UDR Announces Third Quarter 2023 Results and Updates Full-year 2023 Guidance

UDR, Inc. (the “Company”) (NYSE: UDR), announced today its third quarter 2023 results. Net Income, Funds from Operations (“FFO”), FFO as Adjusted (“FFOA”), and Adjusted FFO (“AFFO”) per diluted share for the quarter ended September 30, 2023 are detailed below.

Quarter Ended September 30

Metric

3Q 2023 Actual

3Q 2023 Guidance

3Q 2022 Actual

$ Change vs. Prior Year Period

% Change vs. Prior Year Period

Net Income per diluted share

$0.10

$0.13 to $0.15

$0.07

$0.03

43%

FFO per diluted share

$0.61

$0.62 to $0.64

$0.57

$0.04

7%

FFOA per diluted share

$0.63

$0.62 to $0.64

$0.60

$0.03

5%

AFFO per diluted share

$0.55

$0.56 to $0.58

$0.54

$0.01

2%

• Same-Store (“SS”) results for the third quarter 2023 versus the third quarter 2022 and the second quarter 2023 are summarized below.

	Concessions reflected on a straight-line basis:		Concessions reflected on a cash basis:
SS Growth / (Decline)	Year-Over-Year (“YOY”): 3Q 2023 vs. 3Q 2022	Sequential: 3Q 2023 vs. 2Q 2023	YOY: 3Q 2023 vs. 3Q 2022	Sequential: 3Q 2023 vs. 2Q 2023
Revenue	5.3%	2.3%	5.0%	2.0%
Expense	3.4%	3.9%	3.4%	3.9%
Net Operating Income (“NOI”)	6.1%	1.6%	5.7%	1.2%

• During the third quarter,
  • As previously announced, the Company acquired a six community portfolio in Texas (four in Dallas and two in Austin) totaling 1,753 apartment homes and valued at approximately $402.2 million.
  • As previously announced, the Company repurchased 0.6 million shares of its common stock at a weighted average price per share of $40.13 for total consideration of approximately $25.0 million.
  • The Company achieved stabilized occupancy at 5421 at Dublin Station, a $126.9 million, 220-home apartment community developed in the Dublin submarket of the San Francisco Bay Area.
• Subsequent to quarter end, the Company published its fifth annual ESG report and concurrently announced that it earned the Regional Sector Leader designation from GRESB.

“Our third quarter FFOA per diluted share met the guidance we provided in July, as the nation’s employment situation remained resilient and relative affordability versus other forms of housing continued to favor apartments,” said Tom Toomey, UDR’s Chairman and CEO. “Recent operating trends across the industry have been softer than typical due to all-time high levels of new supply, leading us to lower our expectation for FFOA per diluted share during the fourth quarter to a midpoint of $0.63 versus the $0.65 that was implied by our prior full-year 2023 guidance. Nevertheless, we believe UDR is well positioned due to our diversified portfolio, investment grade balance sheet, and unique operating initiatives that will differentiate our growth profile moving forward.”

Outlook⁽¹⁾

As shown in the table below, the Company has established guidance ranges for the fourth quarter 2023 and has updated its prior full-year 2023 Net Income per share, FFO per share, FFOA per share, AFFO per share, and same-store growth guidance ranges.

	4Q 2023 Outlook	3Q 2023 Actual	Prior Full-Year 2023 Outlook	Updated Full-Year 2023 Outlook	Full-Year 2023 Midpoint (change)
Net Income per diluted share	$0.08 to $0.10	$0.10	$1.35 to $1.39	$1.32 to $1.34	$1.33 (-$0.04)
FFO per diluted share	$0.62 to $0.64	$0.61	$2.48 to $2.52	$2.45 to $2.47	$2.46 (-$0.04)
FFOA per diluted share	$0.62 to $0.64	$0.63	$2.47 to $2.51	$2.46 to $2.48	$2.47 (-$0.02)
AFFO per diluted share	$0.56 to $0.58	$0.55	$2.24 to $2.28	$2.23 to $2.25	$2.24 (-$0.02)
YOY Growth: concessions reflected on a straight-line basis:
SS Revenue	N/A	5.3%	6.25% to 7.25%	5.75% to 6.25%	6.00% (-0.75%)
SS Expense	N/A	3.4%	4.0% to 5.5%	4.50% to 5.00%	4.75% (unch)
SS NOI	N/A	6.1%	6.75% to 8.25%	6.50% to 7.00%	6.75% (-0.75%)
YOY Growth: concessions reflected on a cash basis:
SS Revenue	N/A	5.0%	6.0% to 7.0%	5.40% to 5.90%	5.65% (-0.85%)
SS NOI	N/A	5.7%	6.5% to 8.0%	6.00% to 6.50%	6.25% (-1.00%)

(1)

Additional assumptions for the Company’s fourth quarter and full-year 2023 outlook can be found on Attachment 14 of the Company’s related quarterly Supplemental Financial Information (“Supplement”). 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 Supplement. 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 Supplement.

