Why Invest In UDR, Inc.

Press Release

UDR Announces Third Quarter 2009 Results

Company Release - 10/19/2009 4:01 PM ET

Maintains Occupancy at Greater than 95 Percent and Operating Margin at 67 Percent

Enhances Technology Platform

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

The Company generated Funds from Operations (FFO) of $29.8 million, or $0.19 per diluted share, for the quarter ended September 30, 2009, versus $49.6 million, or $0.33 per diluted share, in the third quarter of 2008. The third quarter 2009 results reflect (1) a non-cash equity loss of $0.10 per share on a diluted basis related to the Company's investment in two of its single-asset unconsolidated joint ventures, and (2) a $0.02 per share charge associated with the premium on a tender offer for $37.5 million of the Company's bonds maturing in 2024 with a coupon of 8.5 percent. The 2009 results exclude the negative $0.01 per share effect of the implementation of FASB ASC Subtopic 470-201. Excluding the one-time charge for the premium on the bond tender, the equity loss on the Bellevue assets and the impact of ASC Subtopic 470-20, FFO-Core per diluted share would have been $0.31 versus FFO-Core of $0.30 per diluted share in the prior year period.

For the nine months ended September 30, 2009, UDR generated FFO of $0.90 per diluted share as compared to $1.02 for the comparable period a year ago, exclusive of the impact of ASC Subtopic 470-20. Including the impact of ASC Subtopic 470-20, FFO per share would have been $0.86 per diluted share for the nine months ended September 30, 2009 and $0.99 per diluted share a year ago. Excluding the one-time charge for the premium on the bond tender and gains on debt repurchases and the non-cash equity loss, FFO-Core per diluted share for the nine months ended September 30, 2009 would have been $0.94 excluding the impact of ASC Subtopic 470-20 and $0.93 per diluted share a year ago.

A reconciliation of FFO follows below:


                                   Q3 2009    Q3 2008    YTD 2009   YTD 2008

FFO-Core                           $ 0.31     $ 0.30     $ 0.94     $ 0.93

Equity Loss on Unconsolidated JV     (0.10 )    -          (0.10 )    -

Debt Gains                           -          0.02       0.08       0.06

Debt Tender Offer                    (0.02 )               (0.02 )    -

Asset Sales                          -          -          -          (0.01 )

Tax Benefits                         -          0.01       -          0.04

FFO-Reported                       $ 0.19     $ 0.33     $ 0.90     $ 1.02

ASC Subtopic 470-20 (Additional
expense                              (0.01 )    (0.01 )    (0.04 )    (0.03 )
plus write-offs from repurchases)

FFO - adjusted for ASC Subtopic    $ 0.18     $ 0.32     $ 0.86     $ 0.99
470-20



A reconciliation of FFO to GAAP Net Income can be found on page 8 of the Company's earnings release.

In the third quarter of 2009, the Company recognized a non-cash equity loss of $16.0 million or $0.10 per diluted share, representing a decline in fair market value below the carrying value of the Company's investment in two of its single-asset unconsolidated joint venture properties.

Tom Toomey, UDR's President and CEO stated, "While it was a prudent decision to write down our investment in these joint ventures, it should not overshadow the solid performance of our portfolio. This includes the stability of our occupancy, decline in expenses and year-over-year maintenance of operating margin. We will continue to operate our communities defensively, with occupancies in the 95 percent range and a focus on tight cost controls, while also developing industry-leading technology innovations in an effort to expand our margin as market conditions improve."

Mr. Toomey continued, "We are energized by the capital markets' willingness to provide UDR with numerous attractive sources of capital. We improved the term and cost of our debt and implemented an opportunistic equity offering program. Additionally, we are diligently looking for opportunities to deploy capital and expand our footprint with our joint venture partner, Kuwait Finance House. I am confident that UDR is well-positioned to not only weather the remainder of this downturn but to capitalize on improving conditions. We look forward to taking advantage of the most attractive supply/demand dynamic our industry has seen over the last thirty years."

Operations

The Company experienced a same-store net operating income (NOI) decline of 3.7 percent for the third quarter 2009. Same-store physical occupancy increased 60 basis points to 95.6 percent year-over-year. Same-store revenue declined by 3.0 percent on a challenging revenue comparable of positive 3.4 percent in the prior year. Same-store expenses were down 1.6 percent due to tight expense controls, allowing UDR to maintain a 67 percent operating margin substantially in line with the third quarter of 2008. Sequentially, revenues declined 1.5 percent, same-store expenses increased by 3.6 percent and net operating income declined 3.9 percent.


