Why Invest In UDR, Inc.

Press Release

UDR Announces Second Quarter 2009 Results

~ Reports Strong Same Store Results ~

~ Maintains $900 Million of Balance Sheet Capacity ~

Company Release - 8/4/2009 4:01 PM ET

DENVER--(BUSINESS WIRE)-- UDR, Inc. (NYSE: UDR), a leading multifamily real estate investment trust (REIT), today announced its second quarter 2009 results.

The Company generated Funds from Operations (FFO) of $56.3 million, or $0.35 per diluted share, for the quarter ended June 30, 2009, versus $49.8 million, or $0.33 per diluted share, in the second quarter of 2008. Both 2009 and 2008 per share results reflect the issuance of 11.4 million shares of common stock distributed with the Company's January 29, 2009 special dividend. The results exclude the effects of the implementation of Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement.) Including the impact of APB 14-1, FFO would have been $53.6 million, or $0.34 per diluted share, and $48.2 million, or $0.32 per diluted share, for the three months ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009, UDR generated FFO of $0.72 per diluted share as compared to $0.70 for the comparable period a year ago, exclusive of the impact of APB 14-1. Including the impact of APB 14-1 FFO per share would have been $0.68 per diluted share for the six months ended June 30, 2009 and $0.67 per diluted share a year ago.


                                   Q2 2009   Q2 2008   YTD 2009  YTD 2008

FFO-Core                           $ 0.32    $ 0.31    $ 0.64    $ 0.64

Debt Gains                           0.03      -         0.08      0.04

Asset Sales                          -         -         -         (0.01)

Tax Benefits                         -         0.02      -         0.03

FFO-Reported                       $ 0.35    $ 0.33    $ 0.72    $ 0.70

APB 14-1 (Additional expense plus    (0.01)    (0.01)    (0.04)    (0.03)
write-offs from repurchase)

FFO - adjusted for APB 14-1        $ 0.34    $ 0.32    $ 0.68    $ 0.67



A reconciliation of FFO to GAAP Net Income can be found on Attachment 2 of the Company's earnings release.

Tom Toomey, UDR's President and CEO stated, "UDR's ongoing solid operational execution led to increased occupancies and tight expense controls resulted in stable operating margins during a period of significant economic challenges."

"We expected this year to be challenging both operationally and from a capital markets perspective; thus, we planned conservatively. Due to our proactive efforts we have seen minimal erosion in our same store results and have nearly $900 million of balance sheet capacity. Consequently our operations are performing well and our balance sheet has the flexibility and capacity to help us to effectively navigate this cycle," Mr. Toomey concluded.

Operations

The Company generated same-store net operating income (NOI) decline of 1.0 percent for the second quarter 2009. Same-store physical occupancy increased 90 basis points to 95.7 percent year-over-year. The occupancy gains in every region helped stem same-store revenue declines to just 90 basis points in the quarter and 10 basis points sequentially. Same-store expenses declined by 0.80 percent in the second quarter as a consequence of lower utility and administrative and marketing costs. Despite a same-store NOI decline, UDR maintained an operating margin of 68.3 percent for the first two quarters of the year; consistent with the second quarter of 2008.

Summary Same-Store Results Second Quarter 2009 versus Second Quarter 2008


              Revenue  Expense  NOI      % Same-                   # Same-
                                                       Same-Store
Region        Growth/  Growth/  Growth/  Store                     Store
                                                       Occupancy2
              Decline  Decline  Decline  Portfolio(1)              Homes3

Western       -1.4%    -3.6%    -0.5%    49.8%         95.5%       13,499

Mid-Atlantic  1.7%     0.9%     2.0%     24.5%         96.6%       8,134

Southeastern  -2.1%    2.6%     -4.9%    22.4%         95.2%       10,693

Southwestern  -3.2%    -3.3%    -3.1%    3.3%          95.7%       1,219

Total         -0.9%    -0.8%    -1.0%    100.0%        95.7%       33,545




1  Based on QTD 2009 NOI

2  Average same-store occupancy for the quarter

   During the second quarter, 33,545 apartment homes, or 75 percent of total
3  apartment homes 44,701, were classified as same-store. The Company defines
   same-store as all multifamily communities owned and stabilized for at least
   one year as of the beginning of the most recent quarter.



