Why Invest In UDR, Inc.

Press Release

UDR Announces Fourth Quarter and Full Year 2009 Results

Company Release - 2/9/2010 4:15 PM ET

~ Occupancy Remains Strong at Greater than 95 Percent ~

~ Provides 2010 Guidance ~

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

The Company generated Funds from Operations (FFO) of $45.5 million, or $0.28 per diluted share, for the quarter ended December 31, 2009, versus $58.3 million, or $0.40 per diluted share, in the fourth quarter of 2008. The fourth quarter 2009 results include a $1.0 million, or $0.01 per share, one-time charge associated with the early prepayment of debt. 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 prepayment penalty and the impact of ASC Subtopic 470-20, FFO-Core per diluted share would have been $0.29 versus FFO-Core of $0.30 per diluted share in the prior year period. Please see the reconciliation below for further detail.

For the twelve months ended December 31, 2009, UDR generated FFO of $1.19 per diluted share as compared to $1.50 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 $1.14 per diluted share for the twelve months ended December 31, 2009 and $1.43 per diluted share a year ago. Excluding the one-time charges for the previously announced premium on the bond tender, gains on debt repurchases, the non-cash equity loss and above mentioned prepayment penalty and the impact of ASC Subtopic 470-20, FFO-Core per diluted share for the twelve months ended December 31, 2009 would have been $1.24 compared to $1.30 per diluted share a year ago. Please see the reconciliation below for further detail.

A reconciliation of FFO follows below:


                                     Q4 2009    Q4 2008     YTD 2009   YTD 2008

FFO-Core                             $ 0.29     $ 0.30      $ 1.24     $ 1.30

Equity Loss on Unconsolidated JV       -          -           (0.10 )    -

Debt Gains                             -          0.14        0.08       0.21

Debt Prepayment Penalties and DFC      (0.01 )    (0.03 )     (0.01 )    (0.03 )
Write Offs

Debt Tender Offer                      -          -           (0.02 )    -

Asset Sales                            -          -           -          (0.01 )

One-time Charges to G&A                -          (0.04 )     -          (0.04 )

Tax Benefits                           -          0.03        -          0.07

FFO-Reported                         $ 0.28     $ 0.40      $ 1.19     $ 1.50

ASC Subtopic 470-20 (Additional
expense plus write-offs from           (0.01 )    (0.04 )     (0.05 )    (0.07 )
repurchases)

FFO - adjusted for ASC Subtopic      $ 0.27     $ 0.36      $ 1.14     $ 1.43
470-20



A reconciliation of FFO to GAAP Net Income can be found on page 9 of the Company's earnings release.

Tom Toomey, UDR's President and CEO stated, "We are very pleased with our performance and positioning given the challenging operating environment in 2009. We exercised patience in managing through a capital constrained market and took advantage of buying opportunities in our debt and preferred securities at attractive discounts. We extended debt maturities and tapped into a variety of capital sources that strengthened our balance sheet and should afford UDR the ability to take advantage of opportunities in the future." Mr. Toomey continued, "We enter 2010 with cautious optimism and recognize that we still have challenges ahead. We will continue to exercise patience while focusing on improving our operating results and driving our technology initiatives while finding ways to accretively deploy our capital."

Operations

Same-store net operating income (NOI) declined 5.1 percent for the fourth quarter 2009. Same-store physical occupancy increased 90 basis points to 95.5 percent year-over-year. Same-store revenue declined by 3.7 percent as a result of a 5.4 percent decline in rents, that were partially offset by higher occupancy and utility reimbursements.

Same-store expenses were down 0.7 percent driven by continued tight expense controls and favorable real estate tax appeals.

Sequentially from the third quarter of 2009, revenues declined 1.6 percent, same-store expenses decreased by 4.4 percent and net operating income declined 0.2 percent; however, due to increased efficiencies, the Company widened its operating margin by 100 basis points over the third quarter to 67 percent.

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


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

Western       -6.0%    1.0%     -8.9%    44.9%         95.4%       14,693

Mid-Atlantic  0.3%     6.4%     -2.4%    28.7%         96.2%       10,666

Southeastern  -3.5%    -10.0%   0.4%     21.3%         95.0%       11,375

Southwestern  -6.0%    -4.3%    -7.0%    5.1%          94.7%       2,512

Total         -3.7%    -0.7%    -5.1%    100.0%        95.5%       39,246



(1) Based on QTD 2009 NOI

2 Average same-store occupancy for the quarter

3 During the fourth quarter, 39,246 apartment homes, or approximately 85 percent of 45,913 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.

