UDR, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

The following discussion should be read in conjunction with the consolidated
financial statements appearing elsewhere herein and is based primarily on the
consolidated financial statements for the three months ended March 31, 2022 and
2021, of UDR, Inc. Unless the context otherwise requires, all references in this
Quarterly Report on Form 10-Q (this "Report") to "UDR," the "Company," "we,"
"our" and "us" refer to UDR, Inc., together with its consolidated subsidiaries,
including United Dominion Realty, L.P. (the "Operating Partnership" or the "OP")
and UDR Lighthouse DownREIT L.P. (the "DownREIT Partnership").

Forward-Looking Statements


This Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking
statements include, without limitation, statements concerning property
acquisitions and dispositions, development activity and capital expenditures,
capital raising activities, rent growth, occupancy, rental expense growth and
expected or potential impacts of the novel coronavirus disease ("COVID-19")
pandemic. Words such as "expects," "anticipates," "intends," "plans," "likely,"
"will," "believes," "seeks," "estimates," and variations of such words and
similar expressions are intended to identify such forward-looking statements.
Such statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements to be materially
different from the results of operations or plans expressed or implied by such
forward-looking statements. Such factors include, among other things, the impact
of the COVID-19 pandemic and measures intended to prevent its spread or address
its effects, unfavorable changes in the apartment market, changing economic
conditions, the impact of inflation/deflation on rental rates and property
operating expenses, expectations concerning the availability of capital and the
stability of the capital markets, the impact of competition and competitive
pricing, acquisitions, developments and redevelopments not achieving anticipated
results, delays in completing developments and redevelopments, delays in
completing lease-ups on schedule or at expected rent and occupancy levels,
expectations on job growth, home affordability and demand/supply ratio for
multifamily housing, expectations concerning development and redevelopment
activities, expectations on occupancy levels and rental rates, expectations
concerning joint ventures and partnerships with third parties, expectations that
automation will help grow net operating income, and expectations on annualized
net operating income.

The following factors, among others, could cause our future results to differ
materially from those expressed in the forward-looking statements:

? the impact of the COVID-19 pandemic and measures intended to prevent its spread

or address its effects;

? general economic conditions;

unfavorable changes in apartment market and economic conditions that could

? adversely affect occupancy levels and rental rates, including as a result of

COVID-19;

? the failure of acquisitions to achieve anticipated results;

? possible difficulty in selling apartment communities;

? competitive factors that may limit our ability to lease apartment homes or

increase or maintain rents;

? insufficient cash flow that could affect our debt financing and create

refinancing risk;

? failure to generate sufficient revenue, which could impair our debt service

payments and distributions to stockholders;

? development and construction risks that may impact our profitability;

? potential damage from natural disasters, including hurricanes and other

weather-related events, which could result in substantial costs to us;

? risks from climate change that impacts our properties or operations;

? risks from extraordinary losses for which we may not have insurance or adequate

reserves;

risks from cybersecurity breaches of our information technology systems and the

 ? information technology systems of our third party vendors and other third
   parties;


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? uninsured losses due to insurance deductibles, self-insurance retention,

uninsured claims or casualties, or losses in excess of applicable coverage;

? delays in completing developments and lease-ups on schedule;

? our failure to succeed in new markets;

risks that third parties who have an interest in or are otherwise involved in

? projects in which we have an interest, including mezzanine borrowers, joint

venture partners or other investors, do not perform as expected;

? changing interest rates, which could increase interest costs and affect the

market price of our securities;

? potential liability for environmental contamination, which could result in

substantial costs to us;

? the imposition of federal taxes if we fail to qualify as a REIT under the Code

in any taxable year;

our internal control over financial reporting may not be considered effective

? which could result in a loss of investor confidence in our financial reports,

and in turn have an adverse effect on our stock price; and

? changes in real estate laws, tax laws, rent control or stabilization laws or

other laws affecting our business.



A discussion of these and other factors affecting our business and prospects is
set forth in Part II, Item 1A. Risk Factors. We encourage investors to review
these risk factors.

Although we believe that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore such statements included in this Report may not prove
to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by us or any other person that the
results or conditions described in such statements or our objectives and plans
will be achieved.

Forward-looking statements and such risks, uncertainties and other factors speak
only as of the date of this Report, and we expressly disclaim any obligation or
undertaking to update or revise any forward-looking statement contained herein,
to reflect any change in our 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.

Business Overview


We are a self-administered real estate investment trust, or REIT, that owns,
operates, acquires, renovates, develops, redevelops, disposes of, and manages
multifamily apartment communities in targeted markets located in the United
States. We were formed in 1972 as a Virginia corporation. In June 2003, we
changed our state of incorporation from Virginia to Maryland. Our subsidiaries
include the Operating Partnership and the DownREIT Partnership.

At March 31, 2022, our consolidated real estate portfolio included 160
communities in 13 states plus the District of Columbia totaling 53,503 apartment
homes. In addition, we have an ownership interest in 6,489 completed or
to-be-completed apartment homes through unconsolidated joint ventures or
partnerships, including 3,652 apartment homes owned by entities in which we hold
preferred equity investments. The Same-Store Community apartment home population
for the three months ended March 31, 2022, was 47,443.

