 2008 portfolio sale

    --  Delivered a new development community with 320 homes

    --  Completed redevelopment of 672 homes at two communities

    --  Achieved 170 basis-point improvement in operating margin, to
        69.2 percent

UDR, Inc. (NYSE: UDR) today reported Funds from Operations ("FFO") of $49.8 million, or $0.36 per diluted share, for the quarter ended June 30, 2008, versus $66.3 million, or $0.45 per diluted share, for the same period a year ago. Comparing year-over-year results, growth in same store net operating income was offset by lower income due to the March 3, 2008 sale of 25,684 apartment homes for $1.7 billion and lower contribution from gains on sales in RE(3). Second quarter 2007 FFO included $6.8M or $0.05 per share in gains on sales in RE(3).

"Today's results continue to demonstrate the benefits of our portfolio transformation which concentrated our holdings in newer communities with higher rents and lower capital requirements," said Thomas W. Toomey, President and Chief Executive Officer of UDR. "We have reinvested $850 million of the $1.7 billion sales proceeds into targeted markets. Total monthly income per home is approaching $1,200, and the average age of the portfolio is 15 years. Fifty percent of second quarter same store net operating income was generated from Pacific Coast communities which grew their net operating income by an average of 9.5 percent over last year."

           Operating Performance and Same-community Results
             Second Quarter 2008 vs. Second Quarter 2007
----------------------------------------------------------------------


                            Revenue Expense  NOI   % of Same-community
          Region            Growth  Growth  Growth    Portfolio(a)
--------------------------- ------- ------- ------ -------------------

Western                        6.8%    0.7%   9.5%               50.1%
Mid-Atlantic                   3.5%   -0.3%   5.2%               23.4%
Southeastern                   0.0%   -4.8%   2.8%               22.5%
Southwestern                   7.4%   -3.1%  13.6%                4.0%
----------------------------------------------------------------------
Total                          4.4%   -1.2%   7.1%              100.0%
======================================================================

(a) Based on YTD 2008 NOI.
The Company defines same-community as all multifamily communities
 owned and stabilized for at least one year as of the beginning of the
 most recent quarter. Of UDR's 43,045 wholly owned apartment homes,
 32,898, or 76%, qualify as same-community homes.
                      Same-community Results
           Second Quarter 2008 vs. Second Quarter 2007
($ in thousands, except rents & fees and total income per occupied
                               home)
------------------------------------------------------------------

                                   2nd Qtr    2nd Qtr
                                      '08        '07    Change (%)
                                  ---------- ---------- --------------
Rent and other income             $111,001   $108,425            2.4
Concessions                            229      1,982          -88.4
Bad debt                               394        670          -41.2
----------------------------------------------------------------------
Total income                       110,378    105,773            4.4
Expenses                            33,995     34,424           -1.2
----------------------------------------------------------------------
Net operating income              $ 76,383   $ 71,349            7.1
======================================================================

Total income per occupied home    $  1,179   $  1,131            4.2
Average physical occupancy (%)          94.9       94.6         30 bps
Operating margin (%)                    69.2       67.5        170 bps
Resident credit loss, % of
 effective rent                          0.4        0.6         20 bps

Comparing second quarter 2008 to second quarter 2007 on a same-
 community basis, 86% of the mature markets generated revenue growth.
                        Same-community Results
              Second Quarter 2008 vs. First Quarter 2008
 ($ in thousands, except rents & fees and total income per occupied
                                 home)
----------------------------------------------------------------------

                                   2nd Qtr    1st Qtr
                                      '08        '08    Change (%)
                                  ---------- ---------- --------------
Rent and other income             $111,001   $109,843            1.1
Concessions                            229        380          -39.7
Bad debt                               394        418           -5.7
----------------------------------------------------------------------
Total income                       110,378    109,045            1.2
Expenses                            33,995     34,241           -0.7
----------------------------------------------------------------------
Net operating income              $ 76,383   $ 74,804            2.1
======================================================================

Total income per occupied home    $  1,179   $  1,169            0.9
Average physical occupancy (%)          94.9       94.6         30 bps
Operating margin (%)                    69.2       68.6         60 bps
Resident credit loss, % of
 effective rent                          0.4        0.4          0 bps

Comparing second quarter 2008 to first quarter 2008 on a same-
 community basis, 77% of the mature markets generated revenue growth.