Technology Platform

The Company continues to pursue additional technology-based marketing channels to expand its outreach and increase the efficiency of its on-site personnel. UDR's call center, its website and mobile web capabilities drive traffic to its communities "24/7", effectively increasing the Company's hours of operation. For the first six months of 2009, UDR's website visitor traffic is up 53 percent year over year. Year-to-date, 59 percent of UDR's signed leases were originated over the Internet, a 29 percent improvement over the first six months of 2008. The incremental improvement in usage and resultant savings in personnel and marketing expenses illustrates the benefit of the Company's technology platform, award winning website and the accessibility it offers to residents and prospects.

As previously announced in January 2009, UDR launched a resident portal which enables our residents to complete all interactions with UDR electronically. After only six months, 75% of our residents are enrolled in the portal. One significant benefit is the electronic rent payment capability. By the end of the second quarter, 38 percent of the Company's residents have adopted the ACH payment option resulting in improved cash management, reduced collection costs and a reduction in labor-hours associated with the rent collection process.

Portfolio Investment Activities

UDR has seven active development projects and two active redevelopment projects underway, comprising 2,915 homes, at a total cost of $457 million. Management anticipates delivery of roughly 87 percent of this pipeline in 2010, which should align with improving market conditions. In addition to its active developments and redevelopments, the Company has one pre-sale community of 289 homes at a cost of $29 million underway, which was completed on July 28, 2009.

The Company does not intend to start any additional development projects in 2009; however, as previously communicated, UDR did commence a $30 million redevelopment in Northern California after receiving requisite zoning approvals. This project is expected to be completed in the third quarter of 2010.

The Company did not complete any acquisitions or dispositions during the quarter.

Liquidity Events

During the second quarter of 2009, the Company adjusted its dividend to a quarterly payout of $0.18 per share, or $0.72 per share per annum, resulting in an annual savings of $79.5 million. It also received cash payment in full of a $200 million note receivable from its strategic portfolio sale completed in March 2008. UDR continued its debt repurchasing efforts retiring an additional $79.3 million of notes during the second quarter bringing its year to date repurchases to $239 million. The majority or $72 million of the activity was to repurchase its 4.0 percent convertible notes due in 2035 with an investor put feature in 2011. These repurchases were completed in the open market at an average discount of 9 percent. The open market purchases resulted in a net gain of approximately $4.3 million, or $0.03 per diluted share.

Balance Sheet

At June 30, 2009, UDR had capacity of $887.3 million in a combination of cash and undrawn credit capacity facilities, giving it ample flexibility to meet its capital needs for its development activities and debt maturities through 2011. Additional capacity, if needed, could be raised from selective asset sales or borrowing on the Company's $3.2 billion unencumbered asset base (on a historical non-depreciated cost basis).

UDR's total indebtedness at June 30, 2009 was $3.2 billion. The Company ended the second quarter with 82.5 percent fixed-rate debt, a total blended interest rate of 4.5 percent and a weighted average maturity of 6.0 years. UDR's fixed charge coverage ratio improved to 2.13 times as compared to 1.9 times at the end of the second quarter 2008.

2009 Guidance

The Company is maintaining its previously announced 2009 guidance. UDR believes that financial results for 2009 will be affected by ongoing uncertainty related to global economic trends and events, credit market volatility, projected job losses in key markets, financing activities, and other factors. All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team.

For full year 2009, the Company is estimating FFO of $1.23 to $1.35 per diluted share exclusive of the impact of APB 14-1.

Assumptions for guidance in 2009 include:

    --  A 1.0 percent to 3.0 percent decline in same-store revenue
        year-over-year;
    --  A 1.5 percent to 2.0 percent growth in same-store expense
        year-over-year;
    --  A 3.0 percent to 5.0 percent decline in same-store NOI year over year;
        and,
    --  No new development starts or asset sales.

Supplemental Information

The Company offers Supplemental Financial 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: www.udr.com.

Conference Call and Webcast Information

UDR will host a webcast and conference call on Tuesday, August 4th at 5:00 p.m. ET, to discuss second quarter results. A webcast will be available on UDR's website at www.udr.com. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register and download and install any necessary audio software.

To participate in the teleconference dial 877-941-2332 for domestic and 480-629-9722 for international.

A replay of the conference call will be available through August 11, 2009, by dialing 800-406-7325 for domestic and 303-590-3030 for international and entering the confirmation number, 4133326 when prompted for the passcode.

A replay of the call will 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 at the UDR web site, www.udr.com.

Mail -- For those without Internet access, the second quarter 2009 earnings release will be available by mail or fax, on request. To receive a copy, please call UDR Investor Relations at 720-283-6120.

