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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☑
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
For the transition period from to
Commission file number 1-10524 (UDR, Inc.)
Commission file number 333-156002-01 (United Dominion Realty, L.P.)
UDR, Inc.
United Dominion Realty, L.P.
(Exact name of registrant as specified in its charter)
Maryland (UDR, Inc.)
Delaware (United Dominion Realty, L.P.)
(State or other jurisdiction of
incorporation or organization)
54-0857512
54-1776887
(I.R.S. Employer
Identification No.)
1745 Shea Center Drive, Suite 200, Highlands Ranch, Colorado 80129
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code: (720) 283-6120
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $0.01 par value
Trading Symbol(s)
UDR
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
UDR, Inc.
United Dominion Realty, L.P.
Yes ☑
Yes ◻
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
UDR, Inc.
United Dominion Realty, L.P.
Yes ◻
Yes ◻
No ◻
No þ
No þ
No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
UDR, Inc.
United Dominion Realty, L.P.
Yes þ
Yes þ
No ◻
No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
UDR, Inc.
United Dominion Realty, L.P.
Yes þ
Yes þ
No ◻
No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
UDR, Inc.:
Large Accelerated Filer þ
United Dominion Realty, L.P.:
Large Accelerated Filer ◻
Accelerated Filer ◻
Non-Accelerated Filer ◻
Accelerated Filer ◻
Non-Accelerated Filer þ
Smaller Reporting Company ☐
Emerging Growth Company ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
◻
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
UDR, Inc.
United Dominion Realty, L.P.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
UDR, Inc.
United Dominion Realty, L.P.
Yes þ
Yes ☐
Yes ☐
Yes ☐
No ☐
No þ
No þ
No þ
The aggregate market value of the shares of common stock of UDR, Inc. held by non-affiliates on June 30, 2020 was approximately $5.8 billion. This calculation excludes shares of common stock held by the
registrant’s officers and directors and each person known by the registrant to beneficially own more than 5% of the registrant’s outstanding shares, as such persons may be deemed to be affiliates. This determination of
affiliate status should not be deemed conclusive for any other purpose. As of February 16, 2021, there were 296,820,995 shares of UDR, Inc.’s common stock outstanding.
There is no public trading market for the partnership units of United Dominion Realty, L.P. As a result, an aggregate market value of the partnership units of United Dominion Realty, L.P. cannot be determined.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
The information required by Part III of this Report, to the extent not set forth herein, is incorporated by reference from UDR, Inc.’s definitive proxy statement for the 2020 Annual Meeting of Stockholders.
TABLE OF CONTENTS
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PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
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EXPLANATORY NOTE
This Report combines the annual reports on Form 10-K for the fiscal year ended December 31, 2020 of UDR, Inc., a
Maryland corporation, and United Dominion Realty, L.P., a Delaware limited partnership, of which UDR, Inc. is the parent
company and sole general partner. Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” the
“Company,” “UDR” or “UDR, Inc.” refer collectively to UDR, Inc., together with its consolidated subsidiaries and joint
ventures, including United Dominion Realty, L.P. and UDR Lighthouse DownREIT L.P. (the “DownREIT Partnership”), also a
Delaware limited partnership of which UDR is the sole general partner. Unless the context otherwise requires, the references in
this Report to the “Operating Partnership” or the “OP” refer to United Dominion Realty, L.P., together with its consolidated
subsidiaries. “Common stock” refers to the common stock of UDR and “stockholders” means the holders of shares of UDR’s
common stock and preferred stock. The limited partnership interests of the Operating Partnership and the DownREIT Partnership
are referred to as “OP Units” and “DownREIT Units,” respectively, and the holders of the OP Units and DownREIT Units are
referred to as “unitholders.” This combined Form 10-K is being filed separately by UDR and the Operating Partnership.
There are a number of differences between the Company and the Operating Partnership, which are reflected in our
disclosures in this Report. UDR is a real estate investment trust (“REIT”), whose most significant asset is its ownership interest in
the Operating Partnership. UDR also conducts business through other subsidiaries, including its taxable REIT subsidiary
(“TRS”). UDR acts as the sole general partner of the Operating Partnership, holds interests in subsidiaries and joint ventures,
owns and operates properties, issues securities from time to time and guarantees debt of certain of our subsidiaries. The Operating
Partnership conducts the operations of a substantial portion of the business and is structured as a partnership with no publicly
traded equity securities. The Operating Partnership has guaranteed certain outstanding debt of UDR.
As of December 31, 2020, UDR owned 0.1 million units (100%) of the general partnership interests of the Operating
Partnership and 176.1 million OP Units, representing approximately 95.3% of the total outstanding OP Units in the Operating
Partnership. UDR conducts a substantial amount of its business and holds a substantial amount of its assets through the Operating
Partnership, and, by virtue of its ownership of the OP Units and UDR’s role as the Operating Partnership’s sole general partner,
UDR has the ability to control all of the day-to-day operations of the Operating Partnership. Separate financial statements and
accompanying notes, as well as separate discussions under “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity
Securities” and “Control and Procedures” are presented in this report for each of UDR and the Operating Partnership. In addition,
certain disclosures in “Business” are separated by entity to the extent that the discussion relates to UDR’s business outside of the
Operating Partnership.
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Forward-Looking Statements
PART I
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. 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;
● uninsured losses due to insurance deductibles, self-insurance retention, uninsured claims or casualties, or losses in
excess of applicable coverage;
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● 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 I, 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.
Summary of Risk Factors
Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives
or may adversely affect our business, financial condition, results of operations, cash flows and prospects. These risks are
discussed more fully in Item 1A. Risk Factors herein. These risks include, but are not limited to, the following:
●
The Ongoing COVID-19 Pandemic and Measures Intended to Prevent its Spread Could Have a Material Adverse Effect
on our Business, Results of Operations, Cash Flows and Financial Condition.
● Unfavorable Apartment Market and Economic Conditions Could Adversely Affect Occupancy Levels, Rental Revenues
and the Value of Our Real Estate Assets.
●
The Geographic Concentration of Our Communities in Certain Markets Could Have an Adverse Effect on Our
Operations if a Particular Market is Adversely Impacted by Economic or Other Conditions.
● We May Be Unable to Renew Leases or Relet Apartment Units as Leases Expire, or the Terms of Renewals or New
Leases May Be Less Favorable Than Current Leases.
● Competition Could Limit Our Ability to Lease Apartment Homes or Increase or Maintain Rents.
● We May Not Realize the Anticipated Benefits of Past or Future Acquisitions, and the Failure to Integrate Acquired
Communities and New Personnel Successfully Could Create Inefficiencies.
● Competition Could Adversely Affect Our Ability to Acquire Properties.
● Development and Construction Risks Could Impact Our Profitability.
● Bankruptcy or Defaults of Our Counterparties Could Adversely Affect Our Performance.
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● We Could Incur Significant Insurance Costs and Some Potential Losses May Not Be Adequately Covered by Insurance.
●
●
●
The Adoption of, or Changes to, Rent Control, Rent Stabilization, Eviction, Tenants’ Rights and Similar Laws and
Regulations in Our Markets Could Have an Adverse Effect on Our Results of Operations and Property Values.
Insufficient Cash Flow Could Affect Our Debt Financing and Create Refinancing Risk.
Failure to Generate Sufficient Income Could Impair Debt Service Payments and Distributions to Stockholders.
● Changing Interest Rates Could Increase Interest Costs and Adversely Affect Our Cash Flow and the Market Price of Our
Securities.
●
Failure To Maintain Our Current Credit Ratings Could Adversely Affect Our Cost of Funds, Related Margins,
Liquidity, and Access to Capital Markets.
● Disruptions in Financial Markets May Adversely Impact Availability and Cost of Credit and Have Other Adverse
Effects on Us and the Market Price of UDR’s Stock.
● We Would Incur Adverse Tax Consequences if UDR Failed to Qualify as a REIT.
● Changes in Market Conditions and Volatility of Stock Prices Could Adversely Affect the Market Price of UDR’s
Common Stock.
● We May Change the Dividend Policy for UDR’s Common Stock in the Future.
●
Limitations on Share Ownership and Limitations on the Ability of UDR’s Stockholders to Effect a Change in Control of
Our Company Restricts the Transferability of UDR’s Stock and May Prevent Takeovers That are Beneficial to UDR’s
Stockholders.
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Item 1. BUSINESS
General
UDR is a self-administered real estate investment trust, or REIT, that owns, operates, acquires, renovates, develops,
redevelops, disposes of, and manages multifamily apartment communities generally located in high barrier-to-entry markets
throughout the United States. The high barrier-to-entry markets are characterized by limited land for new construction, difficult
and lengthy entitlement processes, low single-family home affordability and strong employment growth potential. At
December 31, 2020, our consolidated real estate portfolio consisted of 149 communities located in 21 markets, consisting of
48,283 completed apartment homes, which are held directly or through our subsidiaries, including the Operating Partnership and
the DownREIT Partnership, and consolidated joint ventures. In addition, we have an ownership interest in 5,295 completed or to-
be-completed apartment homes through unconsolidated joint ventures or partnerships, including 2,165 apartment homes owned
by entities in which we hold preferred equity investments. At December 31, 2020, the Company was developing five wholly-
owned communities totaling 1,378 homes, 202 of which have been completed.
At December 31, 2020, the Operating Partnership’s consolidated real estate portfolio included 53 communities located
in 15 markets, with a total of 17,174 completed apartment homes. The Operating Partnership owns, operates, acquires, renovates,
develops, redevelops, disposes of, and manages multifamily apartment communities generally located in high barrier-to-entry
markets located throughout the United States. During the year ended December 31, 2020, rental revenues of the Operating
Partnership represented approximately 35% of our total rental revenues.
UDR has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to in this
Report as the “Code.” To continue to qualify as a REIT, we must continue to meet certain tests which, among other things,
generally require that our assets consist primarily of real estate assets, our income be derived primarily from real estate assets,
and that we distribute at least 90% of our REIT taxable income (other than our net capital gains) to our stockholders annually. As
a REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on our net income to the extent we
distribute such net income to our stockholders annually. In 2020, we declared total distributions of $1.44 per common share and
paid dividends of $1.4225 per common share.
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
$
Dividends
Declared in
2020
0.3600
0.3600
0.3600
0.3600
1.4400
$
Dividends
Paid in
2020
0.3425
0.3600
0.3600
0.3600
1.4225
$
$
UDR was formed in 1972 as a Virginia corporation. In June 2003, we changed our state of incorporation from Virginia
to Maryland. The Operating Partnership is the successor-in-interest to United Dominion Realty, L.P., a limited partnership
formed under the laws of Virginia, which commenced operations in 1995. The Operating Partnership was redomiciled in 2004 as
a Delaware limited partnership. Our corporate offices are located at 1745 Shea Center Drive, Suite 200, Highlands Ranch,
Colorado and our telephone number is (720) 283-6120. Our website is www.udr.com. The information contained on our website,
including any information referred to in this Report as being available on our website, is not a part of or incorporated into this
Report.
Human Capital Management
As of February 16, 2021, we had 1,263 full-time associates and 8 part-time associates, all of whom were employed by
UDR. Of such number 994 associates are employed in roles that are located at or that are solely related to our communities and
the remainder are employed in corporate roles. Recruiting and retaining our associates, as well as assisting them in their
professional development, are critically important in successfully managing our business. UDR’s culture is one based on
innovation, inclusion, empowerment, adaptability, and execution, and understanding and maintaining our culture is fundamental
to recruiting and retaining associates. To that end, in 2020 we updated our culture statement and launched an associate facing
culture website to ensure that our associates understand our culture and have an opportunity to participate in its evolution.
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Associate Compensation
Attracting, developing, and retaining high-quality, and diverse associates across our business is critical to the long-term
success of the Company. A crucial factor in ensuring this occurs is compensation practices that are attractive and that are fair and
non-biased. We use a number of recruiting methods depending on the job function for which candidates are needed including an
associate referral program, internet-based recruiting platforms, and third-party recruiting agencies. With respect to compensation,
we utilize market surveys and other third party information when determining salary ranges and we design our compensation
programs to include bonus potential in order to incentivize performance. In addition, we annually evaluate and analyze our
compensation on gender and diversity bases for each job title in order to monitor pay equity and to identify areas for further
action. The results of our evaluation and analysis are provided annually to our Board of Directors.
Associate Growth and Development
We believe that training is important to our associates’ job satisfaction, is essential to furthering their effectiveness, and
assists in associate career advancement and retention, helping us to create a more efficient workforce. Accordingly, we offer a
wide variety of training opportunities. In addition to required training designed to address regulatory and statutory matters (e.g.,
harassment, cybersecurity, fair housing, etc.), associates have the option of participating in management development through our
Certified Manager and Career Mobility Programs. These programs are designed to enable our associates to acquire skills that will
be useful to them as they progress in their career. Our training program also includes annual “refreshment” training, as
appropriate. In total, there are over 5,000 courses available to our associates. Examples of program topics include: leasing skills,
basic property maintenance, customer service, project management, and system applications. In 2020, we enhanced our training
through creating a better process to ensure required training is taken in a timely manner and by increasing or modifying training
availability and training programs, including in the areas of safety and cybersecurity.
Certifications are important in the apartment business and we encourage our associates to become professionally
certified in areas that interest them and are beneficial to the Company. Certifications range from master’s degree programs to
certified property manager programs, to technical licenses for HVAC systems, all of which equip our associates with knowledge
and the potential for career-expansion opportunities. UDR offers partial tuition reimbursement related to attaining these
certifications.
Each UDR associate is required to engage in an annual performance review with their direct supervisor. Among other
things, the performance review establishes the associate’s training plans for the upcoming year and provides feedback on career
development for each associate.
In addition, we monitor associate turnover and take action when issues are identified if appropriate.
Diversity and Inclusion
We are committed to creating and maintaining a diverse and inclusive workplace environment that supports the
development and advancement of all associates.
As of December 31, 2020, our total workforce is 61% male and 39% female. The ethnicity of our workforce is 55%
White, 26% Hispanic/Latino, 11% Black, 3% Asian and 5% Other. “Other” includes: American Indian, Alaska Native, Native
Hawaiian, Pacific Islander, Not Specified or two or more races.
As of December 31, 2020, our management team (associates with the title of community director or director and higher
job classifications) is 45% male and 55% female. The ethnicity of our management team is 80% White and 20% non-White.
Over the three-year period ending December 31, 2020, 740 associates were promoted. Of the associates that were
promoted to the positions of community director, director, or a higher job classification during the period, 60% were female and
15% were non-White.
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Associate Engagement and Outreach
We conduct an associate engagement survey every two years, which surveys all associates on a variety of issues. In our
2019 survey, the results showed that 97% of associates are proud to work at the Company, 87% of associates feel that people
from diverse backgrounds can succeed at the Company, and 84% of associates feel that the Company is innovative.
We believe that our associates should also be involved in their communities and that we should assist with those efforts.
In 2019, UDR provided 2,558 hours of paid time off for our associates to be used for volunteer work with more than 25 local
organizations that make a difference in the communities in which we operate. UDR provides paid time off during specified,
Company-wide volunteer days in 2019 and our associates responded with a 25% year-over-year increase in volunteer hours.
While the COVID-19 pandemic negatively affected the program in 2020, we intend to continue it when we are able.
COVID-19 and Employee Safety, Health and Wellness
The safety, health and wellness of our associates is a top priority. The COVID-19 pandemic presented a unique
challenge with regard to maintaining associate safety, health and wellness while continuing to operate our business.
During the pandemic, through the adaptability of our management and our associates, we were and continue to be able to
transition to a work schedule allowing employees to work from remote locations and provide a safe working environment for
associates performing resident-facing activities at our communities.
We have taken a number of actions to promote the health and well-being of our associates during the pandemic and to ensure
that our associates understand their value to the Company. Among other things, we have:
●
●
●
●
●
●
asked all associates not to come to work (and to work remotely, if possible) when they experienced or have been in
contact with others who experienced signs or symptoms of a possible COVID-19 infection;
provided up to two weeks of paid time off if an associate had an absence due to having COVID-19 symptoms or a
COVID-19 diagnosis or are caring for others who have COVID-19 symptoms or a COVID-19 diagnosis;
provided flexible work arrangements;
provided a one-time bonus for the front-line associates at our communities;
increased communication internally, including frequent calls or webinars with our associates and our Chairman and
Chief Executive Officer; and
offered a vacation buy-back program twice during 2020 whereby associates could sell a portion of their accrued but
unused vacation back to the Company.
In addition, in connection with on-going efforts with respect to associate health and well-being in 2020, we created and
distributed to all associates a brochure setting forth the mental health programs that our associates may access. We also provide
all associates with the opportunity to participate in a wide set of employee benefits, including health, dental and vision insurance
coverage.
Reporting Segments
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, 2019, and held as of December 31, 2020. These communities were owned and had stabilized occupancy and operating
expenses as of the beginning of the prior year, there is no plan to conduct substantial redevelopment activities, and the
communities are not classified as held for disposition at year end. 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. For additional information regarding our operating segments, see Note 16,
Reportable Segments, in the Notes to the UDR Consolidated Financial Statements included in this Report and Note 12,
Reportable Segments, in the Notes to the Operating Partnership’s Consolidated Financial Statements included in this Report.
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Business Objectives
Our principal business objective is to maximize the economic returns of our apartment communities to provide our
stockholders with the greatest possible total return and value. To achieve this objective, we intend to continue to pursue the
following goals and strategies:
● own and operate apartments in high barrier-to-entry markets, which are characterized by limited land for new
construction, difficult and lengthy entitlement processes, low single-family home affordability and strong
employment growth potential, thus enhancing stability and predictability of returns to our stockholders;
● manage real estate cycles by taking an opportunistic approach to buying, selling, renovating, redeveloping, and
developing apartment communities;
● empower site associates to manage our communities efficiently and effectively;
● measure and reward associates based on specific performance targets; and
● manage our capital structure to help enhance predictability of liquidity, earnings and dividends.
2020 Highlights
Commitment to Shareholders
● In July 2020, the Company marked its 48th year as a REIT and, in October 2020, paid its 192nd consecutive quarterly
dividend. The Company’s annualized declared 2020 dividend of $1.44 represented a 5.1% increase over the
previous year.
Property Operations
● Net income attributable to common stockholders was $60.0 million as compared to $180.9 million in the prior year.
The decrease was primarily driven by an increase in depreciation expense and interest expense in 2020 and a
decrease in gains on the sale of unconsolidated real estate in 2020, partially offset by higher total net operating
income (“NOI”) in 2020 and higher gains on the sale of real estate in 2020.
● Total revenues increased 7.7% and total NOI increased 5.6% over the prior year primarily due to communities
acquired during 2020 and 2019, partially offset by negative rent growth in the San Francisco, New York, and Boston
markets.
Investing and Developments
● We acquired one to-be-developed land parcel located in King of Prussia, Pennsylvania, for a total of approximately
$16.2 million.
● We commenced the development of two communities located in Washington, D.C., and King of Prussia,
Pennsylvania, with a total of 500 apartment homes.
● We acquired three communities with a total of 1,366 apartment homes located in Tampa, Florida, and Herndon,
Virginia, for a total of approximately $335.6 million.
● We increased our ownership interest in one community from our West Coast Development joint venture with a total
of 276 apartment homes, located in Hillsboro, Oregon, for a total cash purchase price of approximately $21.6 million
after the repayment of joint venture construction financing.
● We recognized gains of $119.3 million from the sale of three operating communities located in Kirkland, Washington,
Bellevue, Washington, and Alexandria, Virginia.
● We contributed $66.3 million to four investments under our Developer Capital Program, which earn preferred returns
ranging between 8.5% to 13.0%.
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● Our full investment in one Development Capital Program investment was repaid, which earned an 11.0% preferred
return. We received cash of $53.7 million, consisting of our investment of $38.6 million and contractually accrued
interest of $15.1 million.
Balance Sheet
● We issued $950.0 million of senior unsecured medium-term notes (including a $350.0 million “green bond”) at a
weighted average contractual interest rate of 2.3%, and prepaid $300.0 million of senior unsecured medium-term
notes at a weighted average interest rate of 3.69%.
● We repaid $425.8 million of secured debt at a weighted average contractual interest rate of 4.4% through the
issuance of senior unsecured notes and the proceeds from the issuance of secured debt of $160.9 million at a
weighted average interest rate of 2.62%
● We sold 2.1 million shares of common stock through a forward sales agreement for aggregate net proceeds of $102.2
million at a weighted average price per share of $48.23 under our ATM program.
● We repurchased 0.6 million shares of common stock at an average price of $33.11 per share for total consideration of
approximately $19.8 million under our share repurchase program.
Corporate Responsibility Report
We have published our 2020 Annual Corporate Responsibility Report on our website, which discloses our
environmental and social programs and performance. The report’s Environmental, Social, and Governance (ESG) disclosures
were prepared in accordance with the Global Reporting Initiative (GRI) Standards (core), the Sustainability Accounting
Standards Board (SASB) standards, and the Task Force for Climate-related Financial Disclosure (TCFD) framework.
Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further
information on the Company’s and the Operating Partnership’s activities in 2020.
COVID-19 Update
On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the
United States declared a national emergency with respect to COVID-19. The pandemic has led governments and other authorities
around the world, including federal, state and local authorities in the United States, to impose measures intended to control its
spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business
closures, quarantines and shelter-in-place or similar orders. While vaccines have been developed and are being administered it is
unclear when or if the vaccine may allow a return to pre-pandemic activity levels.
While operations in certain areas have been allowed to fully or partially re-open, many areas are experiencing new
closures or restrictions subsequent to re-opening and no assurance can be given that such closures or restrictions will not continue
to occur. Our headquarters, all of our properties and our corporate offices are located in areas that are or have been subject to
shelter-in-place orders and restrictions on the types of businesses that may continue to operate. These orders and restrictions and
other impacts of the COVID-19 pandemic have adversely affected, and could continue to adversely affect, the ability of our
residents and retail and commercial tenants to pay their rent. It is still uncertain how various legislation or orders adopted by the
federal government and state and local governments, or those that may be modified or enacted in the future, may continue to
impact, the ability of our residents and retail and commercial tenants to pay their rent. The governmental actions intended to
prevent the spread of COVID-19 have also caused us to reduce staffing at certain of our locations, and have impacted, and may
continue to impact, our ability to conduct our business in the ordinary course. Further, the federal government and a number of
the states, counties and municipalities in which we operate have adopted, and may extend, eviction moratoriums, either directly
or indirectly (such as through direction to law enforcement or courts not to serve notices or take actions related to eviction),
which have negatively impacted, and may continue to negatively impact, our ability to enforce our legal and contractual rights
and our ability to remove residents or retail and commercial tenants who are not paying their rent and our ability to rent their
units or other space to new residents or retail and commercial tenants, respectively. In addition, certain jurisdictions have
restricted our ability to charge certain fees, including fees for late payment of rent. We have received, and continue to receive,
more
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requests from our residents and retail and commercial tenants for assistance with respect to paying rent than we have historically
received. In response, we have instituted a number of initiatives to assist residents and other tenants, including rent deferrals,
payment plans, and waiving late payment fees when appropriate. In addition, we have seen an increase in tenant rent concessions
compared to prior year periods, as discussed further below. In particular, the urban core markets of New York, NY, San
Francisco Bay Area, CA, and Boston, MA have been more adversely impacted by the COVID-19 pandemic in comparison to our
other markets, resulting in larger decreases in rental income from elevated rent concessions and lower occupancy in those
markets. We also have experienced an increase in resident move-outs and turnover on an annualized basis. With respect to
leasing activities, leasing traffic and visits by potential residents had decreased during much of the year; however, they increased
during the quarter ended December 31, 2020 as compared to the same quarter in 2019. Our percentage of leases entered into with
a prospective tenant has increased year over year.
During the year ended December 31, 2020, the Company performed an analysis in accordance with the ASC 842,
Leases, guidance to assess the collectibility of its operating lease receivables in light of the COVID-19 pandemic. This analysis
included an assessment of collectibility of current and future rents and whether those lease payments were no longer probable of
collection. In accordance with the leases guidance, if lease payments are no longer deemed to be probable over the life of the
lease contract, we recognize revenue only when cash is received, and all existing contractual operating lease receivables and
straight-line lease receivables are reserved.
As a result of its analysis, the Company reserved approximately $13.5 million of multifamily tenant lease receivables
and approximately $6.0 million of retail tenant lease receivables (inclusive of $3.3 million of reserves on straight-line lease
receivables) for its wholly-owned communities and communities held by joint ventures. In aggregate, the reserve is reflected as
an $18.4 million reduction to Rental income and a $1.1 million reduction to Income/(loss) from unconsolidated entities on the
Consolidated Statements of Operations for the year ended December 31, 2020. The impact to deferred leasing commissions was
not material for the year ended December 31, 2020.
During the year ended December 31, 2020, the Company recorded an impairment charge of $3.1 million on its
investment in equity securities of a non-core investment. The Company did not recognize any other adjustments to the carrying
amounts of assets or asset impairment charges due to the COVID-19 pandemic for the year ended December 31, 2020.
As of January 31, 2021, we had collected 97.0%, 96.1% and 95.2% of billed monthly rents for our multifamily residents
for October, November and December, respectively. While our cash rent collections in November, December, and January
showed marginal declines versus October, this slight seasonal deterioration is consistent with historical collection trends in prior
years.
The Operating Partnership reserved approximately $5.5 million of multifamily tenant lease receivables and
approximately $3.5 million of retail tenant lease receivables (inclusive of $2.2 million of reserves on straight-line lease
receivables) for its wholly-owned communities. In aggregate, the reserve is reflected as a $9.0 million reduction to Rental income
on the Consolidated Statements of Operations for the year ended December 31, 2020. The impact to deferred leasing
commissions was not material for the year ended December 31, 2020.
The Operating Partnership did not recognize any other adjustments to the carrying amounts of assets or asset
impairment charges due to the COVID-19 pandemic for the year ended December 31, 2020.
Our Strategic Vision
Our strategic vision is to be the multifamily public REIT of choice. We intend to realize this vision by executing on our
strategic objectives, which are:
1. Maintaining a Diversified Portfolio and Allocating Capital to Accretive Investment Opportunities
2. Maintaining a Strong Balance Sheet
3. Consistently Driving Operating Excellence
4. Advancing a Strong Corporate Culture and Ensuring High Resident Satisfaction
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Maintaining a Diversified Portfolio and Allocating Capital to Accretive Investment Opportunities
We believe greater portfolio diversification, as defined by geographic concentration, location within a market (i.e.,
urban or suburban) and property quality (i.e., A or B), reduces the volatility of our same-store growth throughout the real estate
cycle, appeals to a wider renter and investor audience and lessens the market risk associated with owning a homogenous
portfolio. Diversified characteristics of our portfolio include:
● our consolidated apartment portfolio includes 149 communities located in 21 markets throughout the U.S., including
both coastal and sunbelt locations; and
● our mix of urban/suburban communities is approximately 37%/63% and our mix of A/B quality properties is
approximately 55%/45%.
We are focused on increasing our presence in markets with favorable job formation, high propensity to rent, low single-
family home affordability, and a favorable demand/supply ratio for multifamily housing. Portfolio investment decisions consider
internal analyses and third-party research.
Acquisitions and Dispositions
When evaluating potential acquisitions, we consider a wide variety of factors, including:
● whether it is located in a high barrier-to-entry market;
● population growth, cost of alternative housing, overall potential for economic growth and the tax and regulatory
environment of the market in which the property is located;
● geographic location, including proximity to jobs, entertainment, transportation, and our existing communities which
can deliver significant economies of scale;
● construction quality, condition and design of the property;
● current and projected cash flow of the property and the ability to increase cash flow;
● ability of the property’s projected returns to exceed our cost of capital;
● potential for capital appreciation of the property;
● ability to increase the value and profitability of the property through operations and redevelopment;
● terms of resident leases, including the potential for rent increases;
● occupancy and demand by residents for properties of a similar type in the vicinity;
● prospects for liquidity through sale, financing or refinancing of the property; and
● competition from existing multifamily communities and the potential for the construction of new multifamily
properties in the area.
We regularly monitor our assets to increase the quality and performance of our portfolio. Factors we consider in
deciding whether to dispose of a property include:
● whether it is in a market targeted for divestment or a reduction in investment;
● current market price for an asset compared to projected economics for that asset;
● potential increases in new construction in the market area;
● areas with low job growth prospects;
● near- and long-term capital expenditure needs for the asset; and
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● operating efficiencies.
The following table summarizes our apartment community acquisitions and dispositions and our consolidated year-end
ownership position for the past five years (dollars in thousands):
Homes acquired
Homes disposed
Homes owned at December 31,
Total real estate owned, at cost
2020
2019
2018
2017
1,642
599
48,283
7,079
—
47,010
—
868
39,931
462
218
39,998
$
13,071,472
$ 12,602,101
$ 10,196,159
$ 10,177,206
$
2016
508
1,782
39,454
9,615,753
The following table summarizes the Operating Partnership’s apartment community acquisitions and dispositions and
year-end ownership position for the past five years (dollars in thousands):
Homes acquired
Homes disposed
Homes owned at December 31,
Total real estate owned, at cost
Development Activities
2020
1,072
332
17,174
2019
—
—
16,434
2018
—
264
16,434
$ 4,043,725
$ 3,875,160
$ 3,811,985
2017
218
218
16,698
$ 3,816,956
2016
—
276
16,698
$ 3,674,704
Our objective in developing a community is to create value while improving the quality of our portfolio. How
demographic trends, economic drivers, and multifamily fundamentals and valuations have trended over the long-term and our
portfolio strategy generally govern our review process on where and when to allocate development capital. At
December 31, 2020, the Company was developing five wholly-owned communities located in Addison, Texas, Denver,
Colorado, Dublin, California, Washington, D.C., and King of Prussia, Pennsylvania, totaling 1,378 homes, 202 of which have
been completed, with a budget of $491.5 million, in which we have an investment of $247.9 million. The communities are
estimated to be completed between the first quarter of 2021 and the second quarter of 2023.
Redevelopment Activities
Our objective in redeveloping a community is twofold: we aim to grow rental rates while also producing a higher
yielding and more valuable asset through asset quality improvement. During the year ended December 31, 2020, we incurred
$48.3 million in major renovations, which included major structural changes and/or architectural revisions to existing buildings.
As of December 31, 2020, the Company was not redeveloping any communities.
Joint Venture and Partnership Activities
We have entered into, and may continue in the future to enter into, joint ventures (including limited liability companies
or partnerships) through which we would own an indirect economic interest of less than 100% of the community or communities
owned directly by such joint ventures. Our decision to either hold an apartment community in fee simple or have an indirect
interest in the community through a joint venture is based on a variety of factors and considerations, including: (i) the economic
and tax terms required by the seller of land or a community; (ii) our desire to diversify our portfolio of communities by market,
submarket and product type; (iii) our desire at times to preserve our capital resources to maintain liquidity or balance sheet
strength; and (iv) our projections, in some circumstances, that we will achieve higher returns on our invested capital or reduce our
risk if a joint venture vehicle is used. Each joint venture agreement is individually negotiated, and our ability to operate and/or
dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture
agreement.
Maintaining a Strong Balance Sheet
We maintain a capital structure that we believe allows us to proactively source potential investment opportunities in the
marketplace. We have structured our debt maturity schedule to be able to opportunistically access both secured and unsecured
debt markets when appropriate.
As part of our plan to finance our activities, we utilize proceeds from debt and equity offerings and refinancings to
extend maturities, pay down existing debt, fund development and redevelopment activities, and acquire apartment communities.
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Consistently Driving Operational Excellence
Investment in new technologies continues to drive operating efficiencies in our business and help us to better meet the
changing needs of our business and our residents. Our residents can conduct business with us 24 hours a day, 7 days a week and
complete online leasing applications and renewals throughout our portfolio using our web-based resident internet portal or,
increasingly, a smart-device application.
As a result of transforming our operations through technology, residents’ satisfaction has improved, and our operating
teams have become more efficient. Web-based technologies have also resulted in declining marketing and advertising costs,
improved cash management, and better pricing management of our available apartment homes.
Operating Partnership Strategies and Vision
The Operating Partnership’s long-term strategic vision is the same as that of the Company described above.
Competitive Conditions
Competition for new residents is generally intense across our markets. Some competing communities offer amenities
that our communities do not have. Competing communities can use rental concessions or lower rents to obtain temporary
competitive advantages. Also, some competing communities are larger or newer than our communities. The competitive position
of each community is different depending upon many factors, including sub-market supply and demand. In addition, other real
estate investors compete with us to acquire existing properties, redevelop existing properties, and to develop new properties.
These competitors include insurance companies, pension and investment funds, public and private real estate companies,
investment companies and other public and private apartment REITs, some of which may have greater resources, or lower capital
costs, than we do.
We believe that, in general, we are well-positioned to compete effectively for residents and investments. We believe our
competitive advantages include:
● a fully integrated organization with property management, development, redevelopment, acquisition, marketing,
sales and financing expertise;
● scalable operating and support systems, which include automated systems to meet the changing electronic needs of
our residents and to effectively focus on our internet marketing efforts;
● access to sources of capital;
● geographic diversification with a presence in 21 markets across the country; and
● significant presence in many of our major markets that allows us to be a local operating expert.
Moving forward, we will continue to optimize lease management, improve expense control, increase resident retention
efforts and align employee incentive plans with metrics that impact our bottom-line performance. We believe this plan of
operation, coupled with the portfolio’s strengths in targeting renters across a geographically diverse platform, should position us
for continued operational upside.
Communities
At December 31, 2020, our consolidated real estate portfolio included 149 communities with a total of 48,283
completed apartment homes, which included the Operating Partnership’s consolidated real estate portfolio of 53 communities
with a total of 17,174 completed apartment homes. The overall quality of our portfolio generally enables us to raise rents and to
attract residents with higher levels of disposable income who are more likely to absorb such rents.
At December 31, 2020, the Company was developing five wholly-owned communities located in Addison, Texas,
Denver, Colorado, Dublin, California, Washington, D.C., and King of Prussia, Pennsylvania, totaling 1,378 homes, 202 of which
have been completed, with a budget of $491.5 million, in which we have an investment of $247.9 million. The communities are
estimated to be completed between the first quarter of 2021 and the second quarter of 2023.
At December 31, 2020, the Company was not redeveloping any communities.
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Same-Store Community Comparison
We believe that one pertinent quantitative measurement of the performance of our portfolio is tracking the results of our
Same-Store Communities’ NOI, which is total rental revenue, less rental and other operating expenses excluding property
management. Our Same-Store Community population is comprised of operating communities which we own and have stabilized
occupancy, revenues and expenses as of the beginning of the prior year.
Net income attributable to common stockholders was $60.0 million as compared to $180.9 million in the prior year. The
decrease was primarily driven by an increase in depreciation expense and interest expense in 2020 and a decrease in gains on the
sale of unconsolidated real estate in 2020, partially offset by higher total NOI in 2020 and higher gains on the sale of real estate in
2020.
For the year ended December 31, 2020, our Same-Store NOI decreased by $(40.2) million compared to the prior year.
Our Same-Store Community properties provided 75.5% of our total NOI for the year ended December 31, 2020. The decrease in
NOI for the 37,607 Same-Store apartment homes, or 77.9% of our portfolio, was primarily driven by an increase in our reserve
on multifamily tenant lease receivables, higher rent concessions, economic occupancy loss, higher repair and maintenance
expense and real estate taxes, partially offset by an increase in rental rates, an increase in reimbursement, ancillary and fee
income, and a decrease in personnel expense.
For the year ended December 31, 2020, the Operating Partnership’s Same-Store NOI decreased by $17.7 million
compared to the prior year. The Operating Partnership’s Same-Store Community properties provided 93.1% of its total NOI for
the year ended December 31, 2020. The decrease in NOI for the 15,607 Same-Store apartment homes, or 90.9% of the Operating
Partnership’s portfolio, was primarily driven by an increase in our reserve on multifamily tenant lease receivables, higher rent
concessions, economic occupancy loss, higher repair and maintenance expense and real estate taxes, partially offset by an
increase in rental rates, an increase in reimbursement, ancillary and fee income, and a decrease in personnel expense.
Revenue growth in 2021 may be impacted by adverse developments affecting the general economy, inclusive of
economic conditions as a result of the COVID-19 pandemic, reduced occupancy rates, increased rental concessions, new supply,
increased bad debt and other factors which may adversely impact our ability to increase rents.
Tax Matters
UDR has elected to be taxed as a REIT under the Code. To continue to qualify as a REIT, UDR must continue to meet
certain tests that, among other things, generally require that our assets consist primarily of real estate assets, our income be
derived primarily from real estate assets, and that we distribute at least 90% of our REIT taxable income (other than net capital
gains) to our stockholders annually. Provided we maintain our qualification as a REIT, we generally will not be subject to U.S.
federal income taxes at the corporate level on our net income to the extent such net income is distributed to our stockholders
annually. Even if we continue to qualify as a REIT, we will continue to be subject to certain federal, state and local taxes on our
income and property.
We may utilize our taxable REIT subsidiary (“TRS”) to engage in activities that REITs may be prohibited from
performing, including the provision of management and other services to third parties and the conduct of certain nonqualifying
real estate transactions. Our TRS generally is taxable as a regular corporation, and therefore, subject to federal, state and local
income taxes.
The Operating Partnership intends to qualify as a partnership for federal income tax purposes. As a partnership, the
Operating Partnership generally is not a taxable entity and does not incur federal income tax liability. However, any state or local
revenue, excise or franchise taxes that result from the operating activities of the Operating Partnership are incurred at the entity
level.
Inflation
We believe that the direct effects of inflation on our operations have been immaterial. While the impact of inflation
primarily impacts our results of operations as a result of wage pressures and increases in utilities and material costs, the majority
of our apartment leases have initial terms of 12 months or less, which generally enables us to compensate for any 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 has had a material impact on our results for the year
ended December 31, 2020.
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Environmental Matters
Various environmental laws govern certain aspects of the ongoing operation of our communities. Such environmental
laws include those regulating the existence of asbestos-containing materials in buildings, management of surfaces with lead-
based paint (and notices to residents about the lead-based paint), use of active underground petroleum storage tanks, and waste-
management activities. The failure to comply with such requirements could subject us to a government enforcement action and/or
claims for damages by a private party.
To date, compliance with federal, state and local environmental protection regulations has not had a material effect on
our capital expenditures, earnings or competitive position. We have a property management plan for hazardous materials. As part
of the plan, Phase I environmental site investigations and reports have been completed for each property we acquire. In addition,
all proposed acquisitions are inspected prior to acquisition. The inspections are conducted by qualified environmental consultants,
and we review the issued report prior to the purchase or development of any property. Nevertheless, it is possible that the
environmental assessments will not reveal all environmental liabilities, or that some material environmental liabilities exist of
which we are unaware. In some cases, we have abandoned otherwise economically attractive acquisitions because the costs of
removal or control of hazardous materials have been prohibitive or we have been unwilling to accept the potential risks involved.
We do not believe we will be required to engage in any large-scale abatement at any of our properties. We believe that through
professional environmental inspections and testing for asbestos, lead paint and other hazardous materials, coupled with a
relatively conservative posture toward accepting known environmental risk, we can minimize our exposure to potential liability
associated with environmental hazards.
Federal legislation requires owners and landlords of residential housing constructed prior to 1978 to disclose to potential
residents or purchasers of the communities any known lead paint hazards and imposes treble damages for failure to provide such
notification. In addition, lead based paint in any of the communities may result in lead poisoning in children residing in that
community if chips or particles of such lead based paint are ingested, and we may be held liable under state laws for any such
injuries caused by ingestion of lead based paint by children living at the communities.
We are unaware of any environmental hazards at any of our properties that individually or in the aggregate may have a
material adverse impact on our operations or financial position. We have not been notified by any governmental authority, and
we are not otherwise aware, of any material non-compliance, liability, or claim relating to environmental liabilities in connection
with any of our properties. We do not believe that the cost of continued compliance with applicable environmental laws and
regulations will have a material adverse effect on us or our financial condition or results of operations. Future environmental
laws, regulations, or ordinances, however, may require additional remediation of existing conditions that are not currently
actionable. Also, if more stringent requirements are imposed on us in the future, the costs of compliance could have a material
adverse effect on our results of operations and our financial condition.
Insurance
We carry comprehensive general liability coverage on our communities, with limits of liability customary within the
multi-family apartment industry to insure against liability claims and related defense costs. We are also insured, with limits of
liability customary within the multi-family apartment industry, against the risk of direct physical damage in amounts necessary to
reimburse us on a replacement cost basis for costs incurred to repair or rebuild each property, including loss of rental income
during the reconstruction period.
Available Information
Both UDR and the Operating Partnership file electronically with the Securities and Exchange Commission their
respective annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934. You may obtain a free copy of our annual reports on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K, and amendments to those reports on the day of filing with the
SEC on our website at www.udr.com, or by sending an e-mail message to ir@udr.com.
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Item 1A. RISK FACTORS
There are many factors that affect the business and the results of operations of the Company and the Operating
Partnership, some of which are beyond the control of the Company and the Operating Partnership. The following is a description
of important factors that may cause the actual results of operations of the Company and the Operating Partnership in future
periods to differ materially from those currently expected or discussed in forward-looking statements set forth in this Report
relating to our financial results, operations and business prospects. 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.
Risks Related to Our Real Estate Investments and Our Operations
The Ongoing COVID-19 Pandemic and Measures Intended to Prevent its Spread Could Have a Material Adverse Effect
on our Business, Results of Operations, Cash Flows and Financial Condition.
Since being first reported in December 2019, COVID-19 has spread globally, including to every state in the United
States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United
States declared a national emergency with respect to COVID-19. The pandemic has led governments and other authorities around
the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread,
including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures,
quarantines and shelter-in-place orders. While operations in certain areas have been allowed to fully or partially re-open, many
areas are experiencing new closures or restrictions subsequent to re-opening and no assurance can be given that such closures or
restrictions will not continue to occur. Our headquarters and all of our properties and our corporate offices are located in areas
that are or have been subject to shelter-in-place orders and restrictions on the types of businesses that may continue to operate.
The impact of the COVID-19 pandemic and measures to prevent its spread could materially and adversely affect our
business in a number of ways. Our rental revenue and operating results depend significantly on the occupancy levels at our
properties and the ability of our residents and retail and commercial tenants to meet their rent obligations to us, which have been
in certain cases, and could continue to be, adversely affected by, among other things, job losses, furloughs, store closures, lower
incomes and uncertainty about the future as a result of the COVID-19 pandemic. The deterioration of economic conditions as a
result of the pandemic in certain locations have materially decreased, and in other locations may ultimately materially decrease,
occupancy levels and rents in our portfolio, which could adversely affect the value of our properties. In addition, numerous state,
local, federal and industry-initiated efforts, including eviction moratoriums, shelter-in-place orders, prohibitions on charging
certain fees and limitations on collection laws, have affected, and may continue to affect, our ability to collect rent or enforce
legal or contractual remedies for the failure to pay rent, which have negatively impacted, and may continue to negatively impact,
our ability to remove residents or retail and commercial tenants who are not paying rent and our ability to rent their units or other
space to new residents or retail and commercial tenants, respectively. Even if these measures are lifted, additional cases of
COVID-19 have resulted in, and may continue to result in, governments reinstating these or similar measures. State, local, and
federal governments also have increased, and may in the future increase, property taxes or other taxes, or fees, or may enact new
taxes or fees, in order to increase revenue, which has in the past increased, and may in the future increase our expenses. Our
development and construction projects, including those in our Developer Capital Program, also could be adversely affected,
including as a result of disruptions in supply chains and government restrictions on the types of projects that may continue during
the pandemic or as a result of delayed construction schedules due to social distancing efforts or occurrences of the virus at a
construction site. The COVID-19 pandemic and measures to prevent its spread also could adversely affect the businesses and
financial condition of our counterparties, including our joint venture partners, participants in the Developer Capital Program, and
general contractors and their subcontractors, and their ability to satisfy their obligations to us and to complete transactions or
projects with us as intended. In addition, a significant number of our retail tenants were, or have been, forced to close, either
temporarily or completely, or operate on a limited basis as a result of COVID-19 and related government actions, which has
resulted in, and could continue to result in, delays in rent payments, rent concessions, early lease terminations or tenant
bankruptcies.
The COVID-19 pandemic also has caused, and may continue to cause, severe economic, market and other disruptions
worldwide. Disruptions in the financial markets could adversely impact our access to equity and debt financing, including
through our commercial paper program, on favorable terms or at all, which could adversely affect our ability to consummate
acquisitions, fund developments and capital expenditures, and repay or refinance indebtedness
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as it becomes due. See “Risks Related to Our Indebtedness and Financings—Disruptions in Financial Markets May Adversely
Impact Availability and Cost of Credit and Have Other Adverse Effects on Us and the Market Price of UDR’s Stock.”
The extent of the COVID-19 pandemic’s effect on our operational and financial performance will depend on future
developments, including the duration and intensity of the pandemic, the timing and effectiveness of COVID-19 vaccines, and the
duration of, or the reinstatement of, government measures to mitigate the pandemic or address its effects, all of which are
uncertain and difficult to predict. Due to the speed with which the situation is developing, we are not able at this time to estimate
the full effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition
and cash flows could be material.
Unfavorable Apartment Market and Economic Conditions Could Adversely Affect Occupancy Levels, Rental Revenues
and the Value of Our Real Estate Assets. Unfavorable market conditions in the areas in which we operate or unfavorable
economic conditions generally, including as a result of COVID-19, may significantly affect our occupancy levels, our rental rates
and collections, the value of our properties and our ability to acquire or dispose of apartment communities on economically
favorable terms. Our ability to lease our properties at favorable rates is adversely affected by the increase in supply in the
multifamily and other rental markets and is dependent upon the overall level in the economy, which is adversely affected by,
among other things, job losses and unemployment levels, recession, debt levels, housing markets, stock market volatility and
uncertainty about the future. Some of our major expenses generally do not decline when related rents decline. We would expect
that declines in our occupancy levels and rental revenues would cause us to have less cash available to pay our indebtedness and
to distribute to UDR’s stockholders, which could adversely affect our financial condition or the market value of our securities.
Factors that may affect our occupancy levels, our rental revenues, and/or the value of our properties include the following, among
others:
●
●
●
●
●
●
●
●
●
●
downturns in the global, national, regional and local economic conditions, particularly increases in unemployment;
declines in mortgage interest rates, making alternative housing more affordable;
government or builder incentives with respect to home ownership, making alternative housing options more
attractive;
local real estate market conditions, including oversupply of, or reduced demand for, apartment homes;
declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some
tenants;
changes in market rental rates;
our ability to renew leases or re-lease space on favorable terms;
the timing and costs associated with property improvements, repairs or renovations;
changes in household formation; and
rent control or stabilization laws, or other laws regulating or impacting rental housing, which could prevent us from
raising rents to offset increases in operating costs or otherwise impact us.
The Geographic Concentration of Our Communities in Certain Markets Could Have an Adverse Effect on Our
Operations if a Particular Market is Adversely Impacted by Economic or Other Conditions. For the year ended December 31,
2020, approximately 58.7% of our total NOI was generated from communities located in Metropolitan D.C. (16.3%), Orange
County, CA (13.1%), the San Francisco Bay Area, CA (10.1%), Boston, MA (11.6%) and New York, NY (7.6%). As a result, if
any one or more of these markets is adversely impacted by regional or local economic conditions or real estate market conditions,
such conditions may have a greater adverse impact on our results of operations than if our portfolio was more geographically
diverse. For example, the urban core markets of New York, NY, San Francisco Bay Area, CA, and Boston, MA have been more
adversely impacted by the COVID-19 pandemic in comparison to our other markets, resulting in larger decreases in rental
income from elevated rent concessions and lower occupancy in those markets. In addition, if one or more of these markets is
adversely affected by changes in regional or local regulations, including those related to rent control or stabilization, such
regulations may have a greater adverse impact on our results of operation than if our portfolio was more geographically diverse.
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We May Be Unable to Renew Leases or Relet Apartment Units as Leases Expire, or the Terms of Renewals or New
Leases May Be Less Favorable Than Current Leases. When our residents decide to leave our apartments, whether because they
decide not to renew their leases or they leave prior to their lease expiration date, we may not be able to relet their apartment units.
Even if the residents do renew or we can relet the apartment units, the terms of renewal or reletting may be less favorable than
current lease terms. Furthermore, because the majority of our apartment leases have initial terms of 12 months or less, our rental
revenues are impacted by declines in market rents more quickly than if our leases were for longer terms. If we are unable to
promptly renew the leases or relet the apartment units, or if the rental rates upon renewal or reletting are lower than expected
rates, then our results of operations and financial condition may be adversely affected. If residents do not experience increases in
their income or if they experience decreases in their income or job losses, we may be unable to increase or maintain rent and/or
delinquencies may increase.
We Face Certain Risks Related to Our Retail and Commercial Space. Certain of our properties include retail or
commercial space that we lease to third parties. The long term nature of our retail and commercial leases (generally five to
ten years with market-based or fixed-price renewal options) and the characteristics of many of our tenants (generally small and/or
local businesses) may subject us to certain risks, including risks related to such tenants being required not to operate, or to operate
on a limited basis, due to the COVID-19 pandemic. The longer term leases could result in below market lease rates over time.
Tenants may provide guarantees and other credit support which may prove to be inadequate or uncollectable, and the failure rate
of small and/or local businesses may be higher than average. We may not be able to lease new space for rents that are consistent
with our projections or for market rates. Also, when leases for our retail or commercial space terminate either at the end of the
lease or because a tenant leaves early, the space may not be relet or the terms of reletting, including the cost of allowances and
concessions to tenants, may be less favorable than the prior lease terms or we may incur additional expenses related to
modifications of the spaces in order to satisfy new tenants. Our properties compete with other properties with retail or
commercial space. The presence of competitive alternatives may adversely affect our ability to lease space and the level of rents
we can obtain. If our retail or commercial tenants experience financial distress or bankruptcy, they have in the past and may in
the future fail to comply with their contractual obligations, seek concessions in order to continue operations, or cease their
operations, which could adversely impact our results of operations and financial condition.
Risk of Inflation/Deflation. Substantial inflationary or deflationary pressures could have a negative effect on rental rates
and property operating expenses. The general risk of inflation is that interest on our debt, general and administrative expenses and
other expenses increase at a rate faster than increases in our rental rates, which could adversely affect our financial condition or
results of operations.
We Are Subject to Certain Risks Associated with Selling Apartment Communities, Which Could Limit Our Operational
and Financial Flexibility. We periodically dispose of apartment communities that no longer meet our strategic objectives, but
adverse market conditions may make it difficult to sell apartment communities we own. We cannot predict whether we will be
able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective
purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the
sale of a property. Furthermore, we may be required to expend funds to correct defects or to make improvements before a
property can be sold or the purchase price may be reduced to cover any cost of correcting defects or making improvements.
These conditions may limit our ability to dispose of properties and to change our portfolio in order to meet our strategic
objectives, which could in turn adversely affect our financial condition, results of operations or our ability to fund other activities
in which we may want to engage such as the purchase of properties, development or redevelopment, or funding the Developer
Capital Program. We are also subject to the following risks in connection with sales of our apartment communities, among
others:
●
●
a significant portion of the proceeds from some property sales may be held by intermediaries in order for such sales
to qualify as like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended, or the
“Code,” so that any related capital gain can be deferred for federal income tax purposes. As a result, we may not
have immediate access to all of the cash proceeds generated from our property sales; and
federal tax laws limit our ability to profit on the sale of communities that we have owned for less than two years,
and this limitation may prevent us from selling communities when market conditions are favorable.
Competition Could Limit Our Ability to Lease Apartment Homes or Increase or Maintain Rents. Our apartment
communities compete with numerous housing alternatives in attracting residents, including other apartment communities,
condominiums and single-family rental homes, as well as owner occupied single- and multi-family homes.
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Competitive housing in a particular area could adversely affect our ability to lease apartment homes and increase or maintain
rents, which could materially adversely affect our results of operations and financial condition.
We May Not Realize the Anticipated Benefits of Past or Future Acquisitions, and the Failure to Integrate Acquired
Communities and New Personnel Successfully Could Create Inefficiencies. We have selectively acquired in the past, and if
presented with attractive opportunities we intend to selectively acquire in the future, apartment communities that meet our
investment criteria. Our acquisition activities and their success are subject to the following risks, among others:
● we may be unable to obtain financing for acquisitions on favorable terms, including but not limited to interest rates,
term and/or loan-to-value ratios, or at all, all of which could cause us to delay or even abandon potential
acquisitions;
●
●
even if we are able to finance the acquisition, cash flow from the acquisition may be insufficient to meet our
required principal and interest payments on the debt used to finance the acquisition;
even if we enter into an acquisition agreement for an apartment community, we may not complete the acquisition
for a variety of reasons after incurring certain acquisition-related costs;
● we may incur significant costs and divert management attention in connection with the evaluation and negotiation
of potential acquisitions, including potential acquisitions that we subsequently do not complete;
● when we acquire an apartment community, we may invest additional amounts in it with the intention of increasing
profitability, and these additional investments may not produce the anticipated improvements in profitability;
●
the expected occupancy rates and rental rates may differ from actual results; and
● we may be unable to quickly and efficiently integrate acquired apartment communities and new personnel into our
existing operations, and the failure to successfully integrate such apartment communities or personnel will result in
inefficiencies that could materially and adversely affect our expected return on our investments and our overall
profitability.
Competition Could Adversely Affect Our Ability to Acquire Properties. In the past, other real estate investors, including
insurance companies, pension and investment funds, developer partnerships, investment companies and other public and private
apartment REITs, have competed with us to acquire existing properties and to develop new properties, and such competition in
the future may make it more difficult for us to acquire attractive investment opportunities on favorable terms, which could
adversely affect our ability to grow or acquire properties profitably or with attractive returns.
Development and Construction Risks Could Impact Our Profitability. In the past we have selectively pursued the
development and construction of apartment communities, and we intend to do so in the future as appropriate opportunities arise.
Development activities have been, and in the future may be, conducted through wholly-owned affiliated companies or through
joint ventures with unaffiliated parties. Our development and construction activities are subject to the following risks, among
others:
● we may be unable to obtain construction financing for development activities on favorable terms, including but not
limited to interest rates, term and/or loan-to-value ratios, or at all, which could cause us to delay or even abandon
potential developments;
● we may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy and other
required governmental or quasi-governmental permits and authorizations, which could result in increased
development costs, could delay initial occupancy dates for all or a portion of a development community, and could
require us to abandon our activities entirely with respect to a project for which we are unable to obtain permits or
authorizations;
●
cost may be higher or yields may be less than anticipated as a result of delays in completing projects, costs that
exceed budget and/or higher than expected concessions for lease up and lower rents than expected;
● we may abandon development opportunities that we have already begun to explore, and we may fail to recover
expenses already incurred in connection with exploring such development opportunities;
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● we may be unable to complete construction and lease-up of a community on schedule, or incur development or
construction costs that exceed our original estimates, and we may be unable to charge rents that would compensate
for any increase in such costs;
●
occupancy rates, rents and concessions at a newly developed community may fluctuate depending on a number of
factors, including market and economic conditions, preventing us from meeting our expected return on our
investment and our overall profitability goals; and
● when we sell communities or properties that we developed or renovated to third parties, we may be subject to
warranty or construction defect claims that are uninsured or exceed the limits of our insurance.
