UDR Announces Third Quarter 2021 Results and Increases Full-year 2021 Guidance Ranges

·29 min read

DENVER, October 26, 2021--(BUSINESS WIRE)--UDR, Inc. (the "Company") (NYSE: UDR), announced today its third quarter 2021 results. Net Income, Funds from Operations ("FFO"), FFO as Adjusted ("FFOA"), and Adjusted FFO ("AFFO") per diluted share for the quarter ended September 30, 2021 are detailed below.

Quarter Ended September 30

Metric

3Q 2021
Actual

3Q 2021
Guidance

3Q 2020
Actual

$ Change vs.
Prior Year Period

% Change vs.
Prior Year Period

Net Income per diluted share

$0.06

$0.02 to $0.04

$(0.09)

$0.15

167%

FFO per diluted share

$0.55

$0.49 to $0.51

$0.42

$0.13

31%

FFOA per diluted share

$0.51

$0.49 to $0.51

$0.50

$0.01

2%

AFFO per diluted share

$0.46

$0.44 to $0.46

$0.45

$0.01

2%

  • The Company reported net income attributable to common stockholders of $16.7 million, or $0.06 per share, compared to $(26.3) million, or $(0.09) per share, in the prior year period. This increase was primarily due to an increase in Same-Store ("SS") net operating income ("NOI"), higher NOI from acquired communities, higher income from unconsolidated entities, and lower debt extinguishment costs.

  • SS results for third quarter 2021 versus third quarter 2020 and second quarter 2021 are summarized below.

Growth / (Decline)

Year-Over-Year ("YOY"):
Q3 2021 vs. Q3 2020

Sequential:
Q3 2021 vs. Q2 2021

With concessions reflected on a cash basis:

SS Revenue

5.3%

3.6%

SS Expense

3.3%

5.4%

SS NOI

6.3%

2.9%

With concessions reflected on a straight-line basis:

SS Revenue

1.6%

3.3%

SS NOI

0.9%

2.4%

  • The Company’s weighted average SS physical occupancy for the third quarter of 2021 was 97.5 percent, compared to 95.5 percent for the third quarter of 2020 and 97.2 percent for the second quarter of 2021.

  • The Company continues to implement its Next Generation Operating Platform which helped limit third quarter 2021 SS controllable expense growth to 1.8 percent YOY and 2.0 percent YTD.

  • During the quarter, the Company acquired five communities with a combined purchase price of $619.9 million. Subsequent to quarter-end, the Company acquired two communities for $282.5 million and sold one community for proceeds of $126.0 million.

  • During the quarter and subsequent to quarter-end, the Company entered into forward equity sale agreements under its at-the-market equity program for approximately 6.0 million shares of common stock at a weighted average initial forward price per share of $53.80 for estimated future proceeds of approximately $321.9 million, subject to adjustment as described later in this release. During the quarter, the Company settled approximately 11.4 million shares of common stock under its previously-announced forward equity sales agreements at a weighted average net price per share, after adjustments, of $43.82 for proceeds of approximately $500.0 million.

  • During the quarter, the Company (a) issued $200.0 million of 10-year unsecured debt at an effective interest rate of 2.259 percent, (b) increased the maximum aggregate capacity on its senior unsecured revolving credit facility to $1.3 billion from $1.1 billion and extended its maturity to January 2026, (c) increased the maximum aggregate capacity under its commercial paper program to $700.0 million from $500.0 million, (d) extended the maturity of its $350.0 million senior unsecured term loan to January 2027, and (e) extended the maturity of its $75.0 million working capital facility to January 2024. The spread above LIBOR on each of the revolving credit facility, term loan, and working capital facility was reduced by 5 basis points.

  • Subsequent to quarter-end, the Company published its third annual ESG report, which detailed the Company’s progress towards its ESG goals and introduced enhanced greenhouse gas emissions and energy usage reduction targets. Concurrently, the Company announced it was named the number one ESG performer in the 2021 GRESB survey among publicly listed residential companies worldwide with a score of 86.

"We once again achieved the high-end of our expectations across key performance metrics and raised guidance for the fourth time this year on the back of accretive capital allocation and strong operating results across our 21 markets, which have been further supplemented by our ongoing Platform innovations," said Tom Toomey, UDR’s Chairman and CEO. "The competitive advantages created by our operational focus have and should continue to drive strong same-store growth and margin expansion as well as enable us to accretively deploy capital through numerous channels."