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The following table summarizes our market information by major geographic
markets as of and for the three months ended March 31, 2022:

                                                                                                    Three Months Ended
                                                                March 31, 2022                        March 31, 2022
                                                                Percentage        Total                          Monthly
                                       Number of    Number of   of Total        Carrying       Average         Income per
                                       Apartment    Apartment    Carrying       Value (in     Physical          Occupied
Same-Store Communities                Communities     Homes       Value        thousands)     Occupancy         Home (a)
West Region
Orange County, CA                              10       4,685          9.8 %  $   1,447,005        97.2 %    $         2,734
San Francisco, CA                              11       2,751          6.1 %        898,512        97.4 %              3,199
Seattle, WA                                    14       2,726          6.5 %        958,941        97.7 %              2,581
Monterey Peninsula, CA                          7       1,565          1.3 %        189,432        96.7 %              2,201
Los Angeles, CA                                 4       1,225          3.2 %        468,397        96.6 %              2,973
Other Southern California                       3         821          1.5
%        217,512        97.3 %              2,585
Portland, OR                                    3         752          0.8 %        121,671        97.2 %              1,904
Mid-Atlantic Region
Metropolitan D.C.                              23       8,404         15.8 %      2,362,421        97.3 %              2,184
Baltimore, MD                                   5       1,597          2.3 %        343,671        97.0 %              1,775
Richmond, VA                                    4       1,359          1.1 %        157,541        97.7 %              1,597
Northeast Region
Boston, MA                                     11       4,298         11.4 %      1,685,608        96.9 %              2,872
New York, NY                                    6       2,318         10.4 %      1,548,682        98.3 %              4,037
Philadelphia, PA                                1         313          0.7 %        108,065        96.3 %              2,419
Southeast Region
Tampa, FL                                      11       3,877          4.3 %        643,214        97.0 %              1,841
Orlando, FL                                     9       2,500          1.7 %        246,671        97.0 %              1,595
Nashville, TN                                   8       2,260          1.6 %        230,721        98.2 %              1,517
Other Florida                                   1         636          0.6 %         92,006        97.8 %              1,943
Southwest Region
Dallas, TX                                     11       3,866          3.9 %        582,267        97.2 %              1,629
Austin, TX                                      4       1,272          1.2 %        174,523        97.8 %              1,718
Denver, CO                                      1         218          1.0 %        145,560        96.7 %              3,416
Total/Average Same-Store
Communities                                   147      47,443         85.2 %     12,622,420        97.3 %    $         2,322
Non-Mature, Commercial Properties &
Other                                          13       5,792         11.7 %      1,752,524
Total Real Estate Held for
Investment                                    160      53,235         96.9 %     14,374,944
Real Estate Under Development (b)               -         268          3.1 %        458,111
Total Real Estate Owned                       160      53,503        100.0 %     14,833,055
Total Accumulated Depreciation                                             

(5,289,853)

Total Real Estate Owned, Net of
Accumulated Depreciation                                                   

$ 9,543,202

Monthly Income per Occupied Home represents total monthly revenues divided by
(a) the average physical number of occupied apartment homes in our Same-Store

portfolio.

As of March 31, 2022, the Company was developing seven wholly-owned
(b) communities with a total of 1,832 apartment homes, 268 of which have been

completed.

We report in two segments: Same-Store Communities and Non-Mature
Communities/Other.


Our Same-Store Communities segment represents those communities acquired,
developed, and stabilized prior to January 1, 2021 and held as of
March 31, 2022. These communities were owned and had stabilized occupancy and
operating expenses as of the beginning of the prior period, there is no plan to
conduct substantial redevelopment activities, and the communities are not
classified as held for disposition within the current year. A community is
considered to have stabilized occupancy once it achieves 90% occupancy for at
least three consecutive months.

Our Non-Mature Communities/Other segment represents those communities that do
not meet the criteria to be included in Same-Store Communities, including, but
not limited to, recently acquired, developed and redeveloped communities, and
the non-apartment components of mixed use properties.

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COVID-19 Update

We continue to monitor the status and respond to the effects of the COVID-19
pandemic and its impact on our business. While the pandemic and related
government measures adversely impacted our business in certain prior periods,
the extent of the impact generally has decreased. Future developments regarding
COVID-19, however, continue to be uncertain and difficult to predict. There can
be no assurances that closures or restrictions in response to COVID-19,
including due to new variants, will not be imposed in the future or that other
developments related to COVID-19 will not adversely affect our business, results
of operations, financial condition and cash flows in future periods.

Liquidity and Capital Resources


Liquidity is the ability to meet present and future financial obligations either
through operating cash flows, sales of properties, borrowings under our credit
agreements, and/or the issuance of debt and/or equity securities. Our primary
source of liquidity is our cash flow from operations, as determined by rental
rates, occupancy levels, and operating expenses related to our portfolio of
apartment homes, and borrowings under our credit agreements. We routinely use
our working capital credit facility, our unsecured revolving credit facility and
issuances of commercial paper to temporarily fund certain investing and
financing activities prior to arranging for longer-term financing or the
issuance of equity or debt securities. During the past several years, proceeds
from the sale of real estate have been used for both investing and financing
activities as we continue to execute on maintaining a diversified portfolio.

We expect to meet our short-term liquidity requirements generally through net
cash provided by property operations and borrowings under our credit agreements
and our unsecured commercial paper program. We expect to meet certain long-term
liquidity requirements such as scheduled debt maturities, the repayment of
financing on development activities, and potential property acquisitions,
through net cash provided by property operations, secured and unsecured
borrowings, the issuance of debt or equity securities, and/or the disposition of
properties. We believe that our net cash provided by property operations and
borrowings under our credit agreements and our unsecured commercial paper
program will continue to be adequate to meet both operating requirements and the
payment of dividends by the Company in accordance with REIT requirements.
Likewise, the budgeted expenditures for improvements and renovations of certain
properties are expected to be funded from property operations, borrowings under
credit agreements, the issuance of debt or equity securities, and/or
dispositions of properties.