Overview

During the second quarter, key initiatives were completed in the areas of strengthening the Company's portfolio, redevelopment, development and operations. Progress is described below and will also be discussed during the Company's August 5, 2008 conference call.

Strengthen Our Portfolio
----------------------------------------------------------------------

In the second quarter and early in the third quarter, the Company
 acquired 1,001 homes in four communities:

    Community         Location       Acq. Year    #    Appx.   % Occ.
                                          Built Homes Mo. Rent 6/30/08
Mesa Verde Villas Costa Mesa, CA    May
 (PineBrook II)                      '08   1975   296   $1,760     94%
Hearthstone at    Everett, WA       May
 Merrill Creek                       '08   2000   220   $1,200     94%
Almaden Lake      San Jose, CA      July
 Village                             '08   1999   250   $1,650     92%
Island Square     Mercer Island, WA July
                                     '08   2007   235   $2,000     87%

"These communities strengthen our presence in West Coast markets and are an excellent fit with our acquisition criteria -- which targets urban, infill locations with strong job growth, low single home affordability, located close to public transportation," said Mark Wallis, Senior Executive Vice President of UDR. "Mesa Verde Villas is located between two existing UDR communities, Pine Brook Village and Villa Venetia, and we expect this acquisition to create value immediately through operating efficiencies in leasing staff, maintenance staff and purchasing. Hearthstone at Merrill Creek is strategically located at the north end of Seattle's Technology Corridor, in close proximity to major employers such as Boeing, TRW Aeronautical Systems, Fluke Corporation, and Campbell's Soup. Island Square is a new mixed-use community located on Mercer Island, minutes from both downtown Seattle and Bellevue. Almaden Lake Village is adjacent to light rail with access to major employers including Google, Yahoo, eBay, Apple, Intel and Adobe," Wallis added.

The total purchase price for the four communities was $284.8 million. The purchases were completed using exchange funds from the previously announced, March 3, 2008 portfolio sale.

Redevelopment Update

During the second quarter of 2008, the Company completed redevelopment of 672 homes at two communities, including Wellington Place at Manassas, VA and Ellicott Grove (formerly Dominion Great Oaks) in Baltimore, MD. The Company invested $25.8 million renovating these communities and expects to grow average monthly rent by nearly $270 per month above pre-redevelopment rents, grow stabilized NOI by 37 percent and create an estimated $26.9 million of value, net of costs. The incremental pro forma return on the capital invested ranges between 6.6 percent and 7.8 percent.

As of June 30, 2008, the Company's redevelopment pipeline included three communities with 756 apartment homes. Total redevelopment investment by the company in these properties is expected to be approximately $35.0 million, with $17.9 million invested as of June 30, 2008.

Development Update

During the second quarter, UDR completed a 320-home community in Houston at a total cost of $21.1 million, or $66,075 per home. Tiburon is currently 80.4 percent leased at an average monthly rent of $931. The development was completed with an expected yield to cost of 6.8%.

At June 30, 2008, the Company's development and redevelopment activities totaled $2.6 billion. Approximately 6 percent is completed and in lease up, 53 percent is under construction, and 41 percent represents future development opportunities and contains operating properties generating NOI. The Company has discretion to commence development or continue operating those properties depending on market conditions.

Operations Update

The Company reported solid year-over-year improvements in same-store community results including:

    --  a 7.1 percent increase in net operating income to $76.4
        million;

    --  a 4.4 percent increase in revenues to $110.4;

    --  a 1.2 percent reduction in expenses to $34.0 million;

    --  a 4.2 percent increase in average monthly revenue per occupied
        home to $1,179;

    --  a 30 basis point increase in occupancy to 94.9 percent; and

    --  a 170 basis point improvement in operating margin to 69.2
        percent.

Nineteen of the Company's 22 markets posted year-over-year revenue growth, with ten of these markets exceeding 5 percent growth and two of these markets exceeding 10 percent growth.