For the year ended 2009, the Company's same-store revenue growth declined 2.0 percent as compared to the prior year while expenses declined 1.6 percent resulting in a same-store NOI decline of 2.2 percent as compared to 2008. Year-over-year occupancy increased by 60 basis points which helped to maintain our operating margin at 68.0 percent.

Summary Same-Store Results 2009 versus 2008


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

Western       -2.8%    -2.6%    -2.9%    49.1%         95.1%       13,329

Mid-Atlantic  0.9%     1.3%     0.7%     24.8%         96.4%       8,134

Southeastern  -2.8%    -2.4%    -3.1%    22.8%         95.0%       10,484

Southwestern  -3.8%    -0.8%    -5.3%    3.3%          95.3%       1,219

Total         -2.0%    -1.6%    -2.2%    100.0%        95.4%       33,166



(1) Based on YTD 2009 NOI

2 Average same-store occupancy for the quarter

3 During 2009, 33,166 apartment homes, or approximately 72 percent of 45,913 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 year.

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 its residents. In the fourth quarter, 62 percent of move-ins were originated through an internet source as compared to 51 percent in the fourth quarter 2008. Since its launch in January 2009, 91 percent of UDR's residents are utilizing its resident internet portal, and resident electronic payments have increased to 63 percent from 53 percent at the end of September. 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 9 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 five active development projects and two active redevelopment projects underway, comprising 2,424 homes, at a total cost of $421 million. Management anticipates delivery of all of the apartment homes in 2010, which should align with improving market conditions.

UDR did not complete any acquisitions or dispositions during the quarter.

Capital Markets Activity

During the fourth 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 repaid its $240 million term loan due in February 2010 with proceeds from a new $100 million term loan and capacity from its $600 million unsecured bank credit facility. The new loan was provided by a group of six banks and has identical covenants to those contained in the loan that was repaid. The debt carries a floating rate of 350 basis points over LIBOR with payments of interest only through the maturity date of July 2012. In addition to the repayment of the term loan, the Company prepaid $102 million in secured debt with an average interest rate of 5.5 percent due in 2010 and 2013. The prepayments resulted in a $1.0 million, or $0.01 per share, one-time charge to FFO.

During the fourth quarter, the Company repurchased 997,738 shares of Series G Cumulative Redeemable Shares at an average price per share of $21.55 a 14 percent discount to their liquidation value saving $1.7 million in annual cash flow.

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 2.2 million shares under the program at a weighted average net price of $15.78 per share. Through December 31, 2009, the Company sold 4.5 million shares at a weighted average net price per share of $15.17. Subsequent to the end of the year, the Company sold 312,000 shares at a weighted average net price per share $16.20 bringing the total number of shares issued under the program to 4.8 million at a weighted average net price of $15.24 per share.

Balance Sheet

At December 31, 2009, UDR had $732 million in availability through 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 capital, 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 December 31, 2009 was $3.4 billion. The Company ended the fourth quarter with 79 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 was 2.0 times as compared to 1.7 times at the end of the fourth quarter 2008 when adjusted for non-recurring items.

Subsequent Event

On February 2, 2010, UDR announced that it had reopened and priced $150 million of its 5.25 percent senior unsecured notes originally issued on November 1, 2004. The notes were priced at 99.46 percent of the principal amount plus accrued interest from January 15, 2010 to yield 5.375 percent to maturity.

2010 Guidance

For full year 2010, the Company is estimating FFO of $1.00 to $1.07 per diluted share based on the following same-store assumptions:


Same-store:    Low      High

Revenue        (4.5%)   (3.0%)

Expense        0.0%     2.0%

NOI            (7.5%)   (4.5%)



All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team. The following is a reconciliation from forecasted FFO per share to GAAP Net Loss per share:


FFO Guidance Reconciliation Per Diluted Share

                                                  Low         High

Forecasted 2010 FFO Guidance Per Diluted Share    $ 1.00      $ 1.07

Conversion to GAAP Share Count                      (0.07 )     (0.07 )

Depreciation                                        (1.88 )     (1.88 )

Non-Controlling Interests                           0.02        0.02

Preferred Dividends                                 (0.02 )     (0.02 )

Forecasted GAAP Net Loss Per Diluted Share        $ (0.95 )   $ (0.88 )



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, February 9, 2010 at 5:00 p.m. EST, to discuss fourth 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 877-941-2333 for domestic and 480-629-9723 for international and provide the following conference ID number: 4200528.