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

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

Western       -4.4%    -2.9%    -5.0%    48.0%         95.4%       13,692

Mid-Atlantic  -0.1%    -0.7%    0.2%     27.5%         96.5%       9,257

Southeastern  -3.3%    0.2%     -5.5%    21.0%         95.1%       10,693

Southwestern  -4.8%    -6.0%    -4.1%    3.5%          95.3%       1,469

Total         -3.0%    -1.6%    -3.7%    100.0%        95.6%       35,111




1  Based on QTD 2009 NOI

2  Average same-store occupancy for the quarter

   During the third quarter, 35,111 apartment homes, or approximately 78 percent
3  of 45,249 total apartment homes, 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 make progress on automating its business as a way to drive operating efficiencies and to better meet the changing needs of our residents. In the third quarter, 64 percent of move-ins were originated through an internet source versus 53 percent in third quarter 2008. Since its launch in January 2009, 80 percent of UDR's residents are utilizing the resident internet portal, and resident electronic payments have increased to 52 percent from 38 percent at the end of June. These incremental improvements in adopting the web as a way to conduct business with the Company have resulted in: 1) higher resident satisfaction, 2) a 7 percent decline in same-store marketing and advertising costs and, 3) improved cash management, reduced collection costs and a reduction in labor-hours associated with the rent collection process.

Portfolio Investment Activities

UDR has six active development projects and two active redevelopment projects underway, comprising 2,666 homes, at a total cost of $405 million. Management anticipates delivery of the majority of the apartment homes in 2010, which should align with improving market conditions. During the quarter, the Company purchased a recently completed 289 home community in Dallas via our last pre-sale agreement for $28.3 million and the property is currently 97 percent leased.

UDR does not intend to start additional development projects in 2009 and did not complete any dispositions during the quarter.

Capital Markets Activity

During the third quarter of 2009, the Company completed a number of activities geared toward managing the term and cost structure of its debt. As previously announced, UDR closed on a $200 million, 10-year, secured credit facility with Fannie Mae at a blended interest rate of 5.28 percent, the proceeds of the second draw will be used to prepay substantially all of its 2010 secured debt. Additionally, the Company completed a $37.5 million tender offer of its 2024, 8.5 percent coupon bonds and anticipates that the retirement of this debt will result in a savings of $15 to $17 million in future interest payments. The bonds were retired at a 10 percent premium to face value and resulted in a $3.8 million one-time charge to FFO.

In August, the Company announced the closing of a $450 million joint venture with Kuwait Finance House. The joint venture will have a minimum of 60 percent leverage with an equity contribution from UDR of $54 million when fully invested. The joint venture will invest in high barrier to entry markets and may provide a way for UDR to expand its geographic footprint. In addition, involvement in the joint venture does not preclude UDR from pursuing other acquisition opportunities.

In September, UDR initiated an "At the Market" equity offering program whereby it can sell up to 15 million shares. The program is intended to allow the Company to opportunistically issue equity based on current market conditions. During the quarter, UDR sold approximately 2.3 million shares under the program at a weighted average price of $14.89.

Balance Sheet

At September 30, 2009, UDR had capacity of more than $1 billion in a combination of cash and undrawn capacity on its credit facilities, giving the Company ample flexibility to meet its capital needs for debt maturities and development activities through 2011. Additional capacity, if needed, could be raised via its $3.2 billion unencumbered asset base (on a historical non-depreciated cost basis).

UDR's total indebtedness at September 30, 2009 was $3.3 billion. The Company ended the third quarter with 83 percent fixed-rate debt, a total blended interest rate of 4.5 percent and a weighted average maturity of 5.8 years. UDR's fixed charge coverage ratio improved to 2.1 times as compared to 1.9 times at the end of the third quarter 2008 when adjusted for non-recurring items.

2009 Guidance

The Company is updating its previously announced 2009 guidance. UDR's financial results for 2009 have been affected by ongoing uncertainty related to global economic trends and events, credit market volatility, projected job losses in key markets, financing activities, the equity loss on two of its Bellevue, Washington JV investments and other factors. All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team.


                                         Low        High

Original Guidance Range - February 2009  $ 1.23     $ 1.35

Equity Loss on Unconsolidated JV           (0.10 )    (0.10 )

Update of Underlying Assumptions           0.01       (0.05 )

Revised Guidance Range                   $ 1.14     $ 1.20



The table above excludes the impact of ASC Subtopic 470-20.

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 Monday, October 19th at 5:00 p.m. EST, to discuss third 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 877-941-6010 for domestic and 480-629-9772 for international and provide the following conference ID number: 4141754.