Bankruptcy or Defaults of Our Counterparties Could Adversely Affect Our Performance. We have relationships with
and, from time to time, we execute transactions with or receive services from many counterparties, such as general contractors
engaged in connection with our development activities, borrowers, or joint venture partners, among others. As a result,
bankruptcies or defaults by these counterparties or their subcontractors could result in services not being provided, projects not
being completed on time, or on budget, or at all, or contractual obligations to us not being satisfied, or volatility in the financial
markets and economic weakness could affect the counterparties’ ability to complete transactions with us as intended, both of
which could result in disruptions to our operations that may adversely affect our financial condition and results of operations.
Property Ownership Through Partnerships and Joint Ventures May Limit Our Ability to Act Exclusively in Our Interest.
We have in the past and may in the future develop and/or acquire properties in partnerships and joint ventures, including those in
which we own a preferred interest, with other persons or entities when we believe circumstances warrant the use of such
structures. As of December 31, 2020, we had active joint ventures and partnerships, including our preferred equity investments,
with a total equity investment of $600.2 million. We could become engaged in a dispute with one or more of our partners which
could adversely impact us. Moreover, our partners may have business, economic or other objectives that are inconsistent with our
objectives, including objectives that relate to the appropriate timing and terms of any sale or refinancing of a property. In some
instances, our partners may have competing interests in our markets that could create conflicts of interest. Also, our partners
might fail to make capital contributions when due, which may require us to contribute additional capital or may negatively impact
the project. In addition, we may be responsible to our partners for indemnifiable losses. In general, we and our partners may each
have the right to trigger a buy-sell or other similar arrangement, which could cause us to sell our interest, or acquire our partner’s
interest, at a time when we otherwise would not have initiated such a transaction and may result in the valuation of our interest in
the partnership or joint venture (if we are the seller) or of the other partner’s interest in the partnership or joint venture (if we are
the buyer) at levels which may not be representative of the valuation that would result from an arm’s length marketing process
and could cause us to recognize unanticipated capital gains or losses or the loss of fee income.
We are also subject to other risks in connection with partnerships or joint ventures, including (i) a deadlock if we and
our partner are unable to agree upon certain major and other decisions (which could result in litigation or disposing of an asset at
a time at which we otherwise would not sell the asset), (ii) limitations on our ability to liquidate our position in the partnership or
joint venture without the consent of the other partner, and (iii) requirements to provide guarantees in favor of lenders with respect
to the indebtedness of the joint venture.
We May Not be Permitted to Dispose of Certain Properties or Pay Down the Indebtedness Associated with Those
Properties When We Might Otherwise Desire to do so Without Incurring Additional Costs. In connection with certain property
acquisitions, we have agreed with the sellers that we will not dispose of the acquired properties or reduce the mortgage
indebtedness on such properties for significant periods of time unless we pay certain of the resulting tax costs of the sellers or
dispose of the property in a transaction in which a gain is not recognized for federal income tax purposes by such sellers, and we
may enter into similar agreements in connection with future property acquisitions. These agreements could result in us retaining
properties that we would otherwise sell or not paying down or refinancing indebtedness that we would otherwise pay down or
refinance. However, subject to certain conditions, we retain the right to substitute other property or debt to meet these obligations
to the sellers.
We Could Incur Significant Insurance Costs and Some Potential Losses May Not Be Adequately Covered by Insurance.
We have a comprehensive insurance program covering our properties and operating activities with limits of liability, deductibles
and self-insured retentions customary within the multifamily industry. We believe the policy specifications and insured limits of
these policies are adequate and appropriate. There are, however, certain types of extraordinary losses which may not be
adequately covered under our insurance program. In addition, we will sustain losses due to insurance deductibles, self-insured
retention, uninsured claims or casualties, or losses in excess of applicable coverage.
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If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have
invested in a property, as well as the anticipated future revenue from the property. In such an event, we might nevertheless
remain obligated for any mortgage debt or other financial obligations related to the property. Material losses in excess of
insurance proceeds may occur in the future. If one or more of our significant properties were to experience a catastrophic loss, it
could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Such events
could materially and adversely affect our financial condition and results of operations.
The cost of insuring our apartment communities and our operations is a component of expense. Insurance premiums and
the terms and conditions of insurance policies are subject to significant fluctuations and changes, which are generally outside of
our control. We insure our properties and our operations with insurance companies that we believe have a good rating at the time
our policies are put into effect. The financial condition of one or more insurance companies that insure us may be negatively
impacted, which could result in their inability to pay on future insurance claims. Their inability to pay future claims may have a
negative impact on our financial results. In addition, the failure, or exit or partial exit from an insurance market, of one or more
insurance companies may affect our ability to obtain insurance coverage in the amounts that we seek, or at all, or increase the
costs to renew or replace our insurance policies, or cause us to self-insure a portion of the risk, or increase the cost of insuring
properties.
Failure to Succeed in New Markets May Limit Our Growth. We have acquired in the past, and we may acquire in the
future if appropriate opportunities arise, apartment communities that are outside of our existing markets. Entering into new
markets may expose us to a variety of risks, and we may not be able to operate successfully in new markets. These risks include,
among others:
●
●
●
●
inability to accurately evaluate local apartment market conditions and local economies;
inability to hire and retain key personnel;
lack of familiarity with local governmental and permitting procedures; and
inability to achieve budgeted financial results.
Failure to Succeed with New Initiatives May Limit Our Ability to Grow Same-Store NOI. We have in the past developed
and may in the future develop initiatives that are intended to drive operating efficiencies and grow same-store NOI, including
smart home technologies and self-service options that are accessible to residents through smart devices. Such initiatives may also
involve our associates having new or different responsibilities and processes. We may incur significant costs and divert resources
in connection with such initiatives, and these initiatives may not perform as projected, which could adversely affect our results of
operations and the market price of UDR’s common stock.
Potential Liability for Environmental Contamination Could Result in Substantial Costs. Under various federal, state and
local environmental laws, as a current or former owner or operator of real estate, we could be required to investigate and
remediate the effects of contamination of currently or formerly owned real estate by hazardous or toxic substances, often
regardless of our knowledge of or responsibility for the contamination and solely by virtue of our current or former ownership or
operation of the real estate. In addition, we could be held liable to a governmental authority or to third parties for property
damage and for investigation and clean-up costs incurred in connection with the contamination or we could be required to incur
additional costs to change how the property is constructed or operated due to presence of such substances. These costs could be
substantial, and in many cases environmental laws create liens in favor of governmental authorities to secure their payment. The
presence of such substances or a failure to properly remediate any resulting contamination could materially and adversely affect
our ability to borrow against, sell or rent an affected property.
In addition, our properties are subject to various federal, state and local environmental, health and safety laws, including
laws governing the management of wastes and underground and aboveground storage tanks. Noncompliance with these
environmental, health and safety laws could subject us to liability. Changes in laws could increase the potential costs of
compliance with environmental laws, health and safety laws or increase liability for noncompliance. This may result in
significant unanticipated expenditures or may otherwise adversely affect our financial condition and results of operations.
As the owner or operator of real property, we may also incur liability based on various building conditions. For
example, buildings and other structures on properties that we currently own or operate or those we acquire or operate in the future
contain, may contain, or may have contained, asbestos-containing material, or ACM. Environmental, health
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and safety laws require that ACM be properly managed and maintained and may impose fines or penalties on owners, operators
or employers for non-compliance with those requirements.
These requirements include special precautions, such as removal, abatement or air monitoring, if ACM would be
disturbed during maintenance, renovation or demolition of a building, potentially resulting in substantial costs. In addition, we
may be subject to liability for personal injury or property damage sustained as a result of exposure to ACM or releases of ACM
into the environment.
We cannot assure you that costs or liabilities incurred as a result of environmental or building condition issues will not
adversely affect our financial condition and results of operations.
Our Properties May Contain or Develop Harmful Mold or Suffer from Other Indoor Air Quality Issues, Which Could
Lead to Liability for Adverse Health Effects or Property Damage or Cost for Remediation. When excessive moisture accumulates
in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not
addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem
from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as
pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants can be alleged to cause a variety of adverse health
effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne
contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold
or other airborne contaminants or to increase ventilation, which could adversely affect our results of operations and cash flow. In
addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants or others
for property damage or personal injury.
Compliance or Failure to Comply with the Americans with Disabilities Act of 1990 or Other Safety Regulations and
Requirements Could Result in Substantial Costs. The Americans with Disabilities Act generally requires that public buildings,
including our properties, be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the
federal government or the award of damages to private litigants. Claims have been asserted, and in the future claims may be
asserted, against us with respect to some of our properties under the Americans with Disabilities Act. If, under the Americans
with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties,
including the removal of access barriers, it could adversely affect our financial condition and results of operations. In addition, if
claims arise, we may expend resources and incur costs in investigating and resolving such claims even if our property was in
compliance with the law.
Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life
safety requirements and federal, state and local accessibility requirements in addition to those imposed by the Americans with
Disabilities Act. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know
whether existing requirements will change or whether compliance with future requirements will require significant unanticipated
expenditures that could adversely affect our financial condition or results of operations.
The Adoption of, or Changes to, Rent Control, Rent Stabilization, Eviction, Tenants’ Rights and Similar Laws and
Regulations in Our Markets Could Have an Adverse Effect on Our Results of Operations and Property Values. Various state and
local governments have enacted and may continue to enact rent control, rent stabilization, or limitations, and similar laws and
regulations that could limit our ability to raise rents or charge certain fees, including laws or court orders, either of which could
have a retroactive effect. For example, in June 2019, the State of New York enacted new rent control regulations known as the
Housing Stability and Tenant Protection Act of 2019 and, in October of 2019, the State of California enacted the Tenant
Protection Act of 2019. We have seen a recent increase in governments enacting or considering, or being urged to consider, such
laws and regulations. Federal, state and local governments or courts also have made, and may make in the future, changes to laws
related to allowable fees, eviction and other tenants’ rights laws and regulations (including changes in response to COVID-19 and
other changes that apply retroactively) that could adversely impact our results of operations and the value of our properties. Laws
and regulations regarding rent control, rent stabilization, eviction, tenants’ rights, and similar matters, as well as any lawsuits
against us arising from such laws and regulations, may limit our ability to charge market rents, limit our ability to increase rents,
evict delinquent tenants or change fees, or recover increases in our operating expenses, which could have an adverse effect on our
results of operations and the value of our properties.
Compliance with or Changes in Real Estate Tax and Other Laws and Regulations Could Adversely Affect Our Funds
from Operations and Our Ability to Make Distributions to Stockholders. We are subject to federal, state and local
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laws, regulations, rules and ordinances at locations where we operate regarding a wide variety of matters that could affect,
directly or indirectly, our operations. Generally, we do not directly pass through costs resulting from compliance with or changes
in real estate tax laws to residential property tenants. We also do not generally pass through increases in income, service or other
taxes to tenants under leases. These costs may adversely affect net operating income and the ability to make distributions to
stockholders. Similarly, compliance with or changes in (i) laws increasing the potential liability for environmental conditions
existing on properties or the restrictions on discharges or other conditions, (ii) laws and regulations regulating housing, such as
the Americans with Disabilities Act and the Fair Housing Amendments Act of 1988, or (iii) employment related laws, may result
in significant unanticipated expenditures, which could adversely affect our financial condition and results of operations. In
addition, changes in federal and state legislation and regulation on climate change may result in increased capital expenditures to
improve the energy efficiency of our existing communities and also may require us to spend more on our new development
communities without a corresponding increase in revenue.
Risk of Damage from Catastrophic Weather and Natural Events. Our communities are located in areas that may
experience catastrophic weather and other natural events from time to time, including mudslides, fires, hurricanes, tornadoes,
floods, snow or ice storms, or other severe inclement weather. These adverse weather and natural events could cause damage or
losses that may be greater than insured levels. In the event of a loss in excess of insured limits, we could lose our capital invested
in the affected community, as well as anticipated future revenue from that community. We would also continue to be obligated to
repay any mortgage indebtedness or other obligations related to the community. Any such loss could adversely affect our
financial condition and results of operations.
Risk of Potential Climate Change. To the extent significant changes in the climate in areas where our communities are
located occur, we may experience extreme weather conditions and changes in precipitation and temperature, all of which could
result in physical damage to, and/or a decrease in demand for, our communities located in these areas or communities that are
otherwise affected by these changes. Should the impact of such climate changes be material in nature, or occur for lengthy
periods of time, our financial condition and results of operations could be adversely affected.
Risk of Earthquake Damage. Some of our communities are located in areas subject to earthquakes, including in the
general vicinity of earthquake faults. We cannot assure you that an earthquake would not cause damage or losses greater than
insured levels. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected community, as
well as anticipated future revenue from that community. We may also continue to be obligated to repay any mortgage
indebtedness or other obligations related to the community. Any such loss could adversely affect our financial condition and
results of operations. Insurance coverage for earthquakes can be costly due to limited industry capacity. As a result, we may
experience shortages in desired coverage levels if market conditions are such that insurance is not available or the cost of
insurance makes it, in management’s view, economically impractical.
Risk of Accidental Death or Injury Due to Fire, Natural Disasters or Other Hazards. The accidental death or injury of
persons living in our communities due to fire, natural disasters or other hazards could have an adverse effect on our business and
results of operations. Our insurance coverage may not cover all losses associated with such events, and we may experience
difficulty marketing communities where any such events have occurred, which could have an adverse effect on our financial
condition and results of operations.
Actual or Threatened Terrorist Attacks May Have an Adverse Effect on Our Business and Operating Results and Could
Decrease the Value of Our Assets. Actual or threatened terrorist attacks and other acts of violence, destruction or war could have
an adverse effect on our business and operating results. Attacks or other similar actions that directly impact one or more of our
apartment communities could significantly affect our ability to operate those communities and thereby impair our ability to
achieve our expected results. Further, our insurance coverage may not cover all losses caused by a terrorist attack or similar
events. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could
similarly have an adverse effect on our financial condition and results of operations.
Mezzanine Loan Assets Involve Greater Risks of Loss than Senior Loans Secured by Income-Producing Properties. We
have in the past and may in the future originate mezzanine loans, which take the form of subordinated loans secured by second
mortgages on the underlying property or subordinated loans secured by a pledge of the ownership interests of either the entity
owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property.
Mezzanine loans may involve a higher degree of risk than a senior mortgage secured by real property, because the security for the
loan may lose all or substantially all of its value as a result of foreclosure by the senior lender and because it is in second position
and there may not be adequate equity in the
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property. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have
full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a
borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan
will be satisfied only after the senior debt. As a result, we may not recover some of or all our investment. In addition, mezzanine
loans typically have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and
increasing the risk of loss of principal.
Risk Related to Preferred Equity Investments. We have made in the past and may in the future make preferred equity
investments in corporations, limited partnerships, limited liability companies or other entities that have been formed for the
purpose of acquiring, developing or managing real property. Generally, we will not have the ability to control the daily operations
of the entity, and we will not have the ability to select or remove a majority of the members of the board of directors, managers,
general partner or partners or similar governing body of the entity or otherwise control its operations. Although we would seek to
maintain sufficient influence over the entity to achieve our objectives, our partners may have interests that differ from ours and
may be in a position to take actions without our consent or that are inconsistent with our interests. Further, if our partners were to
fail to invest additional capital in the entity when required, we may have to invest additional capital to protect our investment.
Our partners may fail to develop or operate the real property or refinance property indebtedness or sell the real property in the
manner intended and as a result the entity may not be able to redeem our investment or pay the return expected to us in a timely
manner if at all. In addition, we may not be able to dispose of our investment in the entity in a timely manner or at the price at
which we would want to divest. In the event that such an entity fails to meet expectations or becomes insolvent, we may lose our
entire investment in the entity.
Risks Related to Ground Leases. We have in the past and may in the future enter into, as either landlord or tenant, a
long-term ground lease with respect to a property or a portion thereof. Such ground leases may contain a rent reset provision that
requires both parties to agree to a new rent or is based upon factors, for example fair market rent, that are not objective and are
not within our control. We may not be able to agree with the counterparty to a revised rental rate, or the revised rental rate may be
set by external factors, which could result in a different rental rate than we forecasted. In the past we have had disagreements
with respect to revised rental rates and certain of such disagreements have gone to arbitration (for resolution as provided in the
applicable lease agreement) and have been resolved in a manner adverse to us. In addition, the other party may not perform as
expected under the ground lease or there may be a dispute with the other party to the ground lease. Any of these circumstances
could have an adverse effect on our business, financial condition or operating results.
We May Experience a Decline in the Fair Value of Our Assets and Be Forced to Recognize Impairment Charges, Which
Could Adversely Impact Our Financial Condition, Liquidity and Results of Operations and the Market Price of UDR’s Common
Stock. A decline in the fair value of our assets may require us to recognize an impairment against such assets under generally
accepted accounting principles as in effect in the United States (“GAAP”), if we were to determine that, with respect to any assets
in unrealized loss positions, we do not have the ability and intent to hold such assets for a period of time sufficient to allow for
recovery to the amortized cost of such assets. If such a determination were to be made, we would recognize unrealized losses
through earnings and write down the amortized cost of such assets to a new cost basis, based on the fair value of such assets on
the date they are considered to be impaired. Such impairment charges reflect non-cash losses at the time of recognition;
subsequent disposition or sale of such assets could further affect our future losses or gains, as they are based on the difference
between the sale price received and adjusted amortized cost of such assets at the time of sale. If we are required to recognize asset
impairment charges in the future, these charges could adversely affect our financial condition, liquidity, results of operations and
the per share trading price of UDR’s common stock.
Any Material Weaknesses Identified in Our Internal Control Over Financial Reporting Could Have an Adverse Effect
on UDR’s Stock Price. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal control
over financial reporting. If we fail to maintain the adequacy of our internal controls over financial reporting, including any failure
to implement required new or improved controls as a result of changes to our business or otherwise, or if we experience
difficulties in their implementation, our business, results of operations and financial condition could be materially adversely
harmed and we could fail to meet our reporting obligations. In addition, if we have one or more material weaknesses in our
internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial
reports, which in turn could have an adverse effect on the per share trading price of UDR’s common stock.
A Breach of Information Technology Systems On Which We Rely Could Materially and Adversely Impact Our Business,
Financial Condition, Results of Operations and Reputation. We rely on information technology systems,
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including the internet and networks and systems and software developed, maintained and controlled by third party vendors and
other third parties, to process, transmit and store information and to manage or support our business processes. Third party
vendors may collect and hold personally identifiable information and other confidential information of our tenants, prospective
tenants and employees. We also maintain financial and business information regarding us and persons and entities with which we
do business on our information technology systems. While we take steps, and generally require third party vendors to take steps,
to protect the security of the information maintained in our and third party vendors’ information technology systems, including
associate training and testing and the use of commercially available systems, software, tools and monitoring to provide security
for processing, transmitting and storing of the information, it is possible that our or our third party vendors’ security measures
will not be able to prevent human error or the systems’ or software’s improper functioning, or the loss, misappropriation,
disclosure or corruption of personally identifiable information or other confidential or sensitive information, including
information about our tenants and employees. Cybersecurity breaches, including physical or electronic break-ins, computer
viruses, malware, phishing scams, attacks by hackers, breaches due to employee error or misconduct, and similar breaches, can
create system disruptions, shutdowns or unauthorized access to information maintained on our information technology systems or
the information technology systems of our third party vendors or other third parties or otherwise cause disruption or negative
impacts to occur to our business and adversely affect our financial condition and results of operations. While we maintain cyber
risk insurance to provide some coverage for certain risks arising out of cybersecurity breaches, there is no assurance that such
insurance would cover all or a significant portion of the costs or consequences associated with a cybersecurity breach. We have in
the past experienced cybersecurity breaches on our information technology systems or relating to software that we utilize, and,
while none to date have been material, we expect such breaches may continue to occur in the future. As the techniques used to
obtain unauthorized access to information technology systems become more varied and sophisticated and the occurrence of such
breaches becomes more frequent, we and our third party vendors and other third parties may be unable to adequately anticipate
these techniques or breaches and implement appropriate preventative measures. Any failure to prevent cybersecurity breaches
and maintain the proper function, security and availability of our or our third party vendors’ and other third parties’ information
technology systems could interrupt our operations, damage our reputation and brand, damage our competitive position, make it
difficult for us to attract and retain tenants, and subject us to liability claims or regulatory penalties that could adversely affect our
business, financial condition and results of operations.
Our Business and Operations Would Suffer in the Event of Information Technology System Failures. Despite system
redundancy and the existence of a disaster recovery plan for our information technology systems, our information technology
systems and the information technology systems maintained by our third party vendors are vulnerable to damage arising from any
number of sources beyond our or our third party vendors’ control, including energy blackouts, natural disasters, terrorism, war,
and telecommunication failures. Any failure to maintain proper function and availability of our or third party vendors’
information technology systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory
penalties and could adversely affect our business, financial condition and results of operations.
A Failure to Keep Pace with Developments in Technology Could Impair our Operations or Competitive Position. Our
business continues to demand the use of sophisticated systems, software and technology. These systems, software and
technologies must be refined, updated and replaced on a regular basis in order for us to meet our business requirements and our
residents’ demands and expectations. If we are unable to do so on a timely basis or at a reasonable cost, or fail to do so our
business could suffer. We also may not achieve the benefits that we anticipate from any new system, software or technology, and
a failure to do so could result in higher than anticipated costs or could adversely affect our results of operation.
Social Media Presents Risks. The use of social media could cause us to suffer brand damage or unintended information
disclosure. Negative posts or communications about us on a social networking website could damage our reputation. Further,
employees or others may disclose non-public information regarding us or our business or otherwise make negative comments
regarding us on social networking or other websites, which could adversely affect our business and results of operations. As
social media evolves we will be presented with new risks and challenges.
Our Success Depends on Our Senior Management. Our success depends upon the retention of our senior management,
whose continued service is not guaranteed. We may not be able to find qualified replacements for the individuals who make up
our senior management if their services should no longer be available to us. The loss of services of one or more members of our
senior management team could have a material adverse effect on our business, financial condition and results of operations.
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Changes in U.S. Accounting Standards May Materially and Adversely Affect Our Reported Results of Operations.
Accounting for public companies in the United States is in accordance with GAAP, which is established by the Financial
Accounting Standards Board (the “FASB”), an independent body whose standards are recognized by the SEC as authoritative for
publicly held companies. Uncertainties posed by various initiatives of accounting standard-setting by the FASB and the SEC,
which create and interpret applicable accounting standards for U.S. companies, may change the financial accounting and
reporting standards or their interpretation and application of these standards that govern the preparation of our financial
statements. These changes could have a material impact on our reported financial condition and results of operations. In some
cases, we could be required to apply a new or revised standard retroactively, resulting in potentially material restatements of prior
period financial statements.
Third-Party Expectations Relating to Environmental, Social and Governance Factors May Impose Additional Costs and
Expose Us to New Risks. There is an increasing focus from certain investors, tenants, employees, and other stakeholders
concerning corporate responsibility, specifically related to environmental, social and governance factors. Some investors may use
these factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies
relating to corporate responsibility are inadequate. Third-party providers of corporate responsibility ratings and reports on
companies have increased in number, resulting in varied and in some cases inconsistent standards. In addition, the criteria by
which companies’ corporate responsibility practices are assessed are evolving, which could result in greater expectations of us
and cause us to undertake costly initiatives to satisfy such new criteria. Alternatively, if we elect not to or are unable to satisfy
such new criteria or do not meet the criteria of a specific third-party provider, some investors may conclude that our policies with
respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility
procedures or standards do not meet the standards set by various constituencies. Furthermore, if our competitors’ corporate
responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our
competitors instead. In addition, in the event that we communicate certain initiatives and goals regarding environmental, social
and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be
criticized for the scope of such initiatives or goals. If we fail to satisfy the expectations of investors, tenants and other
stakeholders or our initiatives are not executed as planned, our reputation and financial results could be adversely affected.
Risks Related to Our Indebtedness and Financings
Insufficient Cash Flow Could Affect Our Debt Financing and Create Refinancing Risk. We are subject to the risks
normally associated with debt financing, including the risk that our operating income and cash flow will be insufficient to make
required payments of principal and interest, could restrict or limit our ability to incur additional debt, or could restrict our
borrowing capacity under our line of credit due to debt covenant restraints. Sufficient cash flow may not be available to make all
required debt payments and satisfy UDR’s distribution requirements to maintain its status as a REIT for federal income tax
purposes. In addition, the amounts under our line of credit may not be available to us and we may not be able to access the
commercial paper market if our operating performance falls outside the constraints of our debt covenants. We are also likely to
need to refinance substantially all of our outstanding debt as it matures. We may not be able to refinance existing debt, or the
terms of any refinancing may not be as favorable as the terms of the existing debt, which could create pressures to sell assets or to
issue additional equity when we would otherwise not choose to do so. In addition, our failure to comply with our debt covenants
could result in a requirement to repay our indebtedness prior to its maturity, which could have a material adverse effect on our
financial condition and cash flow, and increase our financing costs and impact our ability to make distributions to UDR’s
stockholders.
Failure to Generate Sufficient Income Could Impair Debt Service Payments and Distributions to Stockholders. If our
apartment communities do not generate sufficient revenue to meet rental expenses, our ability to make required payments of
interest and principal on our debt securities and to pay distributions to UDR’s stockholders or the Operating Partnership’s or the
DownREIT Partnership’s unitholders will be adversely affected. The following factors, among others, may affect the income
generated by our apartment communities:
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the national and local economies;
local real estate market conditions, such as an oversupply of apartment homes;
tenants’ perceptions of the safety, convenience, and attractiveness of our communities and the neighborhoods where
they are located;
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our ability to provide adequate management, maintenance and insurance;
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rental expenses, including real estate taxes and utilities;
competition from other apartment communities;
changes in interest rates and the availability of financing;
changes in governmental regulations and the related costs of compliance; and
changes in tax and housing laws, including the enactment of rent control laws or other laws regulating multifamily
housing.
Expenses associated with our investment in an apartment community, such as debt service, real estate taxes, insurance
and maintenance costs, are generally not reduced when circumstances cause a reduction in revenue from that community. If a
community is mortgaged to secure payment of debt and we are unable to make the mortgage payments, we could sustain a loss as
a result of foreclosure on the community or the exercise of other remedies by the mortgage holder.
Changing Interest Rates Could Increase Interest Costs and Adversely Affect Our Cash Flow and the Market Price of
Our Securities. We currently have, and expect to incur in the future, interest-bearing debt, including unsecured commercial paper,
at rates that vary with market interest rates. As of December 31, 2020, UDR had approximately $280.0 million of variable rate
indebtedness outstanding, which constitutes approximately 5.5% of total outstanding indebtedness as of such date. As of
December 31, 2020, the Operating Partnership had approximately $27.0 million of variable rate indebtedness outstanding, which
constitutes approximately 27.1% of total outstanding indebtedness as of such date. An increase in interest rates would increase
our interest expenses and increase the costs of refinancing existing indebtedness and of issuing new debt, including unsecured
commercial paper. Accordingly, higher interest rates could adversely affect cash flow and our ability to service our debt and to
make distributions to security holders. The effect of prolonged interest rate increases could negatively impact our ability to make
acquisitions and develop properties.
The Phase-Out of LIBOR and Transition to SOFR as a Benchmark Interest Rate Could Have Adverse Effects. In 2018,
the Alternative Reference Rate Committee identified the Secured Overnight Financing Rate (“SOFR”) as the alternative to
LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, published
by the Federal Reserve Bank of New York. By the end of 2021, it is expected that new contracts will not reference LIBOR and
will instead use SOFR. Due to the broad use of LIBOR as a reference rate, all financial market participants, including us, are
impacted by the risks associated with this transition and therefore it could adversely affect our operations and cash flows.
Our Debt Level May Be Increased. Our ability to incur debt is limited by covenants in our bank and other credit
agreements. We manage our debt to be in compliance with these debt covenants, but subject to compliance with these covenants,
we may increase the amount of our debt at any time without a concurrent improvement in our ability to service the additional
debt.
Financing May Not Be Available and Could Be Dilutive. Our ability to execute our business strategy depends on our
access to an appropriate blend of debt financing, including unsecured lines of credit, construction loans and other forms of
secured debt, commercial paper and other forms of unsecured debt, and equity financing, including common and preferred equity.
We and other companies in the real estate industry have experienced limited availability of financing from time to time, including
due to regulatory changes directly or indirectly affecting financing markets, for example the changes in terms on construction
loans brought about by the Basel III capital requirements and the associated “High Volatility Commercial Real Estate”
designation, which has adversely impacted the availability of loans, including construction loans, and the proceeds of and the
interest rate thereon. Restricted lending practices could impact our ability to obtain financing or refinancing for our properties. If
we issue additional equity securities to finance developments and acquisitions instead of incurring debt, the interests of UDR’s
existing stockholders could be diluted.
Failure To Maintain Our Current Credit Ratings Could Adversely Affect Our Cost of Funds, Related Margins,
Liquidity, and Access to Capital Markets. Moody’s and Standard & Poor’s routinely evaluate our debt and have given us ratings
on our senior unsecured debt, commercial paper program and preferred stock. These ratings are based on a number of factors,
which included their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow
and earnings. Due to changes in these factors and market conditions, we may not be able to maintain our current credit ratings,
which could adversely affect our cost of funds and related margins, liquidity, and access to capital markets, including our ability
to access the commercial paper market.
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Disruptions in Financial Markets May Adversely Impact Availability and Cost of Credit and Have Other Adverse
Effects on Us and the Market Price of UDR’s Stock. Our ability to make scheduled payments on, or to refinance, our debt
obligations will depend on our operating and financial performance, which in turn is subject to prevailing economic conditions
and to financial, business and other factors beyond our control. The global equity and credit markets experienced, and may
experience in the future, periods of extraordinary turmoil and volatility as a result of the COVID-19 pandemic, related
government actions and uncertainty regarding their duration and impact. These circumstances may materially and adversely
impact liquidity in the financial markets at times, making terms for certain financings less attractive or in some cases unavailable.
Disruptions and uncertainty in the equity and credit markets may negatively impact our ability to refinance existing indebtedness
and access additional financing for acquisitions, development of our properties and other purposes at reasonable terms or at all,
which may negatively affect our business and the market price of UDR’s common stock. We also rely on the financial institutions
that are parties to our revolving credit facility and other credit facilities. If these institutions become capital constrained, tighten
their lending standards or become insolvent or if they experience excessive volumes of borrowing requests from other borrowers
within a short period of time, they may be unable or unwilling to honor their funding commitments to us, which would adversely
affect our ability to draw on our revolving credit facility. If we are not successful in refinancing our existing indebtedness when it
becomes due, we may be forced to dispose of properties on disadvantageous terms, which might adversely affect our ability to
service other debt and to meet our other obligations. A prolonged downturn in the financial markets may cause us to seek
alternative sources of potentially less attractive financing, and may require us to adjust our business plan accordingly. These
events also may make it more difficult or costly for us to raise capital through the issuance of UDR’s common or preferred stock.
A Change in U.S. Government Policy or Support Regarding Fannie Mae or Freddie Mac Could Have a Material
Adverse Impact on Our Business. While in recent years we have decreased our borrowing from Fannie Mae and Freddie Mac,
Fannie Mae and Freddie Mac are a major source of financing to participants in the multifamily housing market including
potential purchasers of our properties. Potential options for the future of agency mortgage financing in the U.S. have been, and
may in the future be, suggested that could involve a reduction in the amount of financing Fannie Mae and Freddie Mac are able to
provide, limitations on the loans that the agencies may make, which may not include loans secured by properties like our
properties, or the phase out of Fannie Mae and Freddie Mac. While we believe Fannie Mae and Freddie Mac will continue to
provide liquidity to our sector, should they discontinue doing so, have their mandates changed or reduced or be disbanded or
reorganized by the government, or if there is reduced government support for multifamily housing generally, it may adversely
affect interest rates, capital availability, development of multifamily communities and the value of multifamily residential real
estate and, as a result, may adversely affect our business and results of operations.
The Soundness of Financial Institutions Could Adversely Affect Us. We have relationships with many financial
institutions, including lenders under our credit facilities, and, from time to time, we execute transactions with counterparties in
the financial services industry. As a result, defaults by, or even rumors or questions about, financial institutions or the financial
services industry generally, could result in losses or defaults by these institutions. In the event that the volatility of the financial
markets adversely affects these financial institutions or counterparties, we or other parties to the transactions with us may be
unable to complete transactions as intended, which could adversely affect our results of operations.
Interest Rate Hedging Contracts May Be Ineffective and May Result in Material Charges. From time to time when we
anticipate issuing debt securities, we may seek to limit our exposure to fluctuations in interest rates during the period prior to the
pricing of the securities by entering into interest rate hedging contracts. We may do this to increase the predictability of our
financing costs. Also, from time to time we may rely on interest rate hedging contracts to limit our exposure under variable rate
debt to unfavorable changes in market interest rates. If the terms of new debt securities are not within the parameters of, or
market interest rates fall below that which we incur under a particular interest rate hedging contract, the contract is ineffective.
Furthermore, the settlement of interest rate hedging contracts has involved and may in the future involve material charges. In
addition, our use of interest rate hedging arrangements may expose us to additional risks, including a risk that a counterparty to a
hedging arrangement may fail to honor its obligations. Developing an effective interest rate risk strategy is complex and no
strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that our
hedging activities will have the desired beneficial impact on our results of operations or financial condition. Termination of these
hedging agreements typically involves costs, such as transaction fees or breakage costs.
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Risks Related to Tax Laws
We Would Incur Adverse Tax Consequences if UDR Failed to Qualify as a REIT. UDR has elected to be taxed as a
REIT under the Code. Our qualification as a REIT requires us to satisfy numerous requirements, some on an annual and quarterly
basis, established under highly technical and complex Code provisions for which there are only limited judicial or administrative
interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. We
intend that our current organization and method of operation enable us to continue to qualify as a REIT, but we may not so
qualify or we may not be able to remain so qualified in the future. In addition, U.S. federal income tax laws governing REITs and
other corporations and the administrative interpretations of those laws may be amended at any time, potentially with retroactive
effect. Future legislation, new regulations, administrative interpretations or court decisions could adversely affect our ability to
qualify as a REIT or adversely affect UDR’s stockholders.
If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax (including, for periods
prior to 2018, any applicable alternative minimum tax) on our taxable income at regular corporate rates, and would not be
allowed to deduct dividends paid to UDR’s stockholders in computing our taxable income. Also, unless the Internal Revenue
Service granted us relief under certain statutory provisions, we could not re-elect REIT status until the fifth calendar year after
the year in which we first failed to qualify as a REIT. The additional tax liability from the failure to qualify as a REIT would
reduce or eliminate the amount of cash available for investment or distribution to UDR’s stockholders. This would likely have a
significant adverse effect on the value of our securities and our ability to raise additional capital. In addition, we would no longer
be required to make distributions to UDR’s stockholders. Even if we continue to qualify as a REIT, we will continue to be subject
to certain federal, state and local taxes on our income and property.
Certain of our subsidiaries have also elected to be taxed as REITs under the Code, and are therefore subject to the same
risks in the event that any such subsidiary fails to qualify as a REIT in any taxable year.
Dividends Paid by REITs Generally Do Not Qualify for Reduced Tax Rates. In general, the maximum U.S. federal
income tax rate for dividends paid to individual U.S. stockholders is 20%. Unlike dividends received from a corporation that is
not a REIT, our regular dividends (i.e., dividends other than capital gain dividends) paid to individual stockholders generally are
not eligible for the reduced rates. However, individual U.S. stockholders generally may deduct 20% of such regular dividends
under Section 199A of the Code, reducing the effective tax rate applicable to such dividends (although such provision will expire
after 2025 absent future legislation).
UDR Conduct’s a Portion of Its Business Through Taxable REIT Subsidiaries, Which Are Subject to Certain Tax Risks.
We have established and conduct a portion of our business through taxable REIT subsidiaries. Despite UDR’s qualification as a
REIT, its taxable REIT subsidiaries must pay income tax on their taxable income. In addition, we must comply with various tests
to continue to qualify as a REIT for federal income tax purposes, and our income from and investments in our taxable REIT
subsidiaries generally do not constitute permissible income and investments for certain of these tests. While we will attempt to
ensure that our dealings with our taxable REIT subsidiaries will not adversely affect our REIT qualification, we cannot provide
assurance that we will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, we may jeopardize
our ability to retain future gains on real property sales, or our taxable REIT subsidiaries may be denied deductions, to the extent
our dealings with our taxable REIT subsidiaries are not deemed to be arm’s length in nature or are otherwise not respected.
REIT Distribution Requirements Limit Our Available Cash. As a REIT, UDR is subject to annual distribution
requirements, which limit the amount of cash we retain for other business purposes, including amounts to fund our growth. We
generally must distribute annually at least 90% of our net REIT taxable income, excluding any net capital gain, in order for our
distributed earnings not to be subject to corporate income tax. We intend to make distributions to UDR’s stockholders to comply
with the requirements of the Code. However, differences in timing between the recognition of taxable income and the actual
receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution
requirement of the Code.
Certain Property Transfers May Generate Prohibited Transaction Income, Resulting in a Penalty Tax on Gain
Attributable to the Transaction. From time to time, we may transfer or otherwise dispose of some of our properties. Under the
Code, any gain resulting from transfers of properties that we hold as inventory or primarily for sale to customers in the ordinary
course of business would be treated as income from a prohibited transaction and subject to a 100% penalty tax. Since we acquire
properties for investment purposes, we do not believe that our occasional transfers or disposals of property are prohibited
transactions. However, whether property is held for investment purposes is a
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question of fact that depends on all the facts and circumstances surrounding the particular transaction. The Internal Revenue
Service may contend that certain transfers or disposals of properties by us are prohibited transactions. If the Internal Revenue
Service were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, then we would be
required to pay a 100% penalty tax on any gain allocable to us from the prohibited transaction and we may jeopardize our ability
to retain future gains on real property sales. In addition, income from a prohibited transaction might adversely affect UDR’s
ability to satisfy the income tests for qualification as a REIT for federal income tax purposes.
Changes to the U.S. Federal Income Tax Laws, including the Enactment of Certain Tax Reform Measures, Could Have
an Adverse Impact on Our Business and Financial Results. In recent years, numerous legislative, judicial and administrative
changes have been made to the U.S. federal income tax laws applicable to investments in real estate and REITs, including the
passage of the Tax Cuts and Jobs Act of 2017. Federal legislation intended to ameliorate the economic impact of the COVID-19
pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), has been enacted that makes technical
corrections to, or modifies on a temporary basis, certain of the provisions of the Tax Cut and Jobs Act of 2017, and it is possible
that additional such legislation may be enacted in the future. The full impact of the Tax Cut and Jobs Act of 2017 and the CARES
Act may not become evident for some period of time. In addition, there can be no assurance that future changes to the U.S.
federal income tax laws or regulatory changes will not be proposed or enacted that could impact our business and financial
results. The REIT rules are regularly under review by persons involved in the legislative process and by the Internal Revenue
Service and the U.S. Treasury Department, which may result in revisions to regulations and interpretations in addition to statutory
changes. If enacted, certain of such changes could have an adverse impact on our business and financial results.
We cannot predict whether, when or to what extent any new U.S. federal tax laws, regulations, interpretations or rulings
will impact the real estate investment industry or REITs. Prospective investors are urged to consult their tax advisors regarding
the effect of potential future changes to the federal tax laws on an investment in our shares.
We May Be Adversely Affected by Changes in State and Local Tax Laws and May Become Subject to Tax Audits from
Time to Time. Because UDR is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but it is
subject to certain state and local taxes. From time to time, changes in state and local tax laws or regulations are enacted, which
may result in an increase in our tax liability. A shortfall in tax revenues for states and local jurisdictions in which we own
apartment communities may lead to an increase in the frequency and size of such changes. If such changes occur, we may be
required to pay additional state and local taxes. These increased tax costs could adversely affect our financial condition and the
amount of cash available for the payment of distributions to UDR’s stockholders. In the normal course of business, we or our
affiliates (including entities through which we own real estate) may also become subject to federal, state or local tax audits. If we
(or such entities) become subject to federal, state or local tax audits, the ultimate result of such audits could have an adverse
effect on our financial condition and results of operations.
The Operating Partnership and the DownREIT Partnership Intend to Qualify as Partnerships, but Cannot Guarantee
That They Will Qualify. The Operating Partnership and the DownREIT Partnership intend to qualify as partnerships for federal
income tax purposes, and intend to take that position for all income tax reporting purposes. If classified as partnerships, the
Operating Partnership and the DownREIT Partnership generally will not be taxable entities and will not incur federal income tax
liability. However, the Operating Partnership and the DownREIT Partnership would be treated as corporations for federal income
tax purposes if they were “publicly traded partnerships,” unless at least 90% of their income was qualifying income as defined in
the Code. A “publicly traded partnership” is a partnership whose partnership interests are traded on an established securities
market or are readily tradable on a secondary market (or the substantial equivalent thereof). Although neither the Operating
Partnership’s nor the DownREIT Partnership’s partnership units are traded on an established securities market, because of the
redemption rights of their limited partners, the Operating Partnership’s and DownREIT Partnership’s units held by limited
partners could be viewed as readily tradable on a secondary market (or the substantial equivalent thereof), and the Operating
Partnership and the DownREIT Partnership may not qualify for one of the “safe harbors” under the applicable tax regulations.
Qualifying income for the 90% test generally includes passive income, such as real property rents, dividends and interest. The
income requirements applicable to REITs and the definition of qualifying income for purposes of this 90% test are similar in
most respects. The Operating Partnership and the DownREIT Partnership may not meet this qualifying income test. If either the
Operating Partnership or the DownREIT Partnership were to be taxed as a corporation, it would incur substantial tax liabilities,
and UDR would then fail to qualify as a REIT for tax purposes, unless it qualified for relief under certain statutory savings
provisions, and our ability to raise additional capital would be impaired. In addition, even
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if the 90% test were met if the Operating Partnership or the DownREIT Partnership were a publicly traded partnership, there
could be adverse tax impacts for certain limited partners.
Qualifying as a REIT Involves Highly Technical and Complex Provisions of the Code. Our qualification as a REIT
involves the application of highly technical and complex Code provisions for which only limited judicial and administrative
authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Moreover, new legislation,
court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or impossible
for us to qualify as a REIT. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational,
distribution, shareholder ownership and other requirements on a continuing basis. Our ability to satisfy the REIT income and
asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not
susceptible to a precise determination and for which we will not obtain independent appraisals, and upon our ability to
successfully manage the composition of our income and assets on an ongoing basis. In addition, our ability to satisfy the
requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited
influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal
income tax purposes.
Risks Related to Our Organization and Ownership of UDR’s Stock
Changes in Market Conditions and Volatility of Stock Prices Could Adversely Affect the Market Price of UDR’s
Common Stock. The stock markets, including the New York Stock Exchange (“NYSE”), on which we list UDR’s common stock,
have experienced significant price and volume fluctuations, including recently as a result of the COVID-19 pandemic. As a
result, the market price of UDR’s common stock has been, and in the future could be similarly volatile, and investors in UDR’s
common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance
or prospects. In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the price per
share of UDR’s common stock, including:
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general market and economic conditions;
actual or anticipated variations in UDR’s quarterly operating results or dividends or UDR’s payment of dividends in
shares of UDR’s stock;
changes in our funds from operations or earnings estimates;
difficulties or inability to access capital or extend or refinance existing debt;
decreasing (or uncertainty in) real estate valuations;
changes in market valuations of similar companies;
publication of research reports about us or the real estate industry;
the general reputation of real estate investment trusts and the attractiveness of their equity securities in comparison
to other equity securities (including securities issued by other real estate companies);
general stock and bond market conditions, including changes in interest rates on fixed income securities, that may
lead prospective purchasers of UDR’s stock to demand a higher annual yield from future dividends;
a change in analyst ratings;
additions or departures of key management personnel;
adverse market reaction to any additional debt we incur in the future;
speculation in the press or investment community;
terrorist activity which may adversely affect the markets in which UDR’s securities trade, possibly increasing
market volatility and causing the further erosion of business and consumer confidence and spending;
failure to qualify as a REIT;
strategic decisions by us or by our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic
investments or changes in business strategy;
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●
●
●
failure to satisfy listing requirements of the NYSE;
governmental regulatory action and changes in tax laws; and
the issuance of additional shares of UDR’s common stock, or the perception that such sales might occur, including
under UDR’s at-the-market equity distribution program.
Many of the factors listed above are beyond our control. These factors may cause the market price of shares of UDR’s
common stock to decline, regardless of our financial condition, results of operations, business or our prospects.
We May Change the Dividend Policy for UDR’s Common Stock in the Future. The decision to declare and pay
dividends on UDR’s common stock, as well as the timing, amount and composition of any such future dividends, will be at the
sole discretion of our board of directors and will depend on our earnings, funds from operations, liquidity, financial condition,
capital requirements, contractual prohibitions or other limitations under our indebtedness, the annual distribution requirements
under the REIT provisions of the Code, state law and such other factors as our board of directors considers relevant. Any change
in our dividend policy could have an adverse effect on the market price of UDR’s common stock.
Maryland Law May Limit the Ability of a Third Party to Acquire Control of Us, Which May Not be in UDR’s
Stockholders’ Best Interests. Maryland business statutes may limit the ability of a third party to acquire control of us. As a
Maryland corporation, we are subject to various Maryland laws which may have the effect of discouraging offers to acquire our
Company and of increasing the difficulty of consummating any such offers, even if our acquisition would be in UDR’s
stockholders’ best interests. The Maryland General Corporation Law restricts mergers and other business combination
transactions between us and any person who acquires beneficial ownership of shares of UDR’s stock representing 10% or more
of the voting power without our board of directors’ prior approval. Any such business combination transaction could not be
completed until five years after the person acquired such voting power, and generally only with the approval of stockholders
representing 80% of all votes entitled to be cast and 66 2/3 % of the votes entitled to be cast, excluding the interested stockholder,
or upon payment of a fair price. Maryland law also provides generally that a person who acquires shares of our equity stock that
represents 10% (and certain higher levels) of the voting power in electing directors will have no voting rights unless approved by
a vote of two-thirds of the shares eligible to vote.
Limitations on Share Ownership and Limitations on the Ability of UDR’s Stockholders to Effect a Change in Control of
Our Company Restricts the Transferability of UDR’s Stock and May Prevent Takeovers That are Beneficial to UDR’s
Stockholders. One of the requirements for maintenance of our qualification as a REIT for U.S. federal income tax purposes is that
no more than 50% in value of our outstanding capital stock may be owned by five or fewer individuals, including entities
specified in the Code, during the last half of any taxable year. Our charter contains ownership and transfer restrictions relating to
UDR’s stock primarily to assist us in complying with this and other REIT ownership requirements; however, the restrictions may
have the effect of preventing a change of control, which does not threaten REIT status. These restrictions include a provision that
generally limits ownership by any person of more than 9.9% of the value of our outstanding equity stock, unless our board of
directors exempts the person from such ownership limitation, provided that any such exemption shall not allow the person to
exceed 13% of the value of our outstanding equity stock. Absent such an exemption from our board of directors, the transfer of
UDR’s stock to any person in excess of the applicable ownership limit, or any transfer of shares of such stock in violation of the
ownership requirements of the Code for REITs, will be considered null and void, and the intended transferee of such stock will
acquire no rights in such shares. These provisions of our charter may have the effect of delaying, deferring or preventing
someone from taking control of us, even though a change of control might involve a premium price for UDR’s stockholders or
might otherwise be in UDR’s stockholders’ best interests.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
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Item 2. PROPERTIES
At December 31, 2020, our consolidated apartment portfolio included 149 communities located in 21 markets, with a
total of 48,283 completed apartment homes.
The tables below set forth a summary of real estate portfolio by geographic market of the Company and of the Operating
Partnership at December 31, 2020.
SUMMARY OF REAL ESTATE PORTFOLIO BY GEOGRAPHIC MARKET AT DECEMBER 31, 2020
UDR, INC.
Number of
Apartment
Communities
Percentage
Number of
of Total
Apartment Carrying
Homes
Value
Total
Carrying
Value
Encumbrances
(in thousands) (in thousands)
Cost per
Average
Physical
Home Occupancy
Average
Home Size
(in square
feet)
WEST REGION
Orange County, CA
San Francisco, CA
Seattle, WA
Monterey Peninsula, CA
Los Angeles, CA
Other Southern California
Portland, OR
MID-ATLANTIC REGION
Metropolitan D.C.
Baltimore, MD
Richmond, VA
NORTHEAST REGION
New York, NY
Boston, MA
Philadelphia, PA
SOUTHEAST REGION
Tampa, FL
Orlando, FL
Nashville, TN
Other Florida
SOUTHWEST REGION
Dallas, TX
Austin, TX
Denver, CO
Total Operating Communities
Real Estate Under
Development (a)
Land
Held for Disposition
Other
Total Real Estate Owned
11
11
14
7
4
3
3
23
5
4
6
11
1
11
9
8
1
11
4
1
148
—
—
1
—
149
4,950
2,751
2,725
1,565
1,225
817
752
8,402
1,597
1,358
2,318
4,298
313
3,874
2,500
2,260
636
3,864
1,272
218
47,695
202
—
386
—
48,283
11.5 % $
6.8 %
7.3 %
1.4 %
3.5 %
1.6 %
0.9 %
1,500,611 $
888,683
957,686
185,224
463,166
211,285
120,324
27,000
— $ 303,154
323,041
— 351,444
— 118,353
— 378,094
— 258,611
— 160,005
18.1 %
2.6 %
1.2 %
2,350,124
338,347
153,906
288,530
58,600
279,710
211,864
— 113,333
11.9 %
12.8 %
0.8 %
1,552,358
1,669,381
107,736
— 669,697
388,409
271,550
— 344,204
4.8 %
1.8 %
1.7 %
0.7 %
625,752
240,102
223,827
89,630
4.4 %
1.3 %
1.1 %
96.2 %
581,118
171,482
144,998
12,575,740
— 161,526
96,041
—
—
99,038
— 140,928
205,870
150,393
— 134,813
— 665,128
$ 263,670
851,550
1.9 %
0.5 %
0.9 %
0.5 %
247,877
61,682
116,655
69,518
100.0 % $ 13,071,472 $
—
—
—
10,597
862,147
96.4 %
91.5 %
96.7 %
96.6 %
95.5 %
97.2 %
96.6 %
96.5 %
97.1 %
97.8 %
92.5 %
94.4 %
96.1 %
97.0 %
96.8 %
97.8 %
97.2 %
96.8 %
97.6 %
93.1 %
96.0 %
872
841
887
729
967
1,018
903
915
938
1,018
754
987
1,054
996
946
933
1,130
868
913
955
908
(a) As of December 31, 2020, the Company was developing five wholly owned communities with a total of 1,378
apartment homes, 202 of which have been completed.
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SUMMARY OF REAL ESTATE PORTFOLIO BY GEOGRAPHIC MARKET AT DECEMBER 31, 2020
UNITED DOMINION REALTY, L.P.
Number of
Apartment
Communities
Percentage
Number of
of Total
Apartment Carrying
Homes
Value
Total
Carrying
Value
(in thousands)
Encumbrances
(in thousands)
Cost per
Home
Average
Physical
Occupancy
Average
Home Size
(in square
feet)
WEST REGION
Orange County, CA
San Francisco, CA
Seattle, WA
Monterey Peninsula, CA
Los Angeles, CA
Other Southern
California
Portland, OR
MID-ATLANTIC
REGION
Metropolitan D.C.
Baltimore, MD
NORTHEAST REGION
New York, NY
Boston, MA
SOUTHEAST REGION
Tampa, FL
Nashville, TN
Other Florida
SOUTHWEST REGION
Denver, CO
Total Operating
Communities
Other
Total Real Estate
Owned
5
9
5
7
2
1
2
6
2
2
1
3
6
1
1
53
—
53
3,119
2,185
932
1,565
344
414
476
2,136
540
996
387
1,614
1,612
636
19.3 % $
15.8 %
5.9 %
4.7 %
3.0 %
1.9 %
1.3 %
14.7 %
2.8 %
16.0 %
1.9 %
2.8 %
3.9 %
2.3 %
$
753,801
617,359
233,963
185,224
118,281
76,906
52,126
568,202
108,779
624,255
76,059
233,991
157,415
89,630
27,000
— $ 241,680
282,546
— 251,033
— 118,353
— 343,837
— 185,763
— 109,508
— 266,012
— 201,443
— 626,762
196,535
72,500
— 144,976
97,652
—
— 140,928
96.6 %
93.6 %
97.0 %
96.6 %
96.4 %
97.6 %
97.1 %
95.6 %
97.8 %
90.0 %
95.5 %
97.7 %
97.6 %
97.2 %
218
3.7 %
144,998
— 665,128
93.1 %
17,174
—
100.0 %
— %
4,040,989
2,736
99,500
(396)
$ 235,297
96.0 %
17,174
100.0 % $
4,043,725
$
99,104
805
829
874
729
976
996
903
919
967
687
1,069
1,068
925
1,130
955
884
Item 3. LEGAL PROCEEDINGS
We are subject to various legal proceedings and claims arising in the ordinary course of business. We cannot determine
the ultimate liability with respect to such legal proceedings and claims at this time. We believe that such liability, to the extent
not provided for through insurance or otherwise, will not have a material adverse effect on our financial condition, results of
operations or cash flow.
Item 4. MINE SAFETY DISCLOSURES
Not Applicable.
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Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
PART II
UDR, Inc.:
Common Stock
UDR, Inc.’s common stock has been listed on the New York Stock Exchange (“NYSE”) under the symbol “UDR” since
May 7, 1990.
On February 16, 2021, there were 3,173 holders of record of the 296,820,995 outstanding shares of our common stock.
We have determined that, for federal income tax purposes, approximately 73% of the distributions for 2020 represented
ordinary income, less than 1% represented qualified ordinary income, 21% represented long-term capital gain and 6%
represented unrecaptured section 1250 gain.
UDR pays regular quarterly distributions to holders of its common stock. Future distributions will be at the discretion of
our Board of Directors and will depend on our actual funds from operations, financial condition and capital requirements, the
annual distribution requirements under the REIT provisions of the Code, and other factors.
Series E Preferred Stock
The Series E Cumulative Convertible Preferred Stock (“Series E”) has no stated par value and a liquidation preference
of $16.61 per share. Subject to certain adjustments and conditions, each share of the Series E is convertible at any time at the
holder’s option into 1.083 shares of our common stock. The holders of the Series E are entitled to vote on an as-converted basis
as a single class in combination with the holders of common stock at any meeting of our stockholders for the election of directors
or for any other purpose on which the holders of common stock are entitled to vote. The Series E has no stated maturity and is not
subject to any sinking fund or any mandatory redemption. In connection with a special dividend (declared on November 5, 2008),
the Company reserved for issuance upon conversion of the Series E additional shares of common stock to which a holder of the
Series E would have received if the holder had converted the Series E immediately prior to the record date for this special
dividend.
Distributions declared on the Series E for the years ended December 31, 2020 and 2019 were $1.5592 per share, or
$0.3898 per quarter, and $1.4832 per share, or $0.3708 per quarter, respectively. The Series E is not listed on any exchange. At
December 31, 2020, a total of 2.7 million shares of the Series E were outstanding.