Outlook

For the fourth quarter of 2021, the Company has established the following earnings guidance ranges. For the full-year 2021, the Company increased its previously provided Same-Store and earnings guidance ranges(1):

Q4 2021
Outlook

Q3 2021
Actual

Updated
Full-Year 2021
Outlook

Prior
Full-Year 2021
Outlook

Change to
2021 Guidance,
at Midpoint

Net Income / (Loss) per share

$0.30 to $0.32

$0.06

$0.41 to $0.43

$0.12 to $0.16

$0.28

FFO per share

$0.52 to $0.54

$0.55

$1.92 to $1.94

$1.85 to $1.89

$0.06

FFOA per share

$0.52 to $0.54

$0.51

$2.00 to $2.02

$1.97 to $2.01

$0.02

AFFO per share

$0.46 to $0.48

$0.46

$1.82 to $1.84

$1.79 to $1.83

$0.02

YOY Growth/(Decline): concessions reflected on a cash basis:

SS Revenue

N/A

5.3%

1.00% to 1.50%

(0.25)% to 0.75%

1.00%

SS Expense

N/A

3.3%

2.75% to 3.50%

1.00% to 3.00%

1.13%

SS NOI

N/A

6.3%

0.25% to 0.75%

(1.00)% to 0.50%

0.75%

YOY Growth/(Decline): concessions reflected on a straight-line basis:

SS Revenue

N/A

1.6%

(1.00)% to (0.50)%

(2.25)% to (1.25)%

1.00%

SS NOI

N/A

0.9%

(2.25)% to (1.75)%

(3.50)% to (2.00)%

0.75%

(1)

Additional assumptions for the Company’s fourth quarter and 2021 outlook can be found on Attachment 14 of the Company’s related quarterly Supplemental Financial Information. A reconciliation of FFO per share, FFOA per share, and AFFO per share to GAAP Net Income per share can be found on Attachment 15(D) of the Company’s related quarterly Supplemental Financial Information. Non-GAAP financial measures and other terms, as used in this earnings release, are defined and further explained on Attachments 15(A) through 15(D), "Definitions and Reconciliations," of the Company’s related quarterly Supplemental Financial Information.

Recent Operating Trends

"We continue to realize sequential improvement in blended rate growth, collections, and our other income initiatives, while portfolio occupancy remains above 97 percent," said Mike Lacy, UDR’s Senior Vice President of Operations. "Pricing power has remained unseasonably strong with our loss-to-lease staying in the low-teens, and we are effectively capturing higher-than-normal levels of demand throughout our portfolio due to market strength and a variety of Next Generation Operating Platform initiatives."

Summary of Second Quarter 2021, Third Quarter 2021, and October 2021 Residential Operating Trends(1)

As of and Through October 25, 2021

Metric

Q2 2021

Jul
2021

Aug
2021

Sept
2021

Q3
2021

Oct 2021
(Range)

Cash revenue collected (% of billed) during billing period

95.5%

94.4%

94.1%

94.2%

95.8%

94.2% - 94.4%

Cash revenue collected (% of billed) subsequent to billing period(1)

2.3%

2.9%

2.8%

1.8%

0.9%

N/A

Cash revenue collected (% of billed) as of October 25, 2021(1)

97.8%

97.3%

96.9%

96.0%

96.7%

92.7%

Revenue reserved or written-off

1.7%

N/A

N/A

N/A

0.7%(2)

N/A

Same-Store Metrics

Weighted Average Physical Occupancy

97.2%

97.5%

97.6%

97.5%

97.5%

97.0% - 97.2%

Effective Blended Lease Rate Growth(3)

0.9%

5.8%

8.7%

10.9%

8.2%

11.0% - 12.0%

(1)

Metrics shown here are as of October 25, 2021, and are for the Company’s total residential portfolio, unless otherwise indicated. The summation of cash revenue collected during and subsequent to a billing period may not equate to the total cash revenue collected as of October 25, 2021 for that same billing period due to rounding. Cash revenue collected as a percentage of billed revenue for Q2 2020, Q3 2020, Q4 2020, and Q1 2021 continue to increase over time and are 98.3 percent, 98.0 percent, 97.9 percent, and 97.9 percent, respectively, as of October 25, 2021.