Third Quarter 2023 Results and Fourth Quarter 2023 Expectations

In the third quarter, total revenue increased by $18.8 million YOY, or 4.8 percent, to $410.1 million. This increase was primarily attributable to growth in revenue from Same-Store communities and past accretive external growth investments.

“Continued strength in renewal lease rate growth, occupancy, incremental income from our innovative operating initiatives, and positive rent collection trends enabled us to achieve 2.3 percent sequential same-store revenue growth on a straight-line basis in the third quarter,” said Mike Lacy, UDR’s Senior Vice President of Operations. “Resident financial health remains resilient but elevated new apartment supply is resulting in less robust pricing power than we had previously expected for the latter part of the third quarter and into the fourth quarter. As a result, we anticipate that effective lease rate growth for the fourth quarter will be below historical norms and our prior expectations, with October to-date blended lease rate growth approximating 1 percent.”

In the tables below, the Company has presented YOY, sequential, and year-to-date (“YTD”) Same-Store results by region, with concessions accounted for on both cash and straight-line bases.

Summary of Same-Store Results in Third Quarter 2023 versus Third Quarter 2022

Region	Revenue Growth / (Decline)	Expense Growth / (Decline)	NOI Growth / (Decline)	% of Same-Store Portfolio(1)	Physical Occupancy(2)	YOY Change in Occupancy
West	3.9%	4.4%	3.7%	30.9%	96.7%	0.2%
Mid-Atlantic	4.8%	4.6%	4.9%	21.0%	96.9%	0.2%
Northeast	6.9%	5.1%	7.9%	18.2%	96.7%	(0.3)%
Southeast	6.0%	3.1%	7.3%	14.2%	96.4%	(0.1)%
Southwest	3.2%	(5.6)%	8.9%	9.0%	96.8%	0.1%
Other Markets	5.0%	8.0%	3.8%	6.7%	96.6%	(0.2)%
Total (Cash)	5.0%	3.4%	5.7%	100.0%	96.7%	0.0%
Total (Straight-Line)	5.3%	3.4%	6.1%	-	-	-

(1)		Based on 3Q 2023 Same-Store NOI. For definitions of terms, please refer to the “Definitions and Reconciliations” section of the Company’s related quarterly Supplement.
(2)		Weighted average Same-Store physical occupancy for the quarter.

Summary of Same-Store Results in Third Quarter 2023 versus Second Quarter 2023

Region	Revenue Growth / (Decline)	Expense Growth / (Decline)	NOI Growth / (Decline)	% of Same-Store Portfolio(1)	Physical Occupancy(2)	Sequential Change in Occupancy
West	2.4%	2.9%	2.2%	30.9%	96.7%	0.3%
Mid-Atlantic	2.4%	3.2%	2.1%	21.0%	96.9%	0.0%
Northeast	2.6%	7.3%	0.3%	18.2%	96.7%	(0.4)%
Southeast	0.7%	1.7%	0.2%	14.2%	96.4%	0.1%
Southwest	1.1%	0.3%	1.6%	9.0%	96.8%	0.5%
Other Markets	1.3%	11.0%	(2.3)%	6.7%	96.6%	0.0%
Total (Cash)	2.0%	3.9%	1.2%	100.0%	96.7%	0.1%
Total (Straight-Line)	2.3%	3.9%	1.6%	-	-	-

(1)		Based on 3Q 2023 Same-Store NOI. For definitions of terms, please refer to the “Definitions and Reconciliations” section of the Company’s related quarterly Supplement.
(2)		Weighted average Same-Store physical occupancy for the quarter.

Summary of Same-Store Results YTD 2023 versus YTD 2022

Region	Revenue Growth / (Decline)	Expense Growth / (Decline)	NOI Growth / (Decline)	% of Same-Store Portfolio(1)	Physical Occupancy(2)	YOY Change in Occupancy
West	5.0%	5.4%	4.8%	31.2%	96.5%	(0.1)%
Mid-Atlantic	5.7%	5.1%	5.9%	21.2%	96.8%	(0.2)%
Northeast	8.5%	5.8%	10.0%	17.4%	97.0%	(0.3)%
Southeast	9.5%	6.7%	10.8%	14.3%	96.2%	(0.7)%
Southwest	6.9%	2.9%	9.4%	9.0%	96.6%	(0.5)%
Other Markets	5.9%	4.7%	6.4%	6.9%	96.7%	(0.2)%
Total (Cash)	6.7%	5.2%	7.3%	100.0%	96.6%	(0.3)%
Total (Straight-Line)	7.4%	5.2%	8.4%	-	-	-

(1)		Based on YTD 2023 Same-Store NOI. For definitions of terms, please refer to the “Definitions and Reconciliations” section of the Company’s related quarterly Supplement.
(2)		Weighted average Same-Store physical occupancy for the quarter.