Forward Looking Statements

Certain statements made in this press release may constitute "forward-looking statements." The words "expect," "intend," "believe," "anticipate," "likely," "will" and similar expressions generally identify forward-looking statements. These 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 inflation/deflation on rental rates and property operating expenses, expectations concerning availability of capital and the stabilization of the capital markets, the impact of competition and competitive pricing, acquisitions 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, expectations that automation will help grow net operating income, expectations on post-renovated stabilized annual 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. 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 disseminate any updates or revisions to 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 by law.

About UDR, Inc.

UDR 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, 2009, UDR owned 44,701 apartment homes and had 1,916 homes under development and another 289 homes under contract for development in its pre-sale program. For over 37 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.


UDR

Consolidated Statements of Operations

(Unaudited)

                              Three Months Ended        Six Months Ended

                              June 30,                  June 30,

In thousands, except per      2009         2008         2009         2008
share amounts

Rental income                 $ 151,843    $ 139,955    $ 302,458    $ 266,541

Rental expenses:

Real estate taxes and           18,843       16,180       38,863       28,674
insurance

Personnel                       12,782       12,051       25,415       23,848

Utilities                       7,350        6,821        15,717       13,904

Repair and maintenance          7,899        7,436        15,108       14,226

Administrative and marketing    3,584        3,863        6,917        7,149

Property management             4,176        3,849        8,318        7,330

Other operating expenses        1,769        1,026        3,265        2,030

                                56,403       51,226       113,603      97,161

Non-property income:

Loss from unconsolidated        (728    )    (1,015  )    (1,445  )    (1,389  )
entities

Tax benefit/(expense) for       -            3,649        (51     )    4,914
taxable REIT subsidiary

Interest and other income       3,958        6,690        8,982        11,317

                                3,230        9,324        7,486        14,842

Other expenses:

Real estate depreciation and    69,067       62,507       138,052      114,942
amortization

Interest                        35,376       38,015       71,885       78,521

Net gain on debt                (2,736  )    (1,333  )    (9,849  )    (6,072  )
extinguishment (1)

Amortization of convertible     1,053        1,670        2,349        3,340
debt premium

Total interest                  33,693       38,352       64,385       75,789

General and administrative      9,145        9,931        19,000       19,700

Other depreciation and          1,478        944          2,872        1,873
amortization

                                113,383      111,734      224,309      212,304

Loss from continuing            (14,713 )    (13,681 )    (27,968 )    (28,082 )
operations

Income from discontinued        2,053        13,316       1,885        800,172
operations

Consolidated net                (12,660 )    (365    )    (26,083 )    772,090
(loss)/income

Net loss/(income)
attributable to                 602          (312    )    1,396        (49,048 )
non-controlling interests

Net (loss)/income               (12,058 )    (677    )    (24,687 )    723,042
attributable to UDR, Inc.

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

Distributions to preferred      (1,869  )    (2,278  )    (3,738  )    (4,556  )
stockholders - Series G

Net (loss)/income available   $ (14,858 )  $ (3,886  )  $ (30,287 )  $ 716,624
to common stockholders

Earnings per weighted
average common share - basic
and diluted: (2)

Loss from continuing
operations available to         ($0.11  )    ($0.13  )    ($0.21  )    ($0.60  )
common stockholders

Income from discontinued      $ 0.01       $ 0.10       $ 0.01       $ 5.71
operations

Net (loss)/income available     ($0.10  )    ($0.03  )    ($0.20  )  $ 5.11
to common stockholders

Common distributions          $ 0.180      $ 0.305      $ 0.485      $ 0.305
declared per share (2)

Weighted average number of
common shares outstanding -     149,444      137,969      148,564      140,257
basic (2)

Weighted average number of
common shares outstanding -     149,444      137,969      148,564      140,257
diluted (2)




(1)  Includes $1,611 and $3,365 write-off of convertible debt premium for the
     three and six months ended June 30, 2009.

     Amounts for all periods represented have been adjusted to reflect the
(2)  issuance of 11.4 million common shares issued in connection with the
     Company's January 29, 2009 special dividend.




UDR

Funds From Operations

(Unaudited)

                             Three Months Ended        Six Months Ended

                             June 30,                  June 30,

In thousands, except per     2009         2008         2009         2008
share amounts

Net (loss)/income            $ (12,058 )  $ (677    )  $ (24,687 )  $ 723,042
attributable to UDR, Inc.