A replay of the conference call will be available through November 9, 2009, by dialing 800-406-7325 for domestic and 303-590-3030 for international and entering the confirmation number, 4141754 when prompted for the pass code.

A replay of the call will be available for 90 days on UDR's website at www.udr.com.

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 third quarter 2009 earnings report and supplemental data 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 presentation 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 multifamily 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. 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 presentation, 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 by law.

About UDR, Inc.

UDR, Inc. (NYSE:UDR), an S&P 400 company, is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate properties in targeted U.S. markets. As of September 30, 2009, UDR owned 45,249 apartment homes and had 1,657 homes under development. 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.

1 Formerly Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).


UDR

Consolidated Statements of Operations

(Unaudited)

                              Three Months Ended        Nine Months Ended

                              September 30,             September 30,

In thousands, except per      2009         2008         2009         2008
share amounts

Rental income                 $ 150,311    $ 147,414    $ 452,769    $ 413,955

Rental expenses:

Real estate taxes and           18,908       19,101       57,771       47,775
insurance

Personnel                       13,049       12,675       38,464       36,523

Utilities                       8,207        8,113        23,924       22,017

Repair and maintenance          8,315        8,318        23,423       22,544

Administrative and marketing    3,636        3,635        10,553       10,784

Property management             4,134        4,054        12,452       11,384

Other operating expenses        1,172        1,153        4,437        3,183

                                57,421       57,049       171,024      154,210

Non-property income:

Loss from unconsolidated        (16,742 )    (1,897  )    (18,187 )    (3,286  )
entities (1)

Tax benefit/(expense) for       (14     )    829          (65     )    5,743
taxable REIT subsidiary

Interest and other income       1,627        9,969        10,609       21,286

                                (15,129 )    8,901        (7,643  )    23,743

Other expenses:

Real estate depreciation and    69,695       65,551       207,747      180,493
amortization

Interest                        33,909       39,860       105,794      118,381

Net gain on debt                -            (2,523  )    (9,849  )    (8,595  )
extinguishment (2)

Amortization of convertible     967          1,670        3,316        5,010
debt premium

Expenses related to tender      3,764        -            3,764        -
offer

Total interest                  38,640       39,007       103,025      114,796

Hurricane related expenses      -            833          127          833

General and administrative      8,924        9,835        27,797       29,535

Other depreciation and          858          1,140        3,730        3,013
amortization

                                118,117      116,366      342,426      328,670

Loss from continuing            (40,356 )    (17,100 )    (68,324 )    (45,182 )
operations

Income from discontinued        601          6,736        2,486        806,908
operations

Consolidated net                (39,755 )    (10,364 )    (65,838 )    761,726
(loss)/income

Net loss/(income)
attributable to                 1,779        450          3,175        (48,598 )
non-controlling interests

Net (loss)/income               (37,976 )    (9,914  )    (62,663 )    713,128
attributable to UDR, Inc.

Distributions to preferred
stockholders - Series E         (931    )    (931    )    (2,793  )    (2,793  )
(Convertible)

Distributions to preferred      (1,869  )    (1,989  )    (5,607  )    (6,545  )
stockholders - Series G

Discount on preferred stock     -            3,056        -            3,056
repurchases, net

Net (loss)/income available   $ (40,776 )  $ (9,778  )  $ (71,063 )  $ 706,846
to common stockholders

Earnings per weighted
average common share - basic
and diluted: (3)

Loss from continuing
operations available to         ($0.27  )    ($0.12  )    ($0.50  )    ($0.71  )
common stockholders

Income from discontinued      $ 0.00       $ 0.05       $ 0.02       $ 5.79
operations

Net (loss)/income available     ($0.27  )    ($0.07  )    ($0.48  )  $ 5.08
to common stockholders

Common distributions          $ 0.180      $ 0.305      $ 0.665      $ 0.915
declared per share (2)

Weighted average number of
common shares outstanding -     150,000      137,329      149,048      139,266
basic (2)

Weighted average number of
common shares outstanding -     150,000      137,329      149,048      139,266
diluted (2)

(1) Includes $16,000 equity loss on Bellevue Plaza and Ashwood Commons joint
ventures for the three and
nine months ended September 30, 2009.

(2) Includes $0 and $3,365 write-off of convertible debt premium for the three
and nine months ended
September 30, 2009.