Transactional Activity

As previously announced, during the quarter, the Company acquired a portfolio of six communities in Texas totaling 1,753 apartment homes in exchange for $172.8 million of UDR Operating Partnership Units issued at $47.50 per unit, $20.0 million in cash, and the assumption of $209.4 million of below market debt at a weighted average coupon rate of 3.8 percent with a weighted average of 6.3 years to maturity.

The transaction is expected to be cash flow neutral in year one and accretive in year two as operating initiatives are implemented. The transaction is expected to be dilutive to FFOA per share in 2023 due to negative non-cash debt mark-to-market adjustments related to the significantly below-market-rate debt being assumed.

Development Activity and Other Projects

During the quarter, the Company achieved stabilized occupancy at 5421 at Dublin Station, a $126.9 million, 220-home apartment community the Company developed in the Dublin submarket of the San Francisco Bay Area.

At the end of the third quarter, the Company’s development pipeline totaled $187.5 million and was 74 percent funded, with only $48.4 million remaining to fund. The Company’s active development pipeline includes two communities, one each in the Addison submarket of Dallas, TX, and Tampa, FL, for a combined 415 apartment homes.

At the end of the third quarter, the Company’s redevelopment pipeline of 2,313 apartment homes totaled $105.0 million and was 34 percent funded.

Developer Capital Program (“DCP”) Portfolio

At the end of the third quarter, the Company’s commitments under its DCP platform totaled $520.9 million with a contractual weighted average return rate of 9.9 percent and a weighted average estimated remaining term of 2.9 years.

Capital Markets and Balance Sheet Activity

“With minimal committed forward funding obligations, strong next 3-year liquidity, and our ability to source capital through joint venture and OP unit transactions, we can utilize our investment grade balance sheet and continue to opportunistically grow the Company to enhance stakeholder returns,” said Joe Fisher, UDR’s President and Chief Financial Officer.

During the quarter, the Company repurchased 0.6 million shares of its common stock at a weighted average price per share of $40.13 for total consideration of approximately $25.0 million.

The Company’s total indebtedness as of September 30, 2023 was $5.8 billion with no remaining consolidated maturities until 3Q 2024, excluding principal amortization and amounts on the Company’s commercial paper program. As of September 30, 2023, the Company had $970.0 million of liquidity through a combination of cash and undrawn capacity on its credit facilities. Please see Attachment 14 of the Company’s related quarterly Supplement for additional details on projected capital sources and uses.

In the table below, the Company has presented select balance sheet metrics for the quarter ended September 30, 2023 and the comparable prior year period.

	Quarter Ended September 30
Balance Sheet Metric	3Q 2023	3Q 2022	Change
Weighted Average Interest Rate	3.37%	3.06%	0.31%
Weighted Average Years to Maturity(1)	5.9	6.7	(0.8)
Consolidated Fixed Charge Coverage Ratio	5.2x	5.3x	(0.1)x
Consolidated Debt as a percentage of Total Assets	32.8%	33.7%	(0.9)%
Consolidated Net Debt-to-EBITDAre	5.7x	6.0x	(0.3)x

(1)

If the Company’s commercial paper balance was refinanced using its line of credit, the weighted average years to maturity would have been 6.0 years without extensions and 6.1 years with extensions for 3Q 2023 and 7.0 years without extensions and 7.1 years with extensions for 3Q 2022.

ESG

Subsequent to quarter end, the Company published its fifth annual ESG report, which detailed the Company’s ongoing best-in-class commitment to engaging in socially responsible ESG activities including establishing science-based emissions reduction targets that should contribute to a lower-carbon future. Concurrently, the Company announced that it earned the Regional Sector Leader designation from GRESB resulting from the Company’s 2023 GRESB survey score of 87. In addition, the Company’s GRESB Public Disclosure rating is “A”, the fifth consecutive year UDR has achieved such a distinction.