Series F Preferred Stock
We are authorized to issue up to 20.0 million shares of our Series F Preferred Stock (“Series F”). The Series F may be
purchased by holders of our Operating Partnership Units, or OP Units, described below under “Operating Partnership Units,” and
holders of limited partnership interests in the DownREIT Partnership at a purchase price of $0.0001 per share. OP/DownREIT
unitholders are entitled to subscribe for and purchase one share of the Series F for each OP/DownREIT Unit held.
As of December 31, 2020, a total of 14.4 million shares of the Series F were outstanding. Holders of the Series F are
entitled to one vote for each share of the Series F they hold, voting together with the holders of our common stock, on each
matter submitted to a vote of security holders at a meeting of our stockholders. The Series F does not entitle its holders to any
other rights, privileges or preferences.
Distribution Reinvestment and Stock Purchase Plan
We have a Distribution Reinvestment and Stock Purchase Plan under which holders of our common stock may elect to
automatically reinvest their distributions and make additional cash payments to acquire additional shares of our common stock.
Stockholders who do not participate in the plan continue to receive distributions as and when declared. As of February 16, 2021,
there were approximately 1,911 participants in the plan.
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United Dominion Realty, L.P.:
Operating Partnership Units
There is no established public trading market for United Dominion Realty, L.P.’s Operating Partnership Units. From
time to time we issue shares of our common stock in exchange for OP Units tendered to the Operating Partnership for redemption
in accordance with the provisions of the Operating Partnership’s limited partnership agreement. At December 31, 2020, there
were 184.8 million OP Units outstanding in the Operating Partnership, of which 176.2 million OP Units or 95.3% were owned by
UDR and affiliated entities and 8.6 million OP Units or 4.7% were owned by non-affiliated limited partners. Under the terms of
the Operating Partnership’s limited partnership agreement, the holders of OP Units have the right to require the Operating
Partnership to redeem all or a portion of the OP Units held by the holder in exchange for a cash payment based on the market
value of our common stock at the time of redemption. However, the Operating Partnership’s obligation to pay the cash amount is
subject to the prior right of the Company to acquire such OP Units in exchange for either the cash amount or the number of
shares of our common stock equal to the number of OP Units being redeemed.
During the three months ended December 31, 2020, we did not issue any shares of our common stock upon redemption
of OP Units in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.
Purchases of Equity Securities
In February 2006, UDR’s Board of Directors authorized a 10 million share repurchase program. In January 2008,
UDR’s Board of Directors authorized a new 15 million share repurchase program. Under the two share repurchase programs,
UDR may repurchase shares of our common stock in open market purchases, block purchases, privately negotiated transactions
or otherwise. The following table summarizes all of UDR’s repurchases of shares of common stock under these programs during
the quarter ended December 31, 2020 (shares in thousands):
Period
Beginning Balance
October 1, 2020 through October 31, 2020
November 1, 2020 through November 30, 2020
December 1, 2020 through December 31, 2020
Balance as of December 31, 2020
Total Number Maximum
Number of
Shares that
May Yet Be
Purchased
of Shares
Purchased as
Part of
Publicly
or Programs
Average
Price Paid Announced Plans Under the Plans
or Programs (a)
per Share
14,439
$ 23.75
14,439
—
14,439
—
14,439
—
14,439
$ 23.75
11,158
—
—
—
11,158
Total
Number of
Shares
Purchased
11,158
—
—
—
11,158
(a) This number reflects the amount of shares that were available for purchase under our 10 million share repurchase program
authorized in February 2006 and our 15 million share repurchase program authorized in January 2008.
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Comparison of Five-year Cumulative Total Returns
The following graph compares the five-year cumulative total returns for UDR common stock with the comparable
cumulative return of the Nareit Equity REIT Index, Standard & Poor’s 500 Stock Index, the Nareit Equity Apartment Index and
the MSCI U.S. REIT Index. The graph assumes that $100 was invested on December 31, 2014, in each of our common stock and
the indices presented. Historical stock price performance is not necessarily indicative of future stock price performance. The
comparison assumes that all dividends are reinvested.
Period Ending
Index
UDR, Inc.
Nareit Equity Apartment Index
MSCI U.S. REIT Index
S&P 500 Index
Nareit Equity REIT Index
12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020
120.74
118.30
126.65
203.04
126.25
116.42
110.63
108.89
130.42
108.91
141.42
139.75
137.03
171.49
137.23
109.41
106.68
114.11
136.40
114.19
100.27
102.86
108.60
111.96
108.52
100.00
100.00
100.00
100.00
100.00
The performance graph and the related chart and text, are being furnished solely to accompany this Annual Report on
Form 10-K pursuant to Item 201(e) of Regulation S-K, and are not being filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of ours, whether made before or
after the date hereof, regardless of any general incorporation language in such filing.
Item 6. SELECTED FINANCIAL DATA
Not Applicable.
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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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. 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 effect, 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;
● uninsured losses due to insurance deductibles, self-insurance retention, uninsured claims or casualties, or losses in
excess of applicable coverage;
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● 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 I, 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.
COVID-19 Update
See Part I, Item 1. “Business – COVID-19 Update” above for more information on the impact of COVID-19 on the
Company.
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 years ended December 31, 2020, and 2019 of each
UDR, Inc. and United Domination Realty, L.P.
This section of this Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons
between 2020 and 2019 of UDR, Inc. and United Domination Realty, L.P. Discussions of 2018 items and year-to-year
comparisons between 2019 and 2018 that are not included in this Form 10-K can be found in “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2019.
UDR, Inc.:
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. 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. Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” “the
Company,” or “UDR” refer collectively to UDR, Inc., its subsidiaries and its consolidated joint ventures.
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Table of Contents
At December 31, 2020, our consolidated real estate portfolio included of 149 communities in 13 states plus the District
of Columbia totaling of 48,283 apartment homes. In addition, we have an ownership interest in 5,295 completed or to-be-
completed apartment homes through unconsolidated joint ventures or partnerships, including 2,165 apartment homes owned by
entities in which we hold preferred equity investments. The Same-Store Community apartment home population for the year
ended December 31, 2020, was 37,607.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles
(“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and
assumptions. A critical accounting policy is one that is both important to our financial condition and results of operations as well
as involves some degree of uncertainty. Estimates are prepared based on management’s assessment after considering all evidence
available. Changes in estimates could affect our financial position or results of operations. Below is a discussion of the
accounting policies that we consider critical to understanding our financial condition or results of operations where there is
uncertainty or where significant judgment is required. A discussion of our significant accounting policies, including further
discussion of the accounting policies described below, can be found in Note 2, Significant Accounting Policies, to the Notes to
the UDR, Inc. Consolidated Financial Statements included in this Report.
Cost Capitalization
In conformity with GAAP, 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.
In addition to construction costs, we capitalize costs directly related to the predevelopment, development, and
redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated
development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our
professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred.
These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in
progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. As each
home in a capital project is completed and becomes available for lease-up, the Company ceases capitalization on the related
portion. The costs capitalized are reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated
depreciation. Amounts capitalized during the years ended December 31, 2020, 2019, and 2018 were $19.0 million, $13.5 million,
and $18.1 million, respectively.
Investment in Unconsolidated Entities
We may enter into various joint venture agreements and/or partnerships with unrelated third parties to hold or develop
real estate assets. We must determine for each of these ventures whether to consolidate the entity or account for our investment
under the equity method of accounting. We determine whether to consolidate a joint venture or partnership based on our rights
and obligations under the venture agreement, applying the applicable accounting guidance. The application of the rules in
evaluating the accounting treatment for each joint venture or partnership is complex and requires substantial management
judgment. We evaluate our accounting for investments on a regular basis including when a significant change in the design of an
entity occurs. Throughout our financial statements, and in this Management’s Discussion and Analysis of Financial Condition
and Results of Operations, we use the term “joint venture” or “partnership” when referring to investments in entities in which we
do not have a 100% ownership interest.
We continually evaluate our investments in unconsolidated joint ventures 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. These factors include, but are not limited to, age of the venture, our intent and
ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships
with the other joint venture partners and its lenders. The amount of loss recognized is the excess of the investment’s carrying
amount over its estimated fair value. If we believe that the decline in fair value is temporary, no impairment is recorded. The
aforementioned factors are taken as a whole by management in determining the valuation of our investment property. Should the
actual results differ from management’s judgment, the valuation could be negatively affected and may result in a negative impact
to our Consolidated Financial Statements.
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Impairment of Long-Lived Assets
Quarterly or when changes in circumstances warrant, we will assess our real estate properties for indicators
of impairment. The judgments regarding the existence of impairment indicators are based on certain factors. Such factors include,
among other things, operational performance, market conditions, the Company’s intent and ability to hold the related asset, as
well as any significant cost overruns on development properties.
If a real estate property has indicators of impairment, we assess whether the long-lived asset’s carrying value exceeds
the community’s undiscounted future cash flows, which is representative of projected net operating income (“NOI”) plus the
residual value of the community. Our future cash flow estimates are based upon historical results adjusted to reflect our best
estimate of future market and operating conditions and our estimated holding periods. If such indicators of impairment are
present and the carrying value exceeds the undiscounted cash flows of the community, an impairment loss is recognized equal to
the excess of the carrying amount of the asset over its estimated fair value. Our estimates of fair value represent our best estimate
based primarily upon unobservable inputs related to rental rates, operating costs, growth rates, discount rates, capitalization rates,
industry trends and reference to market rates and transactions.
For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated
cost to sell is less than the carrying value of the asset. Properties classified as real estate held for disposition generally represent
properties that are actively marketed or contracted for sale with the closing expected to occur within the next twelve months. Real
estate held for disposition is carried at the lower of cost, net of accumulated depreciation, or fair value, less the cost to sell,
determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held for disposition properties
are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to held for disposition
properties are capitalized at cost. Depreciation is not recorded on real estate held for disposition.
Real Estate Investment Properties
We purchase real estate investment properties from time to time and record the fair value to various components, such
as land, buildings, and intangibles related to in-place leases, based on the fair value of each component. In making estimates of
fair values for purposes of allocating purchase price, we utilize various sources, including independent appraisals, our own
analysis of recently acquired and existing comparable properties in our portfolio and other market data. The fair value of
buildings is determined as if the buildings were vacant upon acquisition and subsequently leased at market rental rates. As such,
the determination of fair value considers the present value of all cash flows expected to be generated from the property including
an initial lease-up period. We determine the fair value of in-place leases by assessing the net effective rent and remaining term of
the lease relative to market terms for similar leases at acquisition. In addition, we consider the cost of acquiring similar leases, the
foregone rents associated with the lease-up period, and the carrying costs associated with the lease-up period. The fair value of
in-place leases is recorded and amortized as amortization expense over the remaining average contractual lease period.
REIT Status
We are a Maryland corporation that has elected to be treated for federal income tax purposes as a REIT. A REIT is a
legal entity that holds interests in real estate and is required by the Code to meet a number of organizational and operational
requirements, including a requirement that a REIT must distribute at least 90% of our REIT taxable income (other than our net
capital gain) to our stockholders. If we were to fail to qualify as a REIT in any taxable year, we will be subject to federal and
state income taxes at the regular corporate rates and may not be able to qualify as a REIT for four years. Based on the net
earnings reported for the year ended December 31, 2020 in our Consolidated Statements of Operations, we would have incurred
federal and state GAAP income taxes if we had failed to qualify as a REIT.
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Summary of Real Estate Portfolio by Geographic Market
The following table summarizes our market information by major geographic markets as of and for the year ended
December 31, 2020:
Same-Store Communities
West Region
Orange County, CA
San Francisco, CA
Seattle, WA
Monterey Peninsula, CA
Los Angeles, CA
Other Southern California
Portland, OR
Mid-Atlantic Region
Metropolitan D.C.
Baltimore, MD
Richmond, VA
Northeast Region
Boston, MA
New York, NY
Southeast Region
Tampa, FL
Orlando, FL
Nashville, TN
Other Florida
Southwest Region
Dallas, TX
Austin, TX
Denver, CO
Total/Average Same-Store Communities
Non-Mature, Commercial Properties &
Other
Total Real Estate Held for Investment
Real Estate Under Development (b)
Real Estate Held for Disposition (c)
Total Real Estate Owned
Total Accumulated Depreciation
Total Real Estate Owned, Net of
Accumulated Depreciation
December 31, 2020
Percentage
of Total
Number of Number of
Apartment Apartment Carrying
Communities Homes
Value
Total
Carrying
Value (in
thousands) Occupancy
Average
Physical
Year Ended December 31, 2020
Net
Operating
Income
(in thousands)
Monthly
Income per
Occupied
Home (a)
10
11
13
7
4
2
2
20
3
4
4
3
7
9
8
1
4,434
2,751
2,570
1,565
1,225
654
476
7,496
720
1,358
1,388
1,452
2,287
2,500
2,260
636
7
4
1
120
28
148
—
1
149
2,345
1,272
218
37,607
10,088
47,695
202
386
48,283
8.8 % $ 1,145,371
885,036
6.8 %
889,749
6.8 %
185,224
1.4 %
463,167
3.5 %
111,656
0.9 %
52,126
0.4 %
14.9 %
1.2 %
1.2 %
1,944,746
156,797
153,906
96.5 % $
91.5 %
96.7 %
96.6 %
95.5 %
97.7 %
97.1 %
96.8 %
97.9 %
97.8 %
3.6 %
7.9 %
470,541
1,037,337
95.1 %
92.6 %
97.1 %
96.8 %
97.8 %
97.2 %
97.3 %
97.6 %
93.1 %
96.3 % $
2.1 %
1.8 %
1.7 %
0.7 %
274,126
240,100
223,827
89,630
2.3 %
1.3 %
1.1 %
68.4 %
298,205
171,483
144,959
8,937,986
28.8 %
3,768,954
97.2 % 12,706,940
247,877
1.9 %
116,655
0.9 %
100.0 % 13,071,472
(4,605,366)
$ 8,466,106
$
2,328
3,501
2,471
1,940
2,765
2,038
1,637
2,077
1,720
1,422
2,783
4,135
1,484
1,413
1,378
1,656
1,382
1,548
3,012
2,126
$
91,704
76,760
53,010
27,587
27,585
11,796
6,623
125,654
9,603
16,874
32,372
33,181
25,949
28,541
25,943
8,085
24,124
13,607
5,200
644,198
196,868
841,066
215
12,421
853,702
(a) Monthly Income per Occupied Home represents total monthly revenues divided by the average physical number of occupied
apartment homes in our Same-Store portfolio.
(b) As of December 31, 2020, the Company was developing five wholly owned communities with a total of 1,378 apartment
homes, 202 of which have been completed.
(c) The Company had one community located in Orange County, California that met the criteria to be classified as held for
disposition at December 31, 2020.
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, 2019 and held as of December 31, 2020. These communities were owned and had stabilized occupancy and operating
expenses as of the beginning of the prior year, there is no plan to conduct substantial redevelopment activities, and the
communities are not classified as held for disposition at year end. A community is considered to have stabilized occupancy once
it achieves 90% occupancy for at least three consecutive months.
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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.
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 2017, 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
April 2017, which replaced the prior at-the-market equity offering program entered into in April 2012. During the year ended
December 31, 2020, the Company did not sell any shares of common stock through its ATM program, other than the forward
sales described below. As of December 31, 2020, we had 9.6 million shares of common stock available for future issuance under
the ATM program.
In February 2020, the Company issued $200.0 million of 3.20% senior unsecured medium-term notes due 2030 (the
“2030 Notes”). Interest is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2020.
The notes were priced at 105.660% of the principal amount at issuance. This was a further issuance of the 2030 Notes, and forms
a single series with, the $300.0 million aggregate principal amount of the Company’s 2030 Notes that were issued in July 2019
and the $100.0 million aggregate principal amount of the Company’s 2030 Notes that were issued in October 2019. As of the
completion of the offering, the aggregate principal amount of outstanding 2030 notes was $600.0 million.
In July 2020, the Company refinanced a 4.35% fixed rate mortgage note payable due in November 2020 with a balance
of $79.3 million with a $160.9 million, 2.62% fixed rate mortgage note payable due in 2031. The Company incurred net
extinguishment costs of $0.5 million in connection with the refinancing. The incremental proceeds were used to reduce the
Company’s borrowings under its unsecured commercial paper program.
In July 2020, the Company announced that it commenced a cash tender offer for any and all of its outstanding 3.75%
unsecured medium-term notes due July 2024 (the “2024 Notes”). Pursuant to the tender offer, on July 21, 2020, the Company
completed the purchase of $116.9 million aggregate principal amount of the 2024 Notes, or 39.0% of the $300.0 million
aggregate principal amount of the 2024 Notes. The tender offer consideration was $1,101.92 for each $1,000 principal amount of
the 2024 Notes, plus accrued and unpaid interest to, but not including, July 21, 2020.
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In July 2020, the Company issued $400.0 million of 2.10% senior unsecured medium-term notes due August 1, 2032.
Interest is payable semi-annually in arrears on February 1 and August 1. The notes were priced at 99.894% of the principal
amount at issuance. The Company used a portion of the net proceeds to fund the purchase of the 2024 Notes accepted pursuant to
the tender offer described above and to prepay $245.8 million of 4.64% secured debt due in 2023. The combined prepayment and
make-whole amounts for the purchase of the 2024 Notes and the prepayment of the secured debt due in 2023, inclusive of the
acceleration of fair market value adjustments originally recorded on secured debt assumed in property acquisitions, totaled
approximately $24.0 million.
In December 2020, the Company issued $350.0 million of 1.90% senior unsecured medium-term notes due March 15,
2033 (the “2033 Notes”). Interest is payable semi-annually in arrears on March 15 and September 15. The notes were priced at
99.578% of the principal amount at issuance. The Company used the net proceeds for the repayment of debt, including the
redemption of the remaining $183.1 million aggregate principal amount (plus the make-whole amount of approximately $21.1
million) of its 2024 Notes, $67.5 million of secured debt maturing in 2023, and outstanding indebtedness under our commercial
paper program and working capital credit facility. The 2033 Notes were issued as “green” bonds and, as a result, the Company
will allocate an amount equal to the net proceeds from the sale of the 2033 Notes to fund eligible green projects.
During the year ended December 31, 2020, the Company repurchased 0.6 million shares of its common stock at an
average price of $33.11 per share for total consideration of approximately $19.8 million under its share repurchase program.
During the year ended December 31, 2020, the Company entered into forward sales agreements under its ATM program
for a total of 2.1 million shares of common stock at a weighted average initial forward price per share of $49.56. The initial
forward price per share received by the Company upon settlement was 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.
In December 2020, the Company settled all 2.1 million shares sold under the forward sales agreement at a weighted
average forward price per share of $48.23, which is inclusive of adjustments made to reflect the then-current federal funds rate,
the amount of dividends paid to holders of UDR common stock and commissions paid to sales agents of approximately $3.9
million, for net proceeds of $102.3 million. Aggregate net proceeds from such sales, after deducting related expenses, was $102.2
million.
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 2021, we have approximately $1.1 million of secured debt maturing, comprised solely of principal amortization,
and $190.0 million of unsecured debt maturing, comprised solely of the unsecured commercial paper. Additionally, the Company
has no secured or unsecured debt maturing in 2022, other than the unsecured working capital credit facility. We anticipate
repaying the debt due in 2021 and 2022 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.
In January 2021, the entire $190.0 million of outstanding unsecured commercial paper as of December 31, 2020 was
repaid at maturity with additional proceeds of unsecured commercial paper with maturity dates in February 2021 and proceeds
under the Working Capital Credit Facility. As of February 16, 2021, we had no borrowings outstanding under the Revolving
Credit Facility, leaving $1.1 billion of unused capacity (excluding $1.9 million of letters of credit), and we had $0.2 million
outstanding under the Working Capital Credit Facility, leaving $74.8 million of unused capacity.
On February 11, 2021, the Company priced an offering of $300.0 million of 2.10% senior unsecured medium-term notes
due 2033. The notes were priced at 99.592% of the principal amount of the notes. The Company intends to
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use the net proceeds to repay indebtedness, including the redemption of its $300.0 million 4.00% senior unsecured medium-term
notes due October 2025 (plus the make-whole amount and accrued and unpaid interest), to fund potential acquisitions, or for
other general corporate purposes. The settlement of the offering is expected to occur on February 26, 2021, subject to the
satisfaction of customary closing conditions.
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 years ended December 31, 2020 and 2019.
Operating Activities
For the year ended December 31, 2020, our Net cash provided by/(used in) operating activities was $604.3 million
compared to $630.7 million for 2019. The decrease in cash flow from operating activities was primarily due to changes in
operating assets and liabilities, partially offset by an increase in return on investments in unconsolidated joint ventures and
improved net operating income, primarily driven by net operating income from communities acquired in 2020 and 2019.
Investing Activities
For the year ended December 31, 2020, Net cash provided by/(used in) investing activities was $(460.8) million
compared to $(1.7) billion for 2019. The decrease in cash used in investing activities was primarily due to the decrease in
acquisitions made during the current year and an increase in proceeds from sales of real estate investments, partially offset by an
increase in spend for development of real estate assets and a decrease in distributions received from unconsolidated joint
ventures.
Acquisitions
In January 2020, the Company acquired a 294 apartment home operating community located in Tampa, Florida for
approximately $85.2 million. The Company increased its real estate assets owned by approximately $83.1 million and recorded
approximately $2.1 million of in-place lease intangibles.
In January 2020, the Company increased its ownership interest from 49% to 100% in a 276 apartment home operating
community located in Hillsboro, Oregon, for a cash purchase price of approximately $21.6 million. In connection with the
acquisition, the Company repaid approximately $35.6 million of joint venture construction financing. As a result, the Company
consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred
equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for
the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned
by approximately $67.8 million and recorded approximately $1.7 million of in-place lease intangibles.
In August 2020, the Company acquired a to-be-developed parcel of land located in King of Prussia, Pennsylvania for
approximately $16.2 million.
In November 2020, the Company acquired a 672 apartment home operating community located in Tampa, Florida for
approximately $122.5 million. The Company increased its real estate assets owned by approximately $119.4 million and recorded
approximately $3.1 million of in-place lease intangibles.
In December 2020, the Company acquired a 400 apartment home operating community located in Herndon, Virginia for
approximately $128.6 million. The Company increased its real estate assets owned by approximately $125.9 million and recorded
approximately $2.7 million of in-place lease intangibles.
In January 2019, the Company increased its ownership interest from 49% to 100% in a 386 apartment home operating
community located in Anaheim, California, for a cash purchase price of approximately $33.5 million. In connection with the
acquisition, the Company repaid approximately $59.8 million of joint venture construction financing. As a result, the Company
consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred
equity investment in an unconsolidated joint venture. The Company accounted
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for the consolidation as an asset acquisition resulting in no gain upon consolidation and increased its real estate assets owned by
approximately $115.7 million and recorded approximately $2.4 million of in-place lease intangibles.
In January 2019, the Company increased its ownership interest from 49% to 100% in a 155 apartment home operating
community located in Seattle, Washington, for a cash purchase price of approximately $20.0 million. In connection with the
acquisition, the Company repaid approximately $26.0 million of joint venture construction financing. As a result, the Company
consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred
equity investment in an unconsolidated joint venture. The Company accounted for the consolidation as an asset acquisition
resulting in no gain upon consolidation and increased its real estate assets owned by approximately $58.1 million and recorded
approximately $2.4 million of real estate intangibles and approximately $0.6 million of in-place lease intangibles.
In January 2019, the Company acquired a to-be-developed parcel of land located in Washington, D.C. for approximately
$27.1 million.
In February 2019, the Company acquired a to-be-developed parcel of land located in Denver, Colorado for
approximately $13.7 million.
In February 2019, the Company acquired a 188 apartment home operating community located in Brooklyn, New York
for approximately $132.1 million. The Company increased its real estate assets owned by approximately $97.5 million and
recorded approximately $33.6 million of real estate intangibles and approximately $1.0 million of in-place lease intangibles.
In February 2019, the Company acquired a 381 apartment home operating community located in St. Petersburg, Florida
for approximately $98.3 million. The Company increased its real estate assets owned by approximately $96.0 million and
recorded approximately $2.3 million of in-place lease intangibles.
In April 2019, the Company acquired a 498 apartment home operating community located in Towson, Maryland for
approximately $86.4 million. The Company increased its real estate assets owned by approximately $82.5 million and recorded
approximately $3.9 million of in-place lease intangibles.
In May 2019, the Company acquired a 313 apartment home operating community located in King of Prussia,
Pennsylvania for approximately $107.3 million. The Company increased its real estate assets owned by approximately $106.4
million and recorded approximately $0.9 million of in-place lease intangibles.
In May 2019, the Company acquired a 240 apartment home operating community located in St. Petersburg, Florida for
approximately $49.4 million. The Company increased its real estate assets owned by approximately $48.2 million and recorded
approximately $1.2 million of in-place lease intangibles.
In June 2019, the Company acquired a 200 apartment home operating community located in Waltham, Massachusetts
for approximately $84.6 million. The Company increased its real estate assets owned by approximately $82.6 million and
recorded approximately $2.0 million of in-place lease intangibles.
In August 2019, the Company acquired a 914 apartment home operating community located in Norwood, Massachusetts
for approximately $270.2 million. The Company increased its real estate assets owned by approximately $260.1 million and
recorded approximately $10.1 million of in-place lease intangibles.
In August 2019, the Company acquired a 185 apartment home operating community located in Englewood, New Jersey
for approximately $83.6 million. The Company increased its real estate assets owned by approximately $77.5 million and
recorded approximately $4.6 million of real estate intangibles and approximately $1.5 million of in-place lease intangibles.
In August 2019, the Company purchased a 292 apartment home operating community in Washington, D.C., directly
from the UDR/KFH joint venture, thereby increasing its ownership interest from 30% to 100%, for a purchase price at 100% of
approximately $184.0 million, before $2.8 million of closing costs incurred by UDR at acquisition. The Company accounted for
the consolidation as an asset acquisition, resulting in no gain upon consolidation, and increased its real estate assets owned by
approximately $156.0 million and recorded approximately $5.9 million of in-place lease intangibles.
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In November 2019, the Company acquired the approximately 50% ownership interest not previously owned in 10
UDR/MetLife operating communities, one development community and four land parcels valued at $1.1 billion, or $564.2
million at UDR’s share, and sold its approximately 50% ownership interest in five UDR/MetLife operating communities valued
at $645.8 million, or $322.9 million at UDR’s share, to MetLife. The Company paid $109.2 million directly to MetLife to
complete the transaction. As a result, the Company consolidated the 10 operating communities, one development community and
four land parcels, and they are no longer accounted for as equity method investments in an unconsolidated joint venture (see Note
5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain
upon consolidation and increased its real estate assets owned by approximately $977.8 million and recorded approximately $30.0
million of in-place lease intangibles. In connection with the acquisition, the Company assumed six secured fixed rate mortgage
notes payable and one credit facility secured by four communities with a combined outstanding balance of $518.4 million and
estimated fair value of $551.8 million. The Company recorded the debt at its fair value in Secured debt, net on the Consolidated
Balance Sheets.
The following table is a summary of the 10 communities, one development community and four land parcels acquired
from the UDR/MetLife joint venture:
Property
Strata
Crescent Falls Church
Charles River Landing
Lodge at Ames Pond
Lenox Farms
Towson Promenade
Savoye
Savoye2
Fiori on Vitruvian Park ®
Vitruvian West
Vitruvian West Phase 2 (a)
Vitruvian Park ®
Type
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Development Community
4 Land Parcels
Number of Homes
163
214
350
364
338
379
394
351
391
383
366
N/A
Location
San Diego, CA
Washington, D.C.
Boston, MA
Boston, MA
Boston, MA
Baltimore, MD
Addison, TX
Addison, TX
Addison, TX
Addison, TX
Addison, TX
Addison, TX
(a) The number of apartment homes for the community under development presented in the table above is based on the
projected number of total homes upon completion of development. As of December 31, 2019, no apartment homes had
been completed.
Dispositions
In May 2020, the Company sold an operating community located in Bellevue, Washington with a total of 71 apartment
homes for gross proceeds of $49.7 million, resulting in a gain of approximately $29.6 million. The sale was partially financed by
the Company through the issuance of a promissory note totaling $4.0 million which was repaid in January 2021. (See Note 2,
Significant Accounting Policies for further discussion.) The proceeds were designated for a tax-deferred Section 1031 exchange
that were used to pay a portion of the purchase price for the above mentioned acquisition of an operating community in Tampa,
Florida, in January 2020.
In May 2020, the Company sold an operating community located in Kirkland, Washington with a total of 196 apartment
homes for gross proceeds of $92.9 million, resulting in a gain of approximately $31.7 million.
In October 2020, the Company sold an operating community located in Alexandria, Virginia with a total of 332
apartment homes for gross proceeds of $145.0 million, resulting in a gain of approximately $58.0 million. The proceeds were
designated for a tax-deferred Section 1031 exchange and were used to pay a portion of the purchase price for acquisitions in
November and December 2020.
In June 2019, the Company sold a parcel of land located in Los Angeles, California for $38.0 million, resulting in a gain
of approximately $5.3 million. Prior to the sale, the parcel of land was subject to a ground lease, under which UDR was the
lessor, scheduled to expire in 2065. The ground lease included a purchase option for the lessee to acquire the land during specific
periods of the ground lease term. During the second quarter of 2019, the lessee exercised the purchase option resulting in the sale
by the Company and the ground lease being terminated.
We plan to continue to pursue our strategy of exiting markets where long-term growth prospects are limited and
redeploying capital to primary locations in markets we believe will provide the best investment returns.
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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 year ended December 31, 2020, total capital expenditures of $165.8 million or $3,494 per stabilized home,
which in aggregate include recurring capital expenditures and major renovations, were spent across our portfolio, excluding
development, as compared to $158.0 million or $3,710 per stabilized home for the prior year.
The increase in total capital expenditures was primarily due to:
●
●
●
an increase of 35.8%, or $12.7 million, in major renovations, which include major structural changes and/or
architectural revisions to existing buildings; and
an increase of 11.1%, or $5.7 million, in recurring capital expenditures, which include asset preservation and
turnover related expenditures; and
an increase of 11.6%, or $5.1 million, in NOI enhancing improvements, such as kitchen and bath remodels and
upgrades to common areas.
This was partially offset by:
●
a decrease of 56.8%, or $15.6 million, in spend as compared to 2019 for our operations platform, which includes
smart home installations at certain of our properties.
The following table outlines capital expenditures and repair and maintenance costs for all of our communities, excluding
real estate under development, for the years ended December 31, 2020 and 2019 (dollars in thousands except Per Home
amounts):
Turnover capital expenditures
Asset preservation expenditures
Total recurring capital expenditures
NOI enhancing improvements (a)
Major renovations (b)
Operations platform
Total capital expenditures (c)
Repair and maintenance expense
Average home count (d)
% Change
2020
Year Ended December 31,
2019
$ 11,192
40,054
51,246
43,689
35,569
27,445
$ 157,949
$ 43,525
42,579
2020
$ 12,978
43,946
56,924
48,752
48,317
11,853
$ 165,846
$ 56,794
47,475
9.7 %
16.0 % $ 273
926
11.1 % 1,199
11.6 % 1,027
35.8 % 1,018
250
(56.8)%
5.0 % $ 3,494
30.5 % $ 1,196
11.5 %
% Change
Per Home
Year Ended December 31,
2019
$ 263
941
1,204
1,026
835
645
$ 3,710
$ 1,022
3.8 %
(1.6)%
(0.4)%
0.1 %
21.9 %
(61.3)%
(5.8)%
17.0 %
(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.
(c) Total capital expenditures includes amounts capitalized during the year. Cash 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.
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 December 31, 2020, our development pipeline consisted of five wholly-owned communities located in Denver,
Colorado, Dublin, California, Addison, Texas, King of Prussia, Pennsylvania and Washington D.C., totaling 1,378 homes, 202 of
which have been completed, with a budget of $491.5 million, in which we have an investment of
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$247.9 million. The communities are estimated to be completed between the first quarter of 2021 and the second quarter of 2023.
During 2020, we incurred $121.2 million for development costs, an increase of $95.8 million as compared to costs incurred in
2019 of $25.4 million.
At December 31, 2020, 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 year ended December 31, 2020:
● we made investments totaling $76.1 million in our unconsolidated joint ventures, including contributions of $66.3
million to four unconsolidated investments under our Developer Capital Program, which earn preferred returns
ranging from 8.5% to 13.0%;
● our proportionate share of the net income/(loss) of the joint ventures and partnerships was $18.8 million; and
● we received distributions of $70.0 million, of which $20.7 million were operating cash flows and $49.3 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 years ended December 31, 2020 and 2019.
Notes Receivable, net
Notes receivable relate to financing arrangements that are typically secured by real estate, real estate related projects or
other assets.
The following significant activities occurred during the year ended December 31, 2020:
● in August 2020, the Company exercised the purchase option associated with the $115.0 million secured note
receivable. The purchase is expected to close in 2021. When the note was funded, the Company also entered into a
purchase option agreement and paid a deposit of $10.0 million, which gave the Company the option to acquire the
community at a fixed price of $170.0 million. The deposit is generally nonrefundable other than due to a failure of
closing conditions pursuant to the terms of the agreement. If the Company fails to close the purchase other than due
to seller’s failure or other breaches in the purchase option agreement, per the terms of the agreement, the note will
be modified to extend the maturity date to 10 years following the date the temporary certificate of occupancy was
issued, which was July 2020. Upon modification, the loan would be interest only for the first three years and after
such date payments will be based on a 30-year amortization schedule.
Financing Activities
For the years ended December 31, 2020 and 2019, Net cash provided by/(used in) financing activities was $(152.6)
million and $880.4 million, respectively.
The following significant financing activities occurred during the year ended December 31, 2020:
●
repayments of secured debt of $425.8 million, which was partially offset by proceeds from the issuance of secured
debt of $160.9 million;
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●
●
●
●
●
●
●
●
●
issuance of $200.0 million of 3.20% senior unsecured medium-term notes due January 15, 2030, for net proceeds of
approximately $211.3 million;
issuance of $400.0 million of 2.10% senior unsecured medium-term notes due August 1, 2032, for net proceeds of
approximately $399.6 million;
issuance of $350.0 million of 1.90% senior unsecured medium-term notes due March 15, 2023, for net proceeds of
approximately $348.5 million;
repayment of $300.0 million senior unsecured medium-term notes due July 2024, $116.9 million of which was
pursuant to our tender offer;
net repayment of $110.0 million on our unsecured commercial paper program;
sale of 2.1 million shares of common stock under our forward sales agreement for aggregate net proceeds of $102.2
million at a price per share of $48.23;
repurchase of 0.6 million common shares for approximately $19.8 million;
distributions of $419.4 million to our common stockholders; and
payment of debt extinguishment costs of $62.6 million from the early prepayment of debt.
The following significant financing activities occurred during the year ended December 31, 2019:
●
●
●
●
●
●
●
●
●
issuance of $300 million of 3.20% senior unsecured medium-term notes due 2030 (3.42% effective rate after the
effect of a cash flow hedge), for net proceeds of approximately $296.6 million;
issuance of $400 million of 3.00% senior unsecured medium-term notes due 2031 (3.01% effective rate after the
effect of a cash flow hedge), for net proceeds of approximately $395.7 million, $300.0 million of which was used to
repay 3.70% medium-term notes due in October 2020;
issuance of $100 million of 3.20% senior unsecured medium-term notes due 2030 (3.24% effective rate after the
effect of a cash flow hedge), and issuance of $300 million of 3.10% senior unsecured medium-term notes due 2034
(3.13% effective rate after the effect of a cash flow hedge), for net proceeds of approximately $398.6 million, which
was used to repay $400.0 million of 4.63% medium-term notes due in January 2022;
net proceeds of $198.9 million from the Company’s unsecured commercial paper program;
net proceeds of $16.6 million from the Company’s unsecured revolving credit facilities;
repayments of $162.3 million of secured debt, which was offset by net proceeds of $162.5 million from the
issuance of secured debt;
sale of 7.5 million shares of common stock in an underwritten public offering for net proceeds of approximately
$349.8 million at a price per share of $46.65;
sale of 7.0 million shares of common stock under our ATM program for proceeds of $312.3 million at an weighted
average price per share of $45.29;
sale of 1.3 million shares of common stock under our forward sales agreement for net proceeds of $63.5 million at a
price per share of $47.41; and
●
distributions of $383.1 million to our common stockholders.
Credit Facilities and Commercial Paper Program
During the year ended December 31, 2020, the Company prepaid the $201.9 million outstanding balance under its
secured credit facility with New York Life with proceeds from the issuance of senior unsecured medium-term notes. The
Company incurred net extinguishment costs of $9.0 million during the year ended December 31, 2020, which was included in
Interest expense on the Consolidated Statements of Operations.
The Company has a $1.1 billion unsecured revolving credit facility and a $350.0 million unsecured term loan. The
Credit Agreement for these facilities allows the total commitments under the Revolving Credit Facility and the total
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borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 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, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled
maturity date of September 30, 2023.
Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a
margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a
margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from
75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to
165 basis points.
As of December 31, 2020, we had no outstanding borrowings under the Revolving Credit Facility, leaving $1.1 billion
of unused capacity (excluding $2.8 million of letters of credit at December 31, 2020), and $350.0 million of outstanding
borrowings under the Term Loan.
We have a working capital credit facility, which provides for a $75 million unsecured revolving credit facility (the
“Working Capital Credit Facility”) with a scheduled maturity date of January 14, 2022. Based on the Company’s current credit
rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on
the Company’s credit rating, the margin ranges from 75 to 145 basis points.
As of December 31, 2020, we had $28.0 million of outstanding borrowings under the Working Capital Credit Facility,
leaving $47.0 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 December 31, 2020.
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 $500 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 December 31, 2020, we had issued $190.0 million of
commercial paper, for one month terms, at a weighted average annualized rate of 0.27%, leaving $310.0 million of unused
capacity. In January 2021, the entire $190.0 million of outstanding unsecured commercial paper as of December 31, 2020 was
repaid at maturity with additional proceeds of unsecured commercial paper with maturity dates in February 2021 and proceeds
under the Working Capital Credit Facility.
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 $280.0 million in
variable rate debt that is not subject to interest rate swap contracts as of December 31, 2020. If market interest rates for variable
rate debt increased by 100 basis points, our interest expense would increase by $3.8 million based on the average balance
outstanding during the year.
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 14, Derivatives and Hedging Activities, in the Notes to the UDR
Consolidated Financial Statements included in this Report for additional discussion of derivative instruments.
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A presentation of cash flow metrics based on GAAP is as follows (dollars in thousands):
Net cash provided by/(used in) operating activities
Net cash provided by/(used in) investing activities
Net cash provided by/(used in) financing activities
Results of Operations
$
Year Ended December 31,
2019
630,704
(1,686,687)
880,383
2020
604,316 $
(460,842)
(152,594)
The following discussion explains the changes in results of operations that are presented in our Consolidated Statements
of Operations for the years ended December 31, 2020 and 2019.
Net Income/(Loss) Attributable to Common Stockholders
Net income/(loss) attributable to common stockholders was $60.0 million ($0.20 per diluted share) for the year ended
December 31, 2020, as compared to $180.9 million ($0.63 per diluted share) for the comparable period in the prior year. The
decrease resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report:
●
●
●
an increase in real estate depreciation expense of $107.4 million primarily due to communities acquired in 2020 and
2019, partially offset by a decrease from sold communities and fully depreciated assets;
an increase in interest expense of $31.8 million primarily due to higher average debt balances and the early pay off
of debt during 2020 and 2019, resulting in prepayment costs of $49.2 million and $29.6 million, respectively;
a decrease in income/(loss) from unconsolidated entities of $119.0 million, primarily attributable to a $114.9
million gain from the disposition of five operating communities from our UDR/MetLife II joint venture, a $10.6
million gain recognized on the sale of two operating properties from our UDR/KFH joint venture, a $4.6 million
unrealized gain recorded on an unconsolidated technology investment, and an increase in preferred interest earned
due to increased Developer Capital Program investments in 2019; and
●
a decrease in interest income and other income/(expense), net of $9.1 million, primarily attributable to an $8.5
million promoted interest on the prepayment of a note to a multifamily technology company in 2019.
This was partially offset by:
●
●
gains of $119.3 million from the sale of three operating communities located in Kirkland, Washington, Bellevue,
Washington and Alexandria, Virginia, during the year ended December 31, 2020, as compared to a gain of $5.3
million on the sale of a parcel of land in Los Angeles, California during the year ended December 31, 2019; and
an increase in total property NOI of $45.4 million primarily due to NOI from additional operating communities,
including those acquired in 2020 and 2019, partially offset by an increase of $11.2 million in property operating
expenses.
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 2.875% 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.
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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.
The following table summarizes the operating performance of our total property NOI for each of the periods presented
(dollars in thousands):
Same-Store Communities:
Same-Store rental income
Same-Store operating expense (c)
Same-Store NOI
Non-Mature Communities/Other NOI:
Stabilized, non-mature communities NOI
(d)
Acquired communities NOI
Redevelopment communities NOI
Development communities NOI
Non-residential/other NOI (e)
Sold and held for disposition communities
NOI
Total Non-Mature Communities/Other NOI
Total property NOI
Year Ended
December 31, (a)
Year Ended
December 31, (b)
2020
2019
% Change
2019
2018
% Change
$ 924,138 $ 953,121
(268,718)
684,403
(279,940)
644,198
(3.0)% $ 962,269 $ 928,849
(265,087)
(271,826)
4.2 %
663,762
690,443
(5.9)%
3.6 %
2.5 %
4.0 %
161,258
7,919
—
214
27,694
98,193
762
—
(8)
12,954
64.2 %
939.2 %
— %
NM *
113.8 %
79,007
5,830
18,571
(8)
13,174
11,968
—
21,875
4,374
18,609
12,419
209,504
11,999
123,900
$ 853,702 $ 808,303
11,527
1,286
3.5 %
69.1 %
68,353
117,860
5.6 % $ 808,303 $ 732,115
560.2 %
— %
(15.1)%
NM *
(29.2)%
(88.8)%
72.4 %
10.4 %
* Not meaningful
(a) Same-Store consists of 37,607 apartment homes.
(b) Same-Store consists of 37,959 apartment homes.
(c) Excludes depreciation, amortization, and property management expenses.
(d) Represents non-mature communities that have achieved 90% occupancy for three consecutive months but do not meet the
criteria to be included in Same-Store Communities.
(e) Primarily non-residential revenue and expense and straight-line adjustment for concessions.
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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):
Net income/(loss) attributable to UDR, Inc.
Joint venture management and other fees
Property management
Other operating expenses
Real estate depreciation and amortization
General and administrative
Casualty-related charges/(recoveries), net
Other depreciation and amortization
(Gain)/loss on sale of real estate owned
(Income)/loss from unconsolidated entities
Interest expense
Interest income and other (income)/expense, net
Tax provision/(benefit), net
Net income/(loss) attributable to redeemable noncontrolling interests in the
Operating Partnership and DownREIT Partnership
Net income/(loss) attributable to noncontrolling interests
Total property NOI
Same-Store Communities
$
Year Ended December 31,
2019
$ 184,965
(14,055)
32,721
13,932
501,257
51,533
474
6,666
(5,282)
(137,873)
170,917
(15,404)
3,838
2018
$ 203,106
(11,754)
28,465
12,100
429,006
46,983
2,121
6,673
(136,197)
5,055
134,168
(6,735)
688
2020
64,266
(5,069)
35,538
22,762
608,616
49,885
2,131
10,013
(119,277)
(18,844)
202,706
(6,274)
2,545
4,543
161
$ 853,702
14,426
188
$ 808,303
18,215
221
$ 732,115
Our Same-Store Community properties (those acquired, developed, and stabilized prior to January 1, 2019 and held on
December 31, 2020) consisted of 37,607 apartment homes and provided 75.5% of our total NOI for the year ended
December 31, 2020.
NOI for our Same-Store Community properties decreased 5.9%, or $40.2 million, for the year ended December 31, 2020
compared to the same period in 2019. The decrease in property NOI was attributable to a 3.0%, or $29.0 million, decrease in
property rental income and a 4.2%, or $11.2 million, increase in operating expenses. The decrease in property rental income was
primarily driven by an $11.7 million increase in our reserve on multifamily tenant lease receivables, an increase of $15.1 million
in rent concessions and an increase of $10.0 million in economic occupancy loss, partially offset by a 0.7%, or $6.0 million,
increase in rental rates and a 1.7%, or $1.8 million, increase in reimbursement and ancillary and fee income. Physical occupancy
decreased by 0.5% to 96.3% and total monthly income per occupied home decreased 2.6% to $2,126.
The increase in operating expenses was primarily driven by a 12.5%, or $4.8 million, increase in repair and maintenance
expense due to the increased use of third party vendors, partially offset by a 2.7%, or $1.7 million, decrease in personnel expense
as a result of fewer employees, and a 6.9%, or $7.7 million, increase in real estate taxes, which was primarily due to higher
assessed valuations.
The operating margin (property net operating income divided by property rental income) was 69.7% and 71.8% for the
years ended December 31, 2020 and 2019, 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 24.5%, or $209.5 million, of our total NOI during the year ended December 31, 2020 was generated from
our Non-Mature Communities/Other. NOI from Non-Mature Communities/Other increased by 69.1%, or $85.6 million, for the
year ended December 31, 2020 as compared to the same period in 2019. The increase was primarily attributable to a $63.1
million increase in NOI from stabilized, non-mature communities, primarily due to communities acquired in 2020 and 2019, a
$14.7 million increase in non-residential/other primarily due to changes in straight-line rent as a result of increased tenant rent
concessions during the period, and a $7.2 million increase in acquired communities.
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Real estate depreciation and amortization
For the years ended December 31, 2020 and 2019, the Company recognized real estate depreciation and amortization of
$608.6 million and $501.3 million, respectively. The increase in 2020 as compared to 2019 was primarily attributable to
communities acquired in 2020 and 2019, partially offset by a decrease from sold communities and fully depreciated assets.
Gain/(Loss) on Sale of Real Estate Owned
During the year ended December 31, 2020, the Company recognized gains of $119.3 million from the sale of three
operating communities located in Kirkland, Washington, Bellevue, Washington and Alexandria, Virginia.
During the year ended December 31, 2019, the Company recognized a gain of $5.3 million on the sale of a parcel of
land in Los Angeles, California.
Income/(Loss) from Unconsolidated Entities
For the years ended December 31, 2020 and 2019, we recognized income/(loss) from unconsolidated entities of $18.8
million and $137.9 million, respectively. The decrease of $119.1 million was primarily due to:
●
no dispositions from the Company’s unconsolidated entities during the year ended December 31, 2020.
As compared to:
●
gains of $114.9 million from the disposition of five operating communities from our UDR/MetLife II joint venture,
a $10.6 million gain from the sale of two operating communities in our UDR/KFH joint venture, and a $4.6 million
unrealized gain recorded on an unconsolidated technology investment and an increase in Developer Capital
Program investments during the year ended December 31, 2019.
Interest expense
For the years ended December 31, 2020 and 2019, the Company recognized interest expense of $202.7 million and
$170.9 million, respectively. The increase in 2020 as compared to 2019 was primarily attributable to higher average debt
balances, and the early pay off of debt during 2020 and 2019, resulting in prepayment costs of $49.2 million and $29.6 million,
respectively.
Interest income and other income/(expense), net
For the years ended December 31, 2020 and 2019, the Company recognized interest income and other
income/(expense), net of $6.3 million and $15.4 million, respectively. The decrease in 2020 as compared to 2019 was primarily
attributable to an $8.5 million promoted interest on the prepayment of a note to a multifamily technology company in 2019.
Inflation
We believe that the direct effects of inflation on our operations have been immaterial. While the impact of inflation
primarily impacts our results of operations as a result of wage pressures and increases in utilities and material costs, the majority
of our apartment leases have initial terms of 12 months or less, which generally enables us to compensate for any inflationary
effects by increasing rental rates 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 has had a material impact on our results for
the year ended December 31, 2020.
Off-Balance Sheet Arrangements
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.
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Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2020 (dollars in thousands):
Contractual Obligations
Long-term debt obligations
Interest on debt obligations (a)
Letters of credit
Operating lease obligations:
Ground leases (b)
2021
$ 191,097
149,982
2,839
Payments Due by Period
2022-2023
$ 380,347
297,275
$
2024-2025
584,113
271,162
Thereafter
$ 3,829,660
479,084
—
—
—
Total
$ 4,985,217
1,197,503
2,839
12,442
$ 356,360
24,884
$ 702,506
24,884
880,159
442,778
$ 4,751,522
504,988
$ 6,690,547
$
(a)
Interest payments on variable rate debt instruments are based on each debt instrument’s respective year-end interest rate at
December 31, 2020.
(b) For purposes of our ground lease contracts, the Company uses the minimum lease payment, if stated in the agreement. For
ground lease agreements where there is a rent reset provision based on fair market value or changes in the consumer price
index but does not include a specified minimum lease payment, the Company uses the current rent over the remainder of the
lease term.
During 2020, we incurred gross interest costs of $209.7 million, of which $7.0 million was capitalized.
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 allows investors to more easily
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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 flows 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 will enable investors to assess our performance in comparison to other REITs.
However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not always be
comparable to AFFO calculated by other REITs. AFFO should not be considered as an alternative to net income/(loss)
(determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from
operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to
fund our cash needs, including our ability to make distributions.
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The following table outlines our reconciliation of Net income/(loss) attributable to common stockholders to FFO,
FFOA, and AFFO for the years ended December 31, 2020, 2019, and 2018 (dollars in thousands):
Net income/(loss) attributable to common stockholders
$
Real estate depreciation and amortization
Noncontrolling interests
Real estate depreciation and amortization on unconsolidated joint ventures
Net gain on the sale of unconsolidated depreciable property
Net gain on the sale of depreciable real estate owned, net of tax
FFO attributable to common stockholders and unitholders, basic
Distributions to preferred stockholders — Series E (Convertible)
FFO attributable to common stockholders and unitholders, diluted
Income/(loss) per weighted average common share, diluted
FFO per weighted average common share and unit, basic
FFO per weighted average common share and unit, diluted
Weighted average number of common shares and OP/DownREIT Units outstanding
— basic
Weighted average number of common shares, OP/DownREIT Units, and common
stock equivalents outstanding — diluted
Impact of adjustments to FFO:
Costs associated with debt extinguishment and other
Promoted interest on settlement of note receivable, net of tax
Legal and other costs
Net gain on the sale of non-depreciable real estate owned
Realized/unrealized (gain)/loss on unconsolidated technology investments, net of
tax
Joint venture development success fee
Severance costs and other restructuring expense
Casualty-related charges/(recoveries), net
Casualty-related charges/(recoveries) on unconsolidated joint ventures, net
FFOA attributable to common stockholders and unitholders, diluted
2020
60,036
608,616
4,704
35,023
Year Ended December 31,
2019
$ 180,861
501,257
14,614
57,954
(125,407)
—
—
(118,852)
$ 589,527
4,230
$ 593,757
0.20
$
1.86
$
1.85
$
$ 629,279
4,104
$ 633,383
0.63
$
2.04
$
2.03
$
2018
$ 199,238
429,006
18,436
61,871
—
(136,197)
$ 570,254
3,868
$ 574,122
0.74
$
1.95
$
1.93
$
316,855
308,020
292,727
320,187
311,799
297,042
$
—
$
49,190
—
8,973
—
$
29,594
(6,482)
3,660
(5,282)
3,476
—
1,622
—
(3,582)
—
1,948
2,545
31
59,105
$
$ 652,862
(3,300)
(3,750)
390
636
(374)
15,092
$
$ 648,475
—
—
114
2,364
—
7,576
$
$ 581,698
FFOA per weighted average common share and unit, diluted
$
2.04
$
2.08
$
1.96
Recurring capital expenditures
AFFO attributable to common stockholders and unitholders, diluted
(56,924)
$ 595,938
(51,246)
$ 597,229
(46,915)
$ 534,783
AFFO per weighted average common share and unit, diluted
$
1.86
$
1.92
$
1.80
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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 years ended December 31, 2020, 2019,
and 2018 (shares in thousands):
Year Ended December 31,
2019
2018
2020
Weighted average number of common shares and OP/DownREIT Units outstanding —
basic
Weighted average number of OP/DownREIT Units outstanding
Weighted average number of common shares outstanding — basic per the Consolidated
Statements of Operations
316,855
(22,310)
308,020
(22,773)
292,727
(24,548)
294,545
285,247
268,179
Weighted average number of common shares, OP/DownREIT Units, and common stock
equivalents outstanding — diluted
Weighted average number of OP/DownREIT Units outstanding
Weighted average number of Series E Cumulative Convertible Preferred shares
outstanding
Weighted average number of common shares outstanding — diluted per the
Consolidated Statements of Operations
320,187
(22,310)
311,799
(22,773)
297,042
(24,548)
(2,950)
(3,011)
(3,011)
294,927
286,015
269,483
United Dominion Realty, L.P.:
Business Overview
United Dominion Realty, L.P. (the “Operating Partnership” or “UDR, L.P.”) is a Delaware limited partnership formed in
February 2004 and organized pursuant to the provisions of the Delaware Revised Uniform Limited Partnership Act. The
Operating Partnership is the successor-in-interest to United Dominion Realty, L.P., a limited partnership formed under the laws
of Virginia, which commenced operations on November 4, 1995. Our sole general partner is UDR, Inc., a Maryland corporation
(“UDR” or the “General Partner”), which conducts a substantial amount of its business and holds a substantial amount of its
assets through the Operating Partnership. At December 31, 2020, the Operating Partnership’s real estate portfolio included 53
communities located in nine states and the District of Columbia with a total of 17,174 apartment homes.
As of December 31, 2020, UDR owned 0.1 million units of our general partnership interests and 176.1 million units of
our limited partnership interests (the “OP Units”), or approximately 95.3% of our outstanding OP Units. By virtue of its
ownership of our OP Units and being our sole general partner, UDR has the ability to control all of the day-to-day operations of
the Operating Partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this section of
this Report to the Operating Partnership or “we,” “us” or “our” refer to UDR, L.P. together with its consolidated subsidiaries, and
all references in this section to “UDR” or the “General Partner” refer solely to UDR, Inc.
UDR is a self-administered real estate investment trust, or REIT, that owns, acquires, renovates, develops, and manages
apartment communities. The General Partner was formed in 1972 as a Virginia corporation and changed its state of incorporation
from Virginia to Maryland in June 2003. At December 31, 2020, the General Partner’s consolidated real estate portfolio included
149 communities located in 13 states and the District of Columbia with a total of 48,283 apartment homes. In addition, the
General Partner had an ownership interest in 5,295 completed or to-be-completed apartment homes through unconsolidated joint
ventures or partnerships, including 2,165 apartment homes owned by entities in which we hold preferred equity investments.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles
(“GAAP”) requires management to use judgment in the application of accounting policies, including making estimates and
assumptions. A critical accounting policy is one that is both important to our financial condition and results of operations as well
as involves some degree of uncertainty. Estimates are prepared based on management’s assessment after considering all evidence
available. Changes in estimates could affect our financial position or results of operations. Below is a discussion of the
accounting policies that we consider critical to understanding our financial condition or results of operations where there is
uncertainty or where significant judgment is required. A discussion of
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our significant accounting policies, including further discussion of the accounting policies described below, can be found in
Note 2, Significant Accounting Policies, to the Notes to the Operating Partnership’s Consolidated Financial Statements included
in this Report.