Distributions to preferred     (2,800  )    (3,209  )    (5,600  )    (6,418   )
stockholders

Real estate depreciation
and amortization, including    69,067       62,507       138,052      114,942
discontinued operations

Non-controlling interest       (602    )    312          (1,396  )    49,048

Real estate depreciation
and amortization on            1,165        1,317        2,308        2,062
unconsolidated joint
ventures

Net gains on the sale of
depreciable property in        (2,053  )    (13,027 )    (1,885  )    (780,989 )
discontinued operations,
excluding RE3

Funds from operations        $ 52,719     $ 47,223     $ 106,792    $ 101,687
("FFO") - basic

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

Funds from operations -      $ 53,650     $ 48,154     $ 108,654    $ 103,549
diluted

FFO per common share -       $ 0.34       $ 0.32       $ 0.69       $ 0.68
basic

FFO per common share -       $ 0.34       $ 0.32       $ 0.68       $ 0.67
diluted

Write-off of convertible
debt premium due to            1,611        -            3,365        -
adoption of APB 14-1

Amortization of convertible
debt premium due to            1,053        1,670        2,349        3,340
adoption of APB 14-1

Funds from operations as     $ 56,314     $ 49,824     $ 114,368    $ 106,889
adjusted - diluted

FFO as adjusted per common   $ 0.35       $ 0.33       $ 0.72       $ 0.70
share - diluted

Weighted average number of
common shares and OP Units     155,958      147,591      155,841      149,921
outstanding - basic (1)

Weighted average number of
common shares, OP Units,
and common stock               159,039      151,412      158,896      153,680
equivalents outstanding -
diluted (1)




     Amounts for all periods represented have been adjusted to reflect the
(1)  issuance of 11.4 million common shares issued in connection with the
     Company's January 29, 2009 special dividend.



FASB Staff Position APB 14-1 requires companies to expense, on a current and retroactive basis, certain implied costs of the option value related to convertible debt and is effective for fiscal years beginning on or after December 15, 2008. Adoption of APB 14-1 results in the recognition of non-cash charges.

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.


UDR

Consolidated Balance Sheets

                                                  June 30,        December 31,

In thousands, except share and per share amounts  2009            2008

                                                  (unaudited)     (audited)

ASSETS

Real estate owned:

Real estate held for investment                   $ 5,720,069     $ 5,644,930

Less: accumulated depreciation                      (1,214,447 )    (1,078,637 )

                                                    4,505,622       4,566,293

Real estate under development

(net of accumulated depreciation of $1,123 and      248,335         186,771
$52)

Total real estate owned, net of accumulated         4,753,957       4,753,064
depreciation

Cash and cash equivalents                           4,983           12,740

Marketable securities                               33,979          -

Restricted cash                                     8,795           7,726

Deferred financing costs, net                       26,561          29,168

Notes receivable                                    7,300           207,450

Investment in unconsolidated joint ventures         63,475          47,048

Other assets                                        71,848          85,842

Other assets - real estate held for disposition     -               767

Total assets                                      $ 4,970,898     $ 5,143,805

LIABILITIES AND STOCKHOLDERS' EQUITY

Secured debt                                      $ 1,729,290     $ 1,462,471

Unsecured debt                                      1,484,659       1,798,662

Real estate taxes payable                           18,665          14,035

Accrued interest payable                            18,717          20,744

Security deposits and prepaid rent                  30,843          28,829

Distributions payable                               30,386          57,144

Deferred gains on the sale of depreciable           28,835          28,845
property

Accounts payable, accrued expenses, and other       58,453          71,395
liabilities

Other liabilities - real estate held for            -               1,204
disposition

Total liabilities                                   3,399,848       3,483,329

Redeemable non-controlling interests in             65,295          108,092
operating partnership

Stockholders' equity

Preferred stock, no par value; 50,000,000 shares
authorized

2,803,812 shares of 8.00% Series E Cumulative
Convertible issued
                                                    46,571          46,571
and outstanding (2,803,812 shares at December
31, 2008)

4,430,700 shares of 6.75% Series G Cumulative
Redeemable issued
                                                    110,768         110,768
and outstanding (4,430,700 shares at December
31, 2008)

Common stock, $0.01 par value; 250,000,000
shares authorized

150,557,442 shares issued and outstanding           1,506           1,488
(148,781,115 shares at December 31, 2008)

Additional paid-in capital                          1,871,525       1,850,871

Distributions in excess of net income               (522,945   )    (448,737   )

Accumulated other comprehensive loss, net           (5,112     )    (11,927    )

Total UDR, Inc. stockholders' equity                1,502,313       1,549,034

Non-controlling interest                            3,442           3,350

Total equity                                        1,505,755       1,552,384

Total liabilities and stockholders' equity        $ 4,970,898     $ 5,143,805




    Source: UDR, Inc.
Contact: UDR, Inc. David Messenger, 720-283-6120 CFO