We have a shelf registration statement filed with the Securities and Exchange
Commission, or "SEC," which provides for the issuance of common stock, preferred
stock, depositary shares, debt securities, guarantees of debt securities,
warrants, subscription rights, purchase contracts and units to facilitate future
financing activities in the public capital markets. Access to capital markets is
dependent on market conditions at the time of issuance.

In July 2021, the Company entered into an ATM sales agreement under which the
Company may offer and sell up to 20.0 million shares of its common stock, from
time to time, to or through its sales agents and may enter into separate forward
sales agreements to or through its forward purchasers. Upon entering into the
ATM sales agreement, the Company simultaneously terminated the sales agreement
for its prior at-the-market equity offering program, which was entered into in
July 2017. During the three months ended March 31, 2022, the Company did not
sell any shares of common stock through its ATM program. As of March 31, 2022,
we had 18.4 million shares of common stock available for future issuance under
the ATM program, including an aggregate of 4.4 million shares subject to the
forward sales agreements described below.

As of March 31, 2022, the Company had a total of 4.4 million shares of common
stock subject to forward sales agreements under its ATM program that had not
been settled, which have a weighted average initial forward price per share of
$53.72. The actual forward price per share to be received by the Company upon
settlement will be determined on the applicable settlement date based on
adjustments made to the initial forward price 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 sales agreement. The final dates by which the
shares sold under the forward sales agreements under the ATM programs must be
settled range between August 1, 2022 and September 14, 2022.

In March 2022, in connection with an underwritten public offering, the Company
entered into forward sale agreements to sell 7.0 million shares of its common
stock at an initial forward price per share of $57.565. The actual forward price
per share to be received by the Company upon settlement will be determined on
the applicable settlement date based on adjustments made to the initial forward
price 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 sales
agreements. As of March 31, 2022, no shares under the

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forward sale agreements have been settled. The final date by which shares sold
under the forward sale agreements must be settled is March 30, 2023.

Future Capital Needs


Future development and redevelopment expenditures may be funded through
unsecured or secured credit facilities, unsecured commercial paper, proceeds
from the issuance of equity or debt securities, sales of properties, joint
ventures, and, to a lesser extent, from cash flows provided by property
operations. Acquisition activity in strategic markets may be funded through
joint ventures, by the reinvestment of proceeds from the sale of properties,
through the issuance of equity or debt securities, the issuance of operating
partnership units and the assumption or placement of secured and/or unsecured
debt.

During the remainder of 2022, we have approximately $0.9 million of secured debt
maturing, inclusive of principal amortization, and $280.0 million of unsecured
debt maturing, comprised solely of unsecured commercial paper. We anticipate
repaying the remaining debt with cash flow from our operations, proceeds from
debt or equity offerings, proceeds from dispositions of properties, or from
borrowings under our credit agreements and our unsecured commercial paper
program.

We do not have any off-balance sheet arrangements that have, or are reasonably
likely to have, a current or future effect on our financial condition, changes
in financial condition, revenue or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material.

Guarantor Subsidiary Summarized Financial Information


UDR has certain outstanding debt securities that are guaranteed by United
Dominion Realty, L.P. (the "Operating Partnership"). With respect to this debt,
as further outlined below, the Operating Partnership fully and unconditionally
guarantees payment of any principal, premium and interest in full to the holders
thereof. The Operating Partnership is a subsidiary of UDR, through which UDR
conducts a significant portion of its business and holds a substantial amount of
its assets. UDR also conducts business through other subsidiaries, including its
taxable REIT subsidiaries. In addition to its ownership interest in the
Operating Partnership, UDR holds interests in subsidiaries and joint ventures,
owns and operates properties, issues securities from time to time and guarantees
debt of certain of its subsidiaries. UDR, as the sole general partner of the
Operating Partnership, owns 100 percent of the Operating Partnership's general
partnership interests and approximately 95 percent of its limited partnership
interests and, by virtue thereof, has the ability to control all of the
day-to-day operations of the Operating Partnership. UDR has concluded that it is
the primary beneficiary of, and therefore consolidates, the Operating
Partnership.

The Operating Partnership is the subsidiary guarantor of certain of our
registered debt securities, including the $300 million of medium-term notes due
September 2026, $300 million of medium-term notes due July 2027, $300 million of
medium-term notes due January 2028, $300 million of medium-term notes due
January 2029, $600 million of medium-term notes due January 2030, $600 million
of medium-term notes due August 2031, $400 million of medium-term notes due
August 2032, $350 million of medium-term notes due March 2033, $300 million of
medium-term notes due in June 2033 and $300 million of medium-term notes due
November 2034.

The Operating Partnership fully and unconditionally guarantees payment of any
principal, premium and interest in full to the holders of the notes described
above. The guarantee forms part of the indenture under which the notes were
issued. If, for any reason, we do not make any required payment in respect of
the notes when due, the Operating Partnership will cause the payment to be made
to, or to the order of, the applicable paying agent on behalf of the trustee.
Holders of the notes may enforce their rights under the guarantee directly
against the Operating Partnership without first making a demand or taking action
against UDR or any other person or entity. The Operating Partnership may,
without the consent of the holders of the notes, assume all of our rights and
obligations under the notes and, upon such assumption, we will be released from
our liabilities under the indenture and the notes.

