In 2008, while markets were characterized by disruption, job losses
and ongoing uncertainty, our year was characterized by three words:
We transformed our portfolio, took aggressive steps to prepare for
our future and delivered solid performance.
2008 Annual Report
Message from the Chairman and the Chief Executive Offi cer
2008 was a tumultuous year. With the near collapse of the global fi nancial system,
businesses suffered declines in net income and asset values and consumers stopped
spending. The Dow Jones Industrial Average dropped 34 percent, Real Estate Investment
Trust (REIT) indices dropped as much as 41 percent and consumer confi dence plummeted.
Without a doubt, 2008 was a terrible year for real estate stocks.
An economy like this reminds us how fortunate we are to be offering one of life’s
basic necessities – shelter. While consumers may put off the purchase of new cars
or fl at-screen televisions, everyone needs a place to live.
For UDR, 2008 can best be characterized by three words: transformation, preparation
and performance. In 2008, we transformed our portfolio, took aggressive steps to
prepare for our future and delivered operating performance near the top of our industry.
Transformation
We completed a $1.7 billion sale of 25,684 homes and reinvested $1 billion in acquiring 4,558 homes.
These acquisitions are newer communities in attractive urban markets, offering convenient access to large
employment centers, major transportation corridors and exciting lifestyle amenities.
Our communities are now concentrated in 23 markets, taking advantage of low single-family home affordability
and positive demographic and employment trends. The average age of our portfolio has been reduced from 24
years to 16, and our average same store monthly income per occupied home has grown to $1,176, well above
the national average of $962.
Preparation
In the midst of deteriorating capital markets and operating environments, we took aggressive steps to increase
our fi nancial fl exibility, reduce our cost structure and adjust our redevelopment and development deliveries.
We secured more than $1 billion of cash and credit capacity, by:
b
b
b
b
Raising $194 million of equity capital;
Closing on a $240 million, two-year unsecured term loan facility;
Securing $438 million from the expansion and extension of a
Fannie Mae facility and other agency fi nancing; and
Obtaining fi ve construction loans with a capacity of $179 million.
During the fi rst quarter of 2009, we further expanded our credit facilities, which, when added to existing
resources, increased our total available fi nancial resources to $1.3 billion. With debt maturities, including
available extensions, totaling just $280 million in 2009 and $348 million in 2010, we believe we have more
than enough cash and credit capacity for the foreseeable future.
We also reduced overhead costs by approximately 17 percent in 2008 and sharply curtailed development
activities to just $425 million, a 60 percent reduction from 2007.
Performance
Finally, in 2008, we continued to deliver solid operating results:
b
b
b
We delivered the second-highest growth in same store net operating income among
our eleven publicly traded peers;
We maintained high same store occupancy at 94.8 percent; and
We continued to lead the industry in web-based marketing initiatives, with approximately
50 percent of our new leases now originating on-line.
These results enabled us to declare dividends totaling $2.28 per common share, or approximately $352 million,
consisting of a regular annual dividend of $1.32 per share, plus a special dividend of $0.96 per share arising
from our portfolio sale.
Looking Ahead
We are confi dent that your Company is well positioned – strategically, organizationally and fi nancially – to
compete effectively in all the markets we serve. And we are also confi dent that, over time, the economy will
recover, markets will correct themselves and our business will participate in the inevitable rebound. We fully
expect 2009 to be a very challenging year. We have prepared for this challenge with increased fi nancial
fl exibility, a solid portfolio and an extraordinary team of associates working every day to win their markets.
We also have a seasoned Board and management team – with many recessions under their belts –
experienced in delivering results in good times and bad.
We appreciate your continued support.