    UDR continued its mobile marketing efforts with the introduction
of Quick Response bar code technology now displayed on the UDR.com
homepage and in print marketing materials. Since the Company's mobile
online apartment reservations capability
(http://udrapartments.mobi) was launched on the Internet in April
2008, over 4,700 apartment page views have been recorded and 41
apartment leads have been generated at a zero
cost-of-acquisition. Overall, 46 percent of second quarter move-ins
was initiated via the Internet, an 8 percent year-over-year increase.

The Company completed activating its Level One Call Center during the quarter. This provides 24x7 access to a representative who can provide information to potential residents and assure that no call from a prospect, customer or resident is unanswered.

Capital Markets Update

During the second quarter of 2008, the company repurchased 963,200 of its outstanding common shares at an average price of $23.65 per share, or $22.8 million in the aggregate, under its previously announced share repurchase program. Total shares repurchased in the first six months of 2008 were 5.75 million at an average price of $23.47 per share.

The Company also repurchased $35 million of outstanding unsecured UDR senior notes at a discount to par value, representing a 6.32 percent yield to maturity, recognizing net gains of $1.2 million in FFO.

On July 1, 2008, the Company announced that its Board of Directors declared the following dividends:

    --  a regular quarterly dividend on its common stock for the
        second quarter of 2008 in the amount of $0.33 per share,
        payable on July 31, 2008 to UDR common stock shareholders of
        record as of July 11, 2008;

    --  a regular quarterly dividend on its Series E Preferred Stock
        for the second quarter of 2008 in the amount of $0.3322 per
        share. The preferred dividend is payable on July 31, 2008 to
        Series E preferred stock shareholders of record as of July 11,
        2008; and

    --  a regular quarterly dividend on its Series G Preferred Stock
        for the period of April 30, 2008 to, but not including, July
        30, 2008 in the amount of $0.421875 per share, payable on July
        30, 2008 to Series G preferred stock shareholders of record as
        of July 11, 2008.

    2008 Guidance

For full year 2008, the Company reaffirms estimated FFO of $1.50 to $1.55 per diluted share (excluding potential gains on sales from its RE(3) subsidiary). Same-store growth expectations are reaffirmed including revenue growth of 4.0 to 4.5 percent, expense growth of 3.0 to 3.5 percent, and net operating income growth of 5.0 to 5.5 percent. All guidance is based on the current expectations and judgment of the Company's management team.

    UDR Los Angeles Property Tour Scheduled for November 18, 2008

UDR and Essex Property Trust plan to host a Los Angeles property tour on Tuesday, November 18, 2008, prior to the NAREIT Annual Convention on November 19 - 21 in San Diego, California. Company management will host a lunch and tour two communities in Marina del Rey, California. Additional information will be made available on the Investor Relations section of the UDR Website at www.udr.com.

Conference Call Information
----------------------------------------------------------------------

Date: Aug. 5, 2008
Time: 1:00 p.m. Eastern Time

To Participate in the Telephone Conference Call:
----------------------------------------------------------------------
Dial in at least five minutes prior to start time.
Domestic: 800-240-4186
International: 303-262-2191
If you have any questions, please contact:
Rebecca Winning: 720-283-6121
E-mail: rwinning@udr.com

Conference Call Playback:
----------------------------------------------------------------------
Domestic: 800-405-2236
International: 303-590-3000
Passcode: 11116518#
The playback can be accessed through Aug. 12, 2008.

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.
    Full Text of the Earnings Report and Supplemental Data

    --  Internet -- The full text of the earnings report and
        supplemental data will be available immediately following the
        earnings release to the wire services on Aug. 4, 2008 at the
        UDR website, at
        http://www.snl.com/irweblinkx/corporateprofile.aspx?iid=103025

    --  Mail -- For those without Internet access, the second quarter
        2008 earnings release will be available by mail or fax, on
        request. To receive a copy, please call UDR Investor Relations
        at 720-283-6121.

    About UDR, Inc.

UDR, Inc. (NYSE:UDR), an S&P 400 company, is a leading multifamily 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 June 30, 2008, UDR owned 43,045 apartment homes and had 4,991 homes under development and another 1,133 homes under contract for development in its pre-sale program. For over 35 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.