The notes are UDR's unsecured general obligations and rank equally with all of
UDR's other unsecured and unsubordinated indebtedness outstanding from time to
time. As a result, our payment of amounts due on the notes is subordinated to
all of our existing and future secured obligations to the extent of the value of
the collateral pledged toward any such secured obligation. Our payment of
amounts due on the notes also is effectively subordinated to all liabilities,
whether secured or unsecured, of any of our non-guarantor subsidiaries because,
in the event of a bankruptcy, liquidation, dissolution, reorganization or
similar proceeding with respect to such subsidiaries, we, as an equity holder of
such subsidiaries, would not receive distributions from such subsidiaries until
claims of any creditors of such subsidiaries are satisfied.

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The following tables present the summarized financial information for the
Operating Partnership as of March 31, 2022 and December 31, 2021, and for the
three months ended March 31, 2022 and 2021. The information presented below
excludes eliminations necessary to arrive at the information on a consolidated
basis (dollars in thousands):

                                       March 31,       December 31,
                                          2022             2021
Total real estate, net                 $ 2,244,205    $     2,262,108
Cash and cash equivalents                       15                 21
Operating lease right-of-use assets        197,911            198,835
Other assets                                88,397             96,553
Total assets                           $ 2,530,528    $     2,557,517

Secured debt, net                      $   143,633    $       143,745
Notes payable to UDR (a)                   984,356            972,283
Operating lease liabilities                193,057            193,892
Other liabilities                          119,825            108,076
Total liabilities                        1,440,871          1,417,996
Total capital                          $ 1,089,657    $     1,139,521


                                                Three Months Ended
                                                    March 31,
                                                2022          2021
Total revenue                                $  120,798    $  105,536
Property operating expenses                    (47,770)      (44,803)
Real estate depreciation and amortization      (36,874)      (40,223)
Operating income/(loss)                          36,154        20,510
Interest expense (a)                            (9,163)       (8,075)
Other income/(loss)                               3,182         3,727
Net income/(loss)                            $   30,173    $   16,162

All $984.4 million and $972.3 million notes payable to UDR as of

March 31, 2022 and December 31, 2021, respectively, and $8.7 million and $7.4

(a) million of interest expense on notes payable to UDR for the three months

ended March 31, 2022 and 2021, respectively, eliminate upon consolidation of

UDR’s consolidated financial statements.

Critical Accounting Policies and Estimates and New Accounting Pronouncements


Our critical accounting policies are those having the most impact on the
reporting of our financial condition and results and those requiring significant
judgments and estimates. These policies include those related to (1) capital
expenditures, (2) impairment of long-lived assets, (3) real estate investment
properties, and (4) revenue recognition.

Our critical accounting policies are described in more detail in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in UDR's Annual Report on Form 10-K, filed with the SEC
on February 15, 2022. There have been no significant changes in our critical
accounting policies from those reported in our Form 10-K filed with the SEC on
February 15, 2022. With respect to these critical accounting policies, we
believe that the application of judgments and assessments is consistently
applied and produces financial information that fairly depicts the results of
operations for all periods presented.

Statements of Cash Flows

The following discussion explains the changes in Net cash provided by/(used in)
operating activities, Net cash provided by/(used in) investing activities, and
Net cash provided by/(used in) financing activities that are presented in our
Consolidated Statements of Cash Flows for the three months ended March 31,
2022
and 2021.

Operating Activities

For the three months ended March 31, 2022, our Net cash provided by/(used in)
operating activities was $161.0 million, compared to $123.6 million for the
comparable period in 2021. The increase in cash flow from operating activities
was

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primarily due to an increase in net operating income, primarily driven by higher
revenue per occupied home, NOI from additional operating communities, including
those acquired in 2021, and an increase in operating distributions from our
unconsolidated joint ventures and partnerships, partially offset by changes in
operating assets and liabilities.

Investing Activities

For the three months ended March 31, 2022, Net cash provided by/(used in)
investing activities was $(86.8) million, compared to $41.0 million for the
comparable period in 2021. The increase in cash used in investing activities was
primarily due to a decrease in proceeds from the sale of real estate, an
increase in spend for development of real estate assets, and an increase in
capital expenditures and other major improvements, partially offset by a
decrease in acquisitions during the current period and an increase in
distributions received from unconsolidated joint ventures and partnerships.

Acquisitions and Dispositions

The Company did not have any acquisitions or dispositions during the three
months ended March 31, 2022.

Capital Expenditures


We capitalize those expenditures that materially enhance the value of an
existing asset or substantially extend the useful life of an existing asset.
Expenditures necessary to maintain an existing property in ordinary operating
condition are expensed as incurred.

For the three months ended March 31, 2022, total capital expenditures of $36.6
million, or $688 per stabilized home, which in aggregate include recurring
capital expenditures and major renovations, were spent across our portfolio,
excluding development, as compared to $25.2 million, or $524 per stabilized
home, for the comparable period in 2021.

The increase in total capital expenditures was primarily due to:

an increase of 202.2%, or $11.0 million, in major renovations, which includes

? major structural changes and/or architectural revisions to existing buildings;

and

? an increase of 16.7%, or $1.6 million, in recurring capital expenditures, which

include asset preservation and turnover related expenditures.