Robert C. Larson
Chairman
Thomas W. Toomey
President and
Chief Executive Offi cer
2
Performance
Strengthen Our Portfolio
Expand Value with RE3
44,388
apartment homes
24%
b
Completed redevelopment of 1,678 homes, new
development of 1,513 homes, and 2,681 homes
are currently under development
18%
18%
50%
Percentages denote 2008 NOI contribution
$1.7 Billion
2008 portfolio sale
$1.0 Billion
2008 acquisitions
Vitruvian Park
Dallas, TX
Transform Operations
Source Low Cost Capital
Secured more than $1 billion of cash and credit
capacity including:
$194 million of equity capital
$240 million two-year unsecured term loan facility
$438 million fi nancing via Fannie Mae and others
$179 million capacity with fi ve construction loans
b
b
b
b
In 2009, we have further expanded
our fi nancial resources to:
$1.3Billion
b
b
b
Delivered second-best same store NOI
growth among 11 peer companies
Industry’s fi rst iPhone apartment
search website
Quick Response (QR) bar
code program available
for mobile devices
Social media website
presence in
MySpace.com
3
Trend Data
Funds From Operations1
(per share)
$1.49
$1.39
$1.55
$1.58
$1.39
Common Dividends1
(per share)
$1.08
$1.11
$1.15
$1.22
$1.22 2
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
Operating Margin
(same store)
Monthly Income
(per same store apartment home)
61.0% 61.5% 63.5%
68.1%
68.3%
$1,176
$1,139
$884
$728
$766
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
Prospective Resident
Internet Visits
(thousands)
1,600
1,300
1,100
645
428
% Leases
Originating
from the
Internet
Marketing
Costs
(millions)
$7.8
49.7%
$6.1
40.0%
2004
2005
2006
2007
2008
2007
2008
2007
2008
1 Amounts for all periods represented have been adjusted to refl ect the issuance of 11.4 million shares
of common stock in connection with the special dividend.
2 In 2008, distributions totalled $2.11 per common share, including the special dividend.
4
Key Financial Highlights
Same Store Results
Revenue Growth
Net Operating Income
Increased
Operating Margin
Monthly Income
(per apartment home)
3.6% 3.8% 68.3% $1,176
Years Ended December 31,
(In millions, except per share data and apartment homes owned)
2008
2007
2006
For the Year
Rental income from continuing property operations
Income from continuing property operations excluding depreciation (NOI)
$
Income/(loss) before minority interests and discontinued operations
Income from discontinued operations, net of minority interests
Net income
Distributions to preferred stockholders
Net income available to common stockholders
Funds from operations - diluted (a)
Common distributions declared (b)
Special Dividend declared
Per Share
Earnings per common share - diluted (b)
Funds from operations - diluted (a)(b)
Common distributions including special dividend declared (b)
At Year End
Real estate owned, at carrying value (c)
Secured debt
Unsecured debt
Stockholders' equity
Number of common shares outstanding (b)
Number of completed apartment homes owned
563
372
(50)
757
707
12
698
214
175
177
$
502
333
49
172
221
14
205
251
178
–
$
468
306
(69)
197
129
15
113
248
168
–
$
4.95
1.39
2.11
$
1.41
1.58
1.22
$
0.78
1.55
1.15
$ 5,832
1,462
1,812
1,571
149
$ 5,956
1,138
2,365
1,019
144
$ 5,820
1,183
2,156
1,055
146
44,388
65,867
70,339
(a) Funds from operations (FFO) is defi ned as net income (computed in accordance with generally accepted accounting principles), excluding gains
(or losses) from sales of depreciable property, premiums or original issuance costs associated with preferred stock redemptions, plus real estate
depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. This defi nition conforms with the National
Association of Real Estate Investment Trust’s defi nition issued in April 2002.
RE3 tax benefi ts and gain on sales, net of taxes, is defi ned as net sales proceeds less a tax provision and the gross investment basis of the asset
before accumulated depreciation. We consider FFO and RE3 tax benefi ts and gain on sales, net of taxes, to be a meaningful supplemental
measure of performance because the short-term use of funds produce profi ts which differ from the traditional long-term investment in real estate
for REITs.
(b) Amounts for all periods represented have been adjusted to refl ect the issuance of 11.4 million shares of common stock in connection with the
Company’s January 29, 2009 special dividend.
(c) Includes real estate held for investment, real estate held for disposition, and real estate under development, before depreciation.