Dividend

As previously announced, the Company’s Board of Directors declared a regular quarterly dividend on its common stock for the third quarter 2023 in the amount of $0.42 per share. The dividend will be paid in cash on October 31, 2023 to UDR common shareholders of record as of October 10, 2023. The third quarter 2023 dividend will represent the 204^th 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)

Definitions and Reconciliations
September 30, 2023
(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 flow 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 lenders 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 lenders 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 lenders 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 with 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)

Definitions and Reconciliations
September 30, 2023
(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 flow 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 2023				YTD 2023
Income/(loss) from unconsolidated entities	$	5,508			$	24,912
Management fee		744				1,969
Interest expense		4,178				12,327
Depreciation		12,606				27,671
General and administrative		236				357
Developer Capital Program (excludes loans)		(8,193	)			(29,996	)
Other (income)/expense		(35	)			123
Realized (gain)/loss on real estate technology investments, net of tax		466				1,186
Unrealized (gain)/loss on real estate technology investments, net of tax		(881	)			(1,720	)
Total Joint Venture NOI at UDR's Ownership Interest	$	14,629			$	36,829

Net Operating Income (“NOI”): The Company defines NOI as rental income less direct property rental expenses. Rental income represents gross market rent and other revenues less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense, which is calculated as 3.25% of property revenue, and land rent. Property management expense covers costs directly related to consolidated property operations, inclusive of corporate management, regional supervision, accounting and other costs.

Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization and is a widely used input, along with capitalization rates, in the determination of real estate valuations. A reconciliation from net income/(loss) attributable to UDR, Inc. to NOI is provided below.

In thousands	3Q 2023			2Q 2023			1Q 2023				4Q 2022			3Q 2022
Net income/(loss) attributable to UDR, Inc.	$	32,858		$	347,545		$	30,964			$	44,530		$	23,605
Property management		13,271			13,101			12,945				12,949			12,675
Other operating expenses		4,611			4,259			3,032				4,008			3,746
Real estate depreciation and amortization		167,551			168,925			169,300				167,241			166,781
Interest expense		44,664			45,113			43,742				43,247			39,905
Casualty-related charges/(recoveries), net		(1,928	)		1,134			4,156				8,523			901
General and administrative		15,159			16,452			17,480				16,811			15,840
Tax provision/(benefit), net		428			1,351			234				(683	)		377
(Income)/loss from unconsolidated entities		(5,508	)		(9,697	)		(9,707	)			(761	)		(10,003	)
Interest income and other (income)/expense, net		3,069			(10,447	)		(1,010	)			(1	)		7,495
Joint venture management and other fees		(1,772	)		(1,450	)		(1,242	)			(1,244	)		(1,274	)
Other depreciation and amortization		3,692			3,681			3,649				4,823			3,430
(Gain)/loss on sale of real estate owned		-			(325,884	)		(1	)			(25,494	)		-
Net income/(loss) attributable to noncontrolling interests		2,561			22,638			1,961				2,937			1,540
Total consolidated NOI	$	278,656		$	276,721		$	275,503			$	276,886		$	265,018

Attachment 15(C)

Definitions and Reconciliations
September 30, 2023
(Unaudited)

NOI Enhancing Capital Expenditures ("Cap Ex"): The Company defines NOI Enhancing Capital Expenditures as expenditures that result in increased income generation or decreased expense growth over time.

Management considers NOI Enhancing Capital Expenditures a useful metric for investors as it quantifies the amount of capital expenditures that are expected to grow, not just maintain, revenues or to decrease expenses.

Non-Mature Communities: The Company defines Non-Mature Communities as those communities that have not met the criteria to be included in same-store communities.

Non-Residential / Other: The Company defines Non-Residential / Other as non-apartment components of mixed-use properties, land held, properties being prepared for redevelopment and properties where a material change in home count has occurred.

Other Markets: The Company defines Other Markets as the accumulation of individual markets where it operates less than 1,000 Same-Store homes. Management considers Other Markets a useful metric as the operating results for the individual markets are not representative of the fundamentals for those markets as a whole.

Physical Occupancy: The Company defines Physical Occupancy as the number of occupied homes divided by the total homes available at a community.

QTD Same-Store Communities: The Company defines QTD Same-Store Communities as those communities Stabilized for five full consecutive quarters. These communities were owned and had stabilized operating expenses as of the beginning of the quarter in the prior year, were not in process of any substantial redevelopment activities, and were not held for disposition.

Recurring Capital Expenditures: The Company defines Recurring Capital Expenditures as expenditures that are necessary to help preserve the value of and maintain functionality at its communities.

Redevelopment Communities: The Company generally defines Redevelopment Communities as those communities where substantial redevelopment is in progress. Based upon the level of material impact the redevelopment has on the community (operations, occupancy levels, and future rental rates), the community may or may not maintain Stabilization. As such, for each redevelopment, the Company assesses whether the community remains in Same-Store.