(2)

For Q3 2021, as a result of the reduction in its accounts receivable balance during the quarter, the Company reduced its reserves (reflected as an increase in revenues) by approximately 0.9 percent, or $3.0 million, including $0.1 million for the Company’s share from unconsolidated joint ventures. This reduces the Company’s total bad debt reserve to $15.1 million, including $1.0 million for the Company’s share from unconsolidated joint ventures, which compares to a quarter-end accounts receivable balance of $23.3 million.

(3)

The Company defines Effective Blended Lease Rate Growth as the combined proportional growth as a result of (a) Effective New Lease Rate Growth and (b) Effective Renewal Lease Rate Growth. Management considers Effective Blended Lease Rate Growth a useful metric for investors as it assesses combined proportional market-level new and in-place demand trends. Please refer to the "Definitions and Reconciliations" section of the Company’s related quarterly Supplemental Financial Information for additional details.

Third Quarter 2021 Operations

In the third quarter, total revenue increased by $19.7 million YOY, or 6.4 percent, to $329.8 million. This increase was primarily attributable to growth in revenue from Same-Store, acquired, and stabilized, non-mature communities. The third quarter annualized rate of turnover decreased by 1,120 basis points versus the prior year period to 53.8 percent.

Summary of Same-Store Results in Third Quarter 2021 versus Third Quarter 2020

Region

Revenue
Growth /
(Decline)

Expense
Growth /
(Decline)

NOI
Growth /
(Decline)

% of Same-Store
Portfolio(1)

Physical
Occupancy(2)

YOY Change in
Occupancy

West

5.1%

3.4%

5.7%

36.9%

97.4%

3.4%

Mid-Atlantic

2.4%

4.6%

1.4%

21.8%

97.2%

0.5%

Northeast

6.3%

4.1%

7.6%

15.8%

97.3%

4.8%

Southeast

7.5%

7.0%

7.8%

12.0%

97.9%

0.7%

Southwest

5.5%

(3.3)%

11.8%

7.3%

98.1%

1.2%

Other Markets

10.0%

(0.7)%

15.2%

6.2%

97.8%

0.9%

Total (Cash)

5.3%

3.3%

6.3%

100.0%

97.5%

2.0%

Total (Straight-Line)

1.6%

-

0.9%

-

-

-

(1)

Based on Q3 2021 Same-Store NOI. For definitions of terms, please refer to the "Definitions and Reconciliations" section of the Company’s related quarterly Supplemental Financial Information.

(2)

Weighted average Same-Store physical occupancy for the quarter.

The table below includes sequential Same-Store results by region, with concessions accounted for on cash and straight-line bases.

Summary of Same-Store Results in Third Quarter 2021 versus Second Quarter 2021

Region

Revenue
Growth /
(Decline)

Expense
Growth /
(Decline)

NOI
Growth /
(Decline)

% of Same-Store
Portfolio(1)

Physical
Occupancy(2)

Sequential
Change in
Occupancy

West

6.5%

3.7%

7.5%

36.9%

97.4%

0.4%

Mid-Atlantic

1.5%

4.5%

0.1%

21.8%

97.2%

0.1%

Northeast

1.2%

10.1%

(3.8)%

15.8%

97.3%

0.5%

Southeast

2.5%

6.0%

0.8%

12.0%

97.9%

0.2%

Southwest

3.4%

1.8%

4.4%

7.3%

98.1%

1.0%

Other Markets

6.2%

5.4%

6.6%

6.2%

97.8%

-

Total (Cash)

3.6%

5.4%

2.9%

100.0%

97.5%

0.3%

Total (Straight-Line)

3.3%

-

2.4%

-

-

-

(1)

Based on Q3 2021 Same-Store NOI. For definitions of terms, please refer to the "Definitions and Reconciliations" section of the Company’s related quarterly Supplemental Financial Information.

(2)

Weighted average Same-Store physical occupancy for the quarter.

Year-to-date ("YTD"), for the nine months ended September 30, 2021, total revenue increased by $3.8 million YOY, or 0.4 percent, to $942.6 million. This increase was primarily attributable to growth in revenue from acquired communities, partially offset by a decrease in revenue from Same-Store and non-residential properties. The YTD annualized rate of turnover decreased by 380 basis points versus the prior year period to 47.1 percent.