(3) Amounts for all periods represented have been adjusted to reflect the
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        Nine Months Ended

                             September 30,             September 30,

In thousands, except per     2009         2008         2009         2008
share amounts

Net (loss)/income            $ (37,976 )  $ (9,914  )  $ (62,663 )  $ 713,128
attributable to UDR, Inc.

Distributions to preferred     (2,800  )    (2,920  )    (8,400  )    (9,338   )
stockholders

Real estate depreciation
and amortization, including    69,695       65,551       207,747      180,493
discontinued operations

Non-controlling interest       (1,779  )    (450    )    (3,175  )    48,598

Real estate depreciation
and amortization on            1,276        1,302        3,584        3,364
unconsolidated joint
ventures

Net gains on the sale of
depreciable property in        (555    )    (6,566  )    (2,440  )    (787,555 )
discontinued operations,
excluding RE3

Funds from operations        $ 27,861     $ 47,003     $ 134,653    $ 148,690
("FFO") - basic

Distribution to preferred
stockholders - Series E        931          931          2,793        2,793
(Convertible)

Funds from operations -      $ 28,792     $ 47,934     $ 137,446    $ 151,483
diluted

FFO per common share -       $ 0.18       $ 0.32       $ 0.86       $ 1.00
basic

FFO per common share -       $ 0.18       $ 0.32       $ 0.86       $ 0.99
diluted

Write-off of convertible
debt premium for               -            -            3,365        -
repurchases (1)

Amortization of convertible    967          1,670        3,316        5,010
debt premium (1)

Funds from operations as     $ 29,759     $ 49,604     $ 144,127    $ 156,493
adjusted - diluted

FFO as adjusted per common   $ 0.19       $ 0.33       $ 0.90       $ 1.02
share - diluted

Weighted average number of
common shares and OP Units     156,317      146,899      156,001      148,899
outstanding - basic (2)

Weighted average number of
common shares, OP Units,
and common stock

equivalents outstanding -      160,197      151,185      159,357      153,160
diluted (2)




(1)
     FASB ASC Subtopic 470-20, formerly 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. The adoption results
     in the recognition of non-cash charges.


     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.

     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

                                                  September 30,   December 31,

In thousands, except share and per share amounts  2009            2008

                                                  (unaudited)     (audited)

ASSETS

Real estate owned:

 Real estate held for investment                  $ 5,835,852     $ 5,644,930

  Less: accumulated depreciation                    (1,284,227 )    (1,078,637 )

                                                    4,551,625       4,566,293

 Real estate under development

 (net of accumulated depreciation of $482 and       232,957         186,771
 $52)

 Total real estate owned, net of accumulated        4,784,582       4,753,064
 depreciation

Cash and cash equivalents                           24,954          12,740

Marketable securities                               37,020          -

Restricted cash                                     8,280           7,726

Deferred financing costs, net                       26,002          29,168

Notes receivable                                    7,300           207,450

Investment in unconsolidated joint ventures         53,598          47,048

Other assets                                        68,521          85,842

Other assets - real estate held for disposition     -               767

 Total assets                                     $ 5,010,257     $ 5,143,805

LIABILITIES AND STOCKHOLDERS' EQUITY

Secured debt                                      $ 1,863,127     $ 1,462,471

Unsecured debt                                      1,411,919       1,798,662

Real estate taxes payable                           32,500          14,035

Accrued interest payable                            19,108          20,744

Security deposits and prepaid rent                  30,771          28,829

Distributions payable                               30,810          57,144

Deferred gains on the sale of depreciable           28,831          28,845
property

Accounts payable, accrued expenses, and other       56,560          71,395
liabilities

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

 Total liabilities                                  3,473,626       3,483,329

Redeemable non-controlling interests in             99,137          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

  and outstanding (2,803,812 shares at December     46,571          46,571
  31, 2008)

  4,430,700 shares of 6.75% Series G Cumulative
  Redeemable issued

  and outstanding (4,430,700 shares at December     110,768         110,768
  31, 2008)

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

  152,846,734 shares issued and outstanding         1,528           1,488
  (148,781,115 shares at December 31, 2008)

 Additional paid-in capital                         1,906,300       1,850,871

 Distributions in excess of net income              (628,445   )    (448,737   )

 Accumulated other comprehensive loss, net          (2,714     )    (11,927    )

 Total UDR, Inc. stockholders' equity               1,434,008       1,549,034

 Non-controlling interest                           3,486           3,350

 Total equity                                       1,437,494       1,552,384

 Total liabilities and stockholders' equity       $ 5,010,257     $ 5,143,805




    Source: UDR, Inc.
Contact: UDR, Inc. H. Andrew Cantor, IR, 720-283-6083