Same-Store Revenue with Concessions on a Cash Basis: Same-Store Revenue with Concessions on a Cash Basis is considered by the Company to be a supplemental measure to rental income on a straight-line basis which allows investors to evaluate the impact of both current and historical concessions and to more readily enable comparisons to revenue as reported by its peer REITs. In addition, Same-Store Revenue with Concessions on a Cash Basis allows an investor to understand the historical trends in cash concessions.

A reconciliation between Same-Store Revenue with Concessions on a Cash Basis to Same-Store Revenue on a straight-line basis (inclusive of the impact to Same-Store NOI) is provided below:

	3Q 23			3Q 22			3Q 23			2Q 23				YTD 23			YTD 22
Revenue (Cash basis)	$	385,551		$	367,346		$	385,551		$	377,950			$	1,126,834		$	1,056,486
Concessions granted/(amortized), net		776			(351	)		776			(209	)			609			(7,207	)
Revenue (Straight-line basis)	$	386,327		$	366,995		$	386,327		$	377,741			$	1,127,443		$	1,049,279
% change - Same-Store Revenue with Concessions on a Cash basis:		5.0	%					2.0	%						6.7	%
% change - Same-Store Revenue with Concessions on a Straight-line basis:		5.3	%					2.3	%						7.4	%
% change - Same-Store NOI with Concessions on a Cash basis:		5.7	%					1.2	%						7.3	%
% change - Same-Store NOI with Concessions on a Straight-line basis:		6.1	%					1.6	%						8.4	%

Sold Communities: The Company defines Sold Communities as those communities that were disposed of prior to the end of the most recent quarter.

Stabilization/Stabilized: The Company defines Stabilization/Stabilized as when a community’s occupancy reaches 90% or above for at least three consecutive months.

Stabilized, Non-Mature Communities: The Company defines Stabilized, Non-Mature Communities as those communities that have reached Stabilization but are not yet in the same-store portfolio.

Total Revenue per Occupied Home: The Company defines Total Revenue per Occupied Home as rental and other revenues with concessions reported on a Cash Basis, divided by the product of occupancy and the number of apartment homes. A reconciliation between Same-Store Revenue with Concessions on a Cash Basis to Same-Store Revenue on a straight-line basis is provided above.

Management considers Total Revenue per Occupied Home a useful metric for investors as it serves as a proxy for portfolio quality, both geographic and physical.

TRS: The Company’s taxable REIT subsidiaries (“TRS”) focus on making investments and providing services that are otherwise not allowed to be made or provided by a REIT.

YTD Same-Store Communities: The Company defines YTD Same-Store Communities as those communities Stabilized for two full consecutive calendar years. These communities were owned and had stabilized operating expenses as of the beginning of the prior year, were not in process of any substantial redevelopment activities, and were not held for disposition.

Conference Call and Webcast Information

UDR will host a webcast and conference call at 12:00 p.m. Eastern Time on October 27, 2023, to discuss third quarter results as well as high-level views for 2023. The webcast will be available on UDR's website at ir.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, download and install any necessary audio software. To participate in the teleconference dial 877-423-9813 for domestic and 201-689-8573 for international. A passcode is not necessary.

Given a high volume of conference calls occurring during this time of year, delays are anticipated when connecting to the live call. As a result, stakeholders and interested parties are encouraged to utilize the Company’s webcast link for its earnings results discussion.

A replay of the conference call will be available through November 27, 2023, by dialing 844-512-2921 for domestic and 412-317-6671 for international and entering the confirmation number, 13741777, when prompted for the passcode. A replay of the call will also be available on UDR's website at ir.udr.com.

Full Text of the Earnings Report and Supplemental Data

The full text of the earnings report and related quarterly Supplement will be available on the Company’s website at ir.udr.com.

Forward-Looking Statements

Certain statements made in this press release may constitute “forward-looking statements.” Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in a forward-looking statement, due to a number of factors, which include, but are not limited to, general market and economic conditions, unfavorable changes in the apartment market and economic conditions that could adversely affect occupancy levels and rental rates, the impact of inflation/deflation on rental rates and property operating expenses, the availability of capital and the stability of the capital markets, rising interest rates, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments, redevelopments and lease-ups on schedule or at expected rent and occupancy levels, changes in job growth, home affordability and demand/supply ratio for multifamily housing, development and construction risks that may impact profitability, risks that joint ventures with third parties and DCP investments do not perform as expected, the failure of automation or technology to help grow net operating income, and other risk factors discussed in documents filed by the Company with the SEC 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 press release, 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 under the U.S. securities laws.

About UDR, Inc.