Cost Capitalization
In conformity with GAAP, 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.
In addition to construction costs, we capitalize costs directly related to the predevelopment, development, and
redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated
development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our
professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred.
These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in
progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. As each
home in a capital project is completed and becomes available for lease-up, the Operating Partnership ceases capitalization on the
related portion. The costs capitalized are reported on the Consolidated Balance Sheets as Total real estate owned, net of
accumulated depreciation. Amounts capitalized during the years ended December 31, 2020, 2019, and 2018 were $1.0 million,
$1.0 million, and less than $0.1 million, respectively.
Investment in Unconsolidated Entities
We may enter into various joint venture agreements and/or partnerships with unrelated third parties to hold or develop
real estate assets. We must determine for each of these ventures whether to consolidate the entity or account for our investment
under the equity method of accounting. We determine whether to consolidate a joint venture or partnership based on our rights
and obligations under the venture agreement, applying the applicable accounting guidance. The application of the rules in
evaluating the accounting treatment for each joint venture or partnership is complex and requires substantial management
judgment. We evaluate our accounting for investments on a regular basis including when a significant change in the design of an
entity occurs. Throughout our financial statements, and in this Management’s Discussion and Analysis of Financial Condition
and Results of Operations, we use the term “joint venture” or “partnership” when referring to investments in entities in which we
do not have a 100% ownership interest.
We continually evaluate our investments in unconsolidated joint ventures 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. These factors include, but are not limited to, age of the venture, our intent and
ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships
with the other joint venture partners and its lenders. The amount of loss recognized is the excess of the investment’s carrying
amount over its estimated fair value. If we believe that the decline in fair value is temporary, no impairment is recorded. The
aforementioned factors are taken as a whole by management in determining the valuation of our investment property. Should the
actual results differ from management’s judgment, the valuation could be negatively affected and may result in a negative impact
to our Consolidated Financial Statements.
Impairment of Long-Lived Assets
Quarterly or when changes in circumstances warrant, we will assess our real estate properties for indicators of
impairment. The judgments regarding the existence of impairment indicators are based on certain factors. Such factors include,
among other things, operational performance, market conditions, the Operating Partnership’s intent and ability to hold the related
asset, as well as any significant cost overruns on development properties.
If a real estate property has indicators of impairment, we assess whether the long-lived asset’s carrying value exceeds
the community’s undiscounted future cash flows, which is representative of projected net operating income (“NOI”) plus the
residual value of the community. Our future cash flow estimates are based upon historical results adjusted to reflect our best
estimate of future market and operating conditions and our estimated holding periods. If such indicators of impairment are
present and the carrying value exceeds the undiscounted cash flows of the community, an impairment loss is recognized equal to
the excess of the carrying amount of the asset over its estimated fair value. Our estimates of fair value represent our best estimate
based primarily upon unobservable inputs related to rental rates, operating costs, growth rates, discount rates and capitalization
rates, industry trends and reference to market rates and transactions.
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For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated
cost to sell is less than the carrying value of the asset. Properties classified as real estate held for disposition generally represent
properties that are actively marketed or contracted for sale with the closing expected to occur within the next twelve months. Real
estate held for disposition is carried at the lower of cost, net of accumulated depreciation, or fair value, less the cost to sell,
determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held for disposition properties
are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to held for disposition
properties are capitalized at cost. Depreciation is not recorded on real estate held for disposition.
Real Estate Investment Properties
We purchase real estate investment properties from time to time and record the fair value to various components, such
as land, buildings, and intangibles related to in-place leases, based on the fair value of each component. In making estimates of
fair values for purposes of allocating purchase price, we utilize various sources, including independent appraisals, our own
analysis of recently acquired and existing comparable properties in our portfolio and other market data. The fair value of
buildings is determined as if the buildings were vacant upon acquisition and subsequently leased at market rental rates. As such,
the determination of fair value considers the present value of all cash flows expected to be generated from the property including
an initial lease-up period. We determine the fair value of in-place leases by assessing the net effective rent and remaining term of
the lease relative to market terms for similar leases at acquisition. In addition, we consider the cost of acquiring similar leases, the
foregone rents associated with the lease-up period, and the carrying costs associated with the lease-up period. The fair value of
in-place leases is recorded and amortized as amortization expense over the remaining average contractual lease period.
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Summary of Real Estate Portfolio by Geographic Market
The following table summarizes our market information by major geographic markets as of and for the year ended
December 31, 2020:
Same-Store Communities
Communities Homes
Value
December 31, 2020
Percentage
of Total
Number of Number of
Apartment Apartment Carrying
Total
Carrying
Value (in
thousands) Occupancy
Average
Physical
Year Ended December 31, 2020
Net
Operating
Income
(in thousands)
Monthly
Income per
Occupied
Home (a)
West Region
Orange County, CA
San Francisco, CA
Seattle, WA
Monterey Peninsula, CA
Los Angeles, CA
Other Southern California
Portland, OR
Mid-Atlantic Region
Metropolitan D.C.
Baltimore, MD
Northeast Region
Boston, MA
New York, NY
Southeast Region
Tampa, FL
Nashville, TN
Other Florida
Southwest Region
Denver, CO
Total/Average Same-Store Communities
Non-Mature, Commercial Properties &
Other
Total Real Estate Owned
Total Accumulated Depreciation
Total Real Estate Owned, Net of
Accumulated Depreciation
5
9
5
7
2
1
2
5
2
1
1
2
6
1
1
50
3
53
3,119
2,185
932
1,565
344
414
476
18.6 % $
15.3 %
5.8 %
4.6 %
2.9 %
1.9 %
1.3 %
753,801
617,293
233,525
185,224
118,281
76,883
52,126
1,736
540
10.9 %
2.7 %
442,224
108,779
387
503
1.9 %
8.3 %
76,059
334,347
942
1,612
636
2.8 %
3.9 %
2.2 %
114,452
157,415
89,630
$
96.6 % $
92.6 %
97.0 %
96.6 %
96.4 %
97.6 %
97.1 %
96.3 %
97.8 %
95.5 %
90.9 %
97.7 %
97.6 %
97.2 %
2,277
3,198
2,086
1,940
2,728
2,155
1,637
2,106
1,563
2,086
3,449
1,556
1,352
1,656
62,791
57,812
15,840
27,587
7,740
7,897
6,623
29,262
6,781
6,656
10,684
11,333
18,159
8,085
218
15,609
3.6 %
86.7 %
144,959
3,504,998
93.1 %
96.0 % $
3,012
2,173
1,565
17,174
13.3 %
100.0 %
538,727
4,043,725
(1,892,011)
$ 2,151,714
5,199
282,449
20,838
303,287
$
$
(a) Monthly Income per Occupied Home represents total monthly revenues divided by the average physical number of occupied
apartment homes in our Same-Store portfolio.
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, 2019 and held as of December 31, 2020. These communities were owned and had stabilized occupancy and operating
expenses as of the beginning of the prior year, there is no plan to conduct substantial redevelopment activities, and the
communities are not classified as held for disposition at year end. 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.
Liquidity and Capital Resources
Liquidity is the ability to meet present and future financial obligations either through operating cash flows, the sale of
properties, and the issuance of debt. Both the coordination of asset and liability maturities and effective capital management are
important to the maintenance of liquidity. The Operating Partnership’s primary source of liquidity is cash flow from operations,
as determined by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment homes, and
borrowings owed by us under the General Partner’s credit agreements. The General
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Partner will routinely use its working capital credit facility, its 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 owed by us under the General Partner’s credit agreements. We expect to meet certain long-term liquidity
requirements such as scheduled debt maturities and potential property acquisitions through net cash provided by property
operations, borrowings and the disposition of properties. We believe that our net cash provided by property operations and
borrowings will continue to be adequate to meet both operating requirements and the payment of distributions. Likewise, the
budgeted expenditures for improvements and renovations of certain properties are expected to be funded from property
operations, borrowings owed by us under the General Partner’s credit agreements, and the disposition of properties.
Future Capital Needs
Future capital expenditures are expected to be funded with proceeds from the issuance of secured debt or unsecured
debt, sales of properties, borrowings owed by us under our General Partner’s credit agreements, and to a lesser extent, from cash
flows provided by operating activities.
As of December 31, 2020, the Operating Partnership does not have any debt maturing in 2021.
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 years ended December 31, 2020 and 2019.
Operating Activities
For the year ended December 31, 2020, Net cash provided by/(used in) operating activities was $217.7 million
compared to $255.1 million for 2019. The decrease in cash flow from operating activities was primarily due to a decrease in net
operating income and changes in operating assets and liabilities.
Investing Activities
For the year ended December 31, 2020, Net cash provided by/(used in) investing activities was $(140.0) million
compared to $(43.9) million for 2019. The increase in cash used in investing activities was primarily due to the acquisition of two
operating communities in 2020, partially offset by proceeds from the sale of an operating community 2020 and a decrease in
capital expenditures and other major improvements in 2020, as compared to 2019.
Acquisitions
In November 2020, the Operating Partnership acquired a 672 apartment home operating community located in Tampa,
Florida for approximately $122.5 million. The Operating Partnership increased its real estate assets owned by approximately
$119.4 million and recorded approximately $3.1 million of in-place lease intangibles.
In December 2020, the Operating Partnership acquired a 400 apartment home operating community located in Herndon,
Virginia for approximately $128.6 million. The Operating Partnership increased its real estate assets owned by approximately
$125.9 million and recorded approximately $2.7 million of in-place lease intangibles.
During the year ended December 31, 2019, the Operating Partnership did not have any acquisitions of real estate.
Dispositions
In October 2020, the Operating Partnership sold an operating community located in Alexandria, Virginia with a total of
332 apartment homes for gross proceeds of $145.0 million, resulting in a gain of approximately $58.0 million.
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The proceeds were designated for a tax-deferred Section 1031 exchange and were used to pay a portion of the purchase price for
acquisitions in November and December 2020.
During the year ended December 31, 2019, the Operating Partnership did not have any dispositions of real estate.
Financing Activities
For the year ended December 31, 2020, Net cash provided by/(used in) financing activities was $(76.6) million
compared to $(210.9) million for 2019. The decrease in cash used in financing activities was primarily due to a decrease in
repayments of notes payable to the General Partner, partially offset by proceeds from the issuance of secured debt in 2019.
Guarantor on Unsecured Debt
The Operating Partnership is the guarantor on the General Partner’s unsecured revolving credit facility with an
aggregate borrowing capacity of $1.1 billion, an unsecured commercial paper program with an aggregate borrowing capacity of
$500 million, a $350 million term loan due September 2023, $300 million of medium-term notes due October 2025, $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, $400 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 and $300 million of medium-term notes due November 2034. As of December 31, 2020
and 2019, the General Partner did not have an outstanding balance under the unsecured revolving credit facility and had $190.0
million and $300.0 million, respectively, outstanding under its unsecured commercial paper program.
The credit facilities are subject to customary financial covenants and limitations.
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. 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 $27.0 million in variable rate debt that is
not subject to interest rate swap contracts as of December 31, 2020. If market interest rates for variable rate debt increased by 100
basis points, our interest expense would increase by $0.3 million based on the average balance at December 31, 2020.
These amounts are determined by considering the impact of hypothetical interest rates on our borrowing cost. These
analyses do 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 amount, 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 General Partner also utilizes derivative financial instruments owed by the Operating Partnership to manage interest
rate risk and generally designates these financial instruments as cash flow hedges. See Note 9, Derivatives and Hedging
Activities, in the Notes to the Operating Partnership’s Consolidated Financial Statements for additional discussion of derivative
instruments.
A presentation of cash flow metrics based on GAAP is as follows (dollars in thousands):
Net cash provided by/(used in) operating activities
Net cash provided by/(used in) investing activities
Net cash provided by/(used in) financing activities
$
Year Ended December 31,
2019
2020
255,093
217,683
(140,039)
(43,906)
(210,853)
(76,578)
$
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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 years ended December 31, 2020 and 2019.
Net Income/(Loss) Attributable to OP Unitholders
Net income/(loss) attributable to OP unitholders was $134.2 million ($0.73 per diluted OP Unit) for the year ended
December 31, 2020 as compared to net income of $102.2 million ($0.56 per diluted OP Unit) for the prior year. The increase in
net income attributable to OP unitholders resulted primarily from the following items, which are discussed in further detail
elsewhere within this Report:
●
gain of $58.0 million on the sale of an operating community in Alexandria, Virginia during the year ended
December 31, 2020, as compared to no gains on the sale of real estate in 2019.
This was partially offset by:
●
a decrease in total property NOI of $19.7 million primarily due to an approximately $5.5 million reserve recorded
on our multifamily tenant lease receivables, an increase in real estate taxes due to higher assessed valuations, and
an increase in repair and maintenance expenses due to increased use of third party vendors, partially offset by a
decrease in personnel expense as result of fewer employees; and
●
an increase in other operating expenses of $6.7 million primarily due to higher ground lease expense.
Apartment Community Operations
Our net income results primarily from NOI generated from the operation of our apartment communities. The Operating
Partnership 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 are
property management costs, which are the Operating Partnership’s allocable share of costs incurred by the General Partner for
shared services of corporate level property management employees and related support functions and 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 we consider 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 OP unitholders 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):
Same-Store Communities:
Same-Store rental income
Same-Store operating expense (b)
Same-Store NOI
Year Ended
December 31, (a)
2020
2019
%
Change
Year Ended
December 31, (b)
%
2019
2018
Change
$ 390,848
(108,399)
282,449
$ 403,551
(103,355)
300,196
(3.1)% $ 404,442
(104,284)
4.9 %
300,158
(5.9)%
$ 390,647
(100,815)
289,832
3.5 %
3.4 %
3.6 %
Non-Mature Communities/Other NOI:
Stabilized, non-mature communities NOI (d)
Acquired communities NOI
Redevelopment communities NOI
Non-residential/other NOI (c)
Sold and held for disposition communities NOI
Total Non-Mature Communities/Other NOI
Total property NOI
8,498
1,176
—
12,773
—
—
6,959
4,205
20,838
$ 303,287
4,504
5,533
22,810
$ 323,006
—
5,621
(33.5)%
— %
12,773
— %
4,454
54.5 %
—
(24.0)%
(8.6)%
22,848
(6.1)% $ 323,006
5,125
—
14,878
6,634
9.7 %
—
(14.1)%
(32.9)%
911 (100.0)%
(17.1)%
1.8 %
27,548
$ 317,380
(a) Same-Store consists of 15,609 apartment homes.
(b) Same-Store consists of 15,723 apartment homes.
(c) Excludes depreciation, amortization, and property management expenses.
(d) Represents non-mature communities that have achieved 90% occupancy for three consecutive months but do not meet the
criteria to be included in Same-Store Communities.
The following table is our reconciliation of Net income/(loss) attributable to OP unitholders to total property NOI for
the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):
Net income/(loss) attributable to OP unitholders
Property management
Other operating expenses
Real estate depreciation and amortization
General and administrative
Casualty-related charges/(recoveries), net
(Gain)/loss on sale of real estate owned
(Income)/loss from unconsolidated entities
Interest expense
Net income/(loss) attributable to noncontrolling interests
Total property NOI
Same-Store Communities
2020
$ 134,229
12,326
16,138
143,005
17,987
793
(57,960)
5,543
29,357
1,869
$ 303,287
Year Ended December 31,
2019
$ 102,163
12,701
9,488
139,975
18,014
853
—
8,313
29,667
1,832
$ 323,006
2018
$ 229,763
11,878
8,864
143,481
16,889
951
(75,507)
(43,496)
22,835
1,722
$ 317,380
Our Same-Store Community properties (those acquired, developed, and stabilized prior to January 1, 2019 and held as of
December 31, 2020) consisted of 15,609 apartment homes and provided 93.1% of our total NOI for the year ended
December 31, 2020.
NOI for our Same-Store Community properties decreased 5.9%, or $17.7 million, for the year ended December 31, 2020
compared to 2019. The decrease in property NOI was primarily attributable to a 3.1%, or $12.7 million, decrease in property
rental income and a 4.9%, or $5.0 million, increase in operating expenses. The decrease in property rental income was primarily
driven by a $6.1 million increase in our reserve on multifamily tenant lease receivables, a $5.9 million increase in rent
concessions and a $4.7 million increase in economic occupancy loss, partially offset by a 0.8%, or $3.1 million, increase in rental
rates and a 2.0%, or $0.9 million, increase in reimbursement and ancillary and fee income. Physical occupancy decreased 0.8% to
96.0% and total monthly income per occupied home decreased 2.4% to $2,173.
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The increase in operating expenses was primarily driven by a 15.9%, or $2.6 million, increase in repair and maintenance
expense due to the increased use of third party vendors, partially offset by a 9.0%, or $2.0 million, decrease in personnel expense
as a result of fewer employees, and a 7.8%, or $3.0 million, increase in real estate taxes, which was primarily due to higher
assessed valuations.
The operating margin (property net operating income divided by property rental income) was 72.3% and 74.4% for
the years ended December 31, 2020 and 2019, respectively.
Non-Mature Communities/Other
The Operating Partnership’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 the non-apartment components of mixed use properties.
The remaining 6.9%, or $20.8 million, of our total NOI during the year ended December 31, 2020 was generated from
our Non-Mature Communities/Other. NOI from Non-Mature Communities/Other decreased 8.6%, or $2.0 million, for the year
ended December 31, 2020 as compared to 2019. The decrease was primarily driven by a decrease in NOI of $4.3 million from
stabilized, non-mature communities, and a decrease of $1.3 million from sold and held for disposition communities, partially
offset by an increase of $2.5 million from non-residential/other primarily due to changes in straight-line rent as a result of
increased tenant rent concessions during 2020, and an increase of $1.2 million from acquired communities.
Other Operating Expense
For the year ended December 31, 2020, other operating expense increased by 70.1%, or $6.7 million, as compared to
2019, which was primarily due to higher ground lease expense in 2020 as a result of a rent reset provision on one of our ground
leases.
Gain/(Loss) on Sale of Real Estate Owned
During the year ended December 31, 2020, the Operating Partnership recognized a gain of $58.0 million on the sale of
an operating community in Alexandria, Virginia with a total of 332 apartment homes. During the year ended December 31, 2019,
the Operating Partnership did not recognize any gains on the sale of real estate.
Inflation
We believe that the direct effects of inflation on our operations have been immaterial. While the impact of inflation
primarily impacts our results of operations as a result of wage pressures and increases in utilities and material costs, the majority
of our apartment leases have initial terms of 12 months or less, which generally enables us to compensate for any inflationary
effects by increasing rental rates 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 has had a material impact on our results for
the year ended December 31, 2020.
Off-Balance Sheet Arrangements
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.
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Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2020 (dollars in thousands):
Contractual Obligations
Long-term debt obligations
Interest on debt obligations (a)
Operating lease obligations — ground leases (b)
Operating lease obligations — equipment leases
Payments Due by Period
2022-2023 2024-2025 Thereafter
2021
$
— $
— $
2,475
12,442
179
$ 15,096
4,950
24,884
370
$ 30,204
— $ 99,500
10,593
442,778
813
$ 553,684
4,950
24,884
386
$ 30,220
Total
$ 99,500
22,968
504,988
1,748
$ 629,204
(a)
Interest payments on variable rate debt instruments are based on each debt instrument’s respective year-end interest rate at
December 31, 2020.
(b) For purposes of our ground lease contracts, the Operating Partnership uses the minimum lease payment, if stated in the
agreement. For ground lease agreements where there is a rent reset provision based on fair market value or changes in the
consumer price index but does not include a specified minimum lease payment, the Operating Partnership uses the current
rent over the remainder of the lease term.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is included in and incorporated by reference from Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations of this Report.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related financial information required to be filed are attached to this Report.
Reference is made to page F-1 of this Report for the Index to Consolidated Financial Statements and Schedules of UDR, Inc. and
United Dominion Realty, L.P.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The disclosure controls and procedures of the Company and the Operating Partnership are designed with the objective
of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is recorded,
processed, summarized and disclosed within the time periods specified in the SEC’s rules and forms. Our disclosure controls and
procedures are also designed to ensure that such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
It should be noted that the design of any system of controls is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. As a result, our disclosure controls and procedures are designed to provide
reasonable assurance that such disclosure controls and procedures will meet their objectives.
As of December 31, 2020, we carried out an evaluation, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer of the Company, which is the sole general partner of the Operating Partnership, of
the effectiveness of the design and operation of the disclosure controls and procedures of the Company and the Operating
Partnership. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer of the Company concluded that the
disclosure controls and procedures of the Company and the Operating Partnership are effective at the reasonable assurance level
described above.
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Management’s Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining effective internal control over
financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 for the Company and the Operating
Partnership. Under the supervision and with the participation of the management, the Chief Executive Officer and Chief Financial
Officer of the Company, which is the sole general partner of the Operating Partnership, conducted an assessment of the
effectiveness of the internal control over financial reporting based on the framework in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations (2013 Framework) (COSO). Based on such evaluation,
management concluded that the Company’s and the Operating Partnership’s internal control over financial reporting was
effective as of December 31, 2020.
Ernst & Young LLP, the independent registered public accounting firm that audited our consolidated financial
statements included in this Report, has audited UDR, Inc.’s internal control over financial reporting as of December 31, 2020.
The report of Ernst & Young LLP, which expresses an unqualified opinion on UDR, Inc.’s internal control over financial
reporting as of December 31, 2020, is included under the heading “Report of Independent Registered Public Accounting Firm” of
UDR, Inc. contained in this Report. Further, an attestation report of the registered public accounting firm of United Dominion
Realty, L.P. will not be required as long as United Dominion Realty, L.P. is a non-accelerated filer.
Changes in Internal Control Over Financial Reporting
There have not been any changes in either the Company’s or the Operating Partnership’s internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the fourth
fiscal quarter to which this Report relates that materially affected, or are reasonably likely to materially affect, the internal control
over financial reporting of either the Company or the Operating Partnership.
Item 9B. OTHER INFORMATION
None.
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PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated by reference to the information set forth under the headings
“Proposal No. 1 Election of Directors,” “Corporate Governance Matters,” “Audit Committee Report,” “Corporate Governance
Matters-Board Leadership Structure and Committees-Audit Committee Financial Expert,” “Corporate Governance Matters-
Identification and Selection of Nominees for Directors,” “Corporate Governance Matters-Board of Directors and Committee
Meetings” and “Executive Officers” in UDR, Inc.’s definitive proxy statement (our “definitive proxy statement”) for its 2021
Annual Meeting of Stockholders. UDR is the sole general partner of the Operating Partnership.
We have a code of ethics for senior financial officers that applies to our principal executive officer, all members of our
finance staff, including the principal financial officer, the principal accounting officer, the treasurer and the controller, our
director of investor relations, our corporate secretary, and all other Company officers. We also have a code of business conduct
and ethics that applies to all of our employees. Information regarding our codes is available on our website, www.udr.com, and is
incorporated by reference to the information set forth under the heading “Corporate Governance Matters” in our definitive proxy
statement for UDR’s 2021 Annual Meeting of Stockholders. We intend to satisfy the disclosure requirements under Item 5.05 of
Form 8-K regarding an amendment to, or a waiver from, a provision of our codes by posting such amendment or waiver on our
website.
Item 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the information set forth under the headings
“Security Ownership of Certain Beneficial Owners and Management,” “Corporate Governance Matters-Board Leadership
Structure and Committees-Compensation Committee Interlocks and Insider Participation,” “Executive Compensation,”
“Compensation of Directors” and “Executive Compensation-Compensation Committee Report” in the definitive proxy statement
for UDR’s 2021 Annual Meeting of Stockholders. UDR is the sole general partner of the Operating Partnership.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to the information set forth under the headings
“Security Ownership of Certain Beneficial Owners and Management,” “Executive Compensation” and “Executive
Compensation-Equity Compensation Plan Information” in the definitive proxy statement for UDR’s 2021 Annual Meeting of
Stockholders. UDR is the sole general partner of the Operating Partnership.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference to the information set forth under the heading
“Security Ownership of Certain Beneficial Owners and Management,” “Corporate Governance Matters-Corporate Governance
Overview,” “Corporate Governance Matters-Director Independence,” “Corporate Governance Matters-Board Leadership
Structure and Committees-Independence of the Audit, Compensation, Governance and Nominating Committees,” and “Executive
Compensation” in the definitive proxy statement for UDR’s 2021 Annual Meeting of Stockholders. UDR is the sole general
partner of the Operating Partnership. Information regarding related party transactions between UDR and the Operating
Partnership is presented in Note 7, Related Party Transactions, of the Consolidated Financial Statements of United Dominion
Realty, L.P. referenced in Part IV, Item 15(a) of this Report.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to the information set forth under the headings “Audit
Matters-Audit Fees” and “Audit Matters-Pre-Approval Policies and Procedures” in the definitive proxy statement for UDR’s
2021 Annual Meeting of Stockholders. UDR is the sole general partner of the Operating Partnership.
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Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Report:
PART IV
1. Financial Statements. See Index to Consolidated Financial Statements and Schedules of UDR, Inc. and United
Dominion Realty, L.P. on page F-1 of this Report.
2. Financial Statement Schedules. See Index to Consolidated Financial Statements and Schedules of UDR, Inc. and
United Dominion Realty, L.P. on page S-1 of this Report. All other schedules are omitted because they are not required, are
inapplicable, or the required information is included in the financial statements or notes thereto.
3. Exhibits. The exhibits filed with this Report are set forth in the Exhibit Index appearing immediately below.
EXHIBIT INDEX
The exhibits listed below are filed as part of this Report. References under the caption “Location” to exhibits or other
filings indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and
that the exhibit referred to is incorporated by reference. Management contracts and compensatory plans or arrangements filed as
exhibits to this Report are identified by an asterisk. The Commission file number for UDR, Inc.’s Exchange Act filings
referenced below is 1-10524. The Commission file number for United Dominion Realty, L.P.’s Exchange Act filings is 333-
156002-01.
Exhibit
2.01
2.02
2.03
Description
Location
Exhibit 2(d) to UDR, Inc.’s Form S-3 Registration
Statement (Registration No. 333-64281) filed with
the Commission on September 25, 1998.
Exhibit 2.1 to UDR, Inc.’s Current Report on
Form 8-K dated September 28, 2004 and filed with
the Commission on September 29, 2004.
Exhibit 2.2 to UDR, Inc.’s Current Report on
Form 8-K dated September 29, 2004 and filed with
the Commission on October 5, 2004.
Partnership Interest Purchase and Exchange Agreement
dated as of September 10, 1998, by and between UDR, Inc.,
United Dominion Realty, L.P., American Apartment
Communities Operating Partnership, L.P., AAC
Management LLC, Schnitzer Investment Corp., Fox
Point Ltd. and James D. Klingbeil including as an exhibit
thereto the proposed form of the Third Amended and
Restated Limited Partnership Agreement of United
Dominion Realty, L.P.
Agreement of Purchase and Sale dated as of August 13,
2004, by and between United Dominion Realty, L.P., a
Delaware limited partnership, as Buyer, and Essex The
Crest, L.P., a California limited partnership, Essex El
Encanto Apartments, L.P., a California limited partnership,
Essex Hunt Club Apartments, L.P., a California limited
partnership, and the other signatories named as Sellers
therein.
First Amendment to Agreement of Purchase and Sale dated
as of September 29, 2004, by and between United Dominion
Realty, L.P., a Delaware limited partnership, as Buyer, and
Essex The Crest, L.P., a California limited partnership,
Essex El Encanto Apartments, L.P., a California limited
partnership, Essex Hunt Club Apartments, L.P., a California
limited partnership, and the other signatories named as
Sellers therein.
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Exhibit
2.04
2.05
2.06
2.07
2.08
Description
Location
Second Amendment to Agreement of Purchase and Sale
dated as of October 26, 2004, by and between United
Dominion Realty, L.P., a Delaware limited partnership, as
Buyer, and Essex The Crest, L.P., a California limited
partnership, Essex El Encanto Apartments, L.P., a California
limited partnership, Essex Hunt Club Apartments, L.P., a
California limited partnership, and the other signatories
named as Sellers therein.
Agreement of Purchase and Sale dated as of January 23,
2008, by and between UDR, Inc., United Dominion
Realty, L.P., UDR Texas Properties LLC, UDR Western
Residential, Inc., UDR South Carolina Trust, UDR Ohio
Properties, LLC, UDR of Tennessee, L.P., UDR of NC,
Limited Partnership, Heritage Communities L.P.,
Governour’s Square of Columbus Co., Fountainhead
Apartments Limited Partnership, AAC Vancouver I, L.P.,
AAC Funding Partnership III, AAC Funding Partnership II
and DRA Fund VI LLC.
First Amendment to Agreement of Purchase and Sale dated
as of February 14, 2008, by and between UDR, Inc., United
Dominion Realty, L.P., UDR Texas Properties LLC, UDR
Western Residential, Inc., UDR South Carolina Trust, UDR
Ohio Properties, LLC, UDR of Tennessee, L.P., UDR of
NC, Limited Partnership, Heritage Communities L.P.,
Governour’s Square of Columbus Co., Fountainhead
Apartments Limited Partnership, AAC Vancouver I, L.P.,
AAC Funding Partnership III, AAC Funding Partnership II
and DRA Fund VI LLC.
Contribution Agreement by and among Home
Properties, L.P., UDR, Inc., United Dominion Realty, L.P.
and LSREF 4 Lighthouse Acquisitions, LLC, dated June 22,
2015 (UDR, Inc. and United Dominion Realty, L.P. have
omitted certain schedules and exhibits pursuant to
Item 601(b)(2) of Regulation S-K and shall furnish
supplementally to the Commission copies of any of the
omitted schedules and exhibits upon request by the
Commission.)
Amendment Agreement, dated as of August 27, 2015, by
and among UDR, Inc., United Dominion Realty, L.P., Home
Properties, Inc., Home Properties, L.P., LSREF4 Lighthouse
Acquisitions, LLC LSREF4 Lighthouse Corporate
Acquisitions, LLC and LSREF4 Lighthouse Operating
Acquisitions, LLC.
Exhibit 2.3 to UDR, Inc.’s Current Report on
Form 8-K/A dated September 29, 2004 and filed
with the Commission on November 1, 2004.
Exhibit 2.1 to UDR, Inc.’s Current Report on
Form 8-K dated January 23, 2008 and filed with
the Commission on January 29, 2008.
Exhibit 2.2 to UDR, Inc.’s Current Report on
Form 8-K/A dated March 3, 2008 and filed with
the Commission on May 2, 2008.
Exhibit 2.1 to UDR, Inc.’s Current Report on
Form 8-K dated and filed with the Commission on
June 22, 2015.
Exhibit 2.1 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2015.
3.01
Articles of Restatement of UDR, Inc.
Exhibit 3.09 to UDR, Inc.’s Current Report on
Form 8-K dated July 27, 2005 and filed with the
Commission on August 1, 2005.
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Exhibit
3.02
3.03
3.04
3.05
3.06
3.07
3.08
3.09
3.10
3.11
3.12
3.13
Description
Location
Articles of Amendment to the Articles of Restatement of
UDR, Inc. dated and filed with the State Department of
Assessments and Taxation of the State of Maryland on
March 14, 2007.
Articles of Amendment to the Articles of Restatement of
UDR, Inc. dated August 30, 2011 and filed with the State
Department of Assessments and Taxation of the State of
Maryland on August 31, 2011.
Exhibit 3.2 to UDR, Inc.’s Current Report on
Form 8-K dated March 14, 2007 and filed with the
Commission on March 15, 2007.
Exhibit 3.1 to UDR, Inc.’s Current Report on
Form 8-K dated August 29, 2011 and filed with the
Commission on September 1, 2011.
Articles of Amendment to the Articles of Restatement of
UDR, Inc. dated and filed with the State Department of
Assessments and Taxation of the State of Maryland on May
24, 2018.
Exhibit 3.1 to UDR, Inc.’s Current Report on Form
8-K dated May 24, 2018 and filed with the SEC on
May 29, 2018.
Articles Supplementary relating to UDR, Inc.’s 6.75%
Series G Cumulative Redeemable Preferred Stock dated and
filed with the State Department of Assessments and
Taxation of the State of Maryland on May 30, 2007.
Exhibit 3.4 to UDR, Inc.’s Form 8-A Registration
Statement dated and filed with the Commission on
May 30, 2007.
Amended and Restated Bylaws of UDR, Inc. (as amended
through May 24, 2018).
Certificate of Limited Partnership of United Dominion
Realty, L.P. dated as of February 19, 2004.
Exhibit 3.6 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2018.
Exhibit 3.4 to United Dominion Realty, L.P.’s
Post-Effective Amendment No. 1 to Registration
Statement on Form S-3 dated and filed with the
Commission on October 15, 2010.
Amended and Restated Agreement of Limited Partnership of
United Dominion Realty, L.P. dated as of February 23,
2004.
Exhibit 10.23 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2003.
First Amendment to the Amended and Restated Agreement
of Limited Partnership of United Dominion Realty, L.P.
dated as of June 24, 2005.
Exhibit 10.06 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2005.
Second Amendment to the Amended and Restated
Agreement of Limited Partnership of United Dominion
Realty, L.P. dated as of February 23, 2006.
Exhibit 10.6 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2006.
Third Amendment to the Amended and Restated Agreement
of Limited Partnership of United Dominion Realty, L.P.
dated as of February 2, 2007.
Exhibit 99.1 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2009.
Fourth Amendment to the Amended and Restated
Agreement of Limited Partnership of United Dominion
Realty, L.P. dated as of December 27, 2007.
Exhibit 10.25 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2007.
Fifth Amendment to the Amended and Restated Agreement
of Limited Partnership of United Dominion Realty, L.P.
dated as of March 7, 2008.
Exhibit 10.53 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2008.
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Exhibit
3.14
Description
Sixth Amendment to the Amended and Restated Agreement
of Limited Partnership of United Dominion Realty, L.P.
dated as of December 9, 2008.
Location
Exhibit 10.1 to UDR, Inc.’s Current Report on
Form 8-K dated December 9, 2008 and filed with
the Commission on December 10, 2008.
3.15
3.16
3.17
3.18
3.19
Seventh Amendment to the Amended and Restated
Agreement of Limited Partnership of United Dominion
Realty, L.P., dated as of March 13, 2009.
Exhibit 10.1 to UDR, Inc.’s Current Report on
Form 8-K dated March 18, 2009 and filed with the
Commission on March 19, 2009.
Eighth Amendment to the Amended and Restated
Agreement of Limited Partnership of United Dominion
Realty, L.P., dated as of November 17, 2010.
Exhibit 10.1 to UDR, Inc.’s Current Report on
Form 8-K dated and filed with the Commission on
November 18, 2010.
Ninth Amendment to the Amended and Restated Agreement
of Limited Partnership of United Dominion Realty, L.P.,
dated as of December 4, 2015.
Exhibit 10.1 to UDR, Inc.’s Current Report on
Form 8-K dated December 4, 2015 and filed with
the Commission on December 10, 2015.
Tenth Amendment to the Amended and Restated Agreement
of Limited Partnership of United Dominion Realty, L.P.,
dated as of October 29, 2018.
Exhibit 3.18 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2018.
Eleventh Amendment to the Amended and Restated
Agreement of Limited Partnership of United Dominion
Realty, L.P., dated as of December 16, 2020.
Exhibit 10.1 to UDR, Inc.’s Current Report on
Form 8-K dated and filed with the Commission on
December 16, 2020.
4.01
Form of UDR, Inc. Common Stock Certificate.
Exhibit 4.1 to UDR, Inc.’s Current Report on
Form 8-K dated March 14, 2007 and filed with the
Commission on March 15, 2007.
Exhibit 4(ii)(h)(1) to UDR, Inc.’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996.
4.02
4.03
4.04
Senior Indenture dated as of November 1, 1995, by and
between UDR, Inc. and First Union National Bank of
Virginia, N.A., as trustee.
Supplemental Indenture dated as of June 11, 2003, by and
between UDR, Inc. and Wachovia Bank, National
Association, as trustee.
Exhibit 4.03 to UDR, Inc.’s Current Report on
Form 8-K dated June 17, 2004 and filed with the
Commission on June 18, 2004.
Subordinated Indenture dated as of August 1, 1994 by and
between UDR, Inc. and Crestar Bank, as trustee.
Exhibit 4(i)(m) to UDR, Inc.’s Form S-3
Registration Statement (Registration No. 33-
64725) filed with the Commission on
November 15, 1995.
Exhibit 4(i)(n) to UDR, Inc.’s Form S-3
Registration Statement (Registration No. 33-
64725) filed with the Commission on
November 15, 1995.
Exhibit 4(i)(p) to UDR, Inc.’s Form S-3
Registration Statement (Registration No. 33-
55159) filed with the Commission on August 19,
1994.
Exhibit 4.01 to UDR, Inc.’s Current Report on
Form 8-K dated March 20, 2007 and filed with the
Commission on March 22, 2007.
4.05
Form of UDR, Inc. Senior Debt Security.
4.06
Form of UDR, Inc. Subordinated Debt Security.
4.07
Form of UDR, Inc. Fixed Rate Medium-Term Note,
Series A.
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Exhibit
4.08
4.09
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
Description
Location
Form of UDR, Inc. Floating Rate Medium-Term Note,
Series A.
Indenture dated as of April 1, 1994, by and between
UDR, Inc. and Nationsbank of Virginia, N.A., as trustee.
Exhibit 4.02 to UDR, Inc.’s Current Report on
Form 8-K dated March 20, 2007 and filed with the
Commission on March 22, 2007.
Exhibit 4(ii)(f)(1) to UDR, Inc.’s Quarterly Report
on Form 10-Q for the quarter ended March 31,
1994.
Supplemental Indenture dated as of August 20, 2009, by and
between UDR, Inc. and U.S. Bank National Association, as
trustee, to UDR, Inc.’s Indenture dated as of April 1, 1994.
Exhibit 4.1 to UDR, Inc.’s Current Report on
Form 8-K dated August 20, 2009 and filed with the
Commission on August 21, 2009.
Guaranty of United Dominion Realty, L.P. with respect to
UDR, Inc.’s Indenture dated as of November 1, 1995.
Guaranty of United Dominion Realty, L.P. with respect to
UDR, Inc.’s Indenture dated as of October 12, 2006.
First Supplemental Indenture among UDR, Inc., United
Dominion Realty, L.P. and U.S. Bank National Association,
as Trustee, dated as of May 3, 2011, relating to UDR, Inc.’s
Medium-Term Notes, Series A, due Nine Months or More
from Date of Issue.
Exhibit 99.1 to UDR, Inc.’s Current Report on
Form 8-K dated and filed with the Commission on
September 30, 2010.
Exhibit 99.2 to UDR, Inc.’s Current Report on
Form 8-K dated and filed with the Commission on
September 30, 2010.
Exhibit 4.1 to UDR, Inc.’s Current Report on
Form 8-K filed with the Commission on May 4,
2011.
UDR, Inc. 4.00% Medium-Term Note, Series A due
October 2025, issued September 22, 2015.
Exhibit 4.23 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2015.
UDR, Inc. 2.950% Medium-Term Note, Series A due
September 2026, issued August 23, 2016.
Exhibit 4.1 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2016.
UDR, Inc. 3.500% Medium-Term Note, Series A due July
2027, issued June 16, 2017.
Exhibit 10.2 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2017.
UDR, Inc. 3.500% Medium-Term Note, Series A due
January 2028, issued December 13, 2017.
Exhibit 4.21 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2017.
UDR, Inc. 4.400% Medium-Term Note, Series A due
January 2029, issued October 26, 2018.
Exhibit 4.21 to UDR, Inc’s Annual Report on Form
10-K for the year ended December 31, 2018.
UDR, Inc. 3.200% Medium-Term Note, Series A due
January 2030, issued July 2, 2019.
UDR, Inc. 3.000% Medium-Term Note, Series A due August
2031, issued August 15, 2019.
Exhibit 4.1 to UDR, Inc’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2019.
Exhibit 4.2 to UDR, Inc’s Quarterly Report on
Form 10-Q for the quarter ended September 30,
2019.
74
Table of Contents
Exhibit
4.21
Description
UDR, Inc. 3.100% Medium-Term Note, Series A due
November 2034, issued October 11, 2019.
Location
Exhibit 4.22 to UDR, Inc.’s Annual Report on Form
10-K for the year ended December 31, 2019.
4.22
UDR, Inc. 3.200% Medium-Term Note, Series A due
January 2030, issued October 11, 2019.
Exhibit 4.23 to UDR, Inc.’s Annual Report on Form
10-K for the year ended December 31, 2019.
4.23
Description of UDR, Inc’s Securities.
Exhibit 4.24 to UDR, Inc.’s Annual Report on Form
10-K for the year ended December 31, 2019.
4.24
4.25
4.26
UDR, Inc. 3.200% Medium-Term Note, Series A due
January 2030, issued February 28, 2020.
Exhibit 4.1 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the Quarter ended March 31, 2020.
UDR, Inc. 2.100% Medium-Term Note, Series A due August
2032, issued July 21, 2020.
Exhibit 4.1 to UDR, Inc.’s Quarterly Report on
Form 10-Q for the Quarter ended September 30,
2020.
UDR, Inc. 1.900% Medium-Term Note, Series A due March
2033, issued December 14, 2020.
Filed herewith.
10.01*
UDR, Inc. 1999 Long-Term Incentive Plan (as amended and
restated February 2, 2017).
Exhibit 10.1 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2016.
10.02*
Form of UDR, Inc. Restricted Stock Award Agreement
under the 1999 Long-Term Incentive Plan.
Exhibit 10.2 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2019.
10.03*
Form of UDR, Inc. Restricted Stock Award Agreement for
awards outside of the 1999 Long-Term Incentive Plan.
10.04*
Description of UDR, Inc. Shareholder Value Plan.
10.05*
Description of UDR, Inc. Executive Deferral Plan.
10.06*
Indemnification Agreement by and between UDR, Inc. and
each of its directors and officers listed on Schedule A
thereto.
Exhibit 99.3 to UDR, Inc.’s Current Report on
Form 8-K dated March 19, 2007 and filed with the
Commission on March 19, 2007.
Exhibit 10(x) to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 1999.
Exhibit 10(xi) to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 1999.
Exhibit 10.7 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2016.
10.07
Subordination Agreement dated as of April 16, 1998, by and
between UDR, Inc. and United Dominion Realty, L.P.
Exhibit 10(vi)(a) to UDR, Inc.’s Quarterly Report
on Form 10-Q for the quarter ended March 31,
1998.
75
Table of Contents
Exhibit
10.08
10.09
10.10
10.11
10.12
10.13
Description
Location
Third Amended and Restated Distribution Agreement
among UDR, Inc., United Dominion Realty, L.P., as
Guarantor, Citigroup Global Markets Inc., Deutsche Bank
Securities Inc., J.P. Morgan Securities LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Wells Fargo Securities, LLC, as Agents,
dated September 1, 2011, with respect to the issue and sale
by UDR, Inc. of its Medium-Term Notes, Series A Due
Nine Months or More From Date of Issue.
Exhibit 1.2 to UDR, Inc.’s Current Report on
Form 8-K dated and filed with the Commission on
September 1, 2011.
First Amended and Restated Credit Agreement, dated as of
September 27, 2018, by and among UDR, Inc., as borrower,
and the lenders and agents party thereto.
Exhibit 10.1 to UDR, Inc.’s Current Report on
Form 8-K dated September 27, 2018 and filed with
the Commission on October 1, 2018.
Guaranty of United Dominion Realty, L.P., dated as of
September 27, 2018, with respect to the Credit Agreement,
dated as of September 27, 2018.
Exhibit 10.2 to UDR, Inc.’s Current Report on
Form 8-K dated September 27, 2018 and filed with
the Commission on October 1, 2018.
Amended and Restated Aircraft Time Sharing Agreement
dated as of February 18, 2019, by and between UDR, Inc.
and Thomas W. Toomey.
Exhibit 10.15 to UDR, Inc’s Annual Report on
Form 10-K for the year ended December 31, 2018.
Amended and Restated Aircraft Time Sharing Agreement
dated as of February 18, 2019, by and between UDR, Inc.
and Warren L. Troupe.
Exhibit 10.16 to UDR, Inc’s Annual Report on
Form 10-K for the year ended December 31, 2018.
Exhibit 1.2 to UDR, Inc.’s Current Report on
Form 8-K dated July 29, 2014 and filed with the
Commission on July 31, 2014.
Amendment No. 1, dated July 29, 2014, to the Third
Amended and Restated Distribution Agreement among
UDR, Inc., United Dominion Realty, L.P., as Guarantor,
Citigroup Global Markets Inc., Deutsche Bank
Securities Inc., J.P. Morgan Securities LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Wells Fargo Securities, LLC, as Agents,
dated September 1, 2011, with respect to the issue and sale
by UDR, Inc. of its Medium-Term Notes, Series A Due
Nine Months or More From Date of Issue.
10.14
Agreement of Limited Partnership of UDR Lighthouse
DownREIT L.P., dated as of October 5, 2015, as amended.
Exhibit 10.21 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2015.
10.15*
Class 1 LTIP Unit Award Agreement.
10.16*
Notice of Class 2 LTIP Unit Award.
10.17*
Notice of Restricted Stock Unit Award.
Exhibit 10.22 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2015.
Exhibit 10.16 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2019.
Exhibit 10.17 to UDR, Inc.’s Annual Report on
Form 10-K for the year ended December 31, 2019.
76
Table of Contents
Exhibit
10.18
10.19
10.20
10.21
Description
Amendment No. 2, dated April 27, 2017, to the Third
Amended and Restated Distribution Agreement, dated
September 1, 2011 and as amended July 29, 2014, among
the Company and Citigroup Global Markets Inc., J.P.
Morgan Securities LLC, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Morgan Stanley & Co. LLC, and Wells
Fargo Securities, LLC, as Agents, with respect to the issue
and sale by UDR, Inc. of its Medium Term Notes, Series A
Due Nine Months or More From Date of Issue.
Location
Exhibit 1.2 to UDR, Inc.’s Current Report on Form
8-K dated April 27, 2017 and filed with the
Commission on April 27, 2017.
Letter Agreement, between UDR, Inc. and Warren L.
Troupe (including the related release agreement and
consulting agreement as exhibits thereto), dated December
31, 2019.
Exhibit 10.1 to UDR, Inc.’s Current Report on
Form 8-K dated December 31, 2019 and filed with
the Commission on January 3, 2020.
Letter Agreement, between UDR, Inc. and Jerry A. Davis
(including the related release agreement and Consulting
Agreement as exhibits thereto), dated December 16, 2020.
Exhibit 10.2 to UDR Inc.’s Current Report on
Form 8-K dated and filed with the Commission on
December 16, 2020.
Amendment No. 3, dated May 7, 2020, to the Third
Amended and Restated Distribution Agreement, dated
September 1, 2011 and as amended July 29, 2014 and April
27, 2017.
Exhibit 1.2 to UDR, Inc.’s Current Report on Form
8-K dated and filed with the Commission on May
7, 2020.
10.22
Class 1 Performance LTIP Unit Award Agreement.
Filed herewith.
10.23
Class 2 Performance LTIP Unit Award Agreement.
Filed herewith.
10.24
Class 2 Performance LTIP Unit Award Agreement, STI.
Filed herewith.
21
Subsidiaries of UDR, Inc. and United Dominion Realty, L.P.
Filed herewith.
23.1
23.2
31.1
31.2
31.3
31.4
32.1
Consent of Independent Registered Public Accounting Firm
for UDR, Inc.
Filed herewith.
Consent of Independent Registered Public Accounting Firm
for United Dominion Realty, L.P.
Filed herewith.
Rule 13a-14(a) Certification of the Chief Executive Officer
of UDR, Inc.
Filed herewith.
Rule 13a-14(a) Certification of the Chief Financial Officer
of UDR, Inc.
Filed herewith.
Rule 13a-14(a) Certification of the Chief Executive Officer
of United Dominion Realty, L.P.
Filed herewith.
Rule 13a-14(a) Certification of the Chief Financial Officer
of United Dominion Realty, L.P.
Filed herewith.
Section 1350 Certification of the Chief Executive Officer of
UDR, Inc.
Filed herewith.
77
Table of Contents
Exhibit
32.2
Description
Section 1350 Certification of the Chief Financial Officer of
UDR, Inc.
Filed herewith.
Location
32.3
32.4
101
Section 1350 Certification of the Chief Executive Officer of
United Dominion Realty, L.P.
Filed herewith.
Section 1350 Certification of the Chief Financial Officer of
United Dominion Realty, L.P.
Filed herewith.
Filed herewith.
Inline XBRL (Extensible Business Reporting Language).
The following materials from this Annual Report on
Form 10-K for the period ended December 31, 2020,
formatted in Inline XBRL: (i) consolidated balance sheets of
UDR, Inc., (ii) consolidated statements of operations of
UDR, Inc., (iii) consolidated statements of comprehensive
income/(loss) of UDR, Inc., (iv) consolidated statements of
changes in equity of UDR, Inc., (v) consolidated statements
of cash flows of UDR, Inc., (vi) notes to consolidated
financial statements of UDR, Inc., (vii) consolidated balance
sheets of United Dominion Realty, L.P., (viii) consolidated
statements of operations of United Dominion Realty, L.P.,
(ix) consolidated statements of comprehensive income/(loss)
of United Dominion Realty, L.P.; (x) consolidated
statements of changes in capital of United Dominion
Realty, L.P., (xi) consolidated statements of cash flows of
United Dominion Realty, L.P. and (xii) notes to consolidated
financial statements of United Dominion Realty, L.P. The
instance document does not appear in the interactive data
file because its XBRL tags are embedded within the Inline
XBRL document.
104
Cover Page Interactive Data File - the cover page XBRL tags
are embedded within the Inline XBRL document.
Filed herewith.
* Management Contract or Compensatory Plan or Arrangement
Item 16. FORM 10-K SUMMARY
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 18, 2021
UDR, Inc.
By: /s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
78
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on February 18,
2021 by the following persons on behalf of the registrant and in the capacities indicated.
/s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
/s/ Joseph D. Fisher
Joseph D. Fisher
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Tracy L. Hofmeister
Tracy L. Hofmeister
Senior Vice President – Chief Accounting Officer
(Principal Accounting Officer)
/s/ James D. Klingbeil
James D. Klingbeil
Lead Independent Director
/s/ Katherine A. Cattanach
Katherine A. Cattanach
Director
/s/ Mary Ann King
Mary Ann King
Director
/s/ Jon A. Grove
Jon A. Grove
Director
/s/ Clint D. McDonnough
Clint D. McDonnough
Director
/s/ Robert A. McNamara
Robert A. McNamara
Director
/s/ Mark R. Patterson
Mark R. Patterson
Director
/s/ Diane M. Morefield
Diane M. Morefield
Director
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 18, 2021
UNITED DOMINION REALTY, L.P.
By: UDR, Inc., its sole general partner
By: /s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
79
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on February 18,
2021 by the following persons on behalf of the registrant and in the capacities indicated.
/s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
of the General Partner
(Principal Executive Officer)
/s/ Joseph D. Fisher
Joseph D. Fisher
Senior Vice President and Chief Financial Officer
of the General Partner (Principal Financial Officer)
/s/ Tracy L. Hofmeister
Tracy L. Hofmeister
Senior Vice President – Chief Accounting Officer
of the General Partner
(Principal Accounting Officer)
/s/ James D. Klingbeil
James D. Klingbeil
Lead Independent Director of the General Partner
/s/ Katherine A. Cattanach
Katherine A. Cattanach
Director of the General Partner
/s/ Mary Ann King
Mary Ann King
Director of the General Partner
/s/ Jon A. Grove
Jon A. Grove
Director of the General Partner
/s/ Clint D. McDonnough
Clint D. McDonnough
Director of the General Partner
/s/ Robert A. McNamara
Robert A. McNamara
Director of the General Partner
/s/ Mark R. Patterson
Mark R. Patterson
Director of the General Partner
/s/ Diane M. Morefield
Diane M. Morefield
Director
80
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
UDR, INC.:
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at December 31, 2020 and 2019
Consolidated Statements of Operations for the years ended December 31, 2020, 2019, and 2018
Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2020, 2019, and 2018
Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019, and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019, and 2018
Notes to Consolidated Financial Statements
UNITED DOMINION REALTY, L.P.:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at December 31, 2020 and 2019
Consolidated Statements of Operations for the years ended December 31, 2020, 2019, and 2018
PAGE
F-2
F-6
F-7
F-8
F-9
F-10
F-12
F-58
F-61
F-62
Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2020, 2019, and 2018
F-63
Consolidated Statements of Changes in Capital for the years ended December 31, 2020, 2019, and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019, and 2018
Notes to Consolidated Financial Statements
SCHEDULES FILED AS PART OF THIS REPORT
UDR, INC.:
Schedule III- Summary of Real Estate Owned
UNITED DOMINION REALTY, L.P.:
Schedule III- Summary of Real Estate Owned
F-64
F-65
F-66
S-1
S-6
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to
require submission of the schedule, or because the information required is included in the consolidated financial statements and
notes thereto.
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of UDR, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UDR, Inc. (the Company) as of December 31, 2020 and
2019, the related consolidated statements of operations, comprehensive income/(loss), changes in equity and cash flows for each
of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedule listed in the
accompanying Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,
2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 18, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Indicators of Impairment of Real Estate Owned and Investment in Unconsolidated Joint Ventures
Description of the
Matter
At December 31, 2020, the Company’s real estate owned, net and investment in and advances to
unconsolidated joint ventures, net were approximately $8.5 billion and $600.2 million, respectively. As
more fully described in Note 2 to the consolidated financial statements, the Company periodically
evaluates these assets for indicators of impairment, and this includes, among other things, judgments based
on factors such as operational performance, market conditions, the Company’s intent and ability to hold
each asset, as well as any significant cost overruns on development or redevelopment
F - 2
Table of Contents
communities. During 2020, the Company did not recognize an impairment related to real estate owned, net
or any other than temporary impairments related to its investment in unconsolidated joint ventures.
Auditing the Company’s evaluation for indicators of impairment was complex due to a high degree of
subjectivity in the identification of events or changes in circumstances that may indicate an impairment of
its real estate owned or that the value of its investment in unconsolidated joint ventures may be other than
temporarily impaired. Differences or changes in these judgments could have a material impact on the
Company’s analysis.
How We Addressed
the Matter in Our
Audit
We tested the Company’s internal controls over the asset impairment evaluation process. This included
testing controls over management’s determination and review of the considerations used in the impairment
indicator analysis.
Description of the
Matter
How We Addressed
the Matter in Our
Audit
Our procedures with regards to the Company’s evaluation for indicators of impairment included, among
others, testing the completeness and accuracy of management’s impairment analysis and evaluating
management’s judgments determining whether indicators of impairment were present. For example, we
performed inquires of management, considered historical operating results and the current market
conditions, performed an independent assessment using both internally and externally available
information, read the minutes of the meetings of the Board of Directors, and reviewed the Company’s
development and redevelopment costs.
Accounting for acquisitions of real estate investment properties
During 2020, the Company acquired real estate investment properties, including one real estate investment
property for which the Company held a previous unconsolidated equity interest. These transactions were
accounted for as asset acquisitions. The aggregate increase in real estate and other assets due to these
acquisitions was approximately $422.0 million. As more fully described in Note 3 to the consolidated
financial statements, the total consideration was allocated to land, land improvements, buildings and
improvements, and real estate intangible assets based on their relative fair value.