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 development and redevelopment activities, expectations on occupancy levels, expectations concerning the Vitruvian Park project, including expectations that the Company will be able to secure one of more institutional investor-partners, 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
-------------------------------
                                 UDR
                Consolidated Statements of Operations
                             (Unaudited)


                               Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                               ------------------- -------------------
In thousands, except per share
 amounts                         2008      2007      2008      2007
-------------------------------------------------- -------------------

Rental income                  $138,834  $123,689  $264,399  $245,095

Rental expenses:
        Real estate taxes and
         insurance               15,785    15,139    29,284    29,623
        Personnel                11,890    10,441    23,532    21,558
        Utilities                 6,705     5,296    13,684    12,314
        Repair and maintenance    7,363     6,590    14,059    13,124
        Administrative and
         marketing                3,279     3,265     6,517     6,315
        Property management       3,818     3,401     7,271     6,740
        Other operating
         expenses                 1,020       314     2,024       625
                               --------- --------- --------- ---------
                                 49,860    44,446    96,371    90,299
Non-property income:
        Other income              9,324     3,546    14,842     8,558
                               --------- --------- --------- ---------
                                  9,324     3,546    14,842     8,558
Other expenses:
        Real estate
         depreciation and
         amortization            62,507    47,730   114,942    92,200
        Interest (net of gains
         on debt extinguishment
         of $1.2 million, $0,
         $6.3 million and $0,
         respectively)           36,706    38,230    72,497    77,956
        General and
         administrative           9,931     9,670    19,700    19,562
        Other depreciation and
         amortization               944       802     1,873     1,524
                               --------- --------- --------- ---------
                                110,088    96,432   209,012   191,242

Loss before minority interests
 and discontinued operations    (11,790)  (13,643)  (26,142)  (27,888)
Minority interests of outside
 partnerships                       (38)      (37)      (97)      (67)
Minority interests of
 unitholders in operating
 partnerships                       468     1,103     1,594     2,137
                               --------- --------- --------- ---------
Loss before discontinued
 operations, net of minority
 interests                      (11,360)  (12,577)  (24,645)  (25,818)
Income from discontinued
 operations, net of minority
 interests (1)                   12,225    19,273   750,769    64,347
                               --------- --------- --------- ---------
Net income                          865     6,696   726,124    38,529
Distributions to preferred
 stockholders - Series B              -    (1,908)        -    (4,819)
Distributions to preferred
 stockholders - Series E
 (Convertible)                     (931)     (931)   (1,862)   (1,862)
Distributions to preferred
 stockholders - Series G         (2,278)     (785)   (4,556)     (785)
Premium on preferred stock
 repurchases                          -    (2,261)        -    (2,261)
                               --------- --------- --------- ---------
Net income available to common
 stockholders                  $ (2,344) $    811  $719,706  $ 28,802
                               ========= ========= ========= =========

Earnings per weighted average common share - basic and diluted:
     Loss from continuing
      operations available to
      common stockholders, net
      of minority interests      ($0.12)   ($0.13)   ($0.24)   ($0.27)
     Income from discontinued
      operations, net of
      minority interests       $   0.10  $   0.14  $   5.80  $   0.48
     Net income available to
      common stockholders        ($0.02) $   0.01  $   5.56  $   0.21

Common distributions declared
 per share                     $ 0.3300  $ 0.3300  $ 0.6600  $ 0.6600

Weighted average number of
 common shares outstanding -
 basic                          127,436   134,727   129,550   134,620
Weighted average number of
 common shares outstanding -
 diluted                        127,436   134,727   129,550   134,620

(1) Discontinued operations represents all properties sold and
 properties that are currently classified as held for disposition at
 June 30, 2008, except for nine operating properties sold to a joint
 venture in the fourth quarter of 2007 that have been included in
 continuing operations in accordance with the provisions of FAS 144,
 "Accounting for the Impairment or Disposal of Long-Lived Assets" and
 EITF No. 03-13.
Attachment 2
------------------------------

                                 UDR
                        Funds From Operations
                             (Unaudited)


                              Three Months Ended    Six Months Ended
                                   June 30,             June 30,
                              ------------------- --------------------
In thousands, except per share
 amounts                        2008      2007       2008      2007
----------------------------------------------------------------------