UDR, Inc. (NYSE: UDR), an S&P 500 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 communities in targeted U.S. markets. As of September 30, 2023, UDR owned or had an ownership position in 60,177 apartment homes including 415 homes under development. For over 51 years, UDR has delivered long-term value to shareholders, the best standard of service to Residents and the highest quality experience for Associates.

Attachment 1
Consolidated Statements of Operations
(Unaudited) (1)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
In thousands, except per share amounts	2023				2022				2023				2022
REVENUES:
Rental income (2)	$	408,359			$	390,023			$	1,209,764			$	1,113,952
Joint venture management and other fees		1,772				1,274				4,464				3,778
Total revenues		410,131				391,297				1,214,228				1,117,730
OPERATING EXPENSES:
Property operating and maintenance		71,599				66,769				205,294				185,658
Real estate taxes and insurance		58,104				58,236				173,590				164,788
Property management		13,271				12,675				39,317				36,203
Other operating expenses		4,611				3,746				11,902				13,485
Real estate depreciation and amortization		167,551				166,781				505,776				497,987
General and administrative		15,159				15,840				49,091				47,333
Casualty-related charges/(recoveries), net		(1,928	)			901				3,362				1,210
Other depreciation and amortization		3,692				3,430				11,022				9,521
Total operating expenses		332,059				328,378				999,354				956,185
Gain/(loss) on sale of real estate owned		-				-				325,885				-
Operating income		78,072				62,919				540,759				161,545
Income/(loss) from unconsolidated entities (2)		5,508				10,003				24,912				4,186
Interest expense		(44,664	)			(39,905	)			(133,519	)			(112,653	)
Interest income and other income/(expense), net		(3,069	)			(7,495	)			8,388				(6,934	)
Income/(loss) before income taxes		35,847				25,522				440,540				46,144
Tax (provision)/benefit, net		(428	)			(377	)			(2,013	)			(1,032	)
Net Income/(loss)		35,419				25,145				438,527				45,112
Net (income)/loss attributable to redeemable noncontrolling interests in the OP and DownREIT Partnership		(2,554	)			(1,533	)			(27,137	)			(2,684	)
Net (income)/loss attributable to noncontrolling interests		(7	)			(7	)			(23	)			(34	)
Net income/(loss) attributable to UDR, Inc.		32,858				23,605				411,367				42,394
Distributions to preferred stockholders - Series E (Convertible)		(1,221	)			(1,106	)			(3,626	)			(3,307	)
Net income/(loss) attributable to common stockholders	$	31,637			$	22,499			$	407,741			$	39,087
Income/(loss) per weighted average common share - basic:	$	0.10			$	0.07			$	1.24			$	0.12
Income/(loss) per weighted average common share - diluted:	$	0.10			$	0.07			$	1.24			$	0.12
Common distributions declared per share	$	0.42			$	0.38			$	1.26			$	1.14
Weighted average number of common shares outstanding - basic		328,760				324,701				328,835				320,378
Weighted average number of common shares outstanding - diluted		329,201				325,686				329,283				321,629
(1) See Attachment 15 for definitions and other terms.
(2) As of September 30, 2023, UDR's residential accounts receivable balance, net of its reserve, was $9.2 million, including its share from unconsolidated joint ventures. The unreserved amount is based on probability of collection.

Attachment 2
Funds From Operations
(Unaudited) (1)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
In thousands, except per share and unit amounts	2023				2022				2023				2022
Net income/(loss) attributable to common stockholders	$	31,637			$	22,499			$	407,741			$	39,087
Real estate depreciation and amortization		167,551				166,781				505,776				497,987
Noncontrolling interests		2,561				1,540				27,160				2,718
Real estate depreciation and amortization on unconsolidated joint ventures		13,149				7,457				29,329				22,570
Net gain on the sale of depreciable real estate owned, net of tax		-				-				(324,770	)			-
Funds from operations ("FFO") attributable to common stockholders and unitholders, basic	$	214,898			$	198,277			$	645,236			$	562,362
Distributions to preferred stockholders - Series E (Convertible) (2)		1,221				1,106				3,626				3,307
FFO attributable to common stockholders and unitholders, diluted	$	216,119			$	199,383			$	648,862			$	565,669
FFO per weighted average common share and unit, basic	$	0.61			$	0.57			$	1.84			$	1.64
FFO per weighted average common share and unit, diluted	$	0.61			$	0.57			$	1.83			$	1.63
Weighted average number of common shares and OP/DownREIT Units outstanding, basic		351,271				346,175				350,534				341,892
Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding, diluted		354,620				350,078				353,890				346,061
Impact of adjustments to FFO:
Variable upside participation on DCP, net	$	-			$	-			$	(204	)		$	(10,622	)
Legal and other		364				10				(894	)			1,493
Realized (gain)/loss on real estate technology investments, net of tax		520				376				1,372				(7,748	)
Unrealized (gain)/loss on real estate technology investments, net of tax		7,411				9,589				(1,551	)			45,896
Casualty-related charges/(recoveries), net		(1,928	)			901				3,362				1,210
Total impact of adjustments to FFO	$	6,367			$	10,876			$	2,085			$	30,229
FFO as Adjusted attributable to common stockholders and unitholders, diluted	$	222,486			$	210,259			$	650,947			$	595,898
FFO as Adjusted per weighted average common share and unit, diluted	$	0.63			$	0.60			$	1.84			$	1.72
Recurring capital expenditures		(27,139	)			(20,383	)			(60,784	)			(50,598	)
AFFO attributable to common stockholders and unitholders, diluted	$	195,347			$	189,876			$	590,163			$	545,300
AFFO per weighted average common share and unit, diluted	$	0.55			$	0.54			$	1.67			$	1.58
(1) See Attachment 15 for definitions and other terms.
(2) Series E cumulative convertible preferred shares are dilutive for purposes of calculating FFO per share for the three and nine months ended September 30, 2023 and September 30, 2022. Consequently, distributions to Series E cumulative convertible preferred stockholders are added to FFO and the weighted average number of Series E cumulative convertible preferred shares are included in the denominator when calculating FFO per common share and unit, diluted.