Auditing the Company’s acquisition of real estate investment properties is complex and requires a higher
degree of auditor judgment due to the significant assumptions that are utilized in the determination of the
relative fair values of the assets acquired. The significant assumptions used in management’s analysis to
estimate the fair value of these components includes capitalization rates, market comparable prices for
similar land parcels, market rental rates, leasing commission rates as well as the time it would take to lease
any acquired buildings that were vacant at acquisition.
We tested the Company’s internal controls over the acquisition of real estate investment properties and the
resulting purchase price allocations. This included testing controls over management’s identification of the
assets acquired and liabilities assumed and evaluating the methods and significant assumptions used by the
Company to develop such estimates.
Our testing of the fair values of the assets acquired included, among others, evaluating the selection of the
Company's valuation model and testing the significant assumptions discussed above as well as the
completeness and accuracy of the underlying data. For example, we compared management’s assumptions
to observable market transactions and replacement costs associated with the fair value of the land and
buildings and improvements. For in-place leases, we compared management’s assumptions to published
market data for comparable leases, related leasing commissions and the amount of time it would take to
lease up the space to stabilization assuming the space was vacant at acquisition. We involved our real
estate valuation specialists to assist in evaluating the significant assumptions listed above. In addition, we
performed sensitivity tests on the significant assumptions to evaluate the change in the fair value resulting
from changes in the assumptions.
F - 3
Table of Contents
/s/ Ernst & Young LLP
We have served as the Company's auditor since at least 1984, but we are unable to determine the specific year.
Denver, Colorado
February 18, 2021
F - 4
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of UDR, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited UDR, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) (the COSO criteria). In our opinion, UDR, Inc. (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, and the related consolidated
statements of operations, comprehensive income/(loss), changes in equity and cash flows for each of the three years in the period
ended December 31, 2020, and the related notes and the financial statement schedule listed in the accompanying Index at Item
15(a) and our report dated February 18, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Denver, Colorado
February 18, 2021
F - 5
Table of Contents
UDR, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
Real estate owned:
Real estate held for investment
ASSETS
Less: accumulated depreciation
Real estate held for investment, net
Real estate under development (net of accumulated depreciation of $1,010 and $23, respectively)
Real estate held for disposition (net of accumulated depreciation of $13,779 and $0,
respectively)
Total real estate owned, net of accumulated depreciation
Cash and cash equivalents
Restricted cash
Notes receivable, net
Investment in and advances to unconsolidated joint ventures, net
Operating lease right-of-use assets
Other assets
Total assets
Liabilities:
LIABILITIES AND EQUITY
Secured debt, net
Unsecured debt, net
Operating lease liabilities
Real estate taxes payable
Accrued interest payable
Security deposits and prepaid rent
Distributions payable
Accounts payable, accrued expenses, and other liabilities
Total liabilities
Commitments and contingencies (Note 15)
December 31,
2020
December 31,
2019
$
$
$
$
$
$
12,706,940
(4,590,577)
8,116,363
246,867
102,876
8,466,106
1,409
22,762
157,992
600,233
200,913
188,118
9,637,533
862,147
4,114,401
195,592
29,946
44,760
49,008
115,795
110,999
5,522,648
12,532,324
(4,131,330)
8,400,994
69,754
—
8,470,748
8,106
25,185
153,650
588,262
204,225
186,296
9,636,472
1,149,441
3,558,083
198,558
29,445
45,199
48,353
109,382
90,032
5,228,493
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership
856,294
1,018,665
Equity:
Preferred stock, no par value; 50,000,000 shares authorized:
8.00% Series E Cumulative Convertible; 2,695,363 and 2,780,994 shares issued and
outstanding at December 31, 2020 and December 31, 2019, respectively
Series F; 14,440,519 and 14,691,274 shares issued and outstanding at December 31, 2020 and
December 31, 2019, respectively
Common stock, $0.01 par value; 350,000,000 shares authorized:
296,611,579 and 294,588,305 shares issued and outstanding at December 31, 2020 and
December 31, 2019, respectively
Additional paid-in capital
Distributions in excess of net income
Accumulated other comprehensive income/(loss), net
Total stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
44,764
46,200
1
1
2,966
5,881,383
(2,685,770)
(9,144)
3,234,200
24,391
3,258,591
9,637,533
$
2,946
5,781,975
(2,462,132)
(10,448)
3,358,542
30,772
3,389,314
9,636,472
$
See accompanying notes to consolidated financial statements.
F - 6
Table of Contents
UDR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
REVENUES:
Rental income
Joint venture management and other fees
Total revenues
OPERATING EXPENSES:
Property operating and maintenance
Real estate taxes and insurance
Property management
Other operating expenses
Real estate depreciation and amortization
General and administrative
Casualty-related charges/(recoveries), net
Other depreciation and amortization
Total operating expenses
Gain/(loss) on sale of real estate owned
Operating income
Income/(loss) from unconsolidated entities
Interest expense
Interest income and other income/(expense), net
Income/(loss) before income taxes
Tax (provision)/benefit, net
Net income/(loss)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating
Partnership and DownREIT Partnership
Net (income)/loss attributable to noncontrolling interests
Net income/(loss) attributable to UDR, Inc.
Distributions to preferred stockholders — Series E (Convertible)
Net income/(loss) attributable to common stockholders
Income/(loss) per weighted average common share:
Basic
Diluted
Weighted average number of common shares outstanding:
Basic
Diluted
Year Ended December 31,
2019
2018
2020
$ 1,236,096
5,069
1,241,165
$ 1,138,138
14,055
1,152,193
$ 1,035,105
11,754
1,046,859
201,944
180,450
35,538
22,762
608,616
49,885
2,131
10,013
1,111,339
119,277
249,103
18,844
(202,706)
6,274
71,515
(2,545)
68,970
(4,543)
(161)
64,266
(4,230)
60,036
0.20
0.20
$
$
$
$
$
$
178,947
150,888
32,721
13,932
501,257
51,533
474
6,666
936,418
5,282
221,057
137,873
(170,917)
15,404
203,417
(3,838)
199,579
(14,426)
(188)
184,965
(4,104)
180,861
0.63
0.63
$
$
$
169,078
133,912
28,465
12,100
429,006
46,983
2,121
6,673
828,338
136,197
354,718
(5,055)
(134,168)
6,735
222,230
(688)
221,542
(18,215)
(221)
203,106
(3,868)
199,238
0.74
0.74
294,545
294,927
285,247
286,015
268,179
269,483
See accompanying notes to consolidated financial statements.
F - 7
Table of Contents
UDR, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In thousands)
Net income/(loss)
Other comprehensive income/(loss), including portion attributable to
noncontrolling interests:
Other comprehensive income/(loss) - derivative instruments:
Unrealized holding gain/(loss)
(Gain)/loss reclassified into earnings from other comprehensive income/(loss)
Other comprehensive income/(loss), including portion attributable to
noncontrolling interests
Comprehensive income/(loss)
Comprehensive (income)/loss attributable to noncontrolling interests
Comprehensive income/(loss) attributable to UDR, Inc.
$
$
Year Ended December 31,
2019
$ 199,579
$
2020
68,970
(3,382)
4,827
1,445
70,415
(4,845)
65,570
(8,437)
(2,770)
(11,207)
188,372
(13,788)
$ 174,584
$
2018
221,542
4,806
(1,948)
2,858
224,400
(18,680)
205,720
See accompanying notes to consolidated financial statements.
F - 8
Table of Contents
UDR, INC.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(In thousands, except per share data)
Balance at December 31, 2018
46,201
2,755
4,920,732
—
—
Balance at December 31, 2017
Net income/(loss) attributable to UDR, Inc.
Net income/(loss) attributable to noncontrolling interests
Contribution of noncontrolling interests in consolidated real estate
Repurchase of common shares
Long Term Incentive Plan Unit grants/(vestings), net
Other comprehensive income/(loss)
Exercise of stock options, net
Issuance/(forfeiture) of common and restricted shares, net
Issuance of common shares through public offering, net
Adjustment for conversion of noncontrolling interest of unitholders in the
Operating Partnership and DownREIT Partnership
Common stock distributions declared ($1.29 per share)
Preferred stock distributions declared-Series E ($1.3968 per share)
Adjustment to reflect redemption value of redeemable noncontrolling
interests
Net income/(loss) attributable to UDR, Inc.
Net income/(loss) attributable to noncontrolling interests
Contribution of noncontrolling interests in consolidated real estate
Long Term Incentive Plan Unit grants/(vestings), net
Other comprehensive income/(loss)
Issuance/(forfeiture) of common and restricted shares, net
Issuance of common shares through public offering, net
Adjustment for conversion of noncontrolling interest of unitholders in the
Operating Partnership and DownREIT Partnership
Common stock distributions declared ($1.37 per share)
Preferred stock distributions declared-Series E ($1.4832 per share)
Adjustment to reflect redemption value of redeemable noncontrolling
interests
Balance at December 31, 2019
Net income/(loss) attributable to UDR, Inc.
Net income/(loss) attributable to noncontrolling interests
Redemption of noncontrolling interests in consolidated real estate
Long Term Incentive Plan Unit grants/(vestings), net
Other comprehensive income/(loss)
Issuance/(forfeiture) of common and restricted shares, net
Cumulative effect upon adoption of ASC 326
Issuance of common shares through public offering, net
Conversion of Series E Cumulative Convertible shares
Adjustment for conversion of noncontrolling interest of unitholders in the
Operating Partnership and DownREIT Partnership
Common stock distributions declared ($1.44 per share)
Repurchase of common shares
Preferred stock distributions declared-Series E ($1.5592 per share)
Adjustment to reflect redemption value of redeemable noncontrolling
interests
Balance at December 31, 2020
Distributions
in Excess of
Net Income
$ (1,871,603) $
203,106
—
—
—
—
—
—
—
—
—
—
—
—
—
Preferred Common
Stock
2,678
Paid-in
Capital
$ 4,651,205
Stock
$ 46,201
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$ 46,201
—
—
—
—
—
—
—
—
(1,436)
—
—
—
—
—
—
(6)
—
—
8
(1)
72
4
—
—
—
—
—
—
—
—
158
33
—
—
—
(19,982)
(23,061)
(507)
299,753
13,324
—
—
—
—
—
—
—
—
2,088
725,157
133,998
—
—
2,946
—
—
—
—
—
1
—
21
1
3
—
(6)
—
$ 5,781,975
—
—
—
—
—
2,886
—
102,213
1,435
12,663
—
(19,789)
—
—
(348,079)
(3,868)
(43,552)
(2,063,996)
184,965
—
—
—
—
—
—
—
(395,113)
(4,104)
64,266
—
—
—
—
—
(2,182)
—
—
—
(425,233)
—
(4,230)
—
(183,884)
$ (2,462,132) $
Accumulated
Other
Comprehensive
Income/(Loss), Noncontrolling
net
Interests
Total
(2,681) $
—
—
—
—
—
2,614
—
—
—
—
—
—
—
(67)
—
—
—
—
(10,381)
—
—
—
—
—
—
(10,448) $
—
—
—
—
1,304
—
—
—
—
—
—
—
—
9,564 $ 2,835,364
203,106
175
108
(19,988)
7,305
2,614
(23,053)
(508)
299,825
—
175
108
—
7,305
—
—
—
—
—
—
—
13,328
(348,079)
(3,868)
—
17,152
—
125
125
13,370
—
—
—
(43,552)
2,922,777
184,965
125
125
13,370
(10,381)
2,088
725,315
—
—
—
134,031
(395,113)
(4,104)
—
(183,884)
30,772 $ 3,389,314
64,266
99
(125)
(6,355)
1,304
2,887
(2,182)
102,234
—
—
99
(125)
(6,355)
—
—
—
—
—
—
—
—
—
12,666
(425,233)
(19,795)
(4,230)
—
$ 44,765
—
2,966
—
$ 5,881,383
$
143,741
$ (2,685,770) $
—
(9,144) $
—
143,741
24,391 $ 3,258,591
See accompanying notes to consolidated financial statements.
F - 9
Table of Contents
UDR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except for share data)
Operating Activities
Net income/(loss)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Year Ended December 31,
2019
2018
2020
$
68,970
$
199,579
$
221,542
Depreciation and amortization
(Gain)/loss on sale of real estate owned
(Income)/loss from unconsolidated entities
Return on investment in unconsolidated joint ventures
Amortization of share-based compensation
Loss on extinguishment of debt, net
Other
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets
Increase/(decrease) in operating liabilities
Net cash provided by/(used in) operating activities
Investing Activities
Acquisition of real estate assets
Proceeds from sales of real estate investments, net
Development of real estate assets
Capital expenditures and other major improvements — real estate assets
Capital expenditures — non-real estate assets
Investment in unconsolidated joint ventures
Distributions received from unconsolidated joint ventures
Purchase deposits on pending acquisitions
Repayment/(issuance) of notes receivable, net
Net cash provided by/(used in) investing activities
Financing Activities
Payments on secured debt
Proceeds from the issuance of secured debt
Payments on unsecured debt
Net proceeds from the issuance of unsecured debt
Net proceeds/(repayment) of commercial paper
Net proceeds/(repayment) of revolving bank debt
Proceeds from the issuance of common shares through public offering, net
Repurchase of common shares
Distributions paid to redeemable noncontrolling interests
Distributions paid to preferred stockholders
Distributions paid to common stockholders
Payment of prepayment and extinguishment costs
Other
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash, beginning of year
Cash, cash equivalents, and restricted cash, end of year
Supplemental Information:
Interest paid during the period, net of amounts capitalized, and cash paid for operating leases
Cash paid/(refunds received) for income taxes
Non-cash transactions:
Transfer of investment in and advances to unconsolidated joint ventures to real estate owned
Transfer of investment in and advances to unconsolidated joint ventures to joint venture
member
Secured debt assumed in the consolidation of unconsolidated joint ventures
Acquisition of intellectual property in exchange for cancellation of secured note receivable
Recognition of allowance for credit losses
Recognition of operating lease right-of-use assets
Recognition of operating lease liabilities
Right-of-use assets obtained in exchange for operating lease liabilities remeasurement
Vesting of LTIP Units
Development costs and capital expenditures incurred, but not yet paid
F - 10
618,629
(119,277)
(18,844)
20,664
19,616
49,190
12,193
(44,670)
(2,155)
604,316
(407,829)
277,886
(121,240)
(163,105)
(11,008)
(76,073)
49,342
(1,530)
(7,285)
(460,842)
(425,839)
160,930
(300,000)
959,419
(110,000)
11,441
102,234
(19,795)
(32,038)
(4,217)
(419,350)
(62,645)
(12,734)
(152,594)
(9,120)
33,291
24,171
172,326
1,029
14,700
$
$
$
—
—
2,250
2,182
—
—
—
23,501
31,387
507,923
(5,282)
(137,873)
5,179
24,330
29,594
10,364
(10,956)
7,846
630,704
(1,370,770)
38,000
(25,401)
(167,188)
(17,159)
(93,059)
72,441
(12,160)
(111,391)
(1,686,687)
(162,253)
162,500
(700,000)
1,099,816
198,885
16,567
725,315
—
(31,580)
(4,063)
(383,079)
(27,782)
(13,943)
880,383
(175,600)
208,891
33,291
169,558
1,519
288,108
60,625
551,800
—
—
94,349
88,336
111,055
14,742
16,635
$
$
$
435,679
(136,197)
5,055
4,248
14,244
3,299
1,699
(13,880)
24,987
560,676
—
247,031
(150,238)
(112,359)
(4,850)
(112,025)
42,683
(1,000)
(22,790)
(113,548)
(279,243)
80,000
—
299,994
(198,885)
(21,751)
299,825
(19,988)
(32,457)
(3,836)
(342,241)
(3,178)
(38,307)
(260,067)
187,061
21,830
208,891
132,466
625
—
—
—
—
—
—
4,397
10,304
$
$
$
UDR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)
(In thousands, except for share data)
Conversion of Operating Partnership and DownREIT Partnership noncontrolling interests to
common stock (303,146 shares in 2020; 3,165,780 shares in 2019; and 348,057 shares in
2018)
Dividends declared, but not yet paid
The following reconciles cash, cash equivalents, and restricted cash to amounts as shown above:
Cash, cash equivalents, and restricted cash, beginning of year:
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash as shown above
Cash, cash equivalents, and restricted cash, end of year:
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash as shown above
Year Ended December 31,
2019
2018
2020
12,666
115,795
134,031
109,382
13,328
97,666
$
$
$
$
8,106
25,185
33,291
1,409
22,762
24,171
$
$
$
$
185,216
23,675
208,891
8,106
25,185
33,291
$
$
$
$
2,038
19,792
21,830
185,216
23,675
208,891
See accompanying notes to consolidated financial statements.
F - 11
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
1. CONSOLIDATION AND BASIS OF PRESENTATION
Organization and Formation
UDR, Inc. (“UDR,” the “Company,” “we,” or “our”) is a self-administered real estate investment trust, or REIT, that
owns, operates, acquires, renovates, develops, redevelops, and manages apartment communities generally in high barrier-to-entry
markets located in the United States. The high barrier-to-entry markets are characterized by limited land for new construction,
difficult and lengthy entitlement process, expensive single-family home prices and significant employment growth potential. At
December 31, 2020, our consolidated apartment portfolio consisted of 149 consolidated communities located in 21 markets
consisting of 48,283 apartment homes. In addition, the Company has an ownership interest in 5,295 completed or to-be-
completed apartment homes through unconsolidated joint ventures or partnerships, including 2,165 apartment homes owned by
entities in which we hold preferred equity investments.
Basis of Presentation
The accompanying consolidated financial statements of UDR include its wholly-owned and/or controlled subsidiaries
(see Note 4, Variable Interest Entities, for further discussion). All significant intercompany accounts and transactions have been
eliminated in consolidation. Certain previously reported amounts have been reclassified to conform to the current financial
statement presentation.
The accompanying consolidated financial statements include the accounts of UDR and its subsidiaries, including United
Dominion Realty, L.P. (the “Operating Partnership” or the “OP”) and UDR Lighthouse DownREIT L.P. (the “DownREIT
Partnership”). As of December 31, 2020 and 2019, there were 184.8 million and 184.1 million units, respectively, in the
Operating Partnership (“OP Units”) outstanding, of which 176.2 million, or 95.3% and 176.2 million, or 95.7%, respectively,
were owned by UDR and 8.6 million, or 4.7% and 7.9 million, or 4.3%, respectively, were owned by outside limited partners. As
of December 31, 2020 and 2019, there were 32.4 million units in the DownREIT Partnership (“DownREIT Units”) outstanding,
of which 18.7 million, or 57.8% and 18.4 million, or 56.8%, respectively, were owned by UDR (including 13.5 million
DownREIT Units, or 41.6% and 13.5 million, or 41.6%, that were held by the Operating Partnership as of December 31, 2020
and 2019, respectively) and 13.7 million, or 42.2% and 14.0 million, or 43.2%, respectively, were owned by outside limited
partners. The consolidated financial statements of UDR include the noncontrolling interests of the unitholders in the Operating
Partnership and DownREIT Partnership.
The Company evaluated subsequent events through the date its financial statements were issued. No significant
recognized or non-recognized subsequent events were noted other than those in Note 2, Significant Accounting Policies, Note 3,
Real Estate Owned, Note 5, Joint Ventures and Partnerships and Note 7, Secured and Unsecured Debt, net.
2. SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2020-06, Debt—Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in
Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The
ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible
instruments and contracts on an entity’s own equity. The updated standard will be effective for the Company on January 1, 2022;
however, early adoption of the ASU is permitted on January 1, 2021. The Company is currently evaluating the effect that the
updated standard will have on the consolidated financial statements and related disclosures.
In April 2020, the FASB issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the
application of lease guidance in ASC 842, Leases. The Q&A states that some lease contracts may contain explicit or implicit
enforceable rights and obligations that require lease concessions if certain circumstances arise that are beyond the control of the
parties to the contract. Therefore, entities would need to perform a lease-by-lease analysis to determine
F - 12
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
whether contractual provisions in an existing lease agreement provide enforceable rights and obligations related to lease
concessions.
The FASB determined it would be acceptable for entities to not perform a lease-by-lease analysis regarding rent
concessions resulting from COVID-19, and to instead make a policy election regarding rent concessions, which would give
entities the option to account or not to account for these rent concessions as lease modifications if the total payments required by
the modified contract are substantially the same or less than the total payments required by the original contract. Entities making
the election to account for these rent concessions as lease modifications would recognize the effects of rent abatements and rent
deferrals on a prospective straight-line basis over the remainder of the modified contract.
We have made the election to not perform a lease-by-lease analysis to determine whether contractual provisions in an
existing lease agreement provide enforceable rights and obligations related to lease concessions. By electing the FASB relief, we
have also made an accounting policy election to account for rent abatements and rent deferrals given to lessees due to the
COVID-19 pandemic as lease modifications. The lease concessions given to lessees due to the COVID-19 pandemic did not have
a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical
expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in
ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020,
the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for
future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the
index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with
past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as
additional changes in the market occur. The ASU has not had a material impact on the consolidated financial statements and the
Company does not expect the ASU to have a material impact on the consolidated financial statements on a prospective basis.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit
Losses on Financial Instruments. The standard required entities to estimate a lifetime expected credit loss for most financial
assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to
present the net amount of the financial instrument expected to be collected. In November 2018, the FASB issued ASU 2018-
19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amended the transition requirements
and scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the credit losses
standard, but rather, should be accounted for in accordance with the leases standard. The updated standard became effective for
the Company on January 1, 2020 and was adopted on a modified retrospective basis through a cumulative-effect adjustment to
retained earnings of approximately $2.2 million on that date, which was primarily associated with our notes receivable. The
Company concluded the cumulative effect was not material to our consolidated financial statements. Disclosures were updated
pursuant to the requirements of the ASU.
Real Estate
Real estate assets held for investment are carried at historical cost and consist of land, land improvements, buildings and
improvements, furniture, fixtures and equipment and other costs incurred during their development, acquisition and
redevelopment.
Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Expenditures for
improvements, renovations, and replacements related to the acquisition and/or improvement of real estate assets are capitalized
and depreciated over their estimated useful lives if the expenditures qualify as a betterment or the life of the related asset will be
substantially extended beyond the original life expectancy.
UDR purchases real estate investment properties and records the tangible and identifiable intangible assets and liabilities
acquired based on their estimated fair value. The primary, although not only, identifiable intangible asset associated with our
portfolio is the value of existing lease agreements. When recording the acquisition of a community,
F - 13
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
we first assign fair value to the estimated intangible value of the existing lease agreements and then to the estimated value of the
land, building and fixtures assuming the community is vacant. The Company estimates the intangible value of the lease
agreements by determining the lost revenue associated with a hypothetical lease-up. Depreciation on the building is based on the
expected useful life of the asset and the in-place leases are amortized over their remaining average contractual life. Property
acquisition costs are capitalized as incurred if the acquisition does not meet the definition of a business.
Quarterly or when changes in circumstances warrant, UDR will assess our real estate properties for indicators
of impairment. The judgments regarding the existence of impairment indicators are based on certain factors. Such factors include,
among other things, operational performance, market conditions, the Company’s intent and ability to hold the related asset, as
well as any significant cost overruns on development properties.
If a real estate property has indicators of impairment, we assess whether the long-lived asset’s carrying value exceeds
the community’s undiscounted future cash flows, which is representative of projected net operating income (“NOI”) plus the
residual value of the community. Our future cash flow estimates are based upon historical results adjusted to reflect our best
estimate of future market and operating conditions and our estimated holding periods. If such indicators of impairment are
present and the carrying value exceeds the undiscounted cash flows of the community, an impairment loss is recognized equal to
the excess of the carrying amount of the asset over its estimated fair value. Our estimates of fair value represent our best estimate
based primarily upon unobservable inputs related to rental rates, operating costs, growth rates, discount rates, capitalization rates,
industry trends and reference to market rates and transactions.
For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated
cost to sell is less than the carrying value of the asset. Properties classified as real estate held for disposition generally represent
properties that are actively marketed or contracted for sale with the closing expected to occur within the next twelve months. Real
estate held for disposition is carried at the lower of cost, net of accumulated depreciation, or fair value, less the cost to sell,
determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held for disposition properties
are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to held for disposition
properties are capitalized at cost. Depreciation is not recorded on real estate held for disposition.
For the years ended December 31, 2020, 2019 and 2018, we did not record any impairments on our real estate
properties.
Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which are 30 to
55 years for buildings, 10 to 35 years for major improvements, and 3 to 10 years for furniture, fixtures, equipment, and other
assets.
Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the
Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Company capitalizes costs directly
related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to,
interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for
personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria
for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary
to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the
asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized
interest, for the years ended December 31, 2020, 2019, and 2018 were $12.0 million, $8.4 million and $7.5 million, respectively.
During the years ended December 31, 2020, 2019, and 2018, total interest capitalized was $7.0 million, $5.1 million and $10.6
million, respectively. As each home in a capital project is completed and becomes available for lease-up, the Company ceases
capitalization on the related portion and depreciation commences over the estimated useful life.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and short-term, highly
liquid investments. We consider all highly liquid investments with maturities of three months or less when
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
purchased to be cash equivalents. The majority of the Company’s cash and cash equivalents are held at major commercial banks.
Restricted Cash
Restricted cash primarily consists of escrow deposits held by lenders for real estate taxes, insurance and replacement
reserves, and security deposits.
Real Estate Sales Gain Recognition
For sale transactions resulting in a transfer of a controlling financial interest of a property, the Company generally
derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in
which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for
derecognition are not met and the Company will continue to recognize the related assets and liabilities on its Consolidated
Balance Sheets.
Sale transactions to entities in which the Company sells a controlling financial interest in a property but retains a
noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair
value and a full gain or loss is recognized. Therefore, the Company will record a gain or loss on the partial interest sold, and the
initial measurement of our retained interest will be accounted for at fair value.
Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the
Company will record a full gain or loss in the period the property is contributed.
To the extent that the Company acquires a controlling financial interest in a property that it previously accounted for as
an equity method investment, the Company will not remeasure its previously held interest if the acquisition is treated as an asset
acquisition. The Company will include the carrying amount of its previously held equity method interest along with the
consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities
acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Company will not recognize a gain or loss
on consolidation of a property.
Allowance for Credit Losses
The Company accounts for allowance for credit losses under the current expected credit loss (“CECL”) impairment
model for its financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial
instruments, and presents the net amount of the financial instrument expected to be collected. The CECL impairment model
excludes operating lease receivables. The CECL impairment model requires an estimate of expected credit losses, measured over
the contractual life of an instrument, that considers forecasts of future economic conditions in addition to information about past
events and current conditions. Based on this model, we analyze the following criteria, as applicable in developing allowances for
credit losses: historical loss information, the borrower’s ability to make scheduled payments, the remaining time to maturity, the
value of underlying collateral, projected future performance of the borrower and macroeconomic trends.
The Company measures credit losses of financial assets on a collective (pool) basis when similar risk characteristics
exist. If the Company determines that a financial asset does not share risk characteristics with its other financial assets, the
Company evaluates the financial asset for expected credit losses on an individual basis. Allowance for credit losses are recorded
as a direct reduction from an asset’s amortized cost basis. Credit losses and recoveries are recorded in Interest income and other
income/(expense), net on the Consolidated Statements of Operations. Recoveries of financial assets previously written off are
recorded when received. For the year ended December 31, 2020, the Company recorded $0.7 million of credit losses on the
Consolidated Statements of Operations.
The Company has made the optional election provided by the standard not to measure allowance for credit losses for
accrued interest receivables as the Company writes off any uncollectible accrued interest receivables in a timely manner. The
Company periodically evaluates the collectability of its accrued interest receivables. A write-off is
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
recorded when the Company concludes that all or a portion of its accrued interest receivable balance is no longer collectible.
Notes Receivable
Notes receivable relate to financing arrangements which are typically secured by real estate, real estate related projects
or other assets. Certain of the loans we extend may include characteristics such as options to purchase the project within a
specific time window following expected project completion. These characteristics can cause the loans to fall under the definition
of a variable interest entity (“VIE”), and thus trigger consolidation consideration. We consider the facts and circumstances
pertinent to each loan, including the relative amount of financing we are contributing to the overall project cost, decision making
rights or control we hold, and our rights to expected residual gains or our obligations to absorb expected residual losses from the
project. If we are deemed to be the primary beneficiary of a VIE due to holding a controlling financial interest, the majority of
decision making control, or by other means, consolidation of the VIE would be required. The Company has concluded that it is
not the primary beneficiary of the borrowing entities.
Additionally, we analyze each loan arrangement that involves real estate development to consider whether the loan
qualifies for accounting as a loan or as an investment in a real estate development project. The Company has evaluated its real
estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC
310-10. For each loan, the Company has concluded that the characteristics and the facts and circumstances indicate that loan
accounting treatment is appropriate.
The following table summarizes our Notes receivable, net as of December 31, 2020 and 2019 (dollars in thousands):
Note due October 2020 (a)
Note due February 2021 (b)
Note due May 2022 (c)
Note due October 2022 (d)
Note due January 2023 (e)
Notes Receivable
Allowance for credit losses
Total notes receivable, net
Interest rate at
Balance Outstanding
December 31, December 31, December 31,
2020
2020
8.00 % $
N/A
8.00 %
4.75 %
10.00 %
$
— $
4,000
20,000
115,000
19,685
158,685
(693)
157,992
$
2019
2,250
—
20,000
115,000
16,400
153,650
—
153,650
(a)
(b)
In March 2020, the Company entered into a purchase agreement to acquire all of the unaffiliated third party’s intellectual
property in exchange for cancellation of the secured note and accrued interest. All property acquired was recorded in Other
assets on the Consolidated Balance Sheets.
In May 2020, the Company entered into a promissory note with an unaffiliated third party with an aggregate commitment of
$4.0 million, in connection with the sale of an operating community. No interest is due on the promissory note and the note
matures in February 2021.
In January 2021, the unaffiliated third party repaid the $4.0 million promissory note.
(c) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million, all of
which has been funded. The note is secured by a parcel of land and related land improvements.
In September 2020, the developer defaulted on the loan. As a result of the default, the Company expects to take title to the
property pursuant to a deed in lieu of foreclosure. At that time, the Company will reclassify the related balance as Real estate
owned on the Consolidated Balance Sheet and anticipates recording a minor gain on extinguishment of the secured note
based upon the property’s fair market value on the date of the title transfer.
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
(d) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $115.0 million, all of
which has been funded. Interest payments are due when the loan matures. The note is secured by a first priority deed of trust
on a 259 apartment home operating community in Bellevue, Washington, which was completed in 2020. When the note was
funded, the Company also entered into a purchase option agreement and paid a deposit of $10.0 million, which gave the
Company the option to acquire the community at a fixed price of $170.0 million. In August 2020, the Company exercised the
purchase option. The purchase is expected to close in 2021. The deposit is generally nonrefundable other than due to a
failure of closing conditions pursuant to the terms of the agreement. If the Company fails to close the purchase other than
due to seller’s failure or other breaches in the purchase option agreement, per the terms of the agreement, the note will be
modified to extend the maturity date to 10 years following the date the temporary certificate of occupancy was issued, which
was July 2020. Upon modification, the loan would be interest only for the first three years and after such date payments will
be based on a 30-year amortization schedule.
(e) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million, of
which $19.7 million has been funded, including $3.3 million funded during the year ended December 31, 2020. Interest
payments are due monthly. The note matures at the earliest of the following: (a) the closing of any private or public capital
raising in the amount of $5.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) January
2023.
During 2020, the terms of this secured note were amended to increase the aggregate commitment from $16.4 million
to $20.0 million, to extend the maturity date of the note to January 2023 and to provide that the April 2020 through July 2020
interest payments are deferred and paid when the note matures.
In January 2021, the terms of this secured note were amended to increase the aggregate commitment from $20.0 million to
$22.0 million. Interest payments are due monthly and the maturity date of the note remains in January 2023.
The Company recognized $9.1 million, $5.5 million, and $4.1 million of interest income and zero, $8.5 million, and
zero of promoted interest from notes receivable during the years ended December 31, 2020, 2019, and 2018, respectively, none of
which was related party interest. Interest income and promoted interest are included in Interest income and other
income/(expense), net on the Consolidated Statements of Operations.
Investment in Joint Ventures and Partnerships
We use the equity method to account for investments in joint ventures and partnerships that qualify as VIEs where we
are not the primary beneficiary and other entities that we do not control or where we do not own a majority of the economic
interest but have the ability to exercise significant influence over the operating and financial policies of the investee. Throughout
these financial statements we use the term “joint venture” or “partnership” when referring to investments in entities in which we
do not have a 100% ownership interest. The Company also uses the equity method when we function as the managing partner and
our venture partner has substantive participating rights or where we can be replaced by our venture partner as managing partner
without cause. For a joint venture or partnership accounted for under the equity method, our share of net earnings or losses is
reflected as income/loss when earned/incurred and distributions are credited against our investment in the joint venture or
partnership as received.
In determining whether a joint venture or partnership is a VIE, the Company considers: the form of our ownership
interest and legal structure; the size of our investment; the financing structure of the entity, including necessity of subordinated
debt; estimates of future cash flows; ours and our partner’s ability to participate in the decision making related to acquisitions,
disposition, budgeting and financing of the entity; obligation to absorb losses and preferential returns; nature of our partner’s
primary operations; and the degree, if any, of disproportionality between the economic and voting interests of the entity. As of
December 31, 2020 and 2019, the Company did not determine any of our joint ventures or partnerships to be VIEs.
We evaluate our investments in unconsolidated joint ventures for events or changes in circumstances that indicate 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. These factors include, but are not limited to, age of the venture, our intent and ability to
retain our investment in the entity, the financial condition and long-term prospects of the entity, the
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
fair value of the property of the joint venture, and the relationships with the other joint venture partners and its lenders. The
amount of loss recognized is the excess of the investment’s carrying amount over its estimated fair value. If we believe that the
decline in fair value is temporary, no impairment is recorded. The aforementioned factors are taken into consideration as a whole
by management in determining the valuation of our equity method investments. Should the actual results differ from
management’s judgment, the valuation could be negatively affected and may result in a negative impact to our Consolidated
Financial Statements.
Derivative Financial Instruments
The Company utilizes derivative financial instruments to manage interest rate risk and generally designates these
financial instruments as cash flow hedges. Derivative financial instruments are recorded on our Consolidated Balance Sheets as
either an asset or liability and measured quarterly at their fair value. The changes in fair value for cash flow hedges that are
deemed effective are reflected in other comprehensive income/(loss) and for non-designated derivative financial instruments in
earnings. The ineffective component of cash flow hedges, if any, is recorded in earnings.
Redeemable Noncontrolling Interests in the Operating Partnership and DownREIT Partnership
Interests in the Operating Partnership and the DownREIT Partnership held by limited partners are represented by OP
Units and DownREIT Units, respectively. The income is allocated to holders of OP Units/DownREIT Units based upon net
income available to common stockholders and the weighted average number of OP Units/DownREIT Units outstanding to total
common shares plus OP Units/DownREIT Units outstanding during the period. Capital contributions, distributions, and profits
and losses are allocated to noncontrolling interests in accordance with the terms of the partnership agreements of the Operating
Partnership and the DownREIT Partnership.
Limited partners of the Operating Partnership and the DownREIT Partnership have the right to require such partnership
to redeem all or a portion of the OP Units/DownREIT Units held by the limited partner at a redemption price equal to and in the
form of the Cash Amount (as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as
applicable), provided that such OP Units/DownREIT Units have been outstanding for at least one year, subject to certain
exceptions. UDR, as the general partner of the Operating Partnership and the DownREIT Partnership may, in its sole discretion,
purchase the OP Units/DownREIT Units by paying to the limited partner either the Cash Amount or the REIT Share Amount
(generally one share of Common Stock of the Company for each OP Unit/DownREIT Unit), as defined in the partnership
agreement of the Operating Partnership or the DownREIT Partnership, as applicable. Accordingly, the Company records the OP
Units/DownREIT Units outside of permanent equity and reports the OP Units/DownREIT Units at their redemption value using
the Company’s stock price at each balance sheet date.
Income Taxes
Due to the structure of the Company as a REIT and the nature of the operations for the operating properties, no
provision for federal income taxes has been provided for at UDR. Historically, the Company has generally incurred only state and
local excise and franchise taxes. UDR has elected for certain consolidated subsidiaries to be treated as taxable REIT subsidiaries
(“TRS”).
Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment
date. The Company’s deferred tax assets/(liabilities) are generally the result of differing depreciable lives on capitalized assets,
temporary differences between book and tax basis of assets and liabilities and timing of expense recognition for certain accrued
liabilities. As of December 31, 2020 and 2019, UDR’s net deferred tax asset/(liability) was $(3.2) million and $(1.6) million,
respectively, and are recorded in Accounts payable, accrued expenses and other liabilities on the Consolidated Balance Sheets.
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. GAAP also provides guidance on derecognition,
classification, interest and penalties, accounting for interim periods, disclosure and transition. The Company recognizes its tax
positions and evaluates them using a two-step process. First, UDR determines whether a tax position is more likely than not
(greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation
processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize
and record the amount that is more likely than not to be realized upon ultimate settlement.
The Company invests in assets that qualify for federal investment tax credits (“ITC”) through our TRS. An ITC reduces
federal income taxes payable when qualifying depreciable property is acquired. The ITC is determined as a percentage of cost of
the assets. The Company accounts for ITCs under the deferral method, under which the tax benefit from the ITC is deferred and
amortized as a tax benefit into Tax (provision)/benefit, net on the Consolidated Statements of Operations over the book life of the
qualifying depreciable property. The ITCs are recorded in Accounts payable, accrued expenses and other liabilities on the
Consolidated Balance Sheets.
UDR had no material unrecognized tax benefit, accrued interest or penalties at December 31, 2020. UDR and its
subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2017
through 2019 remain open to examination by tax jurisdictions to which we are subject. When applicable, UDR recognizes interest
and/or penalties related to uncertain tax positions in Tax (provision)/benefit, net on the Consolidated Statements of Operations.
Principles of Consolidation
The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an
ownership interest in accordance with the consolidation guidance. The Company first evaluates whether each entity is a VIE.
Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the
obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model,
the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.
Discontinued Operations
In accordance with GAAP, a discontinued operation represents (1) a component of an entity or group of components
that has been disposed of or is classified as held for sale in a single transaction and represents a strategic shift that has or will
have a major effect on an entity’s financial results, or (2) an acquired business that is classified as held for sale on the date of
acquisition. A strategic shift could include a disposal of (1) a separate major line of business, (2) a separate major geographic area
of operations, (3) a major equity method investment, or (4) other major parts of an entity.
We record sales of real estate that do not meet the definition of a discontinued operation in Gain/(loss) on sale of real
estate owned on the Consolidated Statements of Operations.
Stock-Based Employee Compensation Plans
The Company measures the cost of employee services received in exchange for an award of an equity instrument based
on the award’s fair value on the grant date and recognizes the cost as stock-based compensation expense over the period during
which the employee is required to provide service in exchange for the award, which is generally the vesting period. For
performance based awards, the Company remeasures the fair value based on the estimated achievement of the performance
criteria each balance sheet date with adjustments made on a cumulative basis until the award is settled and the final compensation
is known. Stock-based compensation expense is only recognized for performance based awards that we expect to vest, which we
estimate based upon an assessment of the probability that the performance criteria will be achieved. Stock-based compensation
expense associated with awards is updated for actual forfeitures. The fair value for market based awards issued by the Company
is calculated utilizing a Monte Carlo simulation and the fair value for stock options issued by the Company is calculated utilizing
the Black-Scholes-Merton formula. For further discussion, see Note 10, Employee Benefit Plans.
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Advertising Costs
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
All advertising costs are expensed as incurred and reported on the Consolidated Statements of Operations within the line
item Property operating and maintenance. During the years ended December 31, 2020, 2019, and 2018, total advertising expense
was $7.9 million, $6.5 million, and $6.7 million, respectively.
Cost of Raising Capital
Costs incurred in connection with the issuance of equity securities are deducted from stockholders’ equity. Costs
incurred in connection with the issuance or renewal of debt are recorded based on the terms of the debt issuance or renewal.
Accordingly, if the terms of the renewed or modified debt instrument are deemed to be substantially different (i.e. a 10 percent or
greater difference in the cash flows between instruments), all unamortized financing costs associated with the extinguished debt
are charged to earnings in the current period and certain costs of new debt issuances are capitalized and amortized over the term
of the debt. When the cash flows are not substantially different, the lender costs associated with the renewal or modification are
capitalized and amortized into interest expense over the remaining term of the related debt instrument and other related costs are
expensed. The balance of any unamortized financing costs associated with retired debt is expensed upon retirement. Deferred
financing costs for new debt instruments include fees and costs incurred by the Company to obtain financing. Deferred financing
costs are generally amortized on a straight-line basis, which approximates the effective interest method, over a period not to
exceed the term of the related debt.
Comprehensive Income/(Loss)
Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other
events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from
investments by or distributions to stockholders, is displayed in the accompanying Consolidated Statements of Comprehensive
Income/(Loss). For the years ended December 31, 2020, 2019, and 2018, the Company’s other comprehensive income/(loss)
consisted of the gain/(loss) (effective portion) on derivative instruments that are designated as and qualify as cash flow hedges,
(gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) into earnings, and the allocation of
other comprehensive income/(loss) to noncontrolling interests. The (gain)/loss on derivative instruments reclassified from other
comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 14,
Derivatives and Hedging Activity, for further discussion. The allocation of other comprehensive income/(loss) to redeemable
noncontrolling interests during the years ended December 31, 2020, 2019, and 2018 was $0.1 million, $(0.8) million, and $0.2
million, respectively.
Forward Sales Agreements
The Company utilizes forward sales agreements for the future issuance of its common stock. When the Company enters
into a forward sales agreement, the contract requires the Company to sell its shares to a counterparty at a predetermined price at a
future date. The net sales price and proceeds attained by the Company will be determined on the dates of settlement, with
adjustments during the term of the contract for the Company’s anticipated dividends as well as for a daily interest factor that
varies with changes in the federal funds rate. The Company generally has the ability to determine the dates and method of
settlement (i.e., gross physical settlement, net share settlement or cash settlement), subject to certain conditions and the right of
the counterparty to accelerate settlement under certain circumstances.
The Company accounts for the shares of common stock reserved for issuance upon settlement as equity in accordance
with ASC 815-40, Contracts in Entity's Own Equity, which permits equity classification when a contract is considered indexed to
its own stock and the contract requires or permits the issuing entity to settle the contract in shares (either physically or net in
shares).
The guidance establishes a two-step process for evaluating whether an equity-linked financial instrument is considered
indexed to its own stock, first, evaluating the instrument’s contingent exercise provisions and second, evaluating the instrument’s
settlement provisions. When entering into forward sales agreements, we determined that (i) none of the agreement’s exercise
contingencies are based on observable markets or indices besides those related to the market for our own stock price; and (ii)
none of the settlement provisions preclude the agreements from being indexed to our own stock.
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Before the issuance of shares of common stock, upon physical or net share settlement of the forward sales agreements,
the Company expects that the shares issuable upon settlement of the forward sales agreements will be reflected in its diluted
income/(loss) per share calculations using the treasury stock method. Under this method, the number of shares of common stock
used in calculating diluted income/(loss) per share is deemed to be increased by the excess, if any, of the number of shares of
common stock that would be issued upon full physical settlement of the forward sales agreements over the number of shares of
common stock that could be purchased by the Company in the open market (based on the average market price during the period)
using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting
period). When the Company physically or net share settles any forward sales agreement, the delivery of shares of common stock
would result in an increase in the number of weighted average common shares outstanding and dilution to basic income/(loss) per
share. (See Note 8, Income/(Loss) per Share for further discussion.)
Impact of COVID-19 Pandemic
The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. The
extent of the pandemic’s effect on our operational and financial performance will depend on future developments, including the
duration, spread and intensity of the pandemic and the duration of government measures to mitigate the pandemic, all of which
continue to be uncertain and difficult to predict.
Given the uncertainty, we cannot predict the effect on future periods, but the adverse impact that could occur on the
Company’s future financial condition, results of operations and cash flows could be material, including, but not limited to, as a
result of extended eviction moratoriums, additional rent deferrals, payment plans, lease concessions, waiving late payment fees,
charges from potential adjustments to the carrying amount of receivables, and asset impairment charges.
During the year ended December 31, 2020, the Company performed an analysis in accordance with the ASC 842,
Leases, guidance to assess the collectibility of its operating lease receivables in light of the COVID-19 pandemic. This analysis
included an assessment of collectibility of current and future rents and whether those lease payments were no longer probable of
collection. In accordance with the leases guidance, if lease payments are no longer deemed to be probable over the life of the
lease contract, we recognize revenue only when cash is received, and all existing contractual operating lease receivables and
straight-line lease receivables are reserved.
As a result of its analysis, the Company reserved approximately $13.5 million of multifamily tenant lease receivables
and approximately $6.0 million of retail tenant lease receivables (inclusive of $3.3 million of reserves on straight-line lease
receivables) for its wholly-owned communities and communities held by joint ventures. In aggregate, the reserve is reflected as a
$18.4 million reduction to Rental income and a $1.1 million reduction to Income/(loss) from unconsolidated entities on the
Consolidated Statements of Operations for the year ended December 31, 2020. The impact to deferred leasing commissions was
not material for the year ended December 31, 2020.
During the year ended December 31, 2020, the Company recorded an impairment charge of $3.1 million on its
investment in equity securities of a non-core investment. The Company did not recognize any other adjustments to the carrying
amounts of assets or asset impairment charges due to the COVID-19 pandemic for the year ended December 31, 2020.
Use of Estimates
The preparation of these financial statements in accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the
financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid
could differ from those estimates.
Market Concentration Risk
The Company is subject to increased exposure from economic and other competitive factors specific to markets where
the Company holds a significant percentage of the carrying value of its real estate portfolio. At
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
December 31, 2020, the Company held greater than 10% of the carrying value of its real estate portfolio in each of the Orange
County, California; Metropolitan D.C., New York, New York and Boston, Massachusetts markets.
3. REAL ESTATE OWNED
Real estate assets owned by the Company consist of income producing operating properties, properties under
development, land held for future development, and held for disposition properties. As of December 31, 2020, the Company
owned and consolidated 149 communities in 13 states plus the District of Columbia totaling 48,283 apartment homes. The
following table summarizes the carrying amounts for our real estate owned (at cost) as of December 31, 2020 and 2019 (dollars
in thousands):
Land
Depreciable property — held and used:
Land improvements
Building, improvements, and furniture, fixtures and equipment
Real estate intangible assets
Under development:
Land and land improvements
Building, improvements, and furniture, fixtures and equipment
Real estate held for disposition:
Land and land improvements
Building, improvements, and furniture, fixtures and equipment
Real estate owned
Accumulated depreciation (a)
Real estate owned, net
December 31,
December 31,
2020
2,139,765
$
$
2019
2,164,032
233,823
10,292,782
40,570
73,702
174,175
224,964
10,102,758
40,570
29,226
40,551
15,184
101,471
13,071,472
(4,605,366)
8,466,106
$
—
—
12,602,101
(4,131,353)
8,470,748
$
(a) Accumulated depreciation is inclusive of $5.8 million of accumulated amortization related to real estate intangible
assets.
Acquisitions
In January 2020, the Company acquired a 294 apartment home operating community located in Tampa, Florida for
approximately $85.2 million. The Company increased its real estate assets owned by approximately $83.1 million and recorded
approximately $2.1 million of in-place lease intangibles.
In January 2020, the Company increased its ownership interest from 49% to 100% in a 276 apartment home operating
community located in Hillsboro, Oregon, for a cash purchase price of approximately $21.6 million. In connection with the
acquisition, the Company repaid approximately $35.6 million of joint venture construction financing. As a result, the Company
consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred
equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for
the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned
by approximately $67.8 million and recorded approximately $1.7 million of in-place lease intangibles.
In August 2020, the Company acquired a to-be-developed parcel of land located in King of Prussia, Pennsylvania for
approximately $16.2 million.
In November 2020, the Company acquired a 672 apartment home operating community located in Tampa, Florida for
approximately $122.5 million. The Company increased its real estate assets owned by approximately $119.4 million and recorded
approximately $3.1 million of in-place lease intangibles.
In December 2020, the Company acquired a 400 apartment home operating community located in Herndon, Virginia for
approximately $128.6 million. The Company increased its real estate assets owned by approximately $125.9 million and recorded
approximately $2.7 million of in-place lease intangibles.
F - 22
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
In January 2021, the Company acquired a 300 apartment home operating community located in Franklin, Massachusetts
for approximately $77.4 million. In connection with the acquisition, the Company assumed a 4.39% fixed rate mortgage note
payable secured by the community with an outstanding balance of approximately $51.8 million. The note is interest only until
February 2024 and after such date payments will be based on a 30-year amortization schedule until its maturity in January 2029.
In January 2019, the Company increased its ownership interest from 49% to 100% in a 386 apartment home operating
community located in Anaheim, California, for a cash purchase price of approximately $33.5 million. In connection with the
acquisition, the Company repaid approximately $59.8 million of joint venture construction financing. As a result, the Company
consolidated the operating community. The Company had previously accounted for its 49% ownership interest as an equity
investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the
consolidation as an asset acquisition resulting in no gain upon consolidation and increased its real estate assets owned by
approximately $115.7 million and recorded approximately $2.4 million of in-place lease intangibles.
In January 2019, the Company increased its ownership interest from 49% to 100% in a 155 apartment home operating
community located in Seattle, Washington, for a cash purchase price of approximately $20.0 million. In connection with the
acquisition, the Company repaid approximately $26.0 million of joint venture construction financing. As a result, the Company
consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred
equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for
the consolidation as an asset acquisition resulting in no gain upon consolidation and increased its real estate assets owned by
approximately $58.1 million and recorded approximately $2.4 million of real estate intangibles and approximately $0.6 million of
in-place lease intangibles.
In January 2019, the Company acquired a to-be-developed parcel of land located in Washington D.C. for approximately
$27.1 million.
In February 2019, the Company acquired a to-be-developed parcel of land located in Denver, Colorado for
approximately $13.7 million.
In February 2019, the Company acquired a 188 apartment home operating community located in Brooklyn, New York
for approximately $132.1 million. The Company increased its real estate assets owned by approximately $97.5 million and
recorded approximately $33.6 million of real estate intangibles and approximately $1.0 million of in-place lease intangibles.
In February 2019, the Company acquired a 381 apartment home operating community located in St. Petersburg, Florida
for approximately $98.3 million. The Company increased its real estate assets owned by approximately $96.0 million and
recorded approximately $2.3 million of in-place lease intangibles.
In April 2019, the Company acquired a 498 apartment home operating community located in Towson, Maryland for
approximately $86.4 million. The Company increased its real estate assets owned by approximately $82.5 million and recorded
approximately $3.9 million of in-place lease intangibles.
In May 2019, the Company acquired a 313 apartment home operating community located in King of Prussia,
Pennsylvania for approximately $107.3 million. The Company increased its real estate assets owned by approximately $106.4
million and recorded approximately $0.9 million of in-place lease intangibles.
In May 2019, the Company acquired a 240 apartment home operating community located in St. Petersburg, Florida for
approximately $49.4 million. The Company increased its real estate assets owned by approximately $48.2 million and recorded
approximately $1.2 million of in-place lease intangibles.
In June 2019, the Company acquired a 200 apartment home operating community located in Waltham, Massachusetts
for approximately $84.6 million. The Company increased its real estate assets owned by approximately $82.6 million and
recorded approximately $2.0 million of in-place lease intangibles.
F - 23
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
In August 2019, the Company acquired a 914 apartment home operating community located in Norwood, Massachusetts
for approximately $270.2 million. The Company increased its real estate assets owned by approximately $260.1 million and
recorded approximately $10.1 million of in-place lease intangibles.
In August 2019, the Company acquired a 185 apartment home operating community located in Englewood, New Jersey
for approximately $83.6 million. The Company increased its real estate assets owned by approximately $77.5 million and
recorded approximately $4.6 million of real estate intangibles and approximately $1.5 million of in-place lease intangibles.
In August 2019, the Company purchased a 292 apartment home operating community in Washington, D.C., directly
from the UDR/KFH joint venture, thereby increasing its ownership interest from 30% to 100%, for a purchase price at 100% of
approximately $184.0 million, before $2.8 million of closing costs incurred by UDR at acquisition (see Note 5, Joint Ventures
and Partnerships). The Company accounted for the consolidation as an asset acquisition, resulting in no gain upon consolidation,
and increased its real estate assets owned by approximately $156.0 million and recorded approximately $5.9 million of in-place
lease intangibles.
In November 2019, the Company acquired the approximately 50% ownership interest not previously owned in 10
UDR/MetLife operating communities, one development community and four land parcels valued at $1.1 billion, or $564.2
million at UDR’s share, and sold its approximately 50% ownership interest in five UDR/MetLife operating communities valued
at $645.8 million, or $322.9 million at UDR’s share, to MetLife, and recognized a net gain on sale of $114.9 million at our share.
The Company paid $109.2 million directly to MetLife to complete the transaction. As a result, the Company consolidated the 10
operating communities, one development community and four land parcels, and they are no longer accounted for as equity
method investments in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted
for the consolidation as an asset acquisition resulting in no gain upon consolidation and increased its real estate assets owned by
approximately $977.8 million and recorded approximately $30.0 million of in-place lease intangibles. In connection with the
acquisition, the Company assumed six secured fixed rate mortgage notes payable and one credit facility secured by four
communities with a combined outstanding balance of $518.4 million and estimated fair value of $551.8 million. The Company
recorded the debt at its fair value in Secured debt, net on the Consolidated Balance Sheets.
The following table summarizes the 10 communities, one development community and four land parcels acquired from
the UDR/MetLife II and the UDR/MetLife Vitruvian Park® joint ventures:
Property
Strata
Crescent Falls Church
Charles River Landing
Lodge at Ames Pond
Lenox Farms
Towson Promenade
Savoye
Savoye2
Fiori on Vitruvian Park ®
Vitruvian West
Vitruvian West Phase 2 (a)
Vitruvian Park ®
Type
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Operating Community
Development Community
4 Land Parcels
Number of Homes
163
214
350
364
338
379
394
351
391
383
366
N/A
Location
San Diego, CA
Washington, D.C.
Boston, MA
Boston, MA
Boston, MA
Baltimore, MD
Addison, TX
Addison, TX
Addison, TX
Addison, TX
Addison, TX
Addison, TX
(a) The number of apartment homes for the community under development presented in the table above is based on the
projected number of total homes upon completion of development. As of December 31, 2019, no apartment homes had
been completed.
During the year ended December 31, 2018, the Company did not have any acquisitions of real estate.
F - 24
Table of Contents
Dispositions
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
In May 2020, the Company sold an operating community located in Bellevue, Washington with a total of 71 apartment
homes for gross proceeds of $49.7 million, resulting in a gain of approximately $29.6 million. The sale was partially financed by
the Company through the issuance of a promissory note totaling $4.0 million which was repaid in January 2021. (See Note 2,
Significant Accounting Policies for further discussion.) The proceeds were designated for a tax-deferred Section 1031 exchange
that were used to pay a portion of the purchase price for an acquisition of an operating community in Tampa, Florida, in January
2020.
In May 2020, the Company sold an operating community located in Kirkland, Washington with a total of 196 apartment
homes for gross proceeds of $92.9 million, resulting in a gain of approximately $31.7 million.