Net income                    $    865  $  6,696  $ 726,124  $ 38,529

   Distributions to preferred
    stockholders                (3,209)   (3,624)    (6,418)   (7,466)
   Real estate depreciation
    and amortization,
    including discontinued
    operations                  62,507    64,317    114,942   128,477
   Minority interest,
    including discontinued
    operations                     376         1     49,159     1,697
   Real estate depreciation
    and amortization on
    unconsolidated joint
    ventures                     1,317       693      2,062       835
   Net gains on the sale of
    depreciable property,
    excluding RE3              (13,027)   (2,762)  (780,989)  (39,819)
                              --------- --------- ---------- ---------
Funds from operations ("FFO")
 - basic                      $ 48,829  $ 65,321  $ 104,880  $122,253
                              ========= ========= ========== =========

   Distribution to preferred
    stockholders - Series E
    (Convertible)                  931       931      1,862     1,862

                              --------- --------- ---------- ---------
Funds from operations -
 diluted                      $ 49,760  $ 66,252  $ 106,742  $124,115
                              ========= ========= ========== =========

Weighted average number of
 common shares and OP Units
 outstanding - basic           136,324   142,493    138,476   142,603
Weighted average number of
 common shares, OP Units, and
 common stock equivalents
 outstanding - diluted         139,853   148,114    141,948   148,623

FFO per common share - basic  $   0.36  $   0.46  $    0.76  $   0.86
                              ========= ========= ========== =========
FFO per common share - diluted$   0.36  $   0.45  $    0.75  $   0.84
                              ========= ========= ========== =========


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.
Attachment 3
---------------------------------------------------------------------

                                 UDR
                     Consolidated Balance Sheets
                             (Unaudited)


In thousands, except share and per share       June 30,   December 31,
 amounts                                         2008         2007
----------------------------------------------------------------------

ASSETS

Real estate owned:
  Real estate held for investment             $4,977,957   $4,129,460
   Less: accumulated depreciation               (935,369)    (821,991)
                                              ----------- ------------
                                               4,042,588    3,307,469
  Real estate under development
     (net of accumulated depreciation of $511
      and $963)                                  327,564      343,768
  Real estate held for disposition
     (net of accumulated depreciation of
      $12,876 and $548,805)                       45,019      929,545
                                              ----------- ------------
  Total real estate owned, net of accumulated
   depreciation                                4,415,171    4,580,782
Cash and cash equivalents                          1,412        3,219
Restricted cash                                    8,515        6,295
Deferred financing costs, net                     32,308       34,136
Notes receivable                                 224,776       12,655
Investment in unconsolidated joint ventures       48,177       48,264
Funds held in escrow from IRC Section 1031
 exchanges pending the acquisition of real
 estate                                          231,795       56,217
Other assets                                      71,812       54,636
Other assets - real estate held for
 disposition                                       2,180        4,917
                                              ----------- ------------
  Total assets                                $5,036,146   $4,801,121
                                              =========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Secured debt                                  $1,206,817   $  910,611
Secured debt - real estate held for
 disposition                                           -      227,325
Unsecured debt                                 2,012,727    2,364,740
Real estate taxes payable                         16,246        8,808
Accrued interest payable                          23,736       27,999
Security deposits and prepaid rent                28,270       21,897
Distributions payable                             47,548       49,152
Deferred gains on the sale of depreciable
 property                                         28,814       28,690
Accounts payable, accrued expenses, and other
 liabilities                                      36,928       51,989
Other liabilities - real estate held for
 disposition                                       2,147       28,468
                                              ----------- ------------
  Total liabilities                            3,403,233    3,719,679

Minority interests                               103,656       62,049


Stockholders' 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, 2007)                                      46,571       46,571
  5,400,000 shares of 6.75% Series G
   Cumulative Redeemable issued and
   outstanding (5,400,000 shares at December
   31, 2007)                                     135,000      135,000
  Common stock, $0.01 par value; 250,000,000
   shares authorized 128,320,888 shares issued
   and outstanding (133,317,706 shares at
   December 31, 2007)                              1,283        1,333
  Additional paid-in capital                   1,494,239    1,620,541
  Distributions in excess of net income         (148,608)    (783,238)
  Accumulated other comprehensive
   income/(loss), net                                772         (814)
                                              ----------- ------------
  Total stockholders' equity                   1,529,257    1,019,393
                                              ----------- ------------
  Total liabilities and stockholders' equity  $5,036,146   $4,801,121
                                              =========== ============

Source: UDR, Inc.

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