Attachment 3
Consolidated Balance Sheets
(Unaudited) (1)
	September 30,				December 31,
In thousands, except share and per share amounts	2023				2022
ASSETS
Real estate owned:
Real estate held for investment	$	15,779,481			$	15,365,928
Less: accumulated depreciation		(6,117,312	)			(5,762,205	)
Real estate held for investment, net		9,662,169				9,603,723
Real estate under development
(net of accumulated depreciation of $0 and $296)		139,143				189,809
Real estate held for disposition
(net of accumulated depreciation of $0 and $0)		-				14,039
Total real estate owned, net of accumulated depreciation		9,801,312				9,807,571
Cash and cash equivalents		1,624				1,193
Restricted cash		30,831				29,001
Notes receivable, net		209,297				54,707
Investment in and advances to unconsolidated joint ventures, net		963,927				754,446
Operating lease right-of-use assets		191,499				194,081
Other assets		221,572				197,471
Total assets	$	11,420,062			$	11,038,470
LIABILITIES AND EQUITY
Liabilities:
Secured debt	$	1,238,240			$	1,052,281
Unsecured debt		4,514,582				4,435,022
Operating lease liabilities		186,701				189,238
Real estate taxes payable		68,900				37,681
Accrued interest payable		27,071				46,671
Security deposits and prepaid rent		50,571				51,999
Distributions payable		149,615				134,213
Accounts payable, accrued expenses, and other liabilities		125,979				153,220
Total liabilities		6,361,659				6,100,325
Redeemable noncontrolling interests in the OP and DownREIT Partnership		907,269				839,850
Equity:
Preferred stock, no par value; 50,000,000 shares authorized at September 30, 2023 and December 31, 2022:
2,686,308 shares of 8.00% Series E Cumulative Convertible issued and outstanding (2,686,308 shares at December 31, 2022)		44,614				44,614
11,891,530 shares of Series F outstanding (12,100,514 shares at December 31, 2022)		1				1
Common stock, $0.01 par value; 450,000,000 shares authorized at September 30, 2023 and December 31, 2022:
328,904,161 shares issued and outstanding (328,993,088 shares at December 31, 2022)		3,289				3,290
Additional paid-in capital		7,487,515				7,493,423
Distributions in excess of net income		(3,392,855	)			(3,451,587	)
Accumulated other comprehensive income/(loss), net		8,360				8,344
Total stockholders' equity		4,150,924				4,098,085
Noncontrolling interests		210				210
Total equity		4,151,134				4,098,295
Total liabilities and equity	$	11,420,062			$	11,038,470
(1) See Attachment 15 for definitions and other terms.