The table below includes YTD Same-Store results by region, with concessions accounted for on cash and straight-line bases, for the nine months ended September 30, 2021.

Summary of Same-Store Results YTD 2021 versus YTD 2020

Region

Revenue
Growth /
(Decline)

Expense
Growth /
(Decline)

NOI
Growth /
(Decline)

% of Same-Store
Portfolio(1)

Physical
Occupancy(2)

YTD YOY Change
in Occupancy

West

(3.9)%

2.4%

(6.1)%

36.4%

96.7%

1.2%

Mid-Atlantic

(0.3)%

3.4%

(1.9)%

22.4%

96.9%

0.1%

Northeast

(2.6)%

6.7%

(7.4)%

16.6%

96.5%

2.2%

Southeast

5.0%

6.9%

4.1%

11.8%

97.6%

0.5%

Southwest

2.2%

(1.7)%

4.8%

7.2%

97.3%

0.4%

Other Markets

4.9%

0.1%

7.0%

5.6%

97.7%

1.2%

Total (Cash)

(0.9)%

3.5%

(2.9)%

100.0%

97.0%

0.8%

Total (Straight-Line)

(2.4)%

-

(4.9)%

-

-

-

(1)

Based on YTD 2021 Same-Store NOI. For definitions of terms, please refer to the "Definitions and Reconciliations" section of the Company’s related quarterly Supplemental Financial Information.

(2)

Weighted average Same-Store physical occupancy for YTD 2021.

Transactional Activity

The table below summarizes the Company’s transactional activity completed during the quarter.

Community / Property

Location (MSA)

Purchase
Price
($ millions)

Homes

Avg. Monthly
Revenue per
Occupied Home(1)

Physical
Occupancy(1)

Acquisitions

Brio

Seattle, WA

$171.9

259

$2,616

97.1%

Canterbury Apartments

Washington, D.C.

127.2

544

1,493

97.6%

The Smith Valley Forge

Philadelphia, PA

116.2

320

2,138

94.7%

1274 at Towson

Baltimore, MD

57.6

192

1,697

96.5%

322 on North Broad

Philadelphia, PA

147.0

339

2,350

96.2%

Total / Weighted Avg.

$619.9

1,654

$1,991

96.5%

(1)

Average Monthly Revenue per Occupied Home and Physical Occupancy are weighted averages for the quarter ended September 30, 2021.

Subsequent to quarter-end, the Company acquired two communities and sold one community, as summarized below.

Community / Property

Location (MSA)

Purchase /
(Sale) Price
($ millions)

Homes

Avg. Monthly
Revenue per
Occupied Home(1)

Physical
Occupancy(1)

Acquisitions Completed

Essex Luxe(2)

Orlando, FL

$105.0

330

$1,905

96.0%

Arbors at Maitland Summit

Orlando, FL

177.5

663

1,575

96.0%

Subtotal / Weighted Avg.

$282.5

993

$1,685

96.0%

Dispositions

1818 Platinum Triangle

Orange County, CA

$(126.0)

265

$2,535

98.1%

(1)

Average Monthly Revenue per Occupied Home and Physical Occupancy are as of September 30, 2021.

(2)

In September 2018, UDR structured a $12.9 million preferred equity investment with a third-party developer to finance this 330-apartment home community that was completed in 2020. In connection with UDR’s acquisition of the community, the joint venture construction loan and the unpaid accrued interest were paid in full. Approximately $47.9 million of the acquisition cost was financed by issuing approximately 0.9 million Operating Partnership Units priced at $53.00 per share to the seller.

Nearly all properties acquired during the quarter and subsequent to quarter-end are located proximate to wholly owned UDR communities, which the Company expects should drive additional operating efficiencies as its Next Generation Operating Platform is deployed.

Development and Redevelopment Activity

At the end of the third quarter, the Company’s development pipeline totaled $501.5 million and was 66 percent funded. The Company’s active pipeline includes five development communities, one each in Denver, CO; Dublin, CA; King of Prussia, PA; Addison, TX; and Washington, D.C., for a combined total of 1,417 homes.

At the end of the third quarter, the Company’s redevelopment pipeline totaled $18.1 million and was 30 percent funded. The Company’s active pipeline features the addition of 43 new apartment homes at two communities, one each in Newport Beach, CA, and San Francisco, CA.