The following table outlines capital expenditures and repair and maintenance
costs for all of our communities, excluding real estate under development, for
the three months ended March 31, 2022 and 2021 (dollars in thousands except Per
Home amounts):

                                                                                              Per Home
                                           Three Months Ended March 31,            Three Months Ended March 31,
                                           2022          2021      % Change      2022         2021         % Change
Turnover capital expenditures           $    3,321     $  2,933        13.2 %  $     62     $     61              1.6 %
Asset preservation expenditures              8,058        6,821        18.1 %       151          142              6.3 %

Total recurring capital expenditures 11,379 9,754 16.7 % 214 203

              5.4 %
NOI enhancing improvements (a)               8,354        9,093       (8.1)
%       157          189           (16.9) %
Major renovations (b)                       16,423        5,434       202.2 %       309          113            173.5 %
Operations platform                            452          934      (51.6) %         8           19           (57.9) %

Total capital expenditures (c) $ 36,608 $ 25,215 45.2 % $ 688 $ 524

             31.3 %
Repair and maintenance expense          $   18,913     $ 15,521        21.9 %  $    355     $    323              9.9 %
Average home count (d)                      53,232       48,124        10.6 %

(a) NOI enhancing improvements are expenditures that result in increased income

generation or decreased expense growth.

(b) Major renovations include major structural changes and/or architectural

revisions to existing buildings.

Total capital expenditures includes amounts capitalized during the year. Cash
(c) paid for capital expenditures is impacted by the net change in related

accruals.

(d) Average number of homes is calculated based on the number of homes

    outstanding at the end of each month.


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We intend to continue to selectively add NOI enhancing improvements, which we
believe will provide a return on investment in excess of our cost of capital.
Our objective in redeveloping a community is twofold: we aim to meaningfully
grow rental rates while also achieving cap rate compression through asset
quality improvement.

Consolidated Real Estate Under Development and Redevelopment

At March 31, 2022, our development pipeline consisted of seven wholly-owned
communities totaling 1,832 apartment homes, 268 of which have been completed,
with a budget of $689.0 million, in which we have a gross carrying value of
$458.1 million. The remaining homes are estimated to be completed between the
second quarter of 2022 and the second quarter of 2024.

At March 31, 2022, the Company was not redeveloping any communities.

Unconsolidated Joint Ventures and Partnerships


The Company recognizes income or losses from our investments in unconsolidated
joint ventures and partnerships consisting of our proportionate share of the net
income or losses of the joint ventures and partnerships. In addition, we may
earn fees for providing management services to the communities held by the
unconsolidated joint ventures and partnerships.

The Company's Investment in and advances to unconsolidated joint ventures and
partnerships, net, are accounted for under the equity method of accounting. For
the three months ended March 31, 2022:

we made investments totaling $48.2 million in our unconsolidated joint ventures

? and partnerships, including contributions of $40.6 million to certain

unconsolidated investments under our Developer Capital Program, each of which

earns a preferred return;

? our proportionate share of the net income/(loss) of the joint ventures and

partnerships was $5.4 million; and

? we received cash distributions of $80.6 million, of which $12.4 million were

operating cash flows and $68.2 million were investing cash flows.



We evaluate our investments in unconsolidated joint ventures and partnerships
when events or changes in circumstances indicate that there may be an
other-than-temporary decline in value. We consider various factors to determine
if a decrease in the value of the investment is other-than-temporary. The
Company did not recognize any other-than-temporary impairments in the value of
its investments in unconsolidated joint ventures or partnerships during the
three months ended March 31, 2022 and 2021.

Financing Activities


For the three months ended March 31, 2022, our Net cash provided by/(used in)
financing activities was $(75.7) million, compared to $(154.2) million for the
comparable period of 2021.

The following significant financing activities occurred during the three months
ended March 31, 2022:

? net proceeds of $60.0 million on our unsecured commercial paper program; and

 ? payment of $115.4 million of distributions to our common stockholders.

Credit Facilities and Commercial Paper Program


The Company has a $1.3 billion unsecured revolving credit facility (the
"Revolving Credit Facility") and a $350.0 million unsecured term loan (the "Term
Loan"). The credit agreement for these facilities (the "Credit Agreement")
allows the total commitments under the Revolving Credit Facility and the total
borrowings under the Term Loan to be increased to an aggregate maximum amount of
up to $2.5 billion, subject to certain conditions, including obtaining
commitments from one or more lenders. The Revolving Credit Facility has a
scheduled maturity date of January 31, 2026, with two six-month extension
options, subject to certain conditions. The Term Loan has a scheduled maturity
date of January 31, 2027.

Based on the Company's current credit rating, the Revolving Credit Facility has
an interest rate equal to LIBOR plus a margin of 77.5 basis points and a
facility fee of 15 basis points, and the Term Loan has an interest rate equal to
LIBOR plus a

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margin of 85 basis points. Depending on the Company's credit rating, the margin
under the Revolving Credit Facility ranges from 70 to 140 basis points, the
facility fee ranges from 10 to 30 basis points, and the margin under the Term
Loan ranges from 75 to 160 basis points. Further, the Credit Agreement includes
sustainability adjustments pursuant to which the applicable margin for the
Revolving Credit Facility and the Term Loan may be reduced by up to two basis
points after September 15, 2022 contingent upon the Company receiving green
building certifications.

As of March 31, 2022, we had no outstanding borrowings under the Revolving
Credit Facility, leaving $1.3 billion of unused capacity (excluding $2.6 million
of letters of credit at March 31, 2022), and $350.0 million of outstanding
borrowings under the Term Loan.