In October 2020, the Company sold an operating community located in Alexandria, Virginia with a total of 332
apartment homes for gross proceeds of $145.0 million, resulting in a gain of approximately $58.0 million. The proceeds were
designated for a tax-deferred Section 1031 exchange and were used to pay a portion of the purchase price for acquisitions in
November and December 2020.
In February 2021, the Company sold an operating community in Anaheim, California with a total of 386 apartment
homes for gross proceeds of $156.0 million, resulting in a gain of approximately $50.8 million.
In June 2019, the Company sold a parcel of land located in Los Angeles, California for $38.0 million, resulting in a gain
of approximately $5.3 million. Prior to the sale, the parcel of land was subject to a ground lease, under which UDR was the
lessor, scheduled to expire in 2065. The ground lease included a purchase option for the lessee to acquire the land during specific
periods of the ground lease term. During the second quarter of 2019, the lessee exercised the purchase option resulting in this sale
by the Company and the ground lease being terminated.
Prior to the sale, the purchase option was not deemed to be a bargain purchase option. This ground lease existed as of
the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the
practical expedient provided by the standard. As a result, this ground lease continued to be classified as an operating lease and the
land parcel subject to the ground lease continued to be recognized in Real estate held for investment on our Consolidated Balance
Sheets until the sale in June 2019.
In February 2018, the Company sold an operating community in Orange County, California with a total of 264
apartment homes for gross proceeds of $90.5 million, resulting in a gain of $70.3 million. The proceeds were designated for a
tax-deferred Section 1031 exchange that were used to pay a portion of the purchase price for an acquisition in October 2017.
In December 2018, the Company sold an operating community in Fairfax, Virginia with a total of 604 apartment homes
for gross proceeds of $160.0 million, resulting in a gain of $65.9 million.
Developments
At December 31, 2020, the Company was developing five wholly-owned communities totaling 1,378 homes, 202 of
which have been completed, in which we have an investment of $247.9 million. The communities are estimated to be completed
between the first quarter of 2021 and the second quarter of 2023.
Other Activity
In connection with the acquisition of certain properties, the Company agreed to pay certain of the tax liabilities of
certain contributors if the Company sells one or more of the properties contributed in a taxable transaction prior to the expiration
of specified periods of time following the acquisition. The Company may, however, sell, without being required to pay any tax
liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax deferred Section 1031
exchange.
F - 25
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Further, the Company has agreed to maintain certain debt that may be guaranteed by certain contributors for specified
periods of time following the acquisition. The Company, however, has the ability to refinance or repay guaranteed debt or to
substitute new debt if the debt and the guaranty continue to satisfy certain conditions.
Amortization of Intangible Assets
The following table provides a summary of the aggregate amortization for the intangible assets acquired in the
acquisition of real estate for each of the next five years and thereafter (in thousands):
Unamortized
Balance as of
December 31,
2020
2021
2022
2023
2024
2025
Real estate intangible assets, net (a)
In-place lease intangible assets, net (b)
Total
$
$
34,782 $ 2,840 $ 2,740 $ 2,643 $ 2,525 $ 2,436 $
2,631
37,413 $ 3,393 $ 3,258 $ 3,046 $ 2,900 $ 2,754 $
553
375
403
518
318
Thereafter
21,598
464
22,062
(a) Real estate intangible assets, net is recorded net of accumulated amortization of $5.8 million in Real estate held for
investment, net on the Consolidated Balance Sheets. For the year ended December 31, 2020, $3.1 million of
amortization expense was recorded in Depreciation and Amortization on the Consolidated Statement of Operations.
(b)
In-place lease intangible assets, net is recorded net of accumulated amortization of $6.0 million in Other assets on the
Consolidated Balance Sheets. For the year ended December 31, 2020, $46.1 million was recorded in Depreciation and
Amortization on the Consolidated Statement of Operations.
4. VARIABLE INTEREST ENTITIES
The Company has determined that the Operating Partnership and DownREIT Partnership are VIEs as the limited
partners lack substantive kick-out rights and substantive participating rights. The Company has concluded that it is the primary
beneficiary of, and therefore consolidates, the Operating Partnership and DownREIT Partnership based on its role as the sole
general partner of the Operating Partnership and DownREIT Partnership. The Company’s role as community manager and its
equity interests give us the power to direct the activities that most significantly impact the economic performance and the
obligation to absorb potentially significant losses or the right to receive potentially significant benefits of the Operating
Partnership and DownREIT Partnership.
See the consolidated financial statements of the Operating Partnership presented within this Report and Note 4,
Unconsolidated Entities, to the Operating Partnership’s consolidated financial statements for condensed summarized financial
information of the DownREIT Partnership.
5. JOINT VENTURES AND PARTNERSHIPS
UDR has entered into joint ventures and partnerships with unrelated third parties to own, operate, acquire, renovate,
develop, redevelop, dispose of, and manage real estate assets that are either consolidated and included in Real estate owned on
the Consolidated Balance Sheets or are accounted for under the equity method of accounting, and are included in Investment in
and advances to unconsolidated joint ventures, net, on the Consolidated Balance Sheets. The Company consolidates the entities
that we control as well as any variable interest entity where we are the primary beneficiary. Under the VIE model, the Company
consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to
receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity
when it controls the entity through ownership of a majority voting interest.
UDR’s joint ventures and partnerships are funded with a combination of debt and equity. Our losses are typically
limited to our investment and except as noted below, the Company does not guarantee any debt, capital payout or other
obligations associated with our joint ventures and partnerships.
F - 26
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
The Company recognizes earnings or losses from our investments in unconsolidated joint ventures and partnerships
consisting of our proportionate share of the net earnings 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 following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and
partnerships, net, which are accounted for under the equity method of accounting as of December 31, 2020 and 2019 (dollars in
thousands):
Joint Venture
Operating:
Location of
Properties
Number of
Operating
Communities
Number of
Apartment
Homes
Investment at
UDR’s Ownership Interest
December 31, December 31, December 31, December 31, December 31,
2020
2019
2020
2020
2020
December 31,
2019
Income/(loss) from investments
Year Ended December 31,
2019
2018
2020
UDR/MetLife I
UDR/MetLife II
Other UDR/MetLife Joint
Ventures (h)
West Coast Development Joint
Ventures (c)
Sold Joint Ventures
Los Angeles, CA
Various
Various
Los Angeles, CA
1
7
5
1
Investment in and advances to unconsolidated joint ventures, net,
before preferred equity investments and other investments
150 $
1,250
26,426 $
151,353
28,812
150,893
50.0 %
50.0 %
50.0 % $
50.0 %
(2,639) $
(1,044)
(2,108) $
117,574
(2,750)
2,954
1,437
82,072
98,441
50.6 %
50.6 % (10,444)
(6,349)
(7,639)
293
30,080
—
34,907
—
47.0 %
— %
47.0 %
— %
(325)
—
(993)
6,123
(237)
(7,694)
$
289,931 $
313,053
$ (14,452) $ 114,247
$ (15,366)
Developer Capital Program
and Other Investments (a)
Preferred equity investments:
West Coast Development Joint Ventures (c)
1532 Harrison
1200 Broadway (d)
Junction
1300 Fairmount (d)
Essex
Modera Lake Merritt (d)
Thousand Oaks (e)
Vernon Boulevard (f)
Other investments:
The Portals (g)
Other investment ventures
Total Preferred Equity Investments and Other
Investments
Location
Rate
Years To
Maturity Commitment (b)
UDR
Investment at
December 31, December 31,
2020
2019
Income/(loss) from investments
Year Ended December 31,
2019
2018
2020
Hillsboro, OR
San Francisco, CA
Nashville, TN
Santa Monica, CA
Philadelphia, PA
Orlando, FL
Oakland, CA
Thousand Oaks, CA
Queens, NY
Washington, D.C.
N/A
6.5 %
11.0 %
8.0 %
12.0 %
Variable
12.5 %
9.0 %
9.0 %
13.0 %
11.0 %
N/A
N/A
1.5
1.7
1.6
2.6
2.6
3.2
4.1
4.5
N/A
N/A
$
— $
— $
24,645
55,558
8,800
51,393
12,886
27,250
20,059
40,000
—
34,500
$
34,135
69,330
11,699
59,544
16,770
30,928
17,919
42,360
—
22,870
17,064
30,585
63,958
10,379
51,215
14,804
22,653
—
—
48,181
13,598
$
(46) $
3,519
5,309
1,321
4,843
1,965
2,592
763
2,348
5,745
4,937
(447) $
3,147
4,888
1,169
3,098
1,639
1,067
—
—
865
2,228
2,970
406
159
258
—
—
—
5,012
4,053
3,692
(267)
305,555
272,437
33,296
23,626
10,311
Total Joint Ventures and Developer Capital Program Investments, net (h)
$
595,486 $
585,490
$18,844
$137,873
$(5,055)
(a) The Developer Capital Program is the program through which the Company makes investments, including preferred equity
investments, mezzanine loans or other structured investments that may receive a fixed yield on the investment and may
include provisions pursuant to which the Company participates in the increase in value of the property upon monetization of
the applicable property and/or holds fixed price purchase options.
(b) Represents UDR’s maximum funding commitment only and therefore excludes other activity such as income from
investments.
(c)
In January 2020, the Company increased its ownership interest from 49% to 100% in a 276 apartment home operating
community located in Hillsboro, Oregon, for a cash purchase price of approximately $21.6 million. As a result, in January
2020, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment
in an unconsolidated joint venture (see Note 3, Real Estate Owned).
In January 2021, the joint venture sold its remaining community, a 293 home operating community in Los Angeles,
California, for a sales price of approximately $121.0 million. As a result, the Company will record a gain on the sale of
approximately $2.5 million in the first quarter of 2021.
(d) The Company’s preferred equity investment receives a variable percentage of the value created from the project upon a
capital or liquidating event.
(e)
In February 2020, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop
and operate a 142 apartment home community in Thousand Oaks, CA. The Company’s preferred equity
F - 27
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
investment of up to $20.1 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value
created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of
the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture
and, therefore, accounts for it under the equity method of accounting.
(f)
In July 2020, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and
operate a 534 apartment home community in Queens, New York. The Company’s preferred equity investment of $40.0
million earns a preferred return of 13.0% per annum and receives a variable percentage of the value created from the project
upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and
the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it
under the equity method of accounting.
(g) The Company previously entered into a joint venture agreement with an unaffiliated joint venture partner. The joint venture
made a mezzanine loan to a third-party developer of a 373-apartment home community in Washington, D.C. In December
2020, the mezzanine loan was paid in full and the Company redeemed its investment. The Company received cash of $53.7
million, consisting of its investment of $38.6 million and contractually accrued interest of $15.1 million.
(h) As of December 31, 2020 and 2019, the Company’s negative investment in 13th and Market Properties LLC of $4.7 million
and $2.8 million, respectively, is included in Other UDR/MetLife Joint Ventures in the table above and recorded in Accounts
payable, accrued expenses, and other liabilities on the Consolidated Balance Sheet.
In January 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to
develop and operate a 356 apartment home community in Herndon, Virginia. The Company’s preferred equity investment of
$30.2 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project
upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the
developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the
equity method of accounting.
As of December 31, 2020 and 2019, the Company had deferred fees of $8.4 million and $9.0 million, respectively,
which will be recognized through earnings over the weighted average life of the related properties, upon the disposition of the
properties to a third party, or upon completion of certain development obligations.
The Company recognized management fees of $5.1 million, $14.0 million, and $11.6 million during the years ended
December 31, 2020, 2019, and 2018, respectively, for management of the communities held by the joint ventures and
partnerships. The management fees are included in Joint venture management and other fees on the Consolidated Statements of
Operations.
The Company may, in the future, make additional capital contributions to certain of our joint ventures and partnerships
should additional capital contributions be necessary to fund acquisitions or operations.
We consider various factors to determine if a decrease in the value of our Investment in and advances to unconsolidated
joint ventures, net is other-than-temporary. These factors include, but are not limited to, age of the venture, our intent and ability
to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships with the
other joint venture partners and its lenders. Based on the significance of the unobservable inputs, we classify these fair value
measurements within Level 3 of the valuation hierarchy. The Company did not incur any other-than-temporary impairments in
the value of its investments in unconsolidated joint ventures during the years ended December 31, 2020, 2019, and 2018.
F - 28
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Condensed summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations
(not just our proportionate share), is presented below for the years ended December 31, 2020, 2019, and 2018 (dollars in
thousands):
As of and For the
Year Ended December 31, 2020
Condensed Statements of Operations:
Total revenues
Property operating expenses
Real estate depreciation and
amortization
Operating income/(loss)
Interest expense
Other income/(loss)
Net realized/unrealized gain/(loss) on
held investments
Net income/(loss)
Condensed Balance Sheets:
Total real estate, net
Real estate assets held for sale
Cash and cash equivalents
Other assets
Total assets
Third party debt, net
Liabilities held for sale
Accounts payable and accrued
liabilities
Total liabilities
Total equity
UDR/
UDR/ UDR/MetLife Development Excluding
MetLife I MetLife II Joint Ventures Joint Ventures
DCP
Other
West Coast
Total
Developer
Capital Program
and Other
Investments
Total
$
9,480
4,978
$ 56,274 $
21,951
57,781 $
22,870
8,668 $
4,477
132,203 $
54,276
5,980
(1,478)
(3,075)
—
18,912
15,411
(15,386)
204
35,454
(543)
(17,457)
—
3,338
853
(1,344)
63
63,684
14,243
(37,262)
267
—
(4,553)
$
$
—
229 $
—
(18,000)$
—
(428)$
—
(22,752)$
$ 114,192
—
2,585
1,622
118,399
70,946
—
$ 650,593 $
—
4,369
14,133
669,095
416,364
—
3,507
74,453
$ 43,946
6,764
423,128
$ 245,967 $
589,822 $
—
7,049
6,214
603,085
454,153
—
8,593
462,746
140,339 $
— $ 1,354,607 $
88,458
—
—
88,458
14,003
21,969
88,458 1,479,037
941,463
55,440
55,440
—
—
18,864
55,440 1,015,767
463,270 $
33,018 $
16,189
8,232
$
148,392
62,508
3,495
4,462
(3,121)
35
67,179
18,705
(40,383)
302
36,141
37,517
$
36,141
14,765
550,198
—
8,275
128,925
687,398
247,247
—
21,692
268,939
418,459
$ 1,904,805
88,458
22,278
150,894
2,166,435
1,188,710
55,440
40,556
1,284,706
881,729
$
UDR/
UDR/
UDR/MetLife Development Excluding
MetLife I MetLife II Joint Ventures Joint Ventures
DCP
Other
West Coast
Total
Developer
Capital Program
and Other
Investments
As of and For the
Year Ended December 31, 2019
Condensed Statements of Operations:
Total revenues
Property operating expenses
Real estate depreciation and amortization
Gain/(loss) on sale of real estate (a)
Operating income/(loss)
Interest expense
Net gain/(loss) on revaluation of assets and
liabilities (b)
Other income/(loss)
Net realized/unrealized gain/(loss) on held
investments
$
9,834 $ 151,226 $
54,445
4,533
5,787
44,077
—
(486)
(3,070)
52,704
(44,825)
—
— 458,195
—
—
—
—
102,888 $
39,542
50,579
115,516
128,283
(27,647)
25,711
—
—
14,058 $
6,829
5,440
—
1,789
(4,656)
278,006 $
105,349
105,883
115,516
182,290
(80,198)
—
159
483,906
159
—
(2,708)$
—
586,157 $
Net income/(loss)
$
(3,556)$ 466,074 $
126,347 $
Condensed Balance Sheets:
Total real estate, net
Cash and cash equivalents
Other assets
Total assets
Third party debt, net
Accounts payable and accrued liabilities
Total liabilities
Total equity
2,317
1,053
$ 120,055 $ 663,492 $
4,208
9,777
123,425 677,477
70,890 425,303
9,303
74,927 434,606
$ 48,498 $ 242,871 $
4,037
621,335 $
7,973
5,400
634,708
454,972
9,757
464,729
169,979 $
140,224 $ 1,545,106 $
5,692
1,305
20,190
17,535
147,221 1,582,831
90,498
3,440
1,041,663
26,537
93,938 1,068,200
514,631 $
53,283 $
Total
289,248
108,781
105,883
115,516
190,100
(80,198)
11,242 $
3,432
—
—
7,810
—
—
(68)
483,906
91
26,417
34,159 $
26,417
620,316
355,975 $ 1,901,081
29,823
9,633
155,406
172,941
521,014 2,103,845
106,385 1,148,048
28,577
55,114
134,962 1,203,162
900,683
386,052 $
(a) Represent the gains on the sale of three operating communities at the UDR/KFH joint venture level.
(b) Represent the net gains on the revaluation of the assets and liabilities to fair value of 15 operating communities at the
UDR/MetLife II joint venture level and one development community and four land parcels at the UDR/MetLife Vitruvian
Park® joint venture level prior to their distribution to the Company or MetLife in November 2019. The
F - 29
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
net gain on revaluation of assets and liabilities to fair value was recognized at the joint venture level as the respective joint
ventures distributed their equity interests in the real estate to the Company or MetLife at fair value.
For the approximately 50% ownership interest acquired in the 10 operating communities, one development community and
four land parcels described above, the Company deferred its share of the net gain on revaluation of approximately $131.5
million and recorded it as a reduction of the carrying amount of real estate owned. (see Note 3, Real Estate Owned). For the
50% ownership interest acquired in the five communities by MetLife, the Company recognized a net gain on sale of $114.9
million at our share, when the communities were disposed of by the UDR/MetLife II joint venture.
UDR/
UDR/
UDR/MetLife Development Excluding
MetLife I MetLife II Joint Ventures Joint Ventures DCP
Other
West Coast
Total
Developer
Capital Program
and Other
Investments
UDR/
MetLife
Vitruvian
Park®
Total
$ 3,187
3,066
$ 158,738 $
56,403
108,766 $
44,048
16,392 $ 287,083
8,830 112,347
$
5,977 $ 293,060 $
1,789 114,136
26,096
13,732
3,392
(3,271)
(1,872)
—
$ (5,143)
44,721
57,614
(49,118)
—
8,496 $
$
59,419
5,299
(30,198)
—
(24,899)$
7,679 115,211
59,525
(117)
(87,363)
(6,175)
148
148
(6,144)$ (27,690)
— 115,211
63,713
(87,363)
148
4,188
—
—
$
4,188 $ (23,502) $
9,495
2,869
(6,051)
—
(3,182)
For the
Year Ended December 31, 2018
Condensed Statements of Operations:
Total revenues
Property operating expenses
Real estate depreciation and
amortization
Operating income/(loss)
Interest expense
Other income/(loss)
Net income/(loss)
6. LEASES
Lessee - Ground and Office Leases
UDR owns six communities that are subject to ground leases, under which UDR is the lessee, expiring between 2043
and 2103, inclusive of extension options we are reasonably certain will be exercised. All of these leases are classified as
operating leases through the lease term expiration based on our election of the practical expedient provided by the leasing
standard. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the remaining
lease term. We currently do not hold any finance leases. The Company also elected the short-term lease exception provided by
the leasing standard and therefore only recognizes right-of-use assets and lease liabilities for leases with a term greater than one
year. No leases qualified for the short-term lease exception during the years ended December 31, 2020 and 2019.
As of December 31, 2020 and 2019, the Operating lease right-of-use assets were $200.9 million and $204.2 million,
respectively, and the Operating lease liabilities were $195.6 million and $198.6 million, respectively, on our Consolidated
Balance Sheet related to our ground leases. The value of the Operating lease right-of-use assets exceeds the value of the
Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real
estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in
the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in
earnings in the period in which the obligation for those payments is incurred.
As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases
utilizing the Company’s incremental borrowing rate at a portfolio level, adjusted for the remaining lease term, and the form of
underlying collateral.
The weighted average remaining lease term for these leases was 43.9 years and 44.7 years at December 31, 2020 and
2019, respectively, and the weighted average discount rate was 5.0% at both December 31, 2020 and 2019.
F - 30
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Future minimum lease payments and total operating lease liabilities from our ground leases as of December 31, 2020 are
as follows (dollars in thousands):
2021
2022
2023
2024
2025
Thereafter
Total future minimum lease payments (undiscounted)
Difference between future undiscounted cash flows and discounted cash flows
Total operating lease liabilities (discounted)
Ground Leases
12,442
12,442
12,442
12,442
12,442
442,778
504,988
(309,396)
195,592
$
$
For purposes of recognizing our ground lease contracts, the Company uses the minimum lease payments, if stated in the
agreement. For ground lease agreements where there is a rent reset provision based on a change in an index or a rate (i.e., changes
in fair market rental rates or changes in the consumer price index) but that does not include a specified minimum lease payment,
the Company uses the current rent over the remainder of the lease term. If there is a contingency upon which some or all of the
variable lease payments that will be paid over the remainder of the lease term are based, which is resolved such that those
payments now meet the definition of lease payments, the Company will remeasure the right-of-use asset and lease liability on the
reset date. For the year ended December 31, 2019, Operating lease right-of-use assets and Operating lease liabilities increased
by $111.1 million due to future minimum payments on two of our ground leases becoming fixed for the remainder of their terms.
The components of operating lease expenses were as follows (dollars in thousands):
Lease expense:
Contractual lease expense
Variable lease expense (a)
Total operating lease expense (b)(c)
Year Ended December 31,
2020
2019
$
$
12,821
119
12,940
$
$
8,272
664
8,936
(a) Variable lease expense includes adjustments such as changes in the consumer price index and payments based on a
percentage of income of the lessee.
(b) Lease expense is reported within the line item Other operating expenses on the Consolidated Statements of Operations.
(c) For the year ended December 31, 2020, Operating lease right-of-use assets and Operating lease liabilities amortized by
$3.3 million and $3.0 million, respectively, and for the year ended December 31, 2019, Operating lease right-of-use assets
and Operating lease liabilities amortized by $1.2 million and $0.8 million, respectively. Due to the net impact of the
amortization, the Company recorded $0.3 million and $0.4 million of total operating lease expense during the year ended
December 31, 2020 and 2019, respectively.
Lessor - Apartment Home, Retail and Commercial Space Leases
UDR’s communities and retail and commercial space are leased to tenants under operating leases. As of
December 31, 2020, our apartment home leases generally have initial terms of 12 months or less and represent approximately
97.3% of our total lease revenue. As of December 31, 2020, our retail and commercial space leases generally have initial terms of
between 5 and 15 years and represent approximately 2.7% of our total lease revenue. Our apartment home leases are generally
renewable at the end of the lease term, subject to potential increases in rental rates, and our retail and commercial space leases
generally have renewal options, subject to associated increases in rental rates due to market-based or fixed-price renewal options
and certain other conditions. (See Note 16, Reportable Segments for further discussion around our major revenue streams and
disaggregation of our revenue.)
F - 31
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
We previously owned a parcel of land subject to a ground lease under which UDR was the lessor, expiring in 2065. The
ground lease included a purchase option for the lessee to acquire the land during specific periods of the ground lease term. In
June 2019, the lessee exercised the purchase option and acquired the parcel of land for $38.0 million. (See Note 3, Real Estate
Owned for further discussion.)
Future minimum lease payments from our retail and commercial leases as of December 31, 2020 are as follows (dollars
in thousands):
2021
2022
2023
2024
2025
Thereafter
Total future minimum lease payments (a)
Retail and Commercial
Leases
23,970
22,749
20,855
19,132
15,972
70,396
173,074
$
$
(a) We have excluded our apartment home leases from this table as our apartment home leases generally have initial terms
of 12 months or less.
Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent
based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage
rents. The Company recorded variable percentage rents of $0.2 million and $0.4 million during the years ended
December 31, 2020 and 2019, respectively.
F - 32
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
7. SECURED AND UNSECURED DEBT, NET
The following is a summary of our secured and unsecured debt at December 31, 2020 and 2019 (dollars in thousands):
Principal Outstanding
As of December 31, 2020
December 31, December 31,
2020
2019
Weighted Weighted
Average
Average
Years to Communities
Interest
Maturity Encumbered
Number of
Rate
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)
Credit facilities (b)
Deferred financing costs and other non-cash adjustments (b)
Total fixed rate secured debt, net
Variable Rate Debt
Tax-exempt secured notes payable (c)
Deferred financing costs
Total variable rate secured debt, net
Total Secured Debt, net
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due
January 2023 (d) (p)
Borrowings outstanding under unsecured commercial paper
program due January 2021 (e) (p)
Borrowings outstanding under unsecured working capital
credit facility due January 2022 (f)
Term Loan due September 2023 (d) (p)
Fixed Rate Debt
Term Loan due September 2023 (d) (p)
3.75% Medium-Term Notes due July 2024 (net of discounts
of $0 and $470, respectively) (g) (p)
8.50% Debentures due September 2024
4.00% Medium-Term Notes due October 2025 (net of
discounts of $327 and $396, respectively) (h) (p)
2.95% Medium-Term Notes due September 2026 (i) (p)
3.50% Medium-Term Notes due July 2027 (net of discounts
of $458 and $529, respectively) (p)
3.50% Medium-Term Notes due January 2028 (net of
discounts of $835 and $954, respectively) (p)
4.40% Medium-Term Notes due January 2029 (net of
discounts of $5 and $5, respectively) (j) (p)
3.20% Medium-Term Notes due January 2030 (net of
premiums of $12,412 and $2,281, respectively) (k) (p)
3.00% Medium-Term Notes due August 2031 (net of
discounts of $1,027 and $1,123, respectively) (l) (p)
2.10% Medium-Term Notes due August 2032 (net of
discounts of $408 and $0, respectively) (m) (p)
1.90% Medium-Term Notes due March 2033 (net of
discounts of $1,471 and $0, respectively) (n) (p)
3.10% Medium-Term Notes due November 2034 (net of
discounts of $1,221 and $1,309, respectively) (o) (p)
Other
Deferred financing costs
Total Unsecured Debt, net
Total Debt, net
$
824,550
$
—
10,665
835,215
27,000
(68)
26,932
862,147
884,869
204,590
33,046
1,122,505
27,000
(64)
26,936
1,149,441
3.31 %
— %
7.2
—
3.31 %
7.2
0.84 %
11.2
0.84 %
3.23 %
11.2
7.3
11
—
11
1
1
12
—
—
— %
2.1
190,000
300,000
0.27 %
0.1
28,024
35,000
16,583
35,000
0.97 %
1.05 %
1.0
2.8
315,000
315,000
2.55 %
2.8
—
15,644
299,530
15,644
299,673
300,000
299,604
300,000
— %
8.50 %
4.53 %
2.89 %
299,542
299,471
3.50 %
299,165
299,046
3.50 %
299,995
299,995
4.27 %
612,412
402,281
3.32 %
—
3.7
4.8
5.7
6.5
7.0
8.1
9.0
398,973
398,877
3.01 %
10.6
399,592
348,529
298,779
10
(25,937)
4,114,401
4,976,548
$
—
—
2.10 %
11.6
1.90 %
12.2
298,691
3.13 %
13.8
13
(21,652)
3,558,083
$ 4,707,524
2.98 %
2.91 %
8.1
8.0
F - 33
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a
cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the
underlying debt instrument.
Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments
with balloon payments due at maturity. As of December 31, 2020, secured debt encumbered $1.4 billion or 10.6% of UDR’s total
real estate owned based upon gross book value ($11.7 billion or 89.4% of UDR’s real estate owned based on gross book value is
unencumbered).
(a) At December 31, 2020, fixed rate mortgage notes payable are generally due in monthly installments of principal and
interest and mature at various dates from July 2024 through February 2031 and carry interest rates ranging from 2.62% to 4.12%.
In July 2020, the Company refinanced a 4.35% fixed rate mortgage note payable due in November 2020 with a balance
of $79.3 million with a $160.9 million, 2.62% fixed rate mortgage note payable due in 2031. The Company incurred net
extinguishment costs of $0.5 million in connection with the refinancing. The incremental proceeds were used to reduce the
Company’s borrowings under its unsecured commercial paper program.
During the years ended December 31, 2020 and 2019, the Company prepaid $111.1 million and zero, respectively, of its
fixed rate mortgage notes payable with proceeds from the issuance of senior unsecured medium-term notes. The Company
incurred net extinguishment costs of $8.5 million, zero and $0.5 million during years ended December 31, 2020, 2019, and 2018,
respectively, which was included in Interest expense on the Consolidated Statements of Operations.
The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the
Company records the debt at its estimated fair value and amortizes any difference between the fair value and par value to interest
expense over the life of the underlying debt instrument.
(b) During the year ended December 31, 2020, the Company prepaid the $201.9 million outstanding balance under its
secured credit facility with New York Life with proceeds from the issuance of senior unsecured medium-term notes. The
Company incurred net extinguishment costs of $9.0 million during the year ended December 31, 2020, which was included in
Interest expense on the Consolidated Statements of Operations.
During the years ended December 31, 2020, 2019, and 2018, the Company had $22.4 million, $3.0 million, and $3.0
million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties inclusive of
its fixed rate mortgage notes payable and credit facilities, which was included in Interest expense on the Consolidated Statements
of Operations. The unamortized fair market adjustment was a net premium of $12.9 million and $35.3 million at
December 31, 2020 and 2019, respectively.
(c) The variable rate mortgage note payable secures a tax-exempt housing bond issue that matures in March 2032.
Interest on this note is payable in monthly installments. As of December 31, 2020, the variable interest rate on the mortgage note
was 0.84%.
(d) The Company has a $1.1 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 $2.0 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, 2023, with two six-month extension
options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023.
Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a
margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a
margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from
75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to
165 basis points.
F - 34
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
The Company previously entered into an interest rate swap to hedge against the interest rate risk on the Term Loan,
which expired in January 2021. As of December 31, 2020, the all-in weighted average interest rate, inclusive of the impact of the
interest rate swap, was 2.55%. In January 2021, the Company entered into three interest rate swaps to hedge against interest rate
risk on the Term Loan until July 2022. The all-in weighted average interest rate, inclusive of the impact of the interest rate
swaps, is 1.07%.
The Credit Agreement contains customary representations and warranties and financial and other affirmative and
negative covenants. The Credit Agreement also includes customary events of default, in certain cases subject to customary
periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among
other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement
to be immediately due and payable.
The following is a summary of short-term bank borrowings under the Revolving Credit Facility at December 31, 2020
and 2019 (dollars in thousands):
December 31, December 31,
Total revolving credit facility
Borrowings outstanding at end of year (1)
Weighted average daily borrowings during the year ended
Maximum daily borrowings during the year ended
Weighted average interest rate during the year ended
Interest rate at end of the year
2020
$ 1,100,000
2019
$ 1,100,000
—
55
20,000
—
42,186
375,000
1.4 %
— %
2.6 %
— %
(1) Excludes $2.8 million and $2.9 million of letters of credit at December 31, 2020 and 2019, respectively.
(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may
issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500.0 million. The notes are sold under
customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured
indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.
The following is a summary of short-term bank borrowings under the unsecured commercial paper program at
December 31, 2020 and 2019 (dollars in thousands):
Total unsecured commercial paper program
Borrowings outstanding at end of year
Weighted average daily borrowings during the year ended
Maximum daily borrowings during the year ended
Weighted average interest rate during the year ended
Interest rate at end of the year
December 31, December 31,
$
2020
500,000
190,000
227,090
500,000
$
2019
500,000
300,000
173,353
435,000
0.9 %
0.3 %
2.5 %
2.0 %
In January 2021, the entire $190.0 million of outstanding unsecured commercial paper as of December 31, 2020 was
repaid at maturity with additional proceeds of unsecured commercial paper with maturity dates in February 2021 and proceeds
under the Working Capital Credit Facility.
(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit
facility (the “Working Capital Credit Facility”) with a previously scheduled maturity date of January 15, 2021. Based on the
Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5
basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.
In July 2020, the Company extended its working capital credit facility maturity date from January 15, 2021 to January
14, 2022.
F - 35
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at
December 31, 2020 and 2019 (dollars in thousands):
Total working capital credit facility
Borrowings outstanding at end of year
Weighted average daily borrowings during the year ended
Maximum daily borrowings during the year ended
Weighted average interest rate during the year ended
Interest rate at end of the year
December 31, December 31,
2020
2019
$
$
75,000
28,024
20,132
54,974
75,000
16,583
23,487
66,170
1.4 %
1.0 %
3.1 %
2.6 %
(g) In July 2020, the Company announced that it commenced a cash tender offer for any and all of its outstanding 3.75%
unsecured medium-term notes due July 2024 (the “2024 Notes”). Pursuant to the tender offer, on July 21, 2020, the Company
completed the purchase of $116.9 million aggregate principal amount of the 2024 Notes, or 39.0% of the $300.0 million
aggregate principal amount of the 2024 Notes. The tender offer consideration was $1,101.92 for each $1,000 principal amount of
the 2024 Notes, plus accrued and unpaid interest to, but not including, July 21, 2020. The Company incurred net extinguishment
costs of $12.8 million during the year ended December 31, 2020, which was included in Interest expense on the Consolidated
Statements of Operations.
In December 2020, the Company redeemed the remaining $183.1 million aggregate principal amount of the 2024 Notes.
The Company incurred $21.1 million in make-whole expense upon redemption of these notes.
(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on
$200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was
4.53%.
(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on
$100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was
2.89%.
(j) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on
$150.0 million of the initial $300.0 million issued. The all-in weighted average interest rate, inclusive of the impact of these
interest rate swaps, was 4.27%.
(k) The Company previously entered into forward starting interest rate swaps to hedge against the interest rate risk of
this debt. In connection with the additional $100.0 million issued in October 2019, the Company entered into treasury lock
agreements to hedge against interest rate risk on all of this debt.
In February 2020, the Company issued an additional $200.0 million of 3.20% senior unsecured medium-term notes due
2030 (the “2030 Notes”). Interest is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July
15, 2020. The notes were priced at 105.660% of the principal amount at issuance. This was a further issuance of the 2030 Notes,
and forms a single series with, the $300.0 million aggregate principal amount of the Company’s 2030 Notes that were issued in
July 2019 and the $100.0 million aggregate principal amount of the Company’s 2030 Notes that were issued in October 2019.
As of the completion of the offerings, the aggregate principal amount of outstanding 2030 Notes was $600.0 million.
The all-in weighted average interest rate, inclusive of the impact of the forward starting swaps and treasury locks, was 3.32% for
the 2030 Notes.
(l) The Company entered into a treasury lock agreement to hedge against interest rate risk on $150.0 million of this debt.
The all-in weighted average interest rate, inclusive of the impact of the treasury lock, was 3.01%.
(m) In July 2020, the Company issued $400.0 million of 2.10% senior unsecured medium-term notes due August 1,
2032. Interest is payable semi-annually in arrears on February 1 and August 1. The notes were priced at 99.894% of the principal
amount at issuance. The Company used a portion of the net proceeds to fund the purchase of
F - 36
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
the 2024 Notes accepted pursuant to the tender offer described above and to prepay $245.8 million of 4.64% secured debt due in
2023. The combined prepayment and make-whole amounts for the purchase of the 2024 Notes and the prepayment of the secured
debt due in 2023, inclusive of the acceleration of fair market value adjustments originally recorded on secured debt assumed in
property acquisitions, totaled approximately $24.0 million, which was included in Interest expense on the Consolidated
Statements of Operations.
(n) In December 2020, the Company issued $350.0 million of 1.90% senior unsecured medium-term notes due March
15, 2033 (the “2033 Notes”). Interest is payable semi-annually in arrears on March 15 and September 15. The notes were priced
at 99.578% of the principal amount at issuance. The Company used the net proceeds for the repayment of debt, including the
redemption of the remaining $183.1 million aggregate principal amount (plus the make-whole amount of approximately $21.1
million) of its 2024 Notes, $67.5 million of secured debt maturing in 2023, and outstanding indebtedness under our commercial
paper program and working capital credit facility. The 2033 Notes were issued as “green” bonds and, as a result, the Company
will allocate an amount equal to the net proceeds from the sale of the 2033 Notes to fund eligible green projects.
(o) The Company previously entered into forward starting interest rate swaps to hedge against the interest rate risk of
this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.13%.
(p) The Operating Partnership is the guarantor of this debt.
The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the
next ten years subsequent to December 31, 2020 are as follows (dollars in thousands):
Total Fixed Total Variable
Total
Total
Secured Debt
$
Secured Debt Unsecured Debt
$
Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Thereafter
Subtotal
Non-cash (b)
Total
Secured Debt
1,097
$
1,140
1,183
95,280
173,189
51,070
1,111
122,466
144,584
72,500
160,930
824,550
10,665
835,215
$
— $
—
—
—
—
—
—
—
—
—
Total
Debt
191,097
29,164
351,183
110,924
473,189
351,070
301,111
422,466
444,584
672,500
1,637,930
4,985,218
(8,670)
$ 4,976,548
190,000 (a)$
28,024
350,000
15,644
300,000
300,000
300,000
300,000
300,000
600,000
1,450,000
4,133,668
(19,267)
4,114,401
1,097
1,140
1,183
95,280
173,189
51,070
1,111
122,466
144,584
72,500
187,930
851,550
10,597
862,147
$
27,000
27,000
(68)
26,932
$
$
(a) All unsecured debt due in the remainder of 2021 is related to the Company’s commercial paper program.
(b)
Includes the unamortized balance of fair market value adjustments, premiums/discounts, and deferred financing costs. For
the years ended December 31, 2020 and 2019, the Company amortized $4.4 million and $4.2 million, respectively, of
deferred financing costs into Interest expense.
We were in compliance with the covenants of our debt instruments at December 31, 2020.
On February 11, 2021, the Company priced an offering of $300.0 million of 2.10% senior unsecured medium-term notes
due 2033. The notes were priced at 99.592% of the principal amount of the notes. The Company intends to use the net proceeds
to repay indebtedness, including the redemption of its $300.0 million 4.00% senior unsecured medium-term notes due October
2025 (plus the make-whole amount and accrued and unpaid interest), to fund potential acquisitions, or for other general corporate
purposes. The settlement of the offering is expected to occur on February 26, 2021, subject to the satisfaction of customary
closing conditions.
F - 37
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
8. INCOME/(LOSS) PER SHARE
The following table sets forth the computation of basic and diluted income/(loss) per share for the periods presented
(dollars and shares in thousands, except per share data):
Numerator for income/(loss) per share:
Net income/(loss)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating
Partnership and DownREIT Partnership
Net (income)/loss attributable to noncontrolling interests
Net income/(loss) attributable to UDR, Inc.
Distributions to preferred stockholders — Series E (Convertible)
Income/(loss) attributable to common stockholders - basic and diluted
$
Denominator for income/(loss) per share:
Weighted average common shares outstanding
Non-vested restricted stock awards
Denominator for basic income/(loss) per share
Incremental shares issuable from assumed conversion of unvested LTIP Units and unvested
restricted stock
Denominator for diluted income/(loss) per share
Year Ended December 31,
2019
2018
2020
$
68,970
$
199,579
$
221,542
(4,543)
(161)
64,266
(4,230)
60,036
$
(14,426)
(188)
184,965
(4,104)
180,861
$
(18,215)
(221)
203,106
(3,868)
199,238
294,808
(263)
294,545
382
294,927
285,509
(262)
285,247
768
286,015
268,513
(334)
268,179
1,304
269,483
Income/(loss) per weighted average common share:
Basic
Diluted
$
$
0.20
0.20
$
$
0.63
0.63
$
$
0.74
0.74
Basic income/(loss) per common share is computed based upon the weighted average number of common shares
outstanding. Diluted income/(loss) per common share is computed based upon the weighted average number of common shares
outstanding plus the common shares issuable from the assumed conversion of the OP Units and DownREIT Units, convertible
preferred stock, stock options, unvested long-term incentive plan units (“LTIP Units”), unvested restricted stock and continuous
equity program forward sales agreements. Only those instruments having a dilutive impact on our basic income/(loss) per share
are included in diluted income/(loss) per share during the periods. For the years ended December 31, 2020, 2019, and 2018, the
effect of the conversion of the OP Units, DownREIT Units, LTIP Units, the Company’s Series E preferred stock and shares
issuable upon settlement of forward sales agreements was not dilutive and therefore not included in the above calculation.
In July 2017, 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
April 2017, which replaced the prior at-the-market equity offering program entered into in April 2012. During the year ended
December 31, 2020, the Company sold 2.1 million shares of common stock through its ATM program pursuant to the Company’s
forward sales agreement described below.
In connection with any forward sales agreement under the Company’s ATM program, the relevant forward purchasers
will borrow from third parties and, through the relevant sales agent, acting in its role as forward seller, sell a number of shares of
the Company’s common stock equal to the number of shares underlying the agreement. The Company does not initially receive
any proceeds from any sale of borrowed shares by the forward seller.
During the year ended December 31, 2020, the Company entered into forward sales agreements under its ATM program
for a total of 2.1 million shares of common stock at a weighted average initial forward price per share of $49.56. The initial
forward price per share received by the Company upon settlement was determined on the
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
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.
In December 2020, the Company settled all 2.1 million shares sold under the forward sales agreement at a weighted
average forward price per share of $48.23, which is inclusive of adjustments made to reflect the then-current federal funds rate,
the amount of dividends paid to holders of UDR common stock and commissions paid to sales agents of approximately $3.9
million, for net proceeds of $102.3 million. Aggregate net proceeds from such sales, after deducting related expenses, was $102.2
million.
As of December 31, 2020, we had 9.6 million shares of common stock available for future issuance under the ATM
program.
During the year ended December 31, 2020, the Company repurchased 0.6 million shares of its common stock at an
average price of $33.11 per share for total consideration of approximately $19.8 million under its share repurchase program.
The following table sets forth the additional shares of common stock outstanding by equity instrument if converted to
common stock for each of the years ended December 31, 2020, 2019, and 2018 (in thousands):
Year Ended December 31,
2019
2018
2020
OP/DownREIT Units
Convertible preferred stock
Stock options, unvested LTIP Units and unvested restricted stock
9. STOCKHOLDERS’ EQUITY
22,310 22,773 24,548
3,011
1,304
3,011
768
2,950
382
UDR has an effective registration statement that allows the Company to sell an undetermined number of debt and equity
securities as defined in the prospectus. The Company had the ability to issue 350.0 million shares of common stock and 50.0
million shares of preferred shares as of December 31, 2020.
F - 39
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
The following table presents the changes in the Company’s issued and outstanding shares of common and preferred
stock for the years ended December 31, 2020, 2019 and 2018:
Balance at December 31, 2017
Issuance/(forfeiture) of common and restricted shares, net
Issuance of common shares upon exercise of stock options
Issuance of common shares through public offering
Repurchase of common shares
Adjustment for conversion of noncontrolling interest of unitholders in the
Operating Partnership
Adjustment for conversion of noncontrolling interest of unitholders in the
DownREIT Partnership
Forfeiture of Series F shares
Balance at December 31, 2018
Issuance/(forfeiture) of common and restricted shares, net
Issuance of common shares through public offering
Issuance of common shares though ATM program
Issuance of common shares through forward sales agreement
Adjustment for conversion of noncontrolling interest of unitholders in the
Operating Partnership
Adjustment for conversion of noncontrolling interest of unitholders in the
DownREIT Partnership
Forfeiture of Series F shares
Balance at December 31, 2019
Issuance/(forfeiture) of common and restricted shares, net
Issuance of common shares through forward sales public offering, net (forward
sales agreement)
Repurchase of common shares
Adjustment for conversion of noncontrolling interest of unitholders in the
Operating Partnership
Adjustment for conversion of noncontrolling interest of unitholders in the
DownREIT Partnership
Conversion of Series E Cumulative Convertible shares
Forfeiture of Series F shares
Balance at December 31, 2020
Common Stock
Common
Stock
267,822
47
772
7,150
(593)
Preferred Stock
Series E
Series F
2,781
—
—
—
—
15,852
—
—
—
—
11
—
—
337
—
275,546
50
7,500
6,988
1,339
—
—
2,781
—
—
—
—
—
(50)
15,802
—
—
—
—
1,969
—
—
1,196
—
294,588
104
2,121
(597)
3
300
93
—
296,612
—
—
2,781
—
—
—
—
—
(86)
—
2,695
—
(1,111)
14,691
—
—
—
—
—
—
(250)
14,441
The Company has an equity distribution agreement which allows it from time to time, through its sales agents, to offer
and sell up to 20.0 million shares of its common stock. Sales of such shares will be made by means of ordinary brokers’
transactions on the NYSE at market prices. In July 2017, the Company updated its equity distribution agreement to also permit
the entry into separate forward sales agreements to or through its forward purchasers. As of December 31, 2020, 9.6 million
shares were available for sale under the continuous equity program.
During the year ended December 31, 2020, the Company entered into the following equity transactions for our common
stock:
● Issued 2.1 million shares of common stock through a forward sales agreement under the Company’s ATM program
at a forward price per share of $48.23, for aggregate net proceeds of approximately $102.2 million after deducting
related expenses;
● Repurchased 0.6 million shares of common stock at a weighted average price per share of $33.11, for total
consideration of approximately $19.8 million
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
● Issued 0.1 million shares of common stock through the Company’s 1999 Long-Term Incentive Plan (the “LTIP”);
● Issued 0.3 million shares of common stock upon redemption of DownREIT Units, resulting in the forfeiture of 0.3
million Series F Preferred shares; and
● Converted 0.1 million Series E Cumulative Convertible shares into 0.1 million shares of common stock.
Distributions are subject to the approval of the Board of Directors and are dependent upon our strategy, financial
condition and operating results. UDR’s common distributions for the years ended December 31, 2020, 2019, and 2018 totaled
$1.44, $1.37, and $1.29 per share, respectively.
Preferred Stock
The Series E Cumulative Convertible Preferred Stock (“Series E”) has no stated par value and a liquidation preference
of $16.61 per share. Subject to certain adjustments and conditions, each share of the Series E is convertible at any time at the
holder’s option into one share of our common stock prior to a “Special Dividend” declared in 2008 (1.083 shares after the Special
Dividend). The holders of the Series E are entitled to vote on an as-converted basis as a single class in combination with the
holders of common stock at any meeting of our stockholders for the election of directors or for any other purpose on which the
holders of common stock are entitled to vote. The Series E has no stated maturity and is not subject to any sinking fund or any
mandatory redemption.
Distributions declared on the Series E for the years ended December 31, 2020, 2019, and 2018 were $1.56, $1.48, and
$1.40 per share, respectively. The Series E is not listed on any exchange. At December 31, 2020 and 2019, a total of 2,695,363
and 2,780,994, respectively, shares of the Series E were outstanding.
UDR is authorized to issue up to 20.0 million shares of the Series F Preferred Stock (“Series F”). The Series F may be
purchased by holders of OP Units and DownREIT Units, at a purchase price of $0.0001 per share. OP/DownREIT Unitholders
are entitled to subscribe for and purchase one share of UDR’s Series F for each OP/DownREIT Unit held. During the years ended
December 31, 2020 and 2019, 0.3 million and 1.1 million of the Series F shares were forfeited upon the conversion of OP Units
and DownREIT Units into Company common stock, respectively.
At December 31, 2020 and 2019, a total of 14.4 million and 14.7 million shares, respectively, of the Series F were
outstanding with an aggregate purchase value of $1,444 and $1,469, respectively. Holders of the Series F are entitled to one vote
for each share of the Series F they hold, voting together with the holders of our common stock, on each matter submitted to a vote
of security holders at a meeting of our stockholders. The Series F does not entitle its holders to dividends or any other rights,
privileges or preferences.
Distribution Reinvestment and Stock Purchase Plan
UDR’s Distribution Reinvestment and Stock Purchase Plan (the “Stock Purchase Plan”) allows common and preferred
stockholders the opportunity to purchase, through the reinvestment of cash dividends and by making additional cash payments,
additional shares of UDR’s common stock. From inception through December 31, 2008, shareholders have elected to utilize the
Stock Purchase Plan to reinvest their distribution for the equivalent of 10.0 million shares of Company common stock. Shares in
the amount of 11.0 million were reserved for issuance under the Stock Purchase Plan as of December 31, 2020. During the year
ended December 31, 2020, UDR acquired all shares issued through the open market.
10. EMPLOYEE BENEFIT PLANS
In May 2001, the stockholders of UDR approved the long term incentive plan (“LTIP”), which supersedes the 1985
Stock Option Plan. The LTIP authorizes the granting of awards which may take the form of options to purchase shares of
common stock, stock appreciation rights, restricted stock, dividend equivalents, other stock-based awards, and any other right or
interest relating to common stock or cash incentive awards to Company directors, employees and
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
outside trustees to promote the success of the Company by linking individual’s compensation via grants of share based payment.
During the year ended December 31, 2015, the LTIP was amended to set forth the terms of new classes of partnership
interests in the Operating Partnership designated as LTIP Units. LTIP Units are designed to qualify as “profits interests” in the
Operating Partnership for federal income tax purposes, meaning that initially they are not economically equivalent in value to a
share of our common stock, but over time can increase in value to one-for-one parity with common stock by operation of special
tax rules applicable to profits interests. Until and unless such parity is reached, the value that an executive will realize for a given
number of vested LTIP units is less than the value of an equal number of shares of our common stock.
As of December 31, 2020, 19.0 million shares were reserved on an unadjusted basis for issuance upon the grant or
exercise of awards under the LTIP. As of December 31, 2020, there were 5.6 million common shares available for issuance under
the LTIP.
The LTIP contains change of control provisions allowing for the immediate vesting of an award upon certain events
such as a merger where UDR is not the surviving entity. Upon the death or disability of an award recipient all outstanding
instruments will vest and all restrictions will lapse. The LTIP specifies that in the event of a capital transaction, which includes
but is not limited to stock dividends, stock splits, extraordinary cash dividends and spin-offs, the number of shares available for
grant in totality or to a single individual is to be adjusted proportionately. The LTIP specifies that when a capital transaction
occurs that would dilute the holder of the stock award, prior grants are to be adjusted such that the recipient is no worse as a
result of the capital transaction.
A summary of UDR’s LTIP Units and restricted stock activities during the year ended December 31, 2020 is as follows
(shares in thousands):
LTIP Units
Restricted Stock
Weighted
Balance, December 31, 2019
Granted
Vested
Forfeited
Balance, December 31, 2020
Weighted
Average Fair
Value Per
LTIP Unit
$
37.77
42.64
39.29
—
41.58
Average Fair
Value Per
Restricted
Stock
$
$
37.29
44.16
36.74
45.68
42.31
Number
of shares
248
188
(174)
(25)
237
Number of
LTIP Units
858
641
(772)
—
$
727
As of December 31, 2020, the Company had granted 6.5 million shares of restricted stock and 3.5 million LTIP Units
under the LTIP.
Stock Option Plan
The Company has no unexercised stock options outstanding and no remaining compensation expense related to
unvested stock options as of December 31, 2020.
During the years ended December 31, 2020, 2019, and 2018, respectively, we did not recognize any net compensation
expense related to outstanding stock options.
Restricted Stock Awards
Restricted stock awards are granted to Company employees, officers, and directors. The restricted stock awards are
valued based upon the closing sales price of UDR common stock on the date of grant. Compensation expense is recorded under
the straight-line method over the vesting period, which is generally three to four years. Restricted stock awards earn dividends
payable in cash. Some of the restricted stock grants are based on the Company’s performance and are subject to adjustment
during the initial one year performance period. For the years ended December 31, 2020, 2019, and 2018, we recognized $5.3
million, $4.8 million, and $4.3 million of compensation expense, net of capitalization,
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
related to the amortization of restricted stock awards, respectively. The total remaining compensation cost on unvested restricted
stock awards was $2.4 million and had a weighted average remaining contractual life of 2.4 years as of December 31, 2020.
Short-Term Incentive Compensation
In January 2020, certain officers of the Company were awarded a STI Unit grant under the 2020 Long-Term Incentive
Program (“2020 LTI”). The STI Unit awards represent short-term incentive compensation for the officers and were valued for
compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant in accordance
with ASC 718, Compensation - Stock Compensation, or $40.77 per unit, inclusive of a discount due to uncertainty associated
with the STI Unit reaching parity with the value of a share of UDR common stock. Compensation expense is recorded under the
straight-line method over the vesting period, which is one year. The STI Unit awards are primarily based on the Company’s
performance and are subject to adjustment based on performance against predefined metrics during the one-year performance
period. For the year ended December 31, 2020, we recognized $3.1 million of compensation expense, net of capitalization,
related to the amortization of STI Unit awards. As the STI Unit awards vest over a one-year period, there was no remaining
unrecognized compensation expense as of December 31, 2020.
In January 2019, certain officers of the Company were awarded a STI Unit grant under the 2019 Long-Term Incentive
Program (“2019 LTI”). The STI Unit awards represent short-term incentive compensation for the officers and were valued for
compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant in accordance
with ASC 718, Compensation - Stock Compensation, or $33.40 per unit, inclusive of a discount due to uncertainty associated
with the STI Unit reaching parity with the value of a share of UDR common stock. Compensation expense is recorded under the
straight-line method over the vesting period, which is one year. The STI Unit awards are primarily based on the Company’s
performance and are subject to adjustment based on performance against predefined metrics during the one-year performance
period. For the year ended December 31, 2019, we recognized $7.2 million of compensation expense, net of capitalization,
related to the amortization of STI Unit awards. As the STI Unit awards vest over a one-year period, there was no remaining
unrecognized compensation expense as of December 31, 2019.
Long-Term Incentive Compensation
In January 2020, certain officers of the Company were awarded either a restricted stock grant or an LTIP Unit grant, or
a combination of both, under the 2020 LTI. For both restricted stock grants and LTIP Unit grants, thirty percent of the 2020 LTI
award is based upon FFO as Adjusted over a two-year period and will vest fifty percent on the two-year anniversary and
fifty percent on the three-year anniversary. Fifteen percent of the 2020 LTI award is based upon relative FFO as Adjusted over a
three-year period and will vest 100% at the end of the three-year performance period. The remaining fifty-five percent of the
2020 LTI award is based on Total Shareholder Return (“TSR”) as measured relative to comparable apartment REITs over a three-
year period and as measured relative to the Nareit Equity REITs Total Return Index over a three-year period whereby both will
vest 100% at the end of the three-year performance periods. The portion of the restricted stock grant based upon FFO as Adjusted
was valued for compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant or
$46.12 per share. Because LTIP Units are granted at the maximum potential payout and there is uncertainty associated with an
LTIP Unit reaching parity with the value of a share of UDR common stock, the portion of the LTIP Unit grant based upon the
two-year FFO as Adjusted was valued for compensation expense purposes at $21.24 per unit on the grant date, inclusive of a
7.9% discount, and the portion of the LTIP Unit grant based upon the three-year FFO as Adjusted was valued for compensation
expense purposes at $22.23 per unit on the grant date, inclusive of a 3.6% discount. The portion of the restricted stock grant
based upon relative TSR was valued for compensation expense purposes at $53.94 per share for the comparable apartment REITs
component and $49.35 per share for the Nareit Equity REITs Total Return Index component on the grant date as determined by a
lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 16.0%. The portion of the
LTIP Unit grant based upon relative TSR was valued for compensation expense purposes at $26.18 per unit, inclusive of a 3.6%
discount, for the comparable apartment REITs component and $23.98 per unit, inclusive of a 3.6% discount, for the Nareit Equity
REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a
Monte Carlo simulation using a volatility factor of 16.0%.