Developer Capital Program ("DCP") Activity

At the end of the third quarter, the Company’s preferred equity investments under its DCP platform, including accrued return, totaled $316.3 million with a weighted average return rate of 10.7 percent and weighted average estimated remaining term of 2.4 years.

Capital Markets and Balance Sheet Activity

During the quarter the Company entered into forward equity sale agreements under its at-the-market equity program for approximately 5.0 million shares of common stock at a weighted average initial forward price per share of $53.86. Subsequent to quarter-end, the Company entered into forward equity sale agreements under its at-the-market equity program for approximately 0.9 million shares of common stock at a weighted average initial forward price per share of $53.51. The initial forward price per share for all forward equity sale agreements mentioned above will be adjusted at settlement to reflect the then-current federal funds rate and the amount of dividends paid to holders of UDR common stock over the term of the forward equity sale agreements. No shares under these new forward equity sale agreements have been settled. The final dates by which shares sold under these forward equity sale agreements must be settled range between August 1, 2022 and September 14, 2022.

During the quarter, the Company settled approximately 11.4 million shares of common stock under its previously-announced forward equity sales agreements at a weighted average net price per share, after adjustments, of $43.82 for proceeds of $500.0 million.

As previously announced, during the quarter, the Company:

  • Issued $200.0 million of 10-year unsecured debt at an effective interest rate of 2.259 percent. The notes were priced at 106.388 percent of the principal amount and were a further issuance of the Company’s $400.0 million senior unsecured notes due 2031.

  • Increased the maximum aggregate capacity on its senior unsecured revolving credit facility to $1.3 billion from $1.1 billion and extended the maturity date to January 31, 2026, with two six-month extension options. At the Company’s current credit rating, the facility carries an interest rate equal to LIBOR plus a spread of 77.5 basis points, a 5 basis point improvement versus prior pricing.

  • Extended the maturity date of its $350.0 million senior unsecured term loan to January 31, 2027. At the Company’s current credit rating, the term loan carries an interest rate equal to LIBOR plus a spread of 85 basis points, a 5 basis point improvement versus prior pricing.

  • Increased the maximum aggregate capacity under its commercial paper program to $700.0 million from $500.0 million. As of September 30, 2021, the program bears an interest rate of 0.22 percent, the equivalent of LIBOR plus a spread of 14 basis points.

  • Extended the maturity date of its $75.0 million working capital facility to January 12, 2024. At the Company’s current credit rating, the facility carries an interest rate equal to LIBOR plus a spread of 77.5 basis points, a 5 basis point improvement versus prior pricing.

As of September 30, 2021, the Company had $1.0 billion of liquidity through a combination of cash and undrawn capacity on its credit facilities, plus estimated proceeds of approximately $593.0 million from the potential settlement of approximately 11.6 million shares subject to previously-announced forward equity sale agreements (subject to adjustment as described above), for a total of $1.6 billion in liquidity. Please see Attachment 14 of the Company’s related quarterly Supplemental Financial Information for additional details on projected capital sources and uses.

The Company’s total indebtedness as of September 30, 2021 was $5.5 billion with no remaining consolidated maturities until 2024, excluding principal amortization, amounts on the Company’s commercial paper program and amounts on the Company’s working capital credit facility. In the table below, the Company has presented select balance sheet metrics for the quarter ended September 30, 2021 and the comparable prior year period.

Quarter Ended September 30

Balance Sheet Metric

Q3 2021

Q3 2020

Change

Weighted Average Interest Rate

2.75%

3.01%

(0.26)%

Weighted Average Years to Maturity

7.8

7.6

0.2

Consolidated Fixed Charge Coverage Ratio

4.9x

4.7x

0.2x

Consolidated Debt as a percentage of Total Assets

35.8%

35.0%

0.8%

Consolidated Net-Debt-to-EBITDAre

7.1x

6.5x

0.6x

Board of Directors

As previously announced, during the quarter the Company appointed Kevin C. Nickelberry to its Board of Directors. Mr. Nickelberry currently serves as a Managing Director and Co-Head of Private Equity Co-Investments at GCM Grosvenor and has over 25 years of private equity origination, execution, and post-acquisition experience. Mr. Nickelberry is an independent director and serves on UDR’s Audit and Governance Committees.