Disclosure of Section 303A.12(a) Certifi cations
On June 11, 2008, the Company’s Chief Executive Offi cer submitted to the New York Stock Exchange the annual certifi cation required by Section
303A.12(a) of the NYSE Listed Company Manual regarding the Company’s compliance with NYSE corporate governance listing standards. In addition,
the certifi cations of the Company’s Chief Executive Offi cer and Chief Financial Offi cer required under Section 302 of the Sarbanes-Oxley Act of 2002
were fi led as Exhibits 31.1 and 31.2, respectively, to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
5
Board of Directors
Katherine A. Cattanach 3, 4
Private Investor
Formerly General Partner
INVESCO Private Capital, Inc.
Eric J. Foss 4
Chairman, President and
Chief Executive Officer
The Pepsi Bottling Group, Inc.
Robert P. Freeman 2, 4
Senior Managing Director
and Principal
Greyfields Investors, LLC
Jon A. Grove 2, 3
Private Investor
Formerly Chairman, President
and Chief Executive Officer
ASR Investments Corporation
James D. Klingbeil 1, 3
Vice Chairman of the Board
Chairman and Chief Executive
Officer, Klingbeil Multifamily
Funds IV, V and VI
Robert C. Larson 1
Chairman of the Board
Senior Advisor of Lazard
Alternative Investments, LLC
Chairman and Senior Advisor of
Lazard Real Estate Partners, LLC
Chairman of Larson Realty Group
Thomas R. Oliver 2, 3
Private Investor
Formerly Chairman and
Chief Executive Officer
InterContinental Hotels, Inc.
Lynne B. Sagalyn 3, 4
Earle W. Kazis and Benjamin
Schore Professor of Real
Estate and Director of the Paul
Milstein Center for Real Estate
Columbia Business School
Mark J. Sandler 2, 4
Private Investor
Formerly Senior Managing Director
Bear, Stearns & Co., Inc.
Thomas W. Toomey 1
Chief Executive Officer
and President
Thomas C. Wajnert 2
Senior Advisor to Irving Place
Capital Partners
Formerly Chairman and
Chief Executive Officer of
AT&T Capital Corporation
Committees: 1Executive 2Audit
3Compensation 4Governance
Executive Offi cers
Thomas W. Toomey
Chief Executive Officer
and President
Warren L. Troupe
Senior Executive Vice President,
General Counsel and Secretary
W. Mark Wallis
Senior Executive Vice President
Acquisitions, Dispositions, Asset
Quality & Development
Richard A. Giannotti
Executive Vice President
Redevelopment
Senior Vice Presidents
Matthew T. Akin
Acquisitions & Dispositions
David L. Messenger
Chief Financial Offi cer
Katie Miles-Ley
Human Resources
Dhrubo K. Sircar
Chief Information Offi cer
Thomas A. Spangler
Business Development
S. Douglas Walker
Transactions
Thomas P. Simon
Treasurer
Mark M. Culwell
Development
Jerry A. Davis
Property Operations
General Information
Corporate Offi ce
1745 Shea Center Drive, Suite 200
Highlands Ranch, Colorado 80129
(720) 283-6120
(720) 283-2452 FAX
Investor Services
E-Mail: ir@udr.com
Website: www.udr.com
Transfer Agent And Registrar
Wells Fargo Shareowner Services
161 North Concord Exchange
South St. Paul, Minnesota 55075
Investor Information: (800) 468-9716
Common Stockholders
At February 27, 2009, UDR had 5,279
common stockholders of record.
Associates
At February 27, 2009, UDR had
1,333 full and part-time associates.
Annual Meeting
The Annual Meeting of Stockholders
is scheduled for Wednesday,
May 13, 2009 at 8:30 a.m. at the
Hyatt Regency Tech Center located
at 7800 E. Tufts Avenue in Denver, CO.
All stockholders are cordially invited.
Dividend Reinvestment and Stock
Purchase Plan
Information regarding the Plan can be
obtained by contacting Investor Services.
Stock Listing
New York Stock Exchange (NYSE)
Symbols: UDR (Common)
UDRPfg (Preferred)
Under the Private Securities Litigation Reform Act of 1995: The forward-looking statements contained in this report are subject to certain economic risks and
uncertainties described under the heading “Risk Factors” in the company’s 2008 Annual Report on Form 10-K. The company assumes no obligation to update
or supplement forward-looking statements that become untrue because of subsequent events.
6
udr.com NYSE: UDR