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
In January 2019, certain officers of the Company were awarded either a restricted stock grant or an LTIP Unit grant, or
a combination of both, under the 2019 LTI. For both restricted stock grants and LTIP Unit grants, thirty percent of the 2019 LTI
award is based upon FFO as Adjusted over a one-year period and will vest fifty percent on the one-year anniversary and
fifty percent on the two-year anniversary. Fifteen percent of the 2019 LTI award is based upon relative FFO as Adjusted over a
three-year period and will vest 100% at the end of the three-year performance period. The remaining fifty-five percent of the
2019 LTI award is based on Total Shareholder Return (“TSR”) as measured relative to comparable apartment REITs over a three-
year period and as measured relative to the Nareit Equity REITs Total Return Index over a three-year period whereby both will
vest 100% at the end of the three-year performance periods. The portion of the restricted stock grant based upon FFO as Adjusted
was valued for compensation expense purposes based upon the closing sales price of UDR common stock on the date of grant or
$38.39 per share. Because LTIP Units are granted at the maximum potential payout and there is uncertainty associated with an
LTIP Unit reaching parity with the value of a share of UDR common stock, the portion of the LTIP Unit grant based upon the
one-year FFO as Adjusted was valued for compensation expense purposes at $17.47 per unit on the grant date, inclusive of a 9%
discount, and the portion of the LTIP Unit grant based upon the three-year FFO as Adjusted was valued for compensation
expense purposes at $18.24 per unit on the grant date, inclusive of a 5% discount. The portion of the restricted stock grant based
upon relative TSR was valued for compensation expense purposes at $43.63 per share for the comparable apartment REITs
component and $43.42 per share for the Nareit Equity REITs Total Return Index component on the grant date as determined by a
lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 21.0%. The portion of the
LTIP Unit grant based upon relative TSR was valued for compensation expense purposes at $20.89 per unit, inclusive of a 5%
discount, for the comparable apartment REITs component and $20.79 per unit, inclusive of a 5% discount, for the Nareit Equity
REITs Total Return Index component on the grant date as determined by a lattice-binomial option-pricing model based on a
Monte Carlo simulation using a volatility factor of 21.0%.
In January 2018, certain officers of the Company were awarded either a restricted stock grant or an LTIP Unit grant, or
a combination of both, under the 2018 Long-Term Incentive Program (“2018 LTI”). For both restricted stock grants and LTIP
Unit grants, thirty percent of the 2018 LTI award is based upon FFO as Adjusted over a one-year period and will vest
fifty percent on the one-year anniversary and fifty percent on the two-year anniversary. Fifteen percent of the 2018 LTI award is
based upon relative FFO as Adjusted over a three-year period and will vest 100% at the end of the three-year performance period.
The remaining fifty-five percent of the 2018 LTI award is based on Total Shareholder Return (“TSR”) as measured relative to
comparable apartment REITs over a three-year period and as measured relative to the Nareit Equity REITs Total Return Index
over a three-year period whereby both will vest 100% at the end of the three-year performance periods. The portion of the
restricted stock grant based upon FFO as Adjusted was valued for compensation expense purposes based upon the closing sales
price of UDR common stock on the date of grant or $38.06 per share. Because LTIP Units are granted at the maximum potential
payout and there is uncertainty associated with an LTIP Unit reaching parity with the value of a share of UDR common stock, the
portion of the LTIP Unit grant based upon the one-year FFO as Adjusted was valued for compensation expense purposes at
$17.13 per unit on the grant date, inclusive of a 10% discount, and the portion of the LTIP Unit grant based upon the three-year
FFO as Adjusted was valued for compensation expense purposes at $18.08 per unit on the grant date, inclusive of a 5% discount.
The portion of the restricted stock grant based upon relative TSR was valued for compensation expense purposes at $42.18 per
share for the comparable apartment REITs component and $40.49 per share for the Nareit Equity REITs Total Return Index
component on the grant date as determined by a lattice-binomial option-pricing model based on a Monte Carlo simulation using a
volatility factor of 17.0%. The portion of the LTIP Unit grant based upon relative TSR was valued for compensation expense
purposes at $20.12 per unit, inclusive of a 5% discount, for the comparable apartment REITs component and $19.35 per unit,
inclusive of a 5% discount, for the Nareit Equity REITs Total Return Index component on the grant date as determined by a
lattice-binomial option-pricing model based on a Monte Carlo simulation using a volatility factor of 17.0%.
For the years ended December 31, 2020, 2019, and 2018, we recognized $10.2 million, $12.4 million and $9.9 million,
respectively, of compensation expense, net of capitalization, related to the amortization of the awards. The total remaining
compensation cost on unvested LTI awards was $9.8 million and had a weighted average remaining contractual life of 1.6 years
as of December 31, 2020.
Profit Sharing Plan
Our profit sharing plan (the “Plan”) is a defined contribution plan covering all eligible full-time employees. Under the
Plan, UDR makes discretionary profit sharing and matching contributions to the Plan as determined by the
F - 44
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Compensation Committee of the Board of Directors. Aggregate provisions for contributions, both matching and discretionary,
which are included in General and administrative on UDR’s Consolidated Statements of Operations for the years ended
December 31, 2020, 2019, and 2018, was $1.5 million, $1.2 million, and $1.3 million, respectively.
11. INCOME TAXES
For 2020, 2019, and 2018, UDR believes that we have complied with the REIT requirements specified in the Code. As
such, the REIT would generally not be subject to federal income taxes.
For income tax purposes, distributions paid to common stockholders may consist of ordinary income, qualified
dividends, capital gains, unrecaptured section 1250 gains, return of capital, or a combination thereof. Distributions that exceed
our current and accumulated earnings and profits constitute a return of capital rather than taxable income and reduce the
stockholder’s basis in their common shares. To the extent that a distribution exceeds both current and accumulated earnings and
profits and the stockholder’s basis in the common shares, it generally will be treated as a gain from the sale or exchange of that
stockholder’s common shares. Taxable distributions paid per common share were taxable as follows for the years ended
December 31, 2020, 2019 and 2018 (unaudited):
Ordinary income
Qualified ordinary income
Long-term capital gain
Unrecaptured section 1250 gain
Nondividend distributions
Total
$
$
Year Ended December 31,
2019
0.981 $
0.004
0.021
0.063
0.281
1.350
2020
1.032 $
0.004
0.298
0.089
—
1.423
$
$
2018
0.774
0.006
0.058
0.233
0.207
1.278
We have a TRS that is subject to federal and state income taxes. A TRS is a C-corporation which has not elected REIT
status and as such is subject to United States federal and state income tax. The components of the provision for income taxes are
as follows for the years ended December 31, 2020, 2019, and 2018 (dollars in thousands):
Year Ended December 31,
2019
2018
2020
Income tax (benefit)/provision
Current
Federal
State
Total current
Deferred
Federal
State
Investment tax credit
Total deferred
Total income tax (benefit)/provision
$
$
(148)
1,374
1,226
894
451
(26)
1,319
2,545
$
$
1,466
735
2,201
1,266
371
—
1,637
3,838
$
$
220
396
616
66
6
—
72
688
Deferred income taxes are provided for the change in temporary differences between the basis of certain assets and
liabilities for financial reporting purposes and income tax reporting purposes. The expected future tax rates are based
F - 45
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
upon enacted tax laws. The components of our TRS deferred tax assets and liabilities are as follows for the years ended
December 31, 2020, 2019, and 2018 (dollars in thousands):
Year Ended December 31,
2019
2018
2020
Deferred tax assets:
Federal and state tax attributes
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Book/tax depreciation and basis
Other investment ventures
Other
Total deferred tax liabilities
Net deferred tax assets/(liabilities)
$
$
6
147
153
(23)
130
22
87
109
(19)
90
(638)
(2,665)
(67)
(3,370)
$ (3,240)
(367)
(1,291)
(67)
(1,725)
$ (1,635)
$
$
28
70
98
(16)
82
—
(17)
(67)
(84)
(2)
Income tax provision/(benefit), net from our TRS differed from the amounts computed by applying the U.S. statutory
rate of 21% to pretax income/(loss) for the years ended December 31, 2020, 2019, and 2018 as follows (dollars in thousands):
Year Ended December 31,
2019
2018
2020
Income tax provision/(benefit)
U.S. federal income tax provision/(benefit)
State income tax provision
Other items
Solar credit amortization
ITC basis adjustment
Valuation allowance
Total income tax provision/(benefit)
$
$
1,240
1,434
(165)
(26)
58
4
2,545
$
$
2,905
1,013
(139)
—
56
3
3,838
$
$
321
527
(167)
—
—
7
688
As of December 31, 2020, the Company had federal net operating loss carryovers (“NOL”) of $27.1 million expiring in
2032 through 2035 and state NOLs of $66.8 million expiring in 2021 through 2032. A portion of these attributes are still
available to the subsidiary REITs, but are carried at a zero effective tax rate.
The Company’s Tax benefit/(provision), net was $(2.5) million, $(3.8) million and $(0.7) million for the years ended
December 31, 2020, 2019 and 2018, respectively. The decrease of $1.3 million was primarily attributable to a $2.0 million tax on
a promoted interest in 2019 and offset by an increase in state tax of $0.4 million due to the California net operating loss
suspension. GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. The financial statements reflect expected future tax
consequences of income tax positions presuming the taxing authorities’ full knowledge of the tax position and all relevant facts,
but without considering time values. GAAP also provides guidance on derecognition, classification, interest and penalties,
accounting for interim periods, disclosure and transition.
The Company evaluates our tax position using a two-step process. First, we determine whether a tax position is more
likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals
or litigation processes, based on the technical merits of the position. The Company will then determine the amount of benefit to
recognize and record the amount of the benefit that is more likely than not to be realized upon ultimate settlement. As of
December 31, 2020 and 2019, UDR has no material unrecognized income tax benefits/(provisions), net.
F - 46
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
The Company files income tax returns in federal and various state and local jurisdictions. The tax years 2017 through
2019 remain open to examination by the major taxing jurisdictions to which the Company is subject.
12. NONCONTROLLING INTERESTS
Redeemable Noncontrolling Interests in the Operating Partnership and DownREIT Partnership
Interests in the Operating Partnership and the DownREIT Partnership held by limited partners are represented by OP
Units and DownREIT Units, respectively. The income is allocated to holders of OP Units/DownREIT Units based upon net
income attributable to common stockholders and the weighted average number of OP Units/DownREIT Units outstanding to total
common shares plus OP Units/DownREIT Units outstanding during the period. Capital contributions, distributions, and profits
and losses are allocated to noncontrolling interests in accordance with the terms of the partnership agreements of the Operating
Partnership and the DownREIT Partnership.
Limited partners of the Operating Partnership and the DownREIT Partnership have the right to require such partnership
to redeem all or a portion of the OP Units/DownREIT Units held by the limited partner at a redemption price equal to and in the
form of the Cash Amount (as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as
applicable), provided that such OP Units/DownREIT Units have been outstanding for at least one year, subject to certain
exceptions. UDR, as the general partner of the Operating Partnership and the DownREIT Partnership may, in its sole discretion,
purchase the OP Units/DownREIT Units by paying to the limited partner either the Cash Amount or the REIT Share Amount
(generally one share of common stock of the Company for each OP Unit/DownREIT Unit), as defined in the partnership
agreement of the Operating Partnership or the DownREIT Partnership, as applicable. Accordingly, the Company records the OP
Units/DownREIT Units outside of permanent equity and reports the OP Units/DownREIT Units at their redemption value using
the Company’s stock price at each balance sheet date.
The following table sets forth redeemable noncontrolling interests in the Operating Partnership and DownREIT
Partnership for the years ended December 31, 2020 and 2019 (dollars in thousands):
Year Ended December 31,
2020
2019
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership,
beginning of year
$ 1,018,665 $
972,740
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating
Partnership and DownREIT Partnership
Conversion of OP Units/DownREIT Units to Common Stock
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating
Partnership and DownREIT Partnership
Distributions to redeemable noncontrolling interests in the Operating Partnership and
DownREIT Partnership
Vesting of Long-Term Incentive Plan Units
Allocation of other comprehensive income/(loss)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT
Partnership, end of year
(143,741)
(12,666)
183,884
(134,031)
4,543
14,426
(34,149)
23,501
141
(32,270)
14,742
(826)
$
856,294
$ 1,018,665
Noncontrolling Interests
Noncontrolling interests represent interests of unrelated partners and unvested LTIP Units in certain consolidated
affiliates, and are presented as part of equity on the Consolidated Balance Sheets since these interests are not redeemable. Net
(income)/loss attributable to noncontrolling interests was $(0.2) million, $(0.2) million, and $(0.2) million during the years ended
December 31, 2020, 2019, and 2018, respectively.
The Company grants LTIP Units to certain employees and non-employee directors. The LTIP Units represent an
ownership interest in the Operating Partnership and have vesting terms of between one and three years, specific to the individual
grants.
F - 47
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Noncontrolling interests related to long-term incentive plan units represent the unvested LTIP Units of these employees
and non-employee directors in the Operating Partnership. The net income/(loss) allocated to the unvested LTIP Units are
included in Net (income)/loss attributable to noncontrolling interests on the Consolidated Statements of Operations.
13. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS
Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a
liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy
prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels,
which are described below:
● Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
● Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active;
or other inputs that are observable or can be corroborated with observable market data.
● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and
similar techniques that use significant unobservable inputs.
The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of
December 31, 2020 and 2019 are summarized as follows (dollars in thousands):
Total
Carrying
Amount in
Statement of
Financial
Position at
December 31,
2020 (a)
Fair Value
Estimate at
December 31,
2020
Fair Value at December 31, 2020, Using
Quoted
Prices in
Active
Markets
for Identical
Assets or
Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Description:
Notes receivable, net (b)
Derivatives - Interest rate contracts (b)
Total assets
Derivatives - Interest rate contracts (c)
Secured debt instruments - fixed rate: (d)
Mortgage notes payable
Secured debt instruments - variable rate: (d)
Tax-exempt secured notes payable
Unsecured debt instruments: (d)
Working capital credit facility
Commercial paper program
Unsecured notes
Total liabilities
Redeemable noncontrolling interests in the
Operating Partnership and DownREIT
Partnership (e)
$
$
$
157,992
2
157,994
167
$
$
$
170,411
2
170,413
167
837,473
854,084
27,000
27,000
28,024
190,000
3,922,314
$ 5,004,978
28,024
190,000
4,283,045
$ 5,382,320
$
$
$
$
— $
—
— $
— $
2
2
$
170,411
—
170,411
— $
167
$
—
—
—
854,084
—
—
27,000
—
—
—
— $
—
—
—
167
28,024
190,000
4,283,045
$ 5,382,153
$
856,294
$
856,294
$
— $ 856,294
$
—
F - 48
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Fair Value at December 31, 2019, Using
Total
Carrying
Amount in
Statement of
Financial
Position at
December 31,
2019 (a)
Fair Value
Estimate at
December 31,
2019
Quoted
Prices in
Active
Markets
for Identical
Assets or
Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
$
$
$
$
$
153,650
6
153,656
142
906,228
218,490
160,197
6
160,203
142
898,329
213,661
27,000
27,000
16,583
300,000
3,263,152
$ 4,731,595
16,583
300,000
3,397,622
$ 4,853,337
$
$
$
$
— $
—
— $
— $
6
6
$
160,197
—
160,197
— $
142
$
—
—
—
—
—
—
—
— $
—
—
898,329
213,661
—
27,000
—
—
—
142
16,583
300,000
3,397,622
$ 4,853,195
$ 1,018,665
$ 1,018,665
$
— $ 1,018,665
$
—
Description:
Notes receivable, net (b)
Derivatives - Interest rate contracts (c)
Total assets
Derivatives - Interest rate contracts (c)
Secured debt instruments - fixed rate: (d)
Mortgage notes payable
Credit facilities
Secured debt instruments - variable rate: (d)
Tax-exempt secured notes payable
Unsecured debt instruments: (d)
Working capital credit facility
Commercial paper program
Unsecured notes
Total liabilities
Redeemable noncontrolling interests in the
Operating Partnership and DownREIT
Partnership (e)
(a) Balances include fair market value adjustments and exclude deferred financing costs.
(b) See Note 2, Significant Accounting Policies.
(c) See Note 14, Derivatives and Hedging Activity.
(d) See Note 7, Secured and Unsecured Debt, Net.
(e) See Note 12, Noncontrolling Interests.
There were no transfers into or out of any of the levels of the fair value hierarchy during the year ended
December 31, 2020.
Financial Instruments Carried at Fair Value
The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted
future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash
payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market
interest rate curves. The fair values of interest rate swaps and caps are determined using the market standard methodology of
discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The
variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates
derived from observable market interest rate curves and volatilities.
The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and
the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative
contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit
enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
F - 49
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of
the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of
current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2020 and
2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its
derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its
derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the
fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy
election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net
basis by counterparty portfolio.
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership have a redemption feature
and are marked to their redemption value. The redemption value is based on the fair value of the Company’s common stock at the
redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date.
Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable
noncontrolling interests in the Operating Partnership and DownREIT Partnership are classified as Level 2.
Financial Instruments Not Carried at Fair Value
At December 31, 2020, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real
estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable
approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other
financial instruments, which includes notes receivable and debt instruments, are classified in Level 3 of the fair value hierarchy
due to the significant unobservable inputs that are utilized in their respective valuations.
14. DERIVATIVES AND HEDGING ACTIVITY
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The
Company principally manages its exposures to a wide variety of business and operational risks through management of its core
business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by
managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments.
Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities
that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest
rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the
Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s
investments and borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its
exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as
part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of
variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the
agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the
receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an
up-front premium.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in Accumulated
other comprehensive income/(loss), net on the Consolidated Balance Sheets and subsequently reclassified into earnings in the
period that the hedged forecasted transaction affects earnings. During the years ended December 31, 2020, 2019, and 2018, such
derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
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Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Amounts reported in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets related to
derivatives that will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.
Through December 31, 2021, the Company estimates that an additional $1.7 million will be reclassified as an increase to Interest
expense.
As of December 31, 2020, the Company had the following outstanding interest rate derivatives that were designated as
cash flow hedges of interest rate risk (dollars in thousands):
Product
Interest rate swaps and caps (a)
Number of
Instruments
2
Notional
$
334,880
(a)
In addition to the interest rate swaps summarized above, the Company entered into three additional interest rate swaps with a
total notional value of $315.0 million that became effective in January 2021 upon maturity of the $315.0 million notional
value interest rate swap summarized above.
Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate
movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair
value of derivatives not designated in hedging relationships are recorded directly in earnings. As of December 31, 2020, no
derivatives not designated as hedges were held by the Company.
Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheet
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification
on the Consolidated Balance Sheets as of December 31, 2020 and 2019 (dollars in thousands):
Derivatives designated as hedging instruments:
Interest rate products
Asset Derivatives
(included in Other assets)
Fair Value at:
Liability Derivatives
(included in Other liabilities)
Fair Value at:
December 31,
2020
December 31,
2019
December 31,
2020
December 31,
2019
$
2
$
6
$
167
$
142
Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations
The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of
Operations for the years ended December 31, 2020, 2019, and 2018 (dollars in thousands):
Derivatives in Cash Flow Hedging
Relationships
Unrealized holding gain/(loss)
Recognized in OCI
Gain/(Loss) Reclassified
from Accumulated OCI into
Interest expense
Gain/(Loss) Recognized in
Interest expense
(Amount Excluded from
Effectiveness Testing)
2020
2019
2018
2020
2019
2018
2020 2019
2018
Interest rate products
$ (3,382) $ (8,437) $ 4,806
$ (4,827) $ 2,770
$ 1,948
$ — $ — $ —
Total amount of Interest expense presented on the Consolidated Statements of
Operations
$
202,706
$
170,917
$
134,168
The Company did not recognize any gain/(loss) in Interest income and other income/(expense), net related to derivatives
not designated during each of the years ended December 31, 2020, 2019, and 2018.
Year Ended
December 31,
2020
2019
2018
F - 51
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Credit-risk-related Contingent Features
The Company has agreements with its derivative counterparties that contain a provision where the Company could be
declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to
the Company’s default on the indebtedness.
The Company has certain agreements with some of its derivative counterparties that contain a provision where, in the
event of default by the Company or the counterparty, the right of setoff may be exercised. Any amount payable to one party by
the other party may be reduced by its setoff against any amounts payable by the other party. Events that give rise to default by
either party may include, but are not limited to, the failure to pay or deliver payment under the derivative agreement, the failure
to comply with or perform under the derivative agreement, bankruptcy, a merger without assumption of the derivative agreement,
or in a merger, a surviving entity’s creditworthiness is materially weaker than the original party to the derivative agreement.
Tabular Disclosure of Offsetting Derivatives
The Company has elected not to offset derivative positions on the consolidated financial statements. The tables below
present the effect on its financial position had the Company made the election to offset its derivative positions as of
December 31, 2020 and 2019 (dollars in thousands):
Offsetting of Derivative Assets
December 31, 2020
December 31, 2019
Net Amounts of
Gross Amounts Not Offset
Gross
Amounts of
Recognized
Assets
Gross
Amounts
Offset in the
Consolidated
Balance
Sheets
Assets
Presented in the
Consolidated
Balance Sheets
(a)
$
$
2
6
$
$
— $
— $
2
6
in the Consolidated
Balance Sheet
Financial
Cash
Collateral
Instruments Received Net Amount
2
$
— $
— $
$
(3) $
— $
3
(a) Amounts reconcile to the aggregate fair value of derivative assets in the “Tabular Disclosure of Fair Values of
Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.
Offsetting of Derivative Liabilities
December 31, 2020
December 31, 2019
Gross
Amounts of
Recognized
Liabilities
Gross
Amounts
Offset in the
Consolidated
Balance
Sheets
$
$
167
142
$
$
— $
— $
Net Amounts of Gross Amounts Not Offset
Liabilities
Presented in the
Consolidated
Balance Sheets
(a)
167
in the Consolidated
Balance Sheet
Financial
Instruments
— $
$
Cash
Collateral
Posted
Net Amount
167
— $
142
$
(3) $
— $
139
(a) Amounts reconcile to the aggregate fair value of derivative liabilities in the “Tabular Disclosure of Fair Values of
Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.
F - 52
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
15. COMMITMENTS AND CONTINGENCIES
Commitments
Real Estate Commitments
The following summarizes the Company’s real estate commitments at December 31, 2020 (dollars in thousands):
Wholly-owned — under development
Joint ventures:
Preferred equity investments
Other investments
Total
Number
Properties
5
UDR's
Investment (a)
UDR's Remaining
Commitment
$
247,877
$
243,623
1
-
$
17,919 (b)
22,870
288,666
$
2,921 (b)
19,245
265,789
(a) Represents UDR’s investment as of December 31, 2020.
(b) Represents UDR’s investment in and remaining commitment for Thousand Oaks, which is under development as of
December 31, 2020.
Contingencies
Litigation and Legal Matters
The Company is subject to various legal proceedings and claims arising in the ordinary course of business. The
Company cannot determine the ultimate liability with respect to such legal proceedings and claims at this time. The Company
believes that such liability, to the extent not provided for through insurance or otherwise, will not have a material adverse effect
on our financial condition, results of operations or cash flows.
16. REPORTABLE SEGMENTS
GAAP guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker
to decide how to allocate resources and for purposes of assessing such segments’ performance. UDR’s Chief Operating Decision
Maker is comprised of several members of its executive management team who use several generally accepted industry financial
measures to assess the performance of the business for our reportable operating segments.
UDR owns and operates multifamily apartment communities that generate rental and other property related income
through the leasing of apartment homes to a diverse base of tenants. The primary financial measures for UDR’s apartment
communities are rental income and net operating income (“NOI”). Rental income represents gross market rent less adjustments
for concessions, vacancy loss and bad debt. NOI is defined as rental income less direct property rental expenses. 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 2.875% 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. UDR’s Chief Operating Decision Maker utilizes NOI as the key measure of segment
profit or loss.
UDR’s two reportable segments are Same-Store Communities and Non-Mature Communities/Other:
● Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2019
and held as of December 31, 2020. A comparison of operating results from the prior year is meaningful as these
communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year,
there is no plan to conduct substantial redevelopment activities, and the community is 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.
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Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
● Non-Mature Communities/Other represent 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.
Management evaluates the performance of each of our apartment communities on a Same-Store Community and Non-
Mature Community/Other basis, as well as individually and geographically. This is consistent with the aggregation criteria under
GAAP as each of our apartment communities generally has similar economic characteristics, facilities, services, and tenants.
Therefore, the Company’s reportable segments have been aggregated by geography in a manner identical to that which is
provided to the Chief Operating Decision Maker.
All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of
UDR’s total revenues during the years ended December 31, 2020, 2019, and 2018.
The following is a description of the principal streams from which the Company generates its revenue:
Lease Revenue
Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with
ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the
noncancellable lease term because collection of the lease payments was probable at lease commencement, inclusive of any
periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in
circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a
straight-line basis over the lease term.
Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance
reimbursements from retail leases. These services represent non-lease components in a contract as the Company transfers a
service to the lessee other than the right to use the underlying asset. The Company has elected the practical expedient under the
leasing standard to not separate lease and non-lease components from its resident and retail lease contracts as the timing and
pattern of revenue recognition for the non-lease component and related lease component are the same and the combined single
lease component would be classified as an operating lease.
Other Revenue
Other revenue is generated by services provided by the Company to its retail and residential tenants and other unrelated
third parties. Revenue is measured based on consideration specified in contracts with customers. The Company recognizes
revenue when it satisfies a performance obligation by providing the services specified in a contract to the customer. These fees
are generally recognized as earned.
Joint venture management and other fees
The Joint venture management and other fees revenue consists of management fees charged to our equity method joint
ventures per the terms of contractual agreements and other fees. Joint venture fee revenue is recognized monthly as the
management services are provided and the fees are earned or upon a transaction whereby the Company earns a fee. Joint venture
management and other fees are not allocable to a specific reportable segment or segments.
The following table details rental income and NOI for UDR’s reportable segments for the years ended December 31,
2020, 2019, and 2018, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of
Operations (dollars in thousands):
F - 54
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UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
Reportable apartment home segment lease revenue
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated lease revenue
Reportable apartment home segment other revenue
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated other revenue
Total reportable apartment home segment rental income
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated rental income
Reportable apartment home segment NOI
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated NOI
Reconciling items:
Joint venture management and other fees
Property management
Other operating expenses
Real estate depreciation and amortization
General and administrative
Casualty-related (charges)/recoveries, net
Other depreciation and amortization
Gain/(loss) on sale of real estate owned
Income/(loss) from unconsolidated entities
Interest expense
Interest income and other income/(expense), net
Tax (provision)/benefit, net
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating
Partnership and DownREIT Partnership
Net (income)/loss attributable to noncontrolling interests
Net income/(loss) attributable to UDR, Inc.
(a) Same-Store Community population consisted of 37,607 apartment homes.
F - 55
Year Ended December 31,
2019
2020
2018
$
385,959
211,633
108,073
123,993
65,713
302,920
$ 1,198,291
$
402,901
211,401
122,008
120,289
64,970
180,668
$ 1,102,237
$
387,215
205,324
119,540
116,011
63,287
111,272
$ 1,002,649
$
$
11,803
6,329
2,697
5,395
2,543
9,038
37,805
$
$
12,339
7,216
2,760
6,444
2,793
4,349
35,901
$
$
10,738
6,357
2,623
6,223
2,664
3,851
32,456
$
397,762
217,962
110,770
129,388
68,256
311,958
$ 1,236,096
$
415,240
218,617
124,768
126,733
67,763
185,017
$ 1,138,138
$
397,953
211,681
122,163
122,234
65,951
115,123
$ 1,035,105
$
$
295,065
152,131
65,553
88,518
42,931
209,504
853,702
5,069
(35,538)
(22,762)
(608,616)
(49,885)
(2,131)
(10,013)
119,277
18,844
(202,706)
6,274
(2,545)
315,812
154,082
83,832
88,467
42,210
123,900
808,303
14,055
(32,721)
(13,932)
(501,257)
(51,533)
(474)
(6,666)
5,282
137,873
(170,917)
15,404
(3,838)
$
300,745
148,057
84,059
85,219
39,631
74,404
732,115
11,754
(28,465)
(12,100)
(429,006)
(46,983)
(2,121)
(6,673)
136,197
(5,055)
(134,168)
6,735
(688)
(4,543)
(161)
64,266
$
(14,426)
(188)
184,965
$
(18,215)
(221)
203,106
$
Table of Contents
UDR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
DECEMBER 31, 2020
The following table details the assets of UDR’s reportable segments as of December 31, 2020 and 2019 (dollars in
thousands):
Reportable apartment home segment assets:
Same-Store Communities (a):
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment assets
Accumulated depreciation
Total segment assets — net book value
Reconciling items:
Cash and cash equivalents
Restricted cash
Notes receivable, net
Investment in and advances to unconsolidated joint ventures, net
Operating lease right-of-use assets
Other assets
Total consolidated assets
(a) Same-Store Community population consisted of 37,607 apartment homes.
Markets included in the above geographic segments are as follows:
December 31,
December 31,
2020
2019
$
$
3,732,329
2,255,449
1,507,878
827,683
614,647
4,133,486
13,071,472
(4,605,366)
8,466,106
1,409
22,762
157,992
600,233
200,913
188,118
9,637,533
$
$
3,696,544
2,222,405
1,500,597
806,830
600,350
3,775,375
12,602,101
(4,131,353)
8,470,748
8,106
25,185
153,650
588,262
204,225
186,296
9,636,472
i.
West Region — Orange County, San Francisco, Seattle, Monterey Peninsula, Los Angeles, Other Southern
California and Portland
ii. Mid-Atlantic Region — Metropolitan D.C., Baltimore and Richmond
iii.
iv.
v.
Northeast Region — Boston and New York
Southeast Region — Tampa, Orlando, Nashville and Other Florida
Southwest Region — Dallas, Austin and Denver
(1)
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F - 57
Table of Contents
Report of Independent Registered Public Accounting Firm
The Partners
United Dominion Realty, L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of United Dominion Realty, L.P. (the Partnership) as of
December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income/(loss), changes in capital
and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial
statement schedule listed in the accompanying Index at Item 15(a) (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Partnership at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on
the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting
but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
F - 58
Table of Contents
Description of the
Matter
Indicators of Impairment of Real Estate Owned and Investment in Unconsolidated Entities
At December 31, 2020, the Partnership’s real estate owned, net and investment in unconsolidated
entities were approximately $2.2 billion and $51.3 million, respectively. As more fully described in
Note 2 to the consolidated financial statements, the Partnership periodically evaluates these assets for
indicators of impairment, and this includes, among other things, judgments based on factors such as
operational performance, market conditions, the Partnership’s intent and ability to hold each asset, as
well as any significant cost overruns on development or redevelopment communities. During 2020, the
Partnership did not recognize an impairment related to real estate owned, net or any other than
temporary impairments related to its investment in unconsolidated entities.
Auditing the Partnership’s evaluation for indicators of impairment was complex due to a high degree of
subjectivity in the identification of events or changes in circumstances that may indicate an impairment
of its real estate owned or that the value of its investment in unconsolidated entities may be other than
temporarily impaired. Differences or changes in these judgments could have a material impact on the
Partnership’s analysis.
How We Addressed
the Matter in Our
Audit
We tested the Partnership’s internal controls over the asset impairment evaluation process. This
included testing controls over management’s determination and review of the considerations used in
the impairment indicator analysis.
Our procedures with regards to the Partnership’s evaluation for indicators of impairment included,
among others, testing the completeness and accuracy of management’s impairment analysis and
evaluating management’s judgments determining whether indicators of impairment were present. For
example, we performed inquires of management, considered historical operating results and the current
market conditions, performed an independent assessment using both internally and externally available
information, read the minutes of the meetings of the Board of Directors, and reviewed the Partnership’s
development and redevelopment costs.
Accounting for acquisitions of real estate investment properties
Description of the
Matter
How We Addressed
the Matter in Our
Audit
During 2020, the Partnership acquired real estate investment properties. These transactions were
accounted for as asset acquisitions. The aggregate increase in real estate and other assets due to these
acquisitions was approximately $251.1 million. As more fully described in Note 3 to the consolidated
financial statements, the total consideration was allocated to land, land improvements, buildings and
improvements, and real estate intangible assets based on their relative fair value.
Auditing the Partnership’s acquisition of real estate investment properties is complex and requires a
higher degree of auditor judgment due to the significant assumptions that are utilized in the
determination of the relative fair values of the assets acquired. The significant assumptions used in
management’s analysis to estimate the fair value of these components includes capitalization rates,
market comparable prices for similar land parcels, market rental rates, leasing commission rates as well
as the time it would take to lease any acquired buildings that were vacant at acquisition.
We tested the Partnership’s internal controls over the acquisition of real estate investment properties
and the resulting purchase price allocations. This included testing controls over management’s
identification of the assets acquired and liabilities assumed and evaluating the methods and significant
assumptions used by the Partnership to develop such estimates.
Our testing of the fair values of the assets acquired included, among others, evaluating the selection of
the Partnership’s valuation model and testing the significant assumptions discussed above as well as
the completeness and accuracy of the underlying data. For example, we compared management’s
assumptions to observable market transactions and replacement costs associated
F - 59
Table of Contents
with the fair value of the land and buildings and improvements. For in-place leases, we
compared management’s assumptions to published market data for comparable leases,
related leasing commissions and the amount of time it would take to lease up the space
to stabilization assuming the space was vacant at acquisition. We involved our real
estate valuation specialists to assist in evaluating the significant assumptions listed
above. In addition, we performed sensitivity tests on the significant assumptions to
evaluate the change in the fair value resulting from changes in the assumptions.
/s/ Ernst & Young LLP
We have served as the Partnership’s auditor since 2010.
Denver, Colorado
February 18, 2021
F - 60
Table of Contents
UNITED DOMINION REALTY, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for unit data)
ASSETS
Real estate owned:
Real estate held for investment
Less: accumulated depreciation
Total real estate owned, net of accumulated depreciation
Cash and cash equivalents
Restricted cash
Investment in unconsolidated entities
Operating lease right-of-use assets
Other assets
Total assets
Liabilities:
LIABILITIES AND CAPITAL
Secured debt, net
Notes payable due to the General Partner
Operating lease liabilities
Real estate taxes payable
Accrued interest payable
Security deposits and prepaid rent
Distributions payable
Accounts payable, accrued expenses, and other liabilities
Total liabilities
Commitments and contingencies (Note 11)
Capital:
Partners’ capital:
General partner:
December 31,
December 31,
2020
2019
$
$
$
4,043,725
(1,892,011)
2,151,714
26
15,062
51,302
202,438
37,025
2,457,567
99,104
810,700
197,135
3,107
205
18,485
66,833
13,566
1,209,135
$
$
$
3,875,160
(1,796,568)
2,078,592
24
13,998
76,222
205,668
24,241
2,398,745
99,071
637,233
200,001
2,801
217
17,946
63,364
12,226
1,032,859
110,883 OP Units outstanding at December 31, 2020 and December 31, 2019
779
859
Limited partners:
184,724,677 and 183,952,659 OP Units outstanding at December 31, 2020 and
December 31, 2019, respectively
Accumulated other comprehensive income/(loss), net
Total partners’ capital
Noncontrolling interests
Total capital
Total liabilities and capital
1,230,923
(49)
1,231,653
16,779
1,248,432
2,457,567
$
1,347,622
—
1,348,481
17,405
1,365,886
2,398,745
$
See accompanying notes to the consolidated financial statements.
F - 61
Table of Contents
UNITED DOMINION REALTY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit data)
REVENUES:
Rental income
OPERATING EXPENSES:
Property operating and maintenance
Real estate taxes and insurance
Property management
Other operating expenses
Real estate depreciation and amortization
General and administrative
Casualty-related charges/(recoveries), net
Total operating expenses
Gain/(loss) on sale of real estate owned
Operating income
Income/(loss) from unconsolidated entities
Interest expense
Interest expense on notes payable due to the General Partner
Net income/(loss)
Net (income)/loss attributable to noncontrolling interests
Net income/(loss) attributable to OP unitholders
Year Ended December 31,
2019
2018
2020
$ 428,747
$ 441,773
$ 431,920
69,213
56,247
12,326
16,138
143,005
17,987
793
315,709
57,960
67,710
51,057
12,701
9,488
139,975
18,014
853
299,798
—
67,400
47,140
11,878
8,864
143,481
16,889
951
296,603
75,507
170,998
141,975
210,824
(5,543)
(2,831)
(26,526)
136,098
(1,869)
$ 134,229
(8,313)
(1,639)
(28,028)
103,995
(1,832)
$ 102,163
43,496
(8,733)
(14,102)
231,485
(1,722)
$ 229,763
Net income/(loss) per weighted average OP Unit - basic and diluted
$
0.73
$
0.56
$
1.25
Weighted average OP Units outstanding - basic and diluted
184,753
184,034
183,609
See accompanying notes to the consolidated financial statements.
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UNITED DOMINION REALTY, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In thousands)
Net income/(loss)
Other comprehensive income/(loss), including portion attributable to noncontrolling
interests:
Other comprehensive income/(loss) - derivative instruments:
Year Ended December 31,
2019
$ 136,098 $ 103,995 $ 231,485
2018
2020
Unrealized holding gain/(loss)
(49)
—
—
Other comprehensive income/(loss), including portion attributable to
noncontrolling interests
Comprehensive income/(loss)
Comprehensive (income)/loss attributable to noncontrolling interests
Comprehensive income/(loss) attributable to OP unitholders
(49)
136,049
(1,869)
$ 134,180
See accompanying notes to consolidated financial statements.
F - 63
—
—
231,485
(1,722)
$ 229,763
103,995
(1,832)
$ 102,163
Table of Contents
Balance at December 31, 2017
Net income/(loss)
Distributions
OP Unit redemptions for
common shares of UDR
Adjustment to reflect limited
partners’ capital at redemption
value
Long-Term Incentive Plan Unit
grants
Conversion of Advances
(to)/from the General Partner to
notes payable
Net change in advances
(to)/from the General Partner
Balance at December 31, 2018
Net income/(loss)
Distributions
OP Unit redemptions for
common shares of UDR
Adjustment to reflect limited
partners’ capital at redemption
value
Long-Term Incentive Plan Unit
grants
Net contributions/(distributions)
to/(from) noncontrolling
interests
Balance at December 31, 2019
Net income/(loss)
Distributions
OP Unit redemptions for
common shares of UDR
Adjustment to reflect limited
partners’ capital at redemption
value
Long-Term Incentive Plan Unit
grants
Unrealized gain/(loss) on
derivative financial investments
Net contributions/(distributions)
to/(from) noncontrolling
interests
Balance at December 31, 2020
UNITED DOMINION REALTY, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL
(In thousands)
Class A
Limited
Partner
$ 67,474
2,221
(2,328)
Limited
Partners
and LTIP
Units
$ 283,568
9,977
(10,718)
UDR, Inc.
Limited
Partner
$ 1,112,298
217,426
(224,637)
General
Partner
$
955 $
139
(144)
Accumulated
Other
Comprehensive
Income/(Loss), net
Total
Partners’
Capital
Advances
(to)/from
General
Partner
Noncontrolling
Interests
— $ 1,464,295
229,763
—
(237,827)
—
$
397,899
—
—
$
$
12,936
1,722
—
—
(416)
416
2,034
4,295
(6,329)
—
—
15,839
—
—
—
—
69,401
971
(2,396)
—
302,545
3,404
(9,063)
—
1,099,174
97,727
(241,207)
—
(79,010)
79,010
13,827
39,638
(53,465)
—
27,066
—
—
81,803
1,272
(2,524)
—
284,580
4,984
(10,281)
—
981,239
127,893
(253,598)
—
(110)
110
(13,234)
(30,986)
44,220
—
—
15,555
—
—
—
—
—
—
—
—
950
61
(152)
—
—
—
—
859
80
(160)
—
—
—
—
—
—
—
—
—
—
15,839
—
—
—
—
(257,204)
—
—
—
—
—
—
— 1,472,070
102,163
—
(252,818)
—
(140,695)
—
—
—
(839)
13,819
1,832
—
—
—
—
—
—
—
—
—
—
—
—
—
27,066
—
1,348,481
134,229
(266,563)
—
—
15,555
(49)
(49)
—
—
—
—
—
—
—
—
—
—
—
Total
1,875,130
231,485
(237,827)
—
—
15,839
(257,204)
(141,534)
1,485,889
103,995
(252,818)
—
—
27,066
—
—
—
1,754
17,405
1,869
—
1,754
1,365,886
136,098
(266,563)
—
—
—
—
—
—
15,555
(49)
—
$ 67,317
—
$ 263,742
$
—
899,864
$
—
779
$
—
(49)
—
$ 1,231,653
$
—
— $
(2,495)
16,779
$
(2,495)
1,248,432
See accompanying notes to the consolidated financial statements.
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Table of Contents
UNITED DOMINION REALTY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Operating Activities
Net income/(loss)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating
activities:
Year Ended December 31,
2019
2018
2020
$
136,098
$
103,995
$
231,485
Depreciation and amortization
(Gain)/loss on sale of real estate owned
(Income)/loss from unconsolidated entities
Other
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets
Increase/(decrease) in operating liabilities
Net cash provided by/(used in) operating activities
Investing Activities
Acquisition of real estate assets
Proceeds from sales of real estate investments, net
Capital expenditures and other major improvements — real estate assets
Distributions received from unconsolidated entities
Net cash provided by/(used in) investing activities
Financing Activities
Advances (to)/from the General Partner, net
Proceeds from the issuance of secured debt
Payments on secured debt
Issuance/(repayment) of notes payable to the General Partner
Distributions paid to partnership unitholders
Payments of financing costs
Other
Net cash provided by/(used in) financing activities
Net increase/(decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash, beginning of year
Cash, cash equivalents, and restricted cash, end of year
Supplemental Information:
Interest paid during the period, net of amounts capitalized, and cash paid for operating
leases
Non-cash transactions:
Development costs and capital expenditures incurred but not yet paid
Recognition of operating lease right-of-use assets
Recognition of operating lease liabilities
Right-of-use assets obtained in exchange for new operating lease liabilities
remeasurements
Right-of-use asset obtained in exchange for new operating lease liability
LTIP Unit grants
Distributions declared but not yet paid
Conversion of Advances (to)/from the General Partner to notes payable
The following reconciles cash, cash equivalents, and restricted cash to the total of the
same amounts as shown above:
Cash, cash equivalents, and restricted cash, beginning of year
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash as shown above
Cash, cash equivalents, and restricted cash, end of year
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash as shown above
143,005
(57,960)
5,543
5,233
(15,340)
1,104
217,683
(250,727)
143,952
(52,641)
19,377
(140,039)
—
—
—
(61,784)
(14,783)
(11)
—
(76,578)
1,066
14,022
15,088
$
139,975
—
8,313
3,534
1,084
(1,808)
255,093
—
—
(62,397)
18,491
(43,906)
—
72,500
—
(272,913)
(10,064)
—
(376)
(210,853)
334
13,688
14,022
$
143,481
(75,507)
(43,496)
1,771
(3,260)
1,194
255,668
—
98,533
(44,227)
17,377
71,683
(348,381)
—
(133,205)
169,577
(12,705)
—
(1,821)
(326,535)
816
12,872
13,688
42,423
$
38,400
$
17,173
3,649
—
—
—
316
15,555
66,833
—
24
13,998
14,022
26
15,062
15,088
2,913
94,174
88,161
111,055
1,443
27,066
63,364
—
2,056
—
—
—
—
15,839
59,461
257,204
$
$
$
$
125
13,563
13,688
24
13,998
14,022
$
$
$
$
293
12,579
12,872
125
13,563
13,688
$
$
$
$
$
$
See accompanying notes to the consolidated financial statements.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
1. CONSOLIDATION AND BASIS OF PRESENTATION
United Dominion Realty, L.P. (“UDR, L.P.,” the “Operating Partnership,” “we” or “our”) is a Delaware limited
partnership, that owns, acquires, renovates, redevelops, manages, and disposes of multifamily apartment communities generally
located in high barrier to entry markets located in the United States. The high barrier to entry markets are characterized by limited
land for new construction, difficult and lengthy entitlement process, expensive single-family home prices and significant
employment growth potential. UDR, L.P. is a subsidiary of UDR, Inc. (“UDR” or the “General Partner”), a self-administered real
estate investment trust, or REIT, through which UDR conducts a significant portion of its business. During the years ended
December 31, 2020, 2019, and 2018, rental revenues of the Operating Partnership represented 35%, 39%, and 42%, respectively,
of the General Partner’s consolidated rental revenues. As of December 31, 2020, the Operating Partnership’s apartment portfolio
consisted of 53 communities located in 15 markets consisting of 17,174 apartment homes.
Interests in UDR, L.P. are represented by operating partnership units (“OP Units”). The Operating Partnership’s net
income is allocated to the partners, which is initially based on their respective distributions made during the year and secondly,
their percentage interests. Distributions are made in accordance with the terms of the Amended and Restated Agreement of
Limited Partnership of United Dominion Realty, L.P. (the “Operating Partnership Agreement”), on a per unit basis that is
generally equal to the dividend per share on UDR’s common stock, which is publicly traded on the New York Stock Exchange
(“NYSE”) under the ticker symbol “UDR.”
As of December 31, 2020, there were 184.8 million OP Units outstanding, of which 176.2 million, or 95.3%, were
owned by UDR and affiliated entities and 8.6 million, or 4.7%, were owned by non-affiliated limited partners. There were 184.1
million OP Units outstanding as of December 31, 2019, of which 176.2 million, or 95.7%, were owned by UDR and affiliated
entities and 7.9 million, or 4.3%, were owned by non-affiliated limited partners. See Note 10, Capital Structure.
As sole general partner of the Operating Partnership, UDR owned all 0.1 million general partner OP units, or 0.1%, of
the total OP Units outstanding as of December 31, 2020 and 2019. At December 31, 2020 and 2019, there were 184.7 million and
184.0 million, respectively, of limited partner OP Units outstanding, of which 1.9 million were Class A Limited Partnership Units
as of both periods. Of the limited partner OP Units outstanding, UDR owned 176.1 million, or 95.3%, and 176.1 million, or
95.7%, at December 31, 2020 and 2019, respectively. The remaining 8.6 million, or 4.7%, and 7.9 million, or 4.3%, of the limited
partner OP Units outstanding were held by outside limited partners at December 31, 2020 and 2019, respectively, of which 1.8
million were Class A Limited Partnership units as of both periods. See Note 10, Capital Structure.
The Operating Partnership evaluated subsequent events through the date its financial statements were issued. No
significant recognized or non-recognized subsequent events were noted other than those noted in Note 6, Debt, Net.
2. SIGNIFICANT ACCOUNTING POLICIES
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2020-06, Debt—Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in
Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The
ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible
instruments and contracts on an entity’s own equity. The updated standard will be effective for the Operating Partnership on
January 1, 2022; however, early adoption of the ASU is permitted on January 1, 2021. The Operating Partnership is currently
evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.
In April 2020, the FASB issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the
application of lease guidance in ASC 842, Leases. The Q&A states that some lease contracts may contain explicit
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
or implicit enforceable rights and obligations that require lease concessions if certain circumstances arise that are beyond the
control of the parties to the contract. Therefore, entities would need to perform a lease-by-lease analysis to determine whether
contractual provisions in an existing lease agreement provide enforceable rights and obligations related to lease concessions.
The FASB determined it would be acceptable for entities to not perform a lease-by-lease analysis regarding rent
concessions resulting from COVID-19, and to instead make a policy election regarding rent concessions, which would give
entities the option to account or not to account for these rent concessions as lease modifications if the total payments required by
the modified contract are substantially the same or less than the total payments required by the original contract. Entities making
the election to account for these rent concessions as lease modifications would recognize the effects of rent abatements and rent
deferrals on a prospective straight-line basis over the remainder of the modified contract.
We have made the election to not perform a lease-by-lease analysis to determine whether contractual provisions in an
existing lease agreement provide enforceable rights and obligations related to lease concessions. By electing the FASB relief, we
have also made an accounting policy election to account for rent abatements and rent deferrals given to lessees due to the
COVID-19 pandemic as lease modifications. The lease concessions given to lessees due to the COVID-19 pandemic did not have
a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical
expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in
ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020,
the Operating Partnership elected to apply the hedge accounting expedients related to probability and the assessments of
effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based
matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives
consistent with past presentation. The Operating Partnership continues to evaluate the impact of the guidance and may apply
other elections as applicable as additional changes in the market occur. The ASU has not had a material impact on the
consolidated financial statements and the Operating Partnership does not expect the ASU to have a material impact on the
consolidated financial statements on a prospective basis.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit
Losses on Financial Instruments. The standard required entities to estimate a lifetime expected credit loss for most financial
assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to
present the net amount of the financial instrument expected to be collected. In November 2018, the FASB issued ASU 2018-
19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amended the transition requirements
and scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the credit losses
standard, but rather, should be accounted for in accordance with the leases standard. The updated standard became effective for
the Operating Partnership on January 1, 2020 and was adopted on a modified retrospective basis. However, as the Operating
Partnership’s financial assets primarily relate to receivables arising from operating leases, the ASU did not have a material
impact on the consolidated financial statements. Disclosures were updated pursuant to the requirements of the ASU.
Real Estate
Real estate assets held for investment are carried at historical cost and consist of land, land improvements, buildings and
improvements, furniture, fixtures and equipment and other costs incurred during their development, acquisition and
redevelopment.
Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Expenditures for
improvements, renovations, and replacements related to the acquisition and/or improvement of real estate assets are capitalized
and depreciated over their estimated useful lives if the expenditures qualify as a betterment or the life of the related asset will be
substantially extended beyond the original life expectancy.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
The Operating Partnership purchases real estate investment properties and records the tangible and identifiable
intangible assets and liabilities acquired based on their estimated fair value. The primary, although not only, identifiable
intangible asset associated with our portfolio is the value of existing lease agreements. When recording the acquisition of a
community, we first assign fair value to the estimated intangible value of the existing lease agreements and then to the estimated
value of the land, building and fixtures assuming the community is vacant. The Operating Partnership estimates the intangible
value of the lease agreements by determining the lost revenue associated with a hypothetical lease-up. Depreciation on the
building is based on the expected useful life of the asset and the in-place leases are amortized over their remaining average
contractual life. Property acquisition costs are capitalized as incurred if the acquisition does not meet the definition of a business.
Quarterly or when changes in circumstances warrant, we will assess our real estate properties for indicators of
impairment. The judgments regarding the existence of impairment indicators are based on certain factors. Such factors include,
among other things, operational performance, market conditions, the Operating Partnership’s intent and ability to hold the related
asset, as well as any significant cost overruns on development properties.
If a real estate property has indicators of impairment, we assess whether the long-lived asset’s carrying value exceeds
the community’s undiscounted future cash flows, which is representative of projected net operating income (“NOI”) plus the
residual value of the community. Our future cash flow estimates are based upon historical results adjusted to reflect our best
estimate of future market and operating conditions and our estimated holding periods. If such indicators of impairment are
present and the carrying value exceeds the undiscounted cash flows of the community, an impairment loss is recognized equal to
the excess of the carrying amount of the asset over its estimated fair value. Our estimates of fair value represent our best estimate
based primarily upon unobservable inputs related to rental rates, operating costs, growth rates, discount rates and capitalization
rates, industry trends and reference to market rates and transactions.
For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated
cost to sell is less than the carrying value of the asset. Properties classified as real estate held for disposition generally represent
properties that are actively marketed or contracted for sale with the closing expected to occur within the next twelve months. Real
estate held for disposition is carried at the lower of cost, net of accumulated depreciation, or fair value, less the cost to sell,
determined on an asset-by-asset basis. Expenditures for ordinary repair and maintenance costs on held for disposition properties
are charged to expense as incurred. Expenditures for improvements, renovations, and replacements related to held for disposition
properties are capitalized at cost. Depreciation is not recorded on real estate held for disposition.
For the years ended December 31, 2020, 2019 and 2018, the Operating Partnership did not record any impairments on
our real estate properties.
Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which are 30 to
55 years for buildings, 10 to 35 years for major improvements, and 3 to 10 years for furniture, fixtures, equipment, and other
assets.
Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the
Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Operating Partnership capitalizes
costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not
limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs
for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the
criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities
necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific
activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and
capitalized interest, for the years ended December 31, 2020, 2019, and 2018 were $0.9 million, $0.8 million, and less than $0.1
million, respectively. During the years ended December 31, 2020, 2019, and 2018, total interest capitalized was $0.1 million,
$0.2 million, and less than $0.1 million, respectively. As each home in a capital project is completed and becomes available for
lease-up, the Operating Partnership ceases capitalization on the related portion and depreciation commences over the estimated
useful life.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and short-term, highly
liquid investments. We consider all highly liquid investments with maturities of three months or less when purchased to be cash
equivalents. The majority of the Operating Partnership’s cash and cash equivalents are held at major commercial banks.
Restricted Cash
Restricted cash primarily consists of escrow deposits held by lenders for real estate taxes, insurance and replacement
reserves, and security deposits.
Real Estate Sales Gain Recognition
For sale transactions resulting in a transfer of a controlling financial interest of a property, the Operating Partnership
generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the
period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for
derecognition are not met and the Operating Partnership will continue to recognize the related assets and liabilities on its
Consolidated Balance Sheets.
Sale transactions to entities in which the Operating Partnership sells a controlling financial interest in a property but
retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for
at fair value and a full gain or loss is recognized. Therefore, the Operating Partnership will record a gain or loss on the partial
interest sold, and the initial measurement of our retained interest will be accounted for at fair value.
Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the
Operating Partnership will record a full gain or loss in the period the property is contributed.
To the extent that the Operating Partnership acquires a controlling financial interest in a property that it previously
accounted for as an equity method investment, the Operating Partnership will not remeasure its previously held interest if the
acquisition is treated as an asset acquisition. The Operating Partnership will include the carrying amount of its previously held
equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to
the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Operating
Partnership will not recognize a gain or loss on consolidation of a property.
Derivative Financial Instruments
The General Partner utilizes derivative financial instruments to manage interest rate risk and generally designates these
financial instruments as cash flow hedges. Derivative financial instruments associated with the Operating Partnership’s allocation
of the General Partner’s debt are recorded on our Consolidated Balance Sheets as either an asset or liability and measured
quarterly at their fair value. The changes in fair value for the General Partner’s cash flow hedges allocated to the Operating
Partnership that are deemed effective are reflected in other comprehensive income/(loss) and for non-designated derivative
financial instruments in earnings. The ineffective component of cash flow hedges, if any, is recorded in earnings.
Noncontrolling Interests
The noncontrolling interests represent the General Partner’s interests in certain consolidated subsidiaries and are
presented in the capital section of the Consolidated Balance Sheets since these interests are not convertible or redeemable into
any other ownership interests of the Operating Partnership.
Income Taxes
The taxable income or loss of the Operating Partnership is reported on the tax returns of the partners. Accordingly, no
provision has been made in the accompanying financial statements for federal or state income taxes on
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
income that is passed through to the partners. However, any state or local revenue, excise or franchise taxes that result from the
operating activities of the Operating Partnership are recorded at the entity level. The Operating Partnership’s tax returns are
subject to examination by federal and state taxing authorities. Net income for financial reporting purposes differs from the net
income for income tax reporting purposes primarily due to temporary differences, principally real estate depreciation and the tax
deferral of certain gains on property sales. The differences in depreciation result from differences in the book and tax basis of
certain real estate assets and the differences in the methods of depreciation and lives of the real estate assets.