Dividend

As previously announced, the Company’s Board of Directors declared a regular quarterly dividend on its common stock for the third quarter of 2021 in the amount of $0.3625 per share. The dividend will be paid in cash on November 1, 2021 to UDR common shareholders of record as of October 11, 2021. The third quarter 2021 dividend will represent the 196th consecutive quarterly dividend paid by the Company on its common stock.

Supplemental Information

The Company offers Supplemental Financial Information that provides details on the financial position and operating results of the Company which is available on the Company's website at ir.udr.com.

Attachment 15(A)

UDR, Inc.
Definitions and Reconciliations
September 30, 2021
(Unaudited)

Acquired Communities: The Company defines Acquired Communities as those communities acquired by the Company, other than development and redevelopment activity, that did not achieve stabilization as of the most recent quarter.

Adjusted Funds from Operations ("AFFO") attributable to common stockholders and unitholders: The Company defines AFFO as FFO as Adjusted attributable to common stockholders and unitholders less recurring capital expenditures on consolidated communities that are necessary to help preserve the value of and maintain functionality at our communities.

Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company's operational performance than FFO or FFO as Adjusted. AFFO is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance. The Company believes that net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to AFFO. Management believes that AFFO is a widely recognized measure of the operations of REITs, and presenting AFFO enables investors to assess our performance in comparison to other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not always be comparable to AFFO calculated by other REITs. AFFO should not be considered as an alternative to net income/(loss) (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. A reconciliation from net income/(loss) attributable to common stockholders to AFFO is provided on Attachment 2.

Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items: The Company defines Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items as Consolidated Interest Coverage Ratio - adjusted for non-recurring items divided by total consolidated interest, excluding the impact of costs associated with debt extinguishment, plus preferred dividends.

Management considers Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation of the components that comprise Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.

Consolidated Interest Coverage Ratio - adjusted for non-recurring items: The Company defines Consolidated Interest Coverage Ratio - adjusted for non-recurring items as Consolidated EBITDAre – adjusted for non-recurring items divided by total consolidated interest, excluding the impact of costs associated with debt extinguishment.

Management considers Consolidated Interest Coverage Ratio - adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation of the components that comprise Consolidated Interest Coverage Ratio - adjusted for non-recurring items is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.

Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items: The Company defines Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items as total consolidated debt net of cash and cash equivalents divided by annualized Consolidated EBITDAre - adjusted for non-recurring items. Consolidated EBITDAre - adjusted for non-recurring items is defined as EBITDAre excluding the impact of income/(loss) from unconsolidated entities, adjustments to reflect the Company’s share of EBITDAre of unconsolidated joint ventures and other non-recurring items including, but not limited to casualty-related charges/(recoveries), net of wholly owned communities.

Management considers Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation between net income/(loss) and Consolidated EBITDAre - adjusted for non-recurring items is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.

Controllable Expenses: The Company refers to property operating and maintenance expenses as Controllable Expenses.

Controllable Operating Margin: The Company defines Controllable Operating Margin as (i) rental income less Controllable Expenses (ii) divided by rental income. Management considers Controllable Operating Margin a useful metric as it provides investors with an indicator of the Company’s ability to limit the growth of expenses that are within the control of the Company.

Development Communities: The Company defines Development Communities as those communities recently developed or under development by the Company, that are currently majority owned by the Company and have not achieved stabilization as of the most recent quarter.

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre): The Company defines EBITDAre as net income/(loss) (computed in accordance GAAP), plus interest expense, including costs associated with debt extinguishment, plus real estate depreciation and amortization, plus other depreciation and amortization, plus (minus) income tax provision/(benefit), net, (minus) plus net gain/(loss) on the sale of depreciable real estate owned, plus impairment write-downs of depreciable real estate, plus the adjustments to reflect the Company’s share of EBITDAre of unconsolidated joint ventures. The Company computes EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts, or Nareit, which may not be comparable to EBITDAre reported by other REITs that do not compute EBITDAre in accordance with the Nareit definition, or that interpret the Nareit definition differently than the Company does. The White Paper on EBITDAre was approved by the Board of Governors of Nareit in September 2017.