A replay of the conference call will be available through March 2, 2010, by dialing

800-406-7325 for domestic and 303-590-3030 for international and entering the confirmation number, 4200528 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 fourth 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 December 31, 2009, UDR owned 45,913 apartment homes and had 1,415 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        Twelve Months Ended

                             December 31,              December 31,

     In thousands, except    2009         2008         2009         2008
     per share amounts

     Rental income           $ 150,130    $ 149,453    $ 602,899    $ 563,408

     Rental expenses:

     Real estate taxes and     16,846       19,217       74,617       66,992
     insurance

     Personnel                 13,344       12,149       51,808       48,672

     Utilities                 7,794        7,284        31,718       29,301

     Repair and maintenance    8,274        7,789        31,697       30,333

     Administrative and        4,046        3,856        14,599       14,640
     marketing

     Property management       4,129        4,110        16,581       15,494

     Other operating           1,144        1,380        5,581        4,563
     expenses

                               55,577       55,785       226,601      209,995

     Non-property income:

     Loss from
     unconsolidated            (478    )    (326    )    (18,665 )    (3,612  )
     entities (1)

     Tax benefit/(expense)
     for taxable REIT          (246    )    3,970        (311    )    9,713
     subsidiary

     Gain on consolidation     1,912        -            1,912        -
     of joint ventures (2)

     Interest and other        1,753        5,904        12,362       27,190
     income

                               2,941        9,548        (4,702  )    33,291

     Other expenses:

     Real estate
     depreciation and          70,644       71,491       278,391      251,984
     amortization

     Interest                  35,586       40,144       141,380      158,525

     Net gain on debt          -            (17,711 )    (9,849  )    (26,306 )
     extinguishment (3)

     Amortization of
     convertible debt          967          1,588        4,283        6,598
     premium

     Prepayment penalty on     1,022        4,201        1,022        4,201
     debt restructure

     Write-off of FMV
     adjustment for debt
     paid off on               1,552        -            1,552        -
     consolidated joint
     venture (4)

     Expenses related to       -            -            3,764        -
     tender offer

     Total interest            39,127       28,222       142,152      143,018

     Hurricane related         -            477          127          1,310
     expenses

     General and               12,015       18,297       39,812       47,832
     administrative

     Other depreciation and    1,431        1,853        5,161        4,866
     amortization

                               123,217      120,340      465,643      449,010

     Loss from continuing      (25,723 )    (17,124 )    (94,047 )    (62,306 )
     operations

     (Loss)/income from
     discontinued              (62     )    (735    )    2,424        806,173
     operations

     Consolidated net          (25,785 )    (17,859 )    (91,623 )    743,867
     (loss)/income

     Net loss/(income)
     attributable to           916          2,521        4,091        (46,077 )
     non-controlling
     interests

     Net (loss)/income
     attributable to UDR,      (24,869 )    (15,338 )    (87,532 )    697,790
     Inc.

     Distributions to
     preferred stockholders    (931    )    (931    )    (3,724  )    (3,724  )
     - Series E
     (Convertible)

     Distributions to
     preferred stockholders    (1,581  )    (1,869  )    (7,188  )    (8,414  )
     - Series G

     Discount on preferred     2,586        -            2,586        3,056
     stock repurchases, net

     Net (loss)/income
     available to common     $ (24,795 )  $ (18,138 )  $ (95,858 )  $ 688,708
     stockholders

     Earnings per weighted
     average common share -
     basic and diluted:

     Loss from continuing
     operations available      ($0.16  )    ($0.13  )    ($0.66  )    ($0.90  )
     to common stockholders

     Income from
     discontinued            $ 0.00       $ 0.00       $ 0.02       $ 6.19
     operations

     Net (loss)/income
     available to common       ($0.16  )    ($0.13  )    ($0.64  )  $ 5.29
     stockholders

     Common distributions    $ 0.180      $ 1.300      $ 0.845      $ 2.290
     declared per share

     Weighted average
     number of common          152,672      134,916      149,090      130,219
     shares outstanding -
     basic

     Weighted average
     number of common          152,672      134,916      149,090      130,219
     shares outstanding -
     diluted

(1)  Includes $0 and $16,000 equity loss on Bellevue Plaza and Elements Too
     joint ventures for the three and twelve months ended December 31, 2009.

(2)  As of December 2009, UDR began consolidating Bellevue Plaza, Elements Too
     and 989 Elements joint ventures.