Attachment 4(C)

Selected Financial Information

(Dollars in Thousands)

(Unaudited) (1)

Quarter Ended

Coverage Ratios

September 30, 2023

Net income/(loss)

$

35,419

Adjustments:

Interest expense, including debt extinguishment and other associated costs

44,664

Real estate depreciation and amortization

167,551

Other depreciation and amortization

3,692

Tax provision/(benefit), net

428

Adjustments to reflect the Company's share of EBITDAre of unconsolidated joint ventures

17,327

EBITDAre

$

269,081

Casualty-related charges/(recoveries), net

(1,928

)

Legal and other costs

364

Unrealized (gain)/loss on real estate technology investments

8,292

Realized (gain)/loss on real estate technology investments

54

(Income)/loss from unconsolidated entities

(5,508

)

Adjustments to reflect the Company's share of EBITDAre of unconsolidated joint ventures

(17,327

)

Management fee expense on unconsolidated joint ventures

(744

)

Consolidated EBITDAre - adjusted for non-recurring items

$

252,284

Annualized consolidated EBITDAre - adjusted for non-recurring items

$

1,009,136

Interest expense, including debt extinguishment and other associated costs

44,664

Capitalized interest expense

2,629

Total interest

$

47,293

Preferred dividends

$

1,221

Total debt

$

5,752,822

Cash

(1,624

)

Net debt

$

5,751,198

Consolidated Interest Coverage Ratio - adjusted for non-recurring items

5.3x

Consolidated Fixed Charge Coverage Ratio - adjusted for non-recurring items

5.2x

Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items

5.7x

Debt Covenant Overview

Unsecured Line of Credit Covenants (2)

Required

Actual

Compliance

Maximum Leverage Ratio

≤60.0%

31.0% (2)

Yes

Minimum Fixed Charge Coverage Ratio

≥1.5x

5.1x

Yes

Maximum Secured Debt Ratio

≤40.0%

9.9%

Yes

Minimum Unencumbered Pool Leverage Ratio

≥150.0%

385.0%

Yes

Senior Unsecured Note Covenants (3)

Required

Actual

Compliance

Debt as a percentage of Total Assets

≤65.0%

32.9% (3)

Yes

Consolidated Income Available for Debt Service to Annual Service Charge

≥1.5x

5.6x

Yes

Secured Debt as a percentage of Total Assets

≤40.0%

7.1%

Yes

Total Unencumbered Assets to Unsecured Debt

≥150.0%

319.3%

Yes

Securities Ratings

Debt

Outlook

Commercial Paper

Moody's Investors Service

Baa1

Stable

P-2

S&P Global Ratings

BBB+

Stable

A-2

Gross

% of

Number of

3Q 2023 NOI (1)

Carrying Value

Total Gross

Asset Summary

Homes

($000s)

% of NOI

($000s)

Carrying Value

Unencumbered assets

46,321

$

243,522

87.4

%

$

13,791,559

86.6

%

Encumbered assets

9,276

35,134

12.6

%

2,127,065

13.4

%

55,597

$

278,656

100.0

%

$

15,918,624

100.0

%

(1) See Attachment 15 for definitions and other terms.

(2) As defined in our credit agreement dated September 15, 2021, as amended.

(3) As defined in our indenture dated November 1, 1995 as amended, supplemented or modified from time to time.

Attachment 15(D)
Definitions and Reconciliations
September 30, 2023
(Unaudited)
All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team. The following reconciles from GAAP Net income/(loss) per share for full-year 2023 and fourth quarter of 2023 to forecasted FFO, FFO as Adjusted and AFFO per share and unit:
	Full-Year 2023
	Low				High
Forecasted net income per diluted share	$	1.32			$	1.34
Conversion from GAAP share count		(0.02	)			(0.02	)
Net gain on the sale of depreciable real estate owned		(0.93	)			(0.93	)
Depreciation		2.00				2.00
Noncontrolling interests		0.07				0.07
Preferred dividends		0.01				0.01
Forecasted FFO per diluted share and unit	$	2.45			$	2.47
Legal and other costs		-				-
Casualty-related charges/(recoveries)		0.01				0.01
Realized/unrealized (gain)/loss on real estate technology investments		-				-
Forecasted FFO as Adjusted per diluted share and unit	$	2.46			$	2.48
Recurring capital expenditures		(0.23	)			(0.23	)
Forecasted AFFO per diluted share and unit	$	2.23			$	2.25
	4Q 2023
	Low				High
Forecasted net income per diluted share	$	0.08			$	0.10
Conversion from GAAP share count		(0.01	)			(0.01	)
Depreciation		0.55				0.55
Noncontrolling interests		-				-
Preferred dividends		-				-
Forecasted FFO per diluted share and unit	$	0.62			$	0.64
Legal and other costs		-				-
Casualty-related charges/(recoveries)		-				-
Realized/unrealized (gain)/loss on real estate technology investments		-				-
Forecasted FFO as Adjusted per diluted share and unit	$	0.62			$	0.64
Recurring capital expenditures		(0.06	)			(0.06	)
Forecasted AFFO per diluted share and unit	$	0.56			$	0.58

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231025376017/en/

The UDR Stock at the time of publication of the news with a fall of -1,24 % to 31,80EUR on Lang & Schwarz stock exchange (26. Oktober 2023, 22:24 Uhr).