Management considers EBITDAre a useful metric for investors as it provides an additional indicator of the Company’s ability to incur and service debt, and enables investors to assess our performance against that of its peer REITs. EBITDAre should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company’s activities in accordance with GAAP. EBITDAre does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs. A reconciliation between net income/(loss) and EBITDAre is provided on Attachment 4(C) of the Company's quarterly supplemental disclosure.

Effective Blended Lease Rate Growth: The Company defines Effective Blended Lease Rate Growth as the combined proportional growth as a result of Effective New Lease Rate Growth and Effective Renewal Lease Rate Growth. Management considers Effective Blended Lease Rate Growth a useful metric for investors as it assesses combined proportional market-level, new and in-place demand trends.

Effective New Lease Rate Growth: The Company defines Effective New Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior resident effective rent for the prior lease term on new leases commenced during the current quarter.

Management considers Effective New Lease Rate Growth a useful metric for investors as it assesses market-level new demand trends.

Effective Renewal Lease Rate Growth: The Company defines Effective Renewal Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior effective rent for the prior lease term on renewed leases commenced during the current quarter.

Management considers Effective Renewal Lease Rate Growth a useful metric for investors as it assesses market-level, in-place demand trends.

Estimated Quarter of Completion: The Company defines Estimated Quarter of Completion of a development or redevelopment project as the date on which construction is expected to be completed, but it does not represent the date of stabilization.

Attachment 15(B)

UDR, Inc.
Definitions and Reconciliations
September 30, 2021
(Unaudited)

Funds from Operations as Adjusted ("FFO as Adjusted") attributable to common stockholders and unitholders: The Company defines FFO as Adjusted attributable to common stockholders and unitholders as FFO excluding the impact of other non-comparable items including, but not limited to, acquisition-related costs, prepayment costs/benefits associated with early debt retirement, impairment write-downs or gains and losses on sales of real estate or other assets incidental to the main business of the Company and income taxes directly associated with those gains and losses, casualty-related expenses and recoveries, severance costs and legal and other costs.

Management believes that FFO as Adjusted is useful supplemental information regarding our operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. FFO as Adjusted is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance. The Company believes that net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to FFO as Adjusted. However, other REITs may use different methodologies for calculating FFO as Adjusted or similar FFO measures and, accordingly, our FFO as Adjusted may not always be comparable to FFO as Adjusted or similar FFO measures calculated by other REITs. FFO as Adjusted should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity. A reconciliation from net income attributable to common stockholders to FFO as Adjusted is provided on Attachment 2.

Funds from Operations ("FFO") attributable to common stockholders and unitholders: The Company defines FFO attributable to common stockholders and unitholders as net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate related to the main business of the Company or of investments in non-consolidated investees that are directly attributable to decreases in the fair value of depreciable real estate held by the investee, gains and losses from sales of depreciable real estate related to the main business of the Company and income taxes directly associated with those gains and losses, plus real estate depreciation and amortization, and after adjustments for noncontrolling interests, and the Company’s share of unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust's definition issued in April 2002 and restated in November 2018. In the computation of diluted FFO, if OP Units, DownREIT Units, unvested restricted stock, unvested LTIP Units, stock options, and the shares of Series E Cumulative Convertible Preferred Stock are dilutive, they are included in the diluted share count.

Management considers FFO a useful metric for investors as the Company uses 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 flow as a measure of the Company's activities in accordance with GAAP. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs. A reconciliation from net income/(loss) attributable to common stockholders to FFO is provided on Attachment 2.

Held For Disposition Communities: The Company defines Held for Disposition Communities as those communities that were held for sale as of the end of the most recent quarter.

Joint Venture Reconciliation at UDR's weighted average ownership interest:

In thousands

3Q 2021

YTD 2021

Income/(loss) from unconsolidated entities

$

14,450

$

29,123

Management fee

490

1,463

Financing fee

-

287

Interest expense

3,751

11,899

Debt extinguishment and other associated costs

-

1,395

Depreciation

7,929

24,064

General and administrative

64

193

Developer Capital Program (excludes Alameda Point Block 11, Brio and Infield Phase II)

(8,318

)

(23,240

)

Other (income)/expense

119

334

Realized/unrealized (gain)/loss on unconsolidated real estate technology investments

(10,016

)

(18,184

)

108

26

(Gain)/loss on sales

-

(2,460

)

Total Joint Venture NOI at UDR's Ownership Interest

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