(3)  Includes $0 and $3,365 write-off of convertible debt premium for the three
     and twelve months ended December 31, 2009.

(4)  UDR paid off 989 Elements debt of $33.4 million in December 2009.




UDR

Funds From Operations

(Unaudited)

                            Three Months Ended        Twelve Months Ended

                            December 31,              December 31,

In thousands, except per    2009         2008         2009         2008
share amounts

Net (loss)/income           $ (24,869 )  $ (15,338 )  $ (87,532 )  $ 697,790
attributable to UDR, Inc.

Distributions to preferred    (2,512  )    (2,800  )    (10,912 )    (12,138  )
stockholders

Real estate depreciation
and amortization,             70,644       71,491       278,391      251,984
including discontinued
operations

Non-controlling interest      (916    )    (2,521  )    (4,091  )    46,077

Real estate depreciation
and amortization on           1,175        1,138        4,759        4,502
unconsolidated joint
ventures

Net gains on the sale of
depreciable property in       97           497          (2,343  )    (787,058 )
discontinued operations,
excluding RE3

Funds from operations       $ 43,619     $ 52,467     $ 178,272    $ 201,157
("FFO") - basic

Distribution to preferred
stockholders - Series E       931          931          3,724        3,724
(Convertible)

Funds from operations -     $ 44,550     $ 53,398     $ 181,996    $ 204,881
diluted

FFO per common share -      $ 0.27       $ 0.37       $ 1.14       $ 1.45
basic

FFO per common share -      $ 0.27       $ 0.36       $ 1.14       $ 1.43
diluted

Write-off of convertible
debt premium for              -            3,333        3,365        3,333
repurchases (1)

Amortization of
convertible debt premium      967          1,588        4,283        6,598
(1)

Funds from operations as    $ 45,517     $ 58,319     $ 189,644    $ 214,812
adjusted - diluted

FFO as adjusted per common  $ 0.28       $ 0.40       $ 1.19       $ 1.50
share - diluted

Weighted average number of
common shares and OP Units    158,831      143,235      155,796      138,970
outstanding - basic

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

equivalents outstanding -     163,427      146,870      159,561      142,904
diluted

(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.

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

                                                 December 31,     December 31,

In thousands, except share and per share         2009             2008
amounts

                                                 (unaudited)      (unaudited)

ASSETS

Real estate owned:

 Real estate held for investment                 $ 5,995,290      $ 5,644,930

  Less: accumulated depreciation                   (1,350,067 )     (1,078,637 )

                                                   4,645,223        4,566,293

 Real estate under development

 (net of accumulated depreciation of $1,226        318,531          186,771
 and $52)

 Total real estate owned, net of accumulated       4,963,754        4,753,064
 depreciation

Cash and cash equivalents                          5,985            12,740

Marketable securities                              37,650           -

Restricted cash                                    8,879            7,726

Deferred financing costs, net                      26,601           29,168

Notes receivable                                   7,800            207,450

Investment in unconsolidated joint ventures        14,126           47,048

Other assets                                       67,822           85,842

Other assets - real estate held for                -                767
disposition

 Total assets                                    $ 5,132,617      $ 5,143,805

LIABILITIES AND STOCKHOLDERS' EQUITY

Secured debt                                     $ 1,989,434      $ 1,462,471

Unsecured debt                                     1,437,155        1,798,662

Real estate taxes payable                          16,976           14,035

Accrued interest payable                           19,146           20,744

Security deposits and prepaid rent                 31,798           28,829

Distributions payable                              30,857           190,189

Deferred gains on the sale of depreciable          28,826           28,845
property

Accounts payable, accrued expenses, and other      80,685           71,395
liabilities

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

 Total liabilities                                 3,634,877        3,616,374

Redeemable non-controlling interests in            98,758           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             46,571           46,571
  December 31, 2008)

  3,432,962 shares of 6.75% Series G
  Cumulative Redeemable issued

  and outstanding (4,430,700 shares at             85,824           110,768
  December 31, 2008)

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

  155,465,482 shares issued and outstanding        1,555            1,374
  (137,423,074 shares at December 31, 2008)

 Additional paid-in capital                        1,948,669        1,717,940

 Distributions in excess of net income             (687,180   )     (448,737   )

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

 Total UDR, Inc. stockholders' equity              1,395,441        1,415,989

 Non-controlling interest                          3,541            3,350

 Total equity                                      1,398,982        1,419,339

 Total liabilities and stockholders' equity      $ 5,132,617      $ 5,143,805




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