We have a working capital credit facility, which provides for a $75.0 million
unsecured revolving credit facility (the "Working Capital Credit Facility") with
a scheduled maturity date of January 12, 2024. Based on the Company's current
credit rating, the Working Capital Credit Facility has an interest rate equal to
LIBOR plus a margin of 77.5 basis points. Depending on the Company's credit
rating, the margin ranges from 70 to 140 basis points.

As of March 31, 2022, we had $37.2 million of outstanding borrowings under the
Working Capital Credit Facility, leaving $37.8 million of unused capacity.


The bank revolving credit facilities and the term loan are subject to customary
financial covenants and limitations, all of which we were in compliance with at
March 31, 2022.

We have an unsecured commercial paper program. Under the terms of the program,
we may issue unsecured commercial paper up to a maximum aggregate amount
outstanding of $700.0 million. The notes are sold under customary terms in the
United States commercial paper market and rank pari passu with all of our other
unsecured indebtedness. The notes are fully and unconditionally guaranteed by
the Operating Partnership. As of March 31, 2022, we had issued $280.0 million of
commercial paper, for one month terms, at a weighted average annualized rate of
0.77%, leaving $420.0 million of unused capacity.

Interest Rate Risk


We are exposed to interest rate risk associated with variable rate notes payable
and maturing debt that has to be refinanced. We do not hold financial
instruments for trading or other speculative purposes, but rather issue these
financial instruments to finance our portfolio of real estate assets and
operations. Interest rate sensitivity is the relationship between changes in
market interest rates and the fair value of market rate sensitive assets and
liabilities. Our earnings are affected as changes in short-term interest rates
impact our cost of variable rate debt and maturing fixed rate debt. We had
$379.2 million in variable rate debt that is not subject to interest rate swap
contracts as of March 31, 2022. If market interest rates for variable rate debt
increased by 100 basis points, our interest expense for the three months ended
March 31, 2022 would increase by $1.0 million based on the average balance
outstanding during the period.

These amounts are determined by considering the impact of hypothetical interest
rates on our borrowing cost. This analysis does not consider the effects of the
adjusted level of overall economic activity that could exist in such an
environment. Further, in the event of a change of such magnitude, management
would likely take actions to further mitigate our exposure to the change.
However, due to the uncertainty of the specific actions that would be taken and
their possible effects, the sensitivity analysis assumes no change in our
financial structure.

The Company also utilizes derivative financial instruments to manage interest
rate risk and generally designates these financial instruments as cash flow
hedges. See Note 11, Derivatives and Hedging Activities, in the Notes to the UDR
Consolidated Financial Statements included in this Report for additional
discussion of derivative instruments.

A presentation of cash flow metrics based on GAAP is as follows (dollars in
thousands):

                                                                 Three Months Ended March 31,
                                                                   2022                 2021
Net cash provided by/(used in) operating activities           $       161,020     $        123,605
Net cash provided by/(used in) investing activities                  (86,811)               41,039
Net cash provided by/(used in) financing activities                  (75,700)            (154,215)


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Results of Operations

The following discussion explains the changes in results of operations that are
presented in our Consolidated Statements of Operations for the three months
ended March 31, 2022 and 2021.

Net Income/(Loss) Attributable to Common Stockholders


Net income/(loss) attributable to common stockholders was $12.6 million ($0.04
per diluted share) for the three months ended March 31, 2022, as compared to
$2.0 million ($0.01 per diluted share) for the comparable period in the
prior year. The increase resulted primarily from the following items, all of
which are discussed in further detail elsewhere within this Report:

an increase in total property NOI of $42.9 million primarily due to higher

? revenue per occupied home, NOI from additional operating communities, including

those acquired in 2021, and a decrease in rent concessions, partially offset by

an increase in property operating expenses; and

a decrease in interest expense of $42.2 million primarily due to $42.0 million

? of extinguishment costs from the prepayment of debt during the three months

ended March 31, 2021, as compared to none for the three months ended March 31,

   2022.


This was partially offset by:

no gains recognized from the sale of real estate during the three months ended

? March 31, 2022, as compared to a gain of $50.8 million from the sale of an

operating community located in Anaheim, California during the three months

ended March 31, 2021; and

an increase in depreciation expense of $19.5 million primarily due to

? communities acquired in 2021, partially offset by fully depreciated assets in

2022 and 2021.

Apartment Community Operations

Our net income results are primarily from NOI generated from the operation of
our apartment communities. The Company defines NOI, which is a non-GAAP
financial measure, as rental income less direct property rental expenses. Rental
income represents gross market rent 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.

Although the Company considers NOI a useful measure of operating performance,
NOI should not be considered an alternative to net income or net cash flow from
operating activities as determined in accordance with GAAP. NOI excludes several
income and expense categories as detailed in the reconciliation of NOI to Net
income/(loss) attributable to UDR, Inc. below.

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The following table summarizes the operating performance of our total property
NOI for each of the periods presented (dollars in thousands):

                                                    Three Months Ended
                                                      March 31,  (a)
                                                    2022          2021       % Change
Same-Store Communities:
Same-Store rental income                         $  321,514    $  290,110        10.8 %
Same-Store operating expense (b)                   (98,012)      (94,089)         4.2 %
Same-Store NOI                                      223,502       196,021  

14.0 %


Non-Mature Communities/Other NOI:
Stabilized, non-mature communities NOI (c)           19,538         1,036          NM *
Development communities NOI                           (440)             -  

N/A

Non-residential/other NOI (d)                         1,333         2,129      (37.4) %
Sold and held for disposition communities NOI             -         1,872     (100.0) %
Total Non-Mature Communities/Other NOI               20,431         5,037  
    305.6 %
Total property NOI                               $  243,933    $  201,058        21.3 %


* Not meaningful

(a) Same-Store consists of 47,443 apartment homes.

(b) Excludes depreciation, amortization, and property management expenses.

Represents non-mature communities that have achieved 90% occupancy for three
(c) consecutive months but do not meet the criteria to be included in Same-Store

Communities.

(d) Primarily non-residential revenue and expense and straight-line adjustment

for concessions.

The following table is our reconciliation of Net income/(loss) attributable to
UDR, Inc. to total property NOI for each of the periods presented (dollars
in
thousands):

                                                                 Three Months Ended
                                                                     March 31,
                                                                 2022          2021
Net income/(loss) attributable to UDR, Inc.                    $  13,705    $    3,104
Joint venture management and other fees                          (1,085)   
   (1,615)
Property management                                               11,576         8,995
Other operating expenses                                           4,712         4,435
Real estate depreciation and amortization                        163,622   

144,088

General and administrative                                        14,908   

12,736

Casualty-related charges/(recoveries), net                         (765)   

5,577

Other depreciation and amortization                                3,075   

2,601

(Gain)/loss on sale of real estate owned                               -   

(50,829)

(Income)/loss from unconsolidated entities                       (5,412)   

(4,922)

Interest expense                                                  35,916   

78,156

Interest income and other (income)/expense, net                    2,440   

(2,057)

Tax provision/(benefit), net                                         343   

619

Net income/(loss) attributable to redeemable noncontrolling
interests in the Operating Partnership and DownREIT
Partnership

                                                          879    

154

Net income/(loss) attributable to noncontrolling interests            19   
        16
Total property NOI                                             $ 243,933    $  201,058


Same-Store Communities

Our Same-Store Community properties, those acquired, developed, and stabilized
prior to January 1, 2021 and held on March 31, 2022 consisted of 47,443
apartment homes and provided 91.6% of our total NOI for the three months ended
March 31, 2022.

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NOI for our Same-Store Community properties increased 14.0%, or $27.5 million,
for the three months ended March 31, 2022 compared to the same period in 2021.
The increase in property NOI was attributable to a 10.8%, or $31.4 million,
increase in property rental income, partially offset by a 4.2%, or $3.9 million,
increase in operating expenses. The increase in property rental income was
primarily driven by a 5.3%, or $15.0 million, increase in rental rates, a $5.0
million decrease in our bad debt expense related to multifamily tenant lease
receivables, a $5.7 million decrease in rent concessions, a $2.5 million
decrease in occupancy loss and a 9.8%, or $3.1 million, increase in
reimbursement and ancillary and fee income. Physical occupancy increased by 1.0%
to 97.3% and total monthly income per occupied home increased by 9.7% to $2,322.

The increase in operating expenses was primarily driven by a 37.2%, or $1.7
million, increase in insurance expense due to increased claims, a 9.3%, or $1.4
million, increase in repair and maintenance expense due to the increased use of
third party vendors, and a 7.8%, or $1.0 million, increase in utilities, which
was primarily due an increase in energy costs.

The operating margin (property net operating income divided by property rental
income) was 69.5% and 67.6% for the three months ended March 31, 2022 and 2021,
respectively.

Non-Mature Communities/Other
UDR's Non-Mature Communities/Other represent those communities that do not meet
the criteria to be included in Same-Store Communities, which include communities
recently developed or acquired, redevelopment properties, sold or held for
disposition properties, and non-apartment components of mixed use properties.

The remaining 8.4%, or $20.4 million, of our total NOI during the three months
ended March 31, 2022 was generated from our Non-Mature Communities/Other. NOI
from Non-Mature Communities/Other increased by 305.6%, or $15.4 million, for the
three months ended March 31, 2022 as compared to the same period in 2021. The
increase was primarily attributable to an $18.5 million increase in stabilized,
non-mature communities NOI due to operating communities acquired in 2021,
partially offset by a $1.9 million decrease in sold and held for disposition
communities.

Real estate depreciation and amortization

For the three months ended March 31, 2022 and 2021, the Company recognized real
estate depreciation and amortization of $163.6 million and $144.1 million,
respectively. The increase in 2022 as compared to 2021 was primarily
attributable to communities acquired in 2021, partially offset by fully
depreciated assets in 2022 and 2021.

Gain/(Loss) on sale of real estate owned

During the three months ended March 31, 2022, the Company did not recognize any
gains from the sale of real estate. During the three months ended March 31,
2021
, the Company recognized a gain of $50.8 million from the sale of an
operating community located in Anaheim, California.

Interest expense

For the three months ended March 31, 2022 and 2021, the Company recognized
interest expense of $35.9 million and $78.2 million, respectively. The decrease
in 2022 as compared to 2021 was primarily due to $42.0 million of extinguishment
costs from the prepayment of debt during the three months ended March 31, 2021,
as compared to none for the three months ended March 31, 2022.

Inflation


Inflation primarily impacts our results of operations as a result of wage
pressures and increases in utilities and repair and maintenance costs. In
addition, inflation could also impact our general and administrative expenses,
the interest on our debt if variable or refinanced in a high-inflationary
environment, and our cost of development, redevelopment or maintenance
activities including if materials are not purchased or contractually locked in
advance of such increases. However, the majority of our apartment leases have
initial terms of 12 months or less, which generally enables us to compensate for
inflationary effects by increasing rents on our apartment homes. Although an
extreme escalation in costs could have a negative impact on our residents and
their ability to absorb rent increases, we do not believe this had a material
impact on our results for the three months ended March 31, 2022.

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Table of Contents

Funds from Operations, Funds from Operations as Adjusted, and Adjusted Funds
from Operations


Funds from Operations

Funds from operations ("FFO") attributable to common stockholders and
unitholders is defined 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 ("Nareit") definition
issued in April 2002 and restated in November 2018. Historical cost accounting
for real estate assets in accordance with GAAP implicitly assumes that the value
of real estate assets diminishes predictably over time. Since real estate values
instead have historically risen or fallen with market conditions, many industry
investors and analysts have considered the presentation of operating results for
real estate companies that use historical cost accounting to be insufficient by
themselves. Thus, Nareit created FFO as a supplemental measure of a REIT's
operating performance. 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.

Funds from Operations as Adjusted


FFO as Adjusted ("FFOA") attributable to common stockholders and unitholders is
defined as FFO excluding the impact of 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 FFOA is useful supplemental information regarding our
operating performance as it provides a consistent comparison of our operating
performance across time periods and enables investors to more easily compare our
operating results with other REITs. FFOA 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. We believe that Net income/(loss)
attributable to common stockholders is the most directly comparable GAAP
financial measure to FFOA. However, other REITs may use different methodologies
for calculating FFOA or similar FFO measures and, accordingly, our FFOA may not
always be comparable to FFOA or similar FFO measures calculated by other REITs.
FFOA 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.

Adjusted Funds from Operations


Adjusted FFO ("AFFO") attributable to common stockholders and unitholders is
defined as FFOA less recurring capital expenditures on consolidated communities
that are necessary to help preserve the value of and maintain functionality at
our communities. Therefore, management considers AFFO a useful supplemental
performance metric for investors as it is more indicative of the Company's
operational performance than FFO or FFOA.

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. We
believe 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

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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.

The following table outlines our reconciliation of Net income/(loss)
attributable to common stockholders to FFO, FFOA, and AFFO for the three months
ended March 31, 2022 and 2021 (dollars in thousands):


                                                                     March 

31,

                                                                 2022       

2021

Net income/(loss) attributable to common stockholders $ 12,613 $ 2,048
Real estate depreciation and amortization

                        163,622    

144,088

Noncontrolling interests                                             898   

170

Real estate depreciation and amortization on
unconsolidated joint ventures                                      7,624   

8,205

Net gain on the sale of unconsolidated depreciable
property                                                               -   

(2,460)

Net gain on the sale of depreciable real estate owned, net
of tax                                                                 -   

(50,778)

FFO attributable to common stockholders and unitholders,
basic                                                         $  184,757    $  101,273
Distributions to preferred stockholders - Series E
(Convertible)                                                      1,092   

1,056

FFO attributable to common stockholders and unitholders,
diluted                                                       $  185,849    $  102,329
Income/(loss) per weighted average common share, diluted      $     0.04    $     0.01
FFO per weighted average common share and unit, basic         $     0.54    $     0.32
FFO per weighted average common share and unit, diluted       $     0.54    $     0.32
Weighted average number of common shares and OP/DownREIT
Units outstanding - basic                                        339,543   

318,935

Weighted average number of common shares, OP/DownREIT
Units, and common stock equivalents outstanding – diluted 344,132

322,342


Impact of adjustments to FFO:
Debt extinguishment and other associated costs                $        -    $   41,950
Debt extinguishment and other associated costs on
unconsolidated joint ventures                                          -   

1,682

Variable upside participation on Developer Capital
Program, net                                                    (10,622)   

Legal and other                                                      774   

629

Realized (gain)/loss on real estate technology
investments, net of tax                                          (2,238)   

(661)

Unrealized (gain)/loss on real estate technology
investments, net of tax                                           15,631   

(767)

Severance costs                                                        -   

468

Casualty-related charges/(recoveries), net                         (765)   

5,577

                                                              $    2,780    

$ 48,878
FFOA attributable to common stockholders and unitholders,
diluted

                                                       $  188,629    

$ 151,207

FFOA per weighted average common share and unit, diluted $ 0.55 $ 0.47

Recurring capital expenditures                                  (11,804)   

(9,754)

AFFO attributable to common stockholders and unitholders,
diluted                                                       $  176,825   

$ 141,453

AFFO per weighted average common share and unit, diluted $ 0.51 $ 0.44



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The following table is our reconciliation of FFO share information to weighted
average common shares outstanding, basic and diluted, reflected on the UDR
Consolidated Statements of Operations for the three months ended March 31, 2022
and 2021 (shares in thousands):

                                                                 Three Months Ended
                                                                     March 31,
                                                                  2022        2021

Weighted average number of common shares and OP/DownREIT
Units outstanding – basic

                                        339,543    

318,935

Weighted average number of OP/DownREIT Units outstanding (21,534) (22,398)
Weighted average number of common shares outstanding – basic
per the Consolidated Statements of Operations

                    318,009    

296,537

Weighted average number of common shares, OP/DownREIT Units,
and common stock equivalents outstanding – diluted

               344,132    

322,342

Weighted average number of OP/DownREIT Units outstanding (21,534) (22,398)
Weighted average number of Series E Cumulative Convertible
Preferred shares outstanding

                                     (2,918)    

(2,918)

Weighted average number of common shares outstanding –
diluted per the Consolidated Statements of Operations

            319,680    

297,026

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