The Operating Partnership evaluates the accounting and disclosure of tax positions taken or expected to be taken in the
course of preparing the Operating Partnership’s tax returns to determine whether the tax positions are “more-likely-than-not” of
being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit or expense in the current year. Management of the Operating Partnership is required to analyze all open
tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The
Operating Partnership has no examinations in progress and none are expected at this time.
Management of the Operating Partnership has reviewed all open tax years (2017 through 2019) of tax jurisdictions and
concluded there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or
expected to be taken in future tax returns.
Principles of Consolidation
The Operating Partnership accounts for subsidiary partnerships, joint ventures and other similar entities in which it
holds an ownership interest in accordance with the consolidation guidance. The Operating Partnership first evaluates whether
each entity is a VIE. Under the VIE model, the Operating Partnership consolidates an entity when it has control to direct the
activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the
VIE. Under the voting model, the Operating Partnership consolidates an entity when it controls the entity through ownership of a
majority voting interest.
Discontinued Operations
In accordance with GAAP, a discontinued operation represents (1) a component of an entity or group of components
that has been disposed of or is classified as held for sale in a single transaction and represents a strategic shift that has or will
have a major effect on an entity’s financial results, or (2) an acquired business that is classified as held for sale on the date of
acquisition. A strategic shift could include a disposal of (1) a separate major line of business, (2) a separate major geographic area
of operations, (3) a major equity method investment, or (4) other major parts of an entity.
We record sales of real estate that do not meet the definition of a discontinued operation in Gain/(loss) on sale of real
estate owned on the Consolidated Statements of Operations.
Allocation of General and Administrative Expenses
The Operating Partnership is charged directly for general and administrative expenses it incurs. The Operating
Partnership is also charged with other general and administrative expenses that have been allocated by the General Partner to
each of its subsidiaries, including the Operating Partnership, based on reasonably anticipated benefits to the parties. (See Note 7,
Related Party Transactions.)
Advertising Costs
All advertising costs are expensed as incurred and reported on the Consolidated Statements of Operations within the line
item Property operating and maintenance. During the years ended December 31, 2020, 2019, and 2018, total advertising expense
was $2.9 million, $1.9 million, and $1.9 million, respectively.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Comprehensive Income/(Loss)
Comprehensive income/(loss), which is defined as the change in capital during each period from transactions and other
events and circumstances from nonowner sources, including all changes in capital during a period except for those resulting from
investments by or distributions to unitholders, is displayed in the accompanying Consolidated Statements of Comprehensive
Income/(Loss). For the years ended December 31, 2020, 2019, and 2018, the Operating Partnership’s other comprehensive
income/(loss) consisted of the gain/(loss) (effective portion) on derivative instruments that are designated as and qualify as cash
flow hedges and (gain)/loss reclassified from other comprehensive income/(loss) into earnings. The (gain)/loss reclassified from
other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 9,
Derivatives and Hedging Activity, for further discussion.
Impact of COVID-19 Pandemic
The Operating Partnership continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its
business. The extent of the pandemic’s effect on our operational and financial performance will depend on future developments,
including the duration, spread and intensity of the pandemic and the duration of government measures to mitigate the pandemic,
all of which continue to be uncertain and difficult to predict.
Given the uncertainty, we cannot predict the effect on future periods, but the adverse impact that could occur on the
Operating Partnership’s future financial condition, results of operations and cash flows could be material, including, but not
limited to, as a result of extended eviction moratoriums, additional rent deferrals, payment plans, lease concessions, waiving late
payment fees, charges from potential adjustments to the carrying amount of receivables, and asset impairment charges.
During the year ended December 31, 2020, the Operating Partnership performed an analysis in accordance with the
ASC 842, Leases, guidance to assess the collectibility of its operating lease receivables in light of the COVID-19 pandemic. This
analysis included an assessment of collectibility of current and future rents and whether those lease payments were no longer
probable of collection. In accordance with the leases guidance, if lease payments are no longer deemed to be probable over the
life of the lease contract, we recognize revenue only when cash is received, and all existing contractual operating lease
receivables and straight-line lease receivables are reserved.
As a result of its analysis, the Operating Partnership reserved approximately $5.5 million of multifamily tenant lease
receivables and approximately $3.5 million of retail tenant lease receivables (inclusive of $2.2 million of reserves on straight-line
lease receivables) for its wholly-owned communities. In aggregate, the reserve is reflected as a $9.0 million reduction to Rental
income on the Consolidated Statements of Operations for the year ended December 31, 2020. The impact to deferred leasing
commissions was not material for the year ended December 31, 2020.
The Operating Partnership did not recognize any other adjustments to the carrying amounts of assets or asset
impairment charges due to the COVID-19 pandemic for the year ended December 31, 2020.
Use of Estimates
The preparation of these financial statements in accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the
financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid
could differ from those estimates.
Market Concentration Risk
The Operating Partnership is subject to increased exposure from economic and other competitive factors specific to
those markets where it holds a significant percentage of the carrying value of its real estate portfolio at December 31, 2020, the
Operating Partnership held greater than 10% of the carrying value of its real estate portfolio in each of the Orange County,
California, San Francisco, California; Metropolitan D.C. and New York, New York markets.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
3. REAL ESTATE OWNED
Real estate assets owned by the Operating Partnership consist of income producing operating properties, properties
under development, land held for future development, and sold or held for disposition properties. At December 31, 2020, the
Operating Partnership owned and consolidated 53 communities in nine states plus the District of Columbia totaling 17,174
apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of
December 31, 2020 and 2019 (dollars in thousands):
Land
Depreciable property — held and used:
Land improvements
Buildings, improvements, and furniture, fixtures and equipment
Real estate owned
Accumulated depreciation
Real estate owned, net
Acquisitions
December 31,
December 31,
2020
730,559
101,470
3,211,696
4,043,725
(1,892,011)
2,151,714
$
$
2019
711,256
96,864
3,067,040
3,875,160
(1,796,568)
2,078,592
$
$
In November 2020, the Operating Partnership acquired a 672 apartment home operating community located in Tampa,
Florida for approximately $122.5 million. The Operating Partnership increased its real estate assets owned by approximately
$119.4 million and recorded approximately $3.1 million of in-place lease intangibles.
In December 2020, the Operating Partnership acquired a 400 apartment home operating community located in Herndon,
Virginia for approximately $128.6 million. The Operating Partnership increased its real estate assets owned by approximately
$125.9 million and recorded approximately $2.7 million of in-place lease intangibles.
The Operating Partnership did not have any acquisitions of real estate during the years ended December 31, 2019 and
2018.
Dispositions
In October 2020, the Operating Partnership sold an operating community located in Alexandria, Virginia with a total of
332 apartment homes for gross proceeds of $145.0 million, resulting in a gain of approximately $58.0 million. The proceeds were
designated for a tax-deferred Section 1031 exchange and were used to pay a portion of the purchase price for acquisitions in
November and December 2020.
The Operating Partnership did not have any dispositions of real estate during the year ended December 31, 2019.
In February 2018, the Operating Partnership sold an operating community in Orange County, California with a total of
264 apartment homes for gross proceeds of $90.5 million, resulting in a gain of $70.3 million. The proceeds were designated for a
tax-deferred Section 1031 exchange that were used to pay a portion of the purchase price for an acquisition in October 2017.
In December 2018, the Operating Partnership sold a commercial office building in Fairfax, Virginia for gross proceeds
of $9.3 million, resulting in a gain of $5.2 million.
Other Activity
In connection with the acquisition of certain properties, the Operating Partnership agreed to pay certain of the tax
liabilities of certain contributors if the Operating Partnership sells one or more of the properties contributed in a taxable
transaction prior to the expiration of specified periods of time following the acquisition. The Operating Partnership may,
however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but
not limited to, a tax deferred Section 1031 exchange.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Further, the Operating Partnership has agreed to maintain certain debt that may be guaranteed by certain contributors for
specified periods of time following the acquisition. The Operating Partnership, however, has the ability to refinance or repay
guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.
4. UNCONSOLIDATED ENTITIES
The DownREIT Partnership is accounted for by the Operating Partnership under the equity method of accounting and is
included in Investment in unconsolidated entities on the Consolidated Balance Sheets. The Operating Partnership recognizes
earnings or losses from its investments in unconsolidated entities consisting of our proportionate share of the net earnings or
losses of the partnership in accordance with the Partnership Agreement.
The DownREIT Partnership is a VIE as the limited partners lack substantive kick-out rights and substantive
participating rights. The Operating Partnership is not the primary beneficiary of the DownREIT Partnership as it lacks the power
to direct the activities that most significantly impact its economic performance and will continue to account for its interest as an
equity method investment. See Note 2, Significant Accounting Policies.
As of December 31, 2020, the DownREIT Partnership owned 12 communities with 5,657 apartment homes. The
Operating Partnership’s investment in the DownREIT Partnership was $51.3 million and $76.2 million as of December 31, 2020
and 2019, respectively.
In December 2018, the DownREIT Partnership sold an operating community in Fairfax, Virginia with a total of 604
apartment homes for gross proceeds of $150.7 million. As a result, the Operating Partnership recorded a gain of $51.1 million,
which is included in Income/(loss) from unconsolidated entities on the Consolidated Statement of Operations.
We consider various factors to determine if a decrease in the value of our Investment in unconsolidated entities is other-
than-temporary. These factors include, but are not limited to, age of the entity, our intent and ability to retain our investment in
the entity, the financial condition and long-term prospects of the entity, and the relationships with the other joint venture partners
and its lenders. Based on the significance of the unobservable inputs, we classify these fair value measurements within Level 3 of
the valuation hierarchy. The Operating Partnership did not incur any other-than-temporary impairments in the value of its
investments in unconsolidated joint ventures during the years ended December 31, 2020, 2019 and 2018.
Condensed summary financial information relating to the DownREIT Partnership (not just our proportionate share), is
presented below for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):
Total real estate, net
Cash and cash equivalents
Note receivable from the General Partner
Other assets
Total assets
Secured debt, net
Other liabilities
Total liabilities
Total capital
F - 73
December 31,
2020
$ 1,042,449 $
23
306,594
7,940
$ 1,357,006 $
December 31,
2019
1,106,703
20
222,853
4,829
1,334,405
$
$
506,605
28,800
535,405
821,601
$
$
427,592
28,087
455,679
878,726
Table of Contents
UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Total revenue
Property operating expenses
Real estate depreciation and amortization
Gain/(loss) on sale of real estate
Operating income/(loss)
Interest expense
Other income/(loss)
Net income/(loss)
5. LEASES
Lessee - Ground and Equipment Leases
Year Ended
December 31,
2019
2020
$ 130,597 $ 128,621
(51,747)
(82,283)
—
(5,409)
(15,648)
8,061
(51,888)
(82,092)
—
(3,383)
(15,599)
8,466
$ (10,516) $ (12,996) $
2018
$ 138,121
(56,998)
(85,872)
24,053
19,304
(14,456)
4,884
9,732
The Operating Partnership owns six communities that are subject to ground leases, under which the Operating
Partnership is the lessee, expiring between 2043 and 2103, inclusive of extension options we are reasonably certain will be
exercised. All of these leases are classified as operating leases through the lease term expiration based on our election of the
practical expedient provided by the leasing standard. Rental expense for lease payments related to operating leases is recognized
on a straight-line basis over the remaining lease term. In addition, the Operating Partnership leases equipment at seven
communities from the General Partner, pursuant to leases that expire in 2030. We currently do not hold any finance leases. The
Operating Partnership also elected the short-term lease exception provided by the leasing standard and therefore only recognizes
right-of-use assets and lease liabilities for leases with a term greater than one year. No leases qualified for the short-term lease
exception during the years ended December 31, 2020 and 2019.
As of December 31, 2020 and 2019, the Operating lease right-of-use assets were $202.4 million and $205.7 million,
respectively, and the Operating lease liabilities were $197.1 million and $200.0 million, respectively, on our Consolidated
Balance Sheets related to our ground and equipment leases. The value of the Operating lease right-of-use assets exceeds the
value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the
purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term
(described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and
are recognized in earnings in the period in which the obligation for those payments is incurred.
As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases
utilizing the Operating Partnership’s incremental borrowing rate at a portfolio level, adjusted for the remaining lease term, and
the form of underlying collateral.
The weighted average remaining lease term for these leases was 43.7 years and 44.4 years at December 31, 2020 and
2019, respectively, and the weighted average discount rate was 5.0% at both December 31, 2020 and 2019.
F - 74
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Future minimum lease payments and total operating lease liabilities from our ground and equipment leases as of
December 31, 2020 are as follows (dollars in thousands):
2021
2022
2023
2024
2025
Thereafter
Total future minimum lease payments (undiscounted)
Difference between future undiscounted cash flows and discounted
cash flows
$
Ground Leases
12,442
12,442
12,442
12,442
12,442
442,778
504,988
$
Equipment Leases
179
$
183
187
191
195
813
1,748
(309,396)
(205)
Total operating lease liabilities (discounted)
$
195,592
$
1,543
$
Total
12,621
12,625
12,629
12,633
12,637
443,591
506,736
(309,601)
197,135
For purposes of recognizing our ground lease contracts, the Operating Partnership uses the minimum lease payments, if
stated in the agreement. For ground lease agreements where there is a rent reset provision based on a change in an index or a rate
(i.e., changes in fair market rental rates or changes in the consumer price index) but that does not include a specified minimum
lease payment, the Operating Partnership uses the current rent over the remainder of the lease term. If there is a contingency,
upon which some or all of the variable lease payments that will be paid over the remainder of the lease term are based, which is
resolved such that those payments now meet the definition of lease payments, the Operating Partnership will remeasure the right-
of-use asset and lease liability on the reset date. For the year ended December 31, 2019, Operating lease right-of-use assets and
Operating lease liabilities increased by $111.1 million due to future minimum payments on two of our ground leases becoming
fixed for the remainder of their terms.
For the years ended December 31, 2020 and 2019, Operating lease right-of-use assets and Operating lease
liabilities increased by $0.3 million and $1.4 million, respectively, due to the Operating Partnership entering into new equipment
leases.
The components of operating lease expenses from our ground and equipment leases were as follows (dollars in
thousands):
Ground lease expense:
Contractual ground lease rent expense
Variable ground lease expense (a)
Total ground lease expense (b)
Contractual equipment lease expense (b)
Total operating lease expense (c)
Year Ended December 31,
2020
2019
$
$
12,821
119
12,940
155
13,095
$
$
8,272
664
8,936
19
8,955
(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a
percentage of income of the lessee.
(b) Ground lease and equipment lease expense are reported within the line item Other operating expenses on the Consolidated
Statements of Operations.
(c) For the year ended December 31, 2020, Operating lease right-of-use assets and Operating lease liabilities amortized by
$3.5 million and $3.2 million, respectively, and for the year ended December 31, 2019, Operating lease right-of-use assets
and Operating lease liabilities amortized by $1.0 million and $0.7 million, respectively. Due to the net impact of the
amortization, the Operating Partnership recorded $0.3 million and $0.3 million of total operating lease expense during the
years ended December 31, 2020 and 2019, respectively, due to the net impact of the amortization.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Lessor - Apartment Home and Retail and Commercial Leases
The Operating Partnership’s communities and retail and commercial space are leased to tenants under operating leases.
As of December 31, 2020, our apartment home leases generally have initial terms of 12 months or less and represent 97.7% of
our total lease revenue. As of December 31, 2020, our retail and commercial space leases generally have initial terms between 5
and 15 years and represent approximately 2.3% of our total lease revenue. Our apartment home leases are generally renewable at
the end of the lease term, subject to potential increases in rental rates, and our retail and commercial space leases generally have
renewal options, subject to associated increases in rental rates and certain other conditions. (See Note 12, Reportable Segments
for further discussion around our major revenue streams and disaggregation of our revenue.)
Future minimum lease payments from our retail and commercial leases as of December 31, 2020 are as follows (dollars
in thousands):
2021
2022
2023
2024
2025
Thereafter
Total future minimum lease payments (a)
Retail and Commercial
Leases
$
$
6,808
6,389
6,110
5,368
4,777
9,115
38,567
(a) We have excluded our apartment home leases from this table as our apartment home leases generally have initial terms
of 12 months of less.
Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent
based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage
rents. The Operating Partnership recorded variable percentage rents of less than $0.1 million and $0.1 million during the years
ended December 31, 2020 and 2019.
6. DEBT, NET
Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments
with balloon payments due at maturity. For purposes of classification in the following table, variable rate debt with a derivative
financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Operating
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Partnership having effectively established the fixed interest rate for the underlying debt instrument. Secured debt consists of the
following as of December 31, 2020 and 2019 (dollars in thousands):
Fixed Rate Debt
Mortgage note payable
Deferred financing costs
Total fixed rate secured debt, net
Variable Rate Debt
Tax-exempt secured note payable
Deferred financing costs
Total variable rate secured debt, net
Total Secured Debt, Net
Principal Outstanding
December 31, December 31,
2020
2019
$
$
$
72,500
(328)
72,172
27,000
(68)
26,932
99,104
$
$
$
72,500
(365)
72,135
27,000
(64)
26,936
99,071
As of December 31, 2020
Weighted
Average
Years to
Maturity
Weighted
Average
Interest Rate
Communities
Encumbered
3.10 %
9.1
3.10 %
9.3
0.84 %
11.2
0.84 %
2.54 %
11.2
9.7
1
1
1
1
2
The Operating Partnership may from time to time acquire properties subject to fixed rate debt instruments. In those
situations, management will record the secured debt at its estimated fair value and amortize any difference between the fair value
and par to interest expense over the life of the underlying debt instrument. The Operating Partnership did not have any
unamortized fair value adjustments associated with the fixed rate debt instruments on the Operating Partnership’s properties.
Fixed Rate Debt
Mortgage note payable. At December 31, 2020, the Operating Partnership had a fixed rate mortgage note payable for
$72.5 million with an interest rate of 3.10%. Interest payments are due monthly and the note matures in February 2030.
Variable Rate Debt
Tax-exempt secured note payable. The variable rate mortgage note payable for $27.0 million that secures a tax-exempt
housing bond issue that matures in March 2032. Interest on this note is payable in monthly installments. The mortgage note
payable has an interest rate of 0.84% as of December 31, 2020.
Guarantor on Unsecured Debt
The Operating Partnership is the guarantor on the General Partner’s unsecured revolving credit facility with an
aggregate borrowing capacity of $1.1 billion, an unsecured commercial paper program with an aggregate borrowing capacity of
$500 million, a $350 million term loan due September 2023, $300 million of medium-term notes due October 2025, $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, $400 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 and $300 million of medium-term notes due November 2034. As of December 31, 2020
and 2019, the General Partner did not have an outstanding balance under the unsecured revolving credit facility and had $190.0
million and $300.0 million, respectively, outstanding under its unsecured commercial paper program.
On February 11, 2021, the General Partner priced an offering of $300.0 million of 2.10% senior unsecured medium-
term notes due 2033. The notes were priced at 99.592% of the principal amount of the notes. The General Partner intends to use
the net proceeds to repay indebtedness, including the redemption of its $300.0 million 4.00% senior unsecured medium-term
notes due October 2025 (plus the make-whole amount and accrued and unpaid interest), to fund potential acquisitions, or for
other general corporate purposes. The settlement of the offering is expected to occur on February 26, 2021, subject to the
satisfaction of customary closing conditions. The Operating Partnership will be the guarantor of the debt.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
7. RELATED PARTY TRANSACTIONS
Shared Services
The Operating Partnership self-manages its own properties and is party to an Inter-Company Employee and Cost
Sharing Agreement with the General Partner. This agreement provides for reimbursements to the General Partner for the
Operating Partnership’s allocable share of costs incurred by the General Partner for (a) general and administrative costs, and (b)
shared services of corporate level property management employees and related support functions and costs. See further
discussion below.
Allocation of General and Administrative Expenses
The General Partner shares various general and administrative costs, employees and other overhead costs with the
Operating Partnership including legal assistance, acquisitions analysis, marketing, human resources, IT, accounting, rent, supplies
and advertising, and allocates these costs to the Operating Partnership first on the basis of direct usage when identifiable, with the
remainder allocated based on the reasonably anticipated benefits to the parties. The general and administrative expenses allocated
to the Operating Partnership by UDR were $13.4 million, $13.8 million, and $13.5 million during the years ended
December 31, 2020, 2019 and 2018, respectively, and are included in General and administrative on the Consolidated Statements
of Operations. In the opinion of management, this method of allocation reflects the level of services received by the Operating
Partnership from the General Partner.
During the years ended December 31, 2020, 2019 and 2018, the Operating Partnership also reimbursed the General
Partner $16.9 million, $16.9 million, and $15.2 million, respectively, for shared services related to corporate level property
management costs incurred by the General Partner. These shared cost reimbursements are initially recorded within the line item
General and administrative on the Consolidated Statements of Operations, and a portion related to property management costs is
reclassified to Property management on the Consolidated Statements of Operations.
Notes Payable to the General Partner
The following table summarizes the Operating Partnership’s Notes payable due to the General Partner as of
December 31, 2020 and 2019 (dollars in thousands):
Note due August 2021
Note due December 2023
Note due April 2026
Note due November 2028
Note due December 2028 (a)
Total notes payable due to the General Partner
Interest rate at
December 31,
2020
Balance Outstanding
December 31,
2020
December 31,
2019
5.34 %
5.18 %
4.12 %
4.69 %
2.91 %
$
$
5,500
83,196
184,638
133,205
404,161
810,700
$
$
5,500
83,196
184,638
133,205
230,694
637,233
(a) There is no limit on the total commitments under this unsecured revolving note. Interest is incurred on the unpaid principal
balance at a variable interest rate equivalent to the General Partner’s weighted average interest rate on borrowings, or 2.91%
as of December 31, 2020. The note matures on December 1, 2028. To the extent there is an outstanding principal balance on
the revolving note payable, the General Partner, at its discretion, can demand payment at any time prior to the stated maturity
date of the note.
Certain limited partners of the Operating Partnership have provided guarantees or reimbursement agreements related to
these notes payable. The guarantees were provided by the limited partners in conjunction with their contribution of properties to
the Operating Partnership. The Operating Partnership recognized interest expense on the notes payable of $26.5 million, $28.0
million and $14.1 million for the years ended December 31, 2020, 2019, and 2018, respectively.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
8. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS
Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a
liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy
prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels,
which are described below:
● Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
● Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active;
or other inputs that are observable or can be corroborated with observable market data.
● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair
value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and
similar techniques that use significant unobservable inputs.
The estimated fair values of the Operating Partnership’s financial instruments either recorded or disclosed on a recurring
basis as of December 31, 2020 and 2019 are summarized as follows (dollars in thousands):
Fair Value at December 31, 2020, Using
Total
Carrying
Amount in
Statement of
Financial
Position at
December 31,
2020 (a)
Fair Value
Estimate at
December 31,
2020
Quoted
Prices in
Active
Markets
for Identical
Assets or
Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Description:
Derivatives- Interest rate contracts (b)
Total assets
Secured debt instrument - fixed rate: (c)
Mortgage note payable
Secured debt instrument - variable rate: (c)
Tax-exempt secured note payable
Unsecured debt instruments: (d)
Notes payable due to the General
Partner
Total liabilities
$
$
$
$
2
2
$
$
2
2
$
$
— $
— $
2
2
$
$
—
—
72,500
$
75,182
$
— $
— $
75,182
27,000
27,000
—
—
27,000
810,700
910,200
$
810,700
912,882
$
—
— $
—
— $
810,700
912,882
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Table of Contents
UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Fair Value at December 31, 2019, Using
Total
Carrying
Amount in
Statement of
Financial
Position at
December 31,
2019 (a)
Fair Value
Estimate at
December 31,
2019
Quoted
Prices in
Active
Markets
for Identical
Assets
or
Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Description:
Secured debt instruments - fixed rate: (c)
Mortgage notes payable
$
72,500
$
71,976
$
— $
— $
71,976
Secured debt instrument - variable rate: (c)
Tax-exempt secured note payable
27,000
27,000
—
—
27,000
Unsecured debt instruments: (d)
Notes payable due to the General
Partner
Total liabilities
637,233
736,733
$
637,233
736,209
$
$
—
— $
—
— $
637,233
736,209
(a) Balances exclude deferred financing costs.
(b) See Note 9, Derivatives and Hedging Activity.
(c) See Note 6, Debt, Net.
(d) See Note 7, Related Party Transactions.
There were no transfers into or out of each of the levels of the fair value hierarchy during the year ended
December 31, 2020.
Financial Instruments Carried at Fair Value
The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted
future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash
payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market
interest rate curves. The fair values of interest rate options are determined using the market standard methodology of discounting
the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable
interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived
from observable market interest rate curves and volatilities.
The General Partner, on behalf of the Operating Partnership, incorporates credit valuation adjustments to appropriately
reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.
In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Operating Partnership has
considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and
guarantees.
Although the General Partner, on behalf of the Operating Partnership, has determined that the majority of the inputs
used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its
derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its
counterparties. However, as of December 31, 2020 and 2019, the Operating Partnership has assessed the significance of the
impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit
valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Operating Partnership has
determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with
the FASB’s fair value measurement guidance, the Operating Partnership made an accounting policy election to measure the credit
risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
F - 80
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Financial Instruments Not Carried at Fair Value
As of December 31, 2020, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids,
real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable
approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other
financial instruments, which includes debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant
unobservable inputs that are utilized in their respective valuations.
9. DERIVATIVES AND HEDGING ACTIVITY
Risk Management Objective of Using Derivatives
The Operating Partnership is exposed to certain risks arising from both its business operations and economic conditions.
The General Partner principally manages its exposures to a wide variety of business and operational risks through management of
its core business activities. The General Partner manages economic risks, including interest rate, liquidity, and credit risk
primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial
instruments. Specifically, the General Partner enters into derivative financial instruments to manage exposures that arise from
business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are
determined by interest rates. The General Partner’s and the Operating Partnership’s derivative financial instruments are used to
manage differences in the amount, timing, and duration of the General Partner’s known or expected cash payments principally
related to the General Partner’s borrowings.
Cash Flow Hedges of Interest Rate Risk
The General Partner’s objectives in using interest rate derivatives are to add stability to interest expense and to manage
its exposure to interest rate movements. To accomplish this objective, the General Partner primarily uses interest rate swaps and
caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of
variable-rate amounts from a counterparty in exchange for the General Partner making fixed-rate payments over the life of the
agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the
receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an
up-front premium.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated
other comprehensive income/(loss), net on the Consolidated Balance Sheets and is subsequently reclassified into earnings in the
period that the hedged forecasted transaction affects earnings. During the year ended December 31, 2020, one derivative was
designated as a cash flow hedge by the Operating Partnership. No derivatives designated as cash flow hedges were held by the
Operating Partnership in 2019 and 2018.
Amounts reported in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets related to
derivatives that will be reclassified to interest expense as interest payments are made on the Operating Partnership’s variable-rate
debt. Through December 31, 2021, the Operating Partnership estimates that less than $0.1 million will be reclassified as an
increase to Interest expense.
As of December 31, 2020, the Operating Partnership had the following outstanding interest rate derivative that was
designated as cash flow hedge of interest risk (dollars in thousands):
Product
Interest rate caps
Number of
Instruments
1
$
Notional
19,880
Derivatives not designated as hedges are not speculative and are used to manage the Operating Partnership’s exposure to
interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in
the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As of December 31, 2020,
no derivatives not designated as hedges were held by the Operating Partnership.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets
The table below presents the fair value of the Operating Partnership’s derivative financial instruments as well as their
classification on the Consolidated Balance Sheets as of December 31, 2020 and 2019 (dollars in thousands):
Derivatives designated as hedging instruments:
Interest rate caps
Asset Derivatives
(included in Other assets)
Fair Value at:
Liability Derivatives
(Included in Other liabilities)
Fair Value at:
December 31,
December 31, December 31, December 31,
2020
2019
2020
2019
$
2
$
— $
— $
—
Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations
The tables below present the effect of the Operating Partnership’s derivative financial instruments on the Consolidated
Statements of Operations for the years ended December 31, 2020, 2019, and 2018 (dollars in thousands):
Derivatives in Cash Flow
Hedging Relationships
Interest rate caps
Unrealized holding gain/(loss)
Recognized in OCI
Gain/(Loss) Reclassified
from Accumulated OCI into
Interest expense
Gain/(Loss) Recognized in
Interest expense
(Amount Excluded from
Effectiveness Testing)
2020
2019
2018
2020
2019
2018
2020
2019
2018
$
(49)
$ — $ — $ — $ — $ — $ — $ — $ —
Total amount of Interest expense presented on the Consolidated Statements of
Operations (a)
$
2,831
$
1,639
8,733
(a) Excludes Interest expense on notes payable due to the General Partner for the years ended December 31, 2020, 2019,
Year Ended
December 31,
2020
2019
2018
and 2018.
Credit-risk-related Contingent Features
The General Partner has agreements with its derivative counterparties that contain a provision where the General Partner
could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender
due to the General Partner’s default on the indebtedness.
The General Partner has certain agreements with some of its derivative counterparties that contain a provision where, in
the event of default by the General Partner or the counterparty, the right of setoff may be exercised. Any amount payable to one
party by the other party may be reduced by its setoff against any amounts payable by the other party. Events that give rise to
default by either party may include, but are not limited to, the failure to pay or deliver payment under the derivative agreement,
the failure to comply with or perform under the derivative agreement, bankruptcy, a merger without assumption of the derivative
agreement, or in a merger, a surviving entity’s creditworthiness is materially weaker than the original party to the derivative
agreement.
10. CAPITAL STRUCTURE
General Partnership Units
The General Partner has complete discretion to manage and control the operations and business of the Operating
Partnership, which includes but is not limited to the acquisition and disposition of real property, construction of buildings and
making capital improvements, and the borrowing of funds from outside lenders or UDR and its subsidiaries to finance such
activities. The General Partner can generally authorize, issue, sell, redeem or purchase any OP Unit or securities of the Operating
Partnership without the approval of the limited partners. The General Partner can
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
also approve, with regard to the issuances of OP Units, the class or one or more series of classes, with designations, preferences,
participating, optional or other special rights, powers and duties including rights, powers and duties senior to limited partnership
interests without approval of any limited partners except holders of Class A Limited Partnership Units. There were 0.1 million
General Partnership units outstanding at December 31, 2020 and 2019, all of which were held by UDR.
Limited Partnership Units
As of December 31, 2020 and 2019, there were 184.7 million and 184.0 million, respectively, of limited partnership
units outstanding, of which 1.9 million were Class A Limited Partnership Units for both periods. UDR owned 176.1 million, or
95.3%, and 176.1 million, or 95.7%, of OP Units outstanding at December 31, 2020 and 2019, respectively, of which 0.1 million
were Class A Limited Partnership Units for both periods. The remaining 8.6 million, or 4.7%, and 7.9 million, or 4.3%, of OP
Units outstanding were held by non-affiliated limited partners at December 31, 2020 and 2019, respectively, of which 1.8 million
were Class A Limited Partnership Units for both periods.
Subject to the terms of the Operating Partnership Agreement, the limited partners have the right to require the Operating
Partnership to redeem all or a portion of the OP Units held by the limited partner at a redemption price equal to and in the form of
the Cash Amount (as defined in the Operating Partnership Agreement), provided that such OP Units have been outstanding for at
least one year. UDR, as general partner of the Operating Partnership, may, in its sole discretion, purchase the OP Units by paying
to the limited partner either the Cash Amount or the REIT Share Amount (generally one share of common stock of UDR for each
OP Unit), as defined in the Operating Partnership Agreement.
The non-affiliated limited partners’ capital is adjusted to redemption value at the end of each reporting period with the
corresponding offset against UDR’s limited partner capital account based on the redemption rights noted above. The aggregate
value upon redemption of the then-outstanding OP Units held by non-affiliated limited partners was $331.0 million and $366.4
million as of December 31, 2020 and 2019, respectively, based on the value of UDR’s common stock at each period end. A
limited partner has no right to receive any distributions from the Operating Partnership on or after the date of redemption of its
OP Units.
Class A Limited Partnership Units
Class A Limited Partnership Units have a cumulative, annual, non-compounded preferred return, which is equal to 8%
based on a value of $16.61 per Class A Limited Partnership Unit.
Holders of the Class A Limited Partnership Units exclusively possess certain voting rights. The Operating Partnership
may not do the following without approval of the holders of the Class A Limited Partnership Units: (i) increase the authorized or
issued amount of Class A Limited Partnership Units, (ii) reclassify any other partnership interest into Class A Limited Partnership
Units, (iii) create, authorize or issue any obligations or security convertible into or the right to purchase Class A Limited
Partnership Units, (iv) enter into a merger or acquisition, or (v) amend or modify the Operating Partnership Agreement in a
manner that adversely affects the relative rights, preferences or privileges of the Class A Limited Partnership Units.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
The following table shows OP Units outstanding and OP Unit activity as of and for the years ended December 31, 2020,
2019, and 2018 (units in thousands):
Class A
Limited
Partners
Limited
Partners
Limited
Partner
Ending balance at December 31, 2017
Vesting of LTIP Units
OP redemptions for UDR stock
Ending balance at December 31, 2018
Vesting of LTIP Units
OP redemptions for UDR stock
Ending balance at December 31, 2019
Vesting of LTIP Units
OP redemptions for UDR stock
Ending balance at December 31, 2020
LTIP Units
1,752
—
—
1,752
—
—
1,752
—
—
1,752
7,361
286
(11)
7,636
427
(1,969)
6,094
772
(3)
6,863
UDR, Inc.
Class A
Limited
Partner
121
—
—
121
—
—
174,006
—
11
174,017
—
1,969
175,986
—
3
175,989
121
—
—
121
General
Partner
111
—
—
111
—
—
111
—
—
111
Total
183,351
286
—
183,637
427
—
184,064
772
—
184,836
UDR grants short-term and long-term incentive plan units (“LTIP Units”) to certain employees and non-employee
directors. The LTIP Units represent an ownership interest in the Operating Partnership and have voting and distribution rights
consistent with OP Units. The LTIP Units are subject to the terms of UDR’s long-term incentive plan.
Two classes of LTIP Units are granted, Class 1 LTIP Units and Class 2 LTIP Units. Class 1 LTIP Units are granted to
certain employees and non-employee directors and vest over a period of up to four years. Class 2 LTIP Units are granted to
certain employees and vest over a period from one to three years subject to certain performance and market conditions being
achieved. Vested LTIP Units may be converted into OP Units provided that such LTIP Units have been outstanding for at least
two years from the date of grant.
Allocation of Profits and Losses
Profit of the Operating Partnership is allocated in the following order: (i) to the General Partner and the Limited Partners
in proportion to and up to the amount of cash distributions made during the year, and (ii) to the General Partner and Limited
Partners in accordance with their percentage interests. Losses and depreciation and amortization expenses, non-recourse liabilities
are allocated to the General Partner and Limited Partners in accordance with their percentage interests. Losses allocated to the
Limited Partners are capped to the extent that such an allocation would not cause a deficit in the Limited Partners’ capital
account. Such losses are, therefore, allocated to the General Partner. If any Partner’s capital balance were to fall into a deficit, any
income and gains are allocated to each Partner sufficient to eliminate its negative capital balance.
11. COMMITMENTS AND CONTINGENCIES
Contingencies
Litigation and Legal Matters
The Operating Partnership is subject to various legal proceedings and claims arising in the ordinary course of business.
The Operating Partnership cannot determine the ultimate liability with respect to such legal proceedings and claims at this time.
The General Partner believes that such liability, to the extent not provided for through insurance or otherwise, will not have a
material adverse effect on the Operating Partnership’s financial condition, results of operations or cash flows.
12. REPORTABLE SEGMENTS
GAAP guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker
to decide how to allocate resources and for purposes of assessing such segments’ performance. The Operating
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
Partnership has the same Chief Operating Decision Maker as that of its parent, the General Partner. The Chief Operating Decision
Maker consists of several members of UDR’s executive management team who use several generally accepted industry financial
measures to assess the performance of the business for our reportable operating segments.
The Operating Partnership owns and operates multifamily apartment communities throughout the United States that
generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The
primary financial measures of the Operating Partnership’s apartment communities are rental income and net operating income
(“NOI”), and are included in the Chief Operating Decision Maker’s assessment of the Operating Partnership’s performance on a
consolidated basis. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI
is defined as total revenues less direct property operating expenses. Rental expenses include real estate taxes, insurance,
personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI are property management costs,
which are the Operating Partnership’s allocable share of costs incurred by the General Partner for shared services of corporate
level property management employees and related support functions and costs. The Chief Operating Decision Maker of the
General Partner utilizes NOI as the key measure of segment profit or loss.
The Operating Partnership’s two reportable segments are Same-Store Communities and Non-Mature
Communities/Other:
● Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2019
and held as of December 31, 2020. A comparison of operating results from the prior year is meaningful as these
communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year,
there is no plan to conduct substantial redevelopment activities, and the community is 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.
● Non-Mature Communities/Other represent 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.
Management of the General Partner evaluates the performance of each of the Operating Partnership’s apartment
communities on a Same-Store Community and Non-Mature Community/Other basis, as well as individually and geographically.
This is consistent with the aggregation criteria under GAAP as each of our apartment communities generally has similar
economic characteristics, facilities, services, and tenants. Therefore, the Operating Partnership’s reportable segments have been
aggregated by geography in a manner identical to that which is provided to the Chief Operating Decision Maker.
All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of
the Operating Partnership’s total revenues during the years ended December 31, 2020, 2019, and 2018.
The following is a description of the principal streams from which the Operating Partnership generates its revenue:
Lease Revenue
Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with
ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the
noncancellable lease term because collection of the lease payments was probable at lease commencement, inclusive of any
periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in
circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a
straight-line basis over the lease term.
Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance
reimbursements from retail leases. These services represent non-lease components in a contract as the Operating Partnership
transfers a service to the lessee other than the right to use the underlying asset. The Operating Partnership has elected the
practical expedient under the leasing standard to not separate lease and non-lease components
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
from its resident and retail lease contracts as the timing and pattern of revenue recognition for the non-lease component and
related lease component are the same and the combined single lease component would be classified as an operating lease.
Other Revenue
Other revenue is generated by services provided by the Operating Partnership to its retail and residential tenants and
other unrelated third parties. The Operating Partnership recognizes revenue when it satisfies a performance obligation by
providing the services specified in a contract to the customer. These fees are generally recognized as earned.
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UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
The following table details rental income and NOI for the Operating Partnership’s reportable segments for the years
ended December 31, 2020, 2019, and 2018, and reconciles NOI to Net income/(loss) attributable to OP unitholders on the
Consolidated Statements of Operations (dollars in thousands):
Reportable apartment home segment lease revenue
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated lease revenue
Reportable apartment home segment other revenue
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated other revenue
Total reportable apartment home segment rental income
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated rental income
Reportable apartment home segment NOI
Same-Store Communities (a)
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment and consolidated NOI
Reconciling items:
Property management
Other operating expenses
Real estate depreciation and amortization
General and administrative
Casualty-related (charges)/recoveries, net
Gain/(loss) on sale of real estate owned
Income/(loss) from unconsolidated entities
Interest expense
Net (income)/loss attributable to noncontrolling interests
Net income/(loss) attributable to OP unitholders
(a) Same-Store Community population consisted of 15,609 apartment homes.
F - 87
Year Ended December 31,
2019
2018
2020
$ 240,776
50,566
27,701
52,471
7,118
35,559
$ 414,191
$ 248,474
50,975
32,224
50,795
7,632
37,658
$ 427,758
$
$
$
7,388
1,593
476
2,542
217
2,340
14,556
7,873
1,706
646
2,925
301
564
14,015
$
$
$
$
238,886
50,131
31,693
49,132
7,463
41,577
418,882
7,161
1,489
622
2,764
238
764
13,038
$ 248,164
52,159
28,177
55,013
7,335
37,899
$ 428,747
$ 256,347
52,681
32,870
53,720
7,933
38,222
$ 441,773
$ 246,047
51,620
32,315
51,896
7,701
42,341
$ 431,920
$ 186,290
36,043
17,340
37,577
5,199
20,838
$ 303,287
(12,326)
(16,138)
(143,005)
(17,987)
(793)
57,960
(5,543)
(29,357)
(1,869)
$ 134,229
$ 196,302
36,830
24,103
37,340
5,621
22,810
$ 323,006
$ 187,664
36,028
24,578
35,948
5,125
28,037
$ 317,380
(12,701)
(9,488)
(139,975)
(18,014)
(853)
—
(8,313)
(29,667)
(1,832)
$ 102,163
(11,878)
(8,864)
(143,481)
(16,889)
(951)
75,507
43,496
(22,835)
(1,722)
$ 229,763
Table of Contents
UNITED DOMINION REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
DECEMBER 31, 2020
The following table details the assets of the Operating Partnership’s reportable segments as of December 31, 2020 and
2019 (dollars in thousands):
Reportable apartment home segment assets
Same-Store Communities (a):
West Region
Mid-Atlantic Region
Northeast Region
Southeast Region
Southwest Region
Non-Mature Communities/Other
Total segment assets
Accumulated depreciation
Total segment assets - net book value
Reconciling items:
Cash and cash equivalents
Restricted cash
Investment in unconsolidated entities
Operating lease right-of-use assets
Other assets
Total consolidated assets
December 31,
December 31,
2020
2019
$
$
2,037,133
551,003
410,406
361,497
144,959
538,727
4,043,725
(1,892,011)
2,151,714
26
15,062
51,302
202,438
37,025
2,457,567
$
$
2,011,495
541,481
408,703
352,790
144,210
416,481
3,875,160
(1,796,568)
2,078,592
24
13,998
76,222
205,668
24,241
2,398,745
(a) Same-Store Community population consisted of 15,609 apartment homes.
Markets included in the above geographic segments are as follows:
i.
West Region — Orange County, San Francisco, Seattle, Monterey Peninsula, Los Angeles, Other Southern
California and Portland
ii. Mid-Atlantic Region — Metropolitan D.C. and Baltimore
iii.
iv.
v.
Northeast Region — Boston and New York
Southeast Region — Tampa, Nashville and Other Florida
Southwest — Denver
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Table of Contents
UDR, INC.
SCHEDULE III — REAL ESTATE OWNED
DECEMBER 31, 2020
(In thousands)
Initial Costs
Gross Amount at Which
Carried at Close of Period
Encumbrances
Land and
Land
Improvements
Buildings
and
Improvements
Total Initial
Acquisition
Costs
Costs of
Improvements
Capitalized
Subsequent
to Acquisition
Costs
Land and
Land
Improvements
Buildings &
Buildings
Improvements
Total
Carrying
Value
Accumulated
Depreciation
Date of
Construction(a)
Date
Acquired
$
WEST REGION
Harbor at Mesa Verde
27 Seventy Five Mesa Verde
Huntington Vista
Missions at Back Bay
Eight 80 Newport Beach -
North
Eight 80 Newport Beach -
South
Foxborough
1818 Platinum Triangle
Beach & Ocean
The Residences at Bella Terra
Los Alisos at Mission Viejo
The Residences at Pacific City
ORANGE COUNTY, CA
2000 Post Street
Birch Creek
Highlands Of Marin
Marina Playa
River Terrace
CitySouth
Bay Terrace
Highlands of Marin Phase II
Edgewater
Almaden Lake Village
388 Beale
Channel @ Mission Bay
SAN FRANCISCO, CA
Crowne Pointe
Hilltop
The Hawthorne
The Kennedy
Hearthstone at Merrill Creek
Island Square
elements too
989elements
Lightbox
Ashton Bellevue
TEN20
Milehouse
CityLine
CityLine II
SEATTLE, WA
Boronda Manor
Garden Court
Cambridge Court
Laurel Tree
The Pointe At Harden Ranch
The Pointe At Northridge
The Pointe At Westlake
MONTEREY PENINSULA, CA
Rosebeach
Tierra Del Rey
The Westerly
Jefferson at Marina del Rey
LOS ANGELES, CA
Verano at Rancho Cucamonga
Town Square
Windemere at Sycamore
Highland
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27,000
—
—
27,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
20,476
99,329
8,055
229
62,516
58,785
12,071
16,663
12,878
25,000
17,298
78,085
411,385
9,861
4,365
5,996
6,224
22,161
14,031
8,545
5,353
30,657
594
14,253
23,625
145,665
2,486
2,174
6,474
6,179
6,848
21,284
27,468
8,541
6,449
8,287
5,247
5,976
11,220
3,723
122,356
1,946
888
3,039
1,304
6,388
2,044
1,329
16,938
8,414
39,586
48,182
55,651
151,833
13,557
5,810
$
28,538
110,644
22,486
14,129
$
49,014
209,973
30,541
14,358
$
46,082
108,598
50,067
6,187
51,905
—
—
—
—
330,038
44,578
16,696
24,868
23,916
40,137
30,537
14,458
18,559
83,872
42,515
74,104
—
414,240
6,437
7,408
30,226
22,307
30,922
89,389
72,036
45,990
38,884
124,939
76,587
63,041
85,787
56,843
750,796
8,982
4,188
12,883
5,115
23,854
8,028
5,334
68,384
17,449
36,679
102,364
—
156,492
3,645
23,450
108,852
18,258
68,568
12,878
25,000
17,298
78,085
741,423
54,439
21,061
30,864
30,140
62,298
44,568
23,003
23,912
114,529
43,109
88,357
23,625
559,905
8,923
9,582
36,700
28,486
37,770
110,673
99,504
54,531
45,333
133,226
81,834
69,017
97,007
60,566
873,152
10,928
5,076
15,922
6,419
30,242
10,072
6,663
85,322
25,863
76,265
150,546
55,651
308,325
17,202
29,260
$
23,282
106,411
14,742
4,129
46,676
37,225
5,034
4,556
39,458
129,847
70,880
276,948
759,188
37,292
10,462
29,045
14,413
8,941
39,859
7,598
11,361
13,128
9,940
15,269
131,470
328,778
9,928
6,882
9,397
4,403
9,325
7,991
20,580
5,668
1,265
3,185
4,110
929
420
451
84,534
11,521
6,791
18,790
7,999
34,192
12,411
8,198
99,902
6,859
9,294
43,809
94,879
154,841
59,704
5,513
22,317
116,177
9,302
11,052
69,331
60,961
12,576
17,090
13,121
25,658
16,685
78,227
452,497
14,417
1,409
8,086
1,336
22,998
16,681
11,679
5,782
30,804
981
14,643
24,039
152,855
3,237
3,053
7,137
6,317
7,311
21,674
30,347
8,683
6,474
8,368
5,293
6,007
11,228
3,723
128,852
3,363
1,616
5,721
2,469
10,392
3,624
2,361
29,546
8,917
40,031
50,893
61,607
161,448
24,355
6,371
$
49,979
200,207
35,981
7,435
$
72,296
316,384
45,283
18,487
$
37,780
147,609
27,136
5,837
1965/2003
1979/2013
1970
1969
Jun-03
Oct-04
Jun-03
Dec-03
85,943
155,274
64,662
1968/2000/2016
Oct-04
85,116
10,716
56,034
39,215
129,189
71,493
276,806
1,048,114
77,314
30,114
51,823
43,217
48,241
67,746
18,922
29,491
96,853
52,068
88,983
131,056
735,828
15,614
13,411
38,960
26,572
39,784
96,990
89,737
51,516
40,124
128,043
80,651
63,939
86,199
57,294
828,834
19,086
10,251
28,991
11,949
54,042
18,859
12,500
155,678
23,805
45,528
143,462
88,923
301,718
52,551
28,402
146,077
23,292
73,124
52,336
154,847
88,178
355,033
1,500,611
91,731
31,523
59,909
44,553
71,239
84,427
30,601
35,273
127,657
53,049
103,626
155,095
888,683
18,851
16,464
46,097
32,889
47,095
118,664
120,084
60,199
46,598
136,411
85,944
69,946
97,427
61,017
957,686
22,449
11,867
34,712
14,418
64,434
22,483
14,861
185,224
32,722
85,559
194,355
150,530
463,166
76,906
34,773
59,802
8,033
33,489
15,074
58,013
30,904
55,308
543,647
46,827
18,789
39,256
26,198
33,870
51,728
12,980
21,081
61,120
33,775
48,151
56,161
449,936
11,696
9,868
27,979
17,882
24,773
61,271
67,882
29,943
15,968
30,424
19,241
17,016
21,804
8,079
363,826
12,517
6,763
19,495
7,870
35,017
12,598
8,071
102,331
17,614
28,994
91,044
57,719
195,371
44,276
22,167
1968/2000/2016
1969
2009
2014
2013
2014
2018
1987/2016
1968
1991/2010
1971
2005
1972/2012
1962
1968/2010
2007
1999
1999
2014
1987
1985
2003
2005
2000
2007
2010
2006
2014
2009
2009
2016
2016
2018
1979
1973
1974
1977
1986
1979
1975
1970
1998
1993/2013
2008
2006
2001
Mar-05
Sep-04
Aug-10
Aug-11
Oct-11
Jun-04
Jan-14
Dec-98
Dec-98
Dec-98
Dec-98
Aug-05
Nov-05
Oct-05
Oct-07
Mar-08
Jul-08
Apr-11
Sep-10
Dec-98
Dec-98
Jul-05
Nov-05
May-08
Jul-08
Feb-10
Dec-09
Aug-14
Oct-16
Oct-16
Nov-16
Jan-17
Jan-19
Dec-98
Dec-98
Dec-98
Dec-98
Dec-98
Dec-98
Dec-98
Sep-04
Dec-07
Sep-10
Sep-07
Oct-02
Nov-02
S - 1
Table of Contents
Strata
OTHER SOUTHERN CA
Tualatin Heights
Hunt Club
The Arbory
PORTLAND, OR
TOTAL WEST REGION
MID-ATLANTIC REGION
Dominion Middle Ridge
Dominion Lake Ridge
Presidential Greens
The Whitmore
Ridgewood -apts side
Waterside Towers
Wellington Place at Olde
Town
Andover House
Sullivan Place
Delancey at Shirlington
View 14
Signal Hill Apartments
Capitol View on 14th
Domain College Park
1200 East West
Courts at Huntington Station
Eleven55 Ripley
Arbor Park of Alexandria
Courts at Dulles
Newport Village
1301 Thomas Circle
Crescent Falls Church
Station on Silver
METROPOLITAN, D.C.
Calvert's Walk
20 Lambourne
Domain Brewers Hill
Rodgers Forge
Towson Promenade
BALTIMORE, MD
Gayton Pointe Townhomes
Waterside At Ironbridge
Carriage Homes at
Wyndham
Legacy at Mayland
RICHMOND, VA
TOTAL MID-ATLANTIC
REGION
NORTHEAST REGION
10 Hanover Square
21 Chelsea
View 34
95 Wall Street
Leonard Pointe
One William
NEW YORK, NY
Garrison Square
Ridge at Blue Hills
Inwood West
UDR, INC.
SCHEDULE III — REAL ESTATE OWNED - (Continued)
DECEMBER 31, 2020
(In thousands)
Initial Costs
Gross Amount at Which
Carried at Close of Period
Encumbrances
—
—
—
—
—
—
Land and
Land
Improvements
14,278
33,645
3,273
6,014
4,366
13,653
895,475
Buildings
and
Improvements
84,242
111,337
9,134
14,870
63,457
87,461
1,918,748
Total Initial
Acquisition
Costs
98,520
144,982
12,407
20,884
67,823
101,114
2,814,223
Costs of
Improvements
Capitalized
Subsequent
to Acquisition
Costs
1,086
66,303
9,974
8,861
375
19,210
1,512,756
Land and
Land
Improvements
14,278
45,004
4,285
6,564
4,366
15,215
985,417
Buildings &
Buildings
Improvements
85,328
166,281
18,096
23,181
63,832
105,109
3,341,562
Total
Carrying
Value
99,606
211,285
22,381
29,745
68,198
120,324
4,326,979
Accumulated
Depreciation
5,273
71,716
13,414
18,262
3,990
35,666
1,762,493
27,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
160,930
—
127,600
—
—
—
288,530
—
—
—
—
58,600
58,600
—
—
—
—
—
3,311
2,366
11,238
6,418
5,612
13,001
13,753
183
1,137
21,606
5,710
13,290
31,393
7,300
9,748
27,749
15,566
50,881
14,697
55,283
27,836
13,687
16,661
368,426
4,408
11,750
4,669
15,392
12,599
48,818
826
1,844
474
1,979
5,123
13,283
8,387
18,790
13,411
20,086
49,657
36,059
59,948
103,676
66,765
97,941
—
—
—
68,022
111,878
107,539
159,728
83,834
177,454
128,191
88,692
109,198
1,522,539
24,692
45,590
40,630
67,958
78,847
257,717
5,148
13,239
30,997
11,524
60,908
16,594
10,753
30,028
19,829
25,698
62,658
49,812
60,131
104,813
88,371
103,651
13,290
31,393
7,300
77,770
139,627
123,105
210,609
98,531
232,737
156,027
102,379
125,859
1,890,965
29,100
57,340
45,299
83,350
91,446
306,535
5,974
15,083
31,471
13,503
66,031
347,130
422,367
1,841,164
2,263,531
—
—
—
—
—
—
—
—
25,000
80,000
41,432
36,399
114,410
57,637
38,010
6,422
294,310
6,475
6,039
20,778
218,983
107,154
324,920
266,255
93,204
75,527
1,086,043
91,027
34,869
88,096
260,415
143,553
439,330
323,892
131,214
81,949
1,380,353
97,502
40,908
108,874
4,452
3,170
11,878
7,624
6,482
50,752
14,971
320
1,867
21,713
5,785
25,594
31,478
7,526
9,888
28,115
15,897
51,562
14,782
55,725
27,842
13,694
16,661
427,778
5,196
12,454
4,833
15,565
12,607
50,655
3,600
2,642
4,158
5,546
15,946
28,317
17,617
32,025
37,380
32,414
45,673
56,474
66,870
118,447
74,341
104,120
60,380
97,097
60,629
71,532
116,435
112,330
166,022
94,467
201,053
129,728
89,786
109,209
1,922,346
33,815
57,314
43,185
72,968
80,410
287,692
34,017
22,719
38,183
43,041
137,960
32,769
20,787
43,903
45,004
38,896
96,425
71,445
67,190
120,314
96,054
109,905
85,974
128,575
68,155
81,420
144,550
128,227
217,584
109,249
256,778
157,570
103,480
125,870
2,350,124
39,011
69,768
48,018
88,533
93,017
338,347
37,617
25,361
42,341
48,587
153,906
17,485
13,548
25,745
30,124
25,282
31,613
43,548
41,876
76,621
46,351
55,928
44,807
46,206
26,385
20,981
39,391
32,511
55,367
33,782
68,828
11,545
6,495
600
795,019
26,175
36,827
24,816
8,648
5,829
102,295
31,703
17,564
29,877
39,006
118,150
494,379
2,347,998
2,842,377
1,015,464
41,815
36,530
116,048
58,084
38,016
6,459
296,952
6,617
6,470
19,826
247,675
122,384
437,666
276,681
94,604
76,396
1,255,406
116,884
40,347
103,436
289,490
158,914
553,714
334,765
132,620
82,855
1,552,358
123,501
46,817
123,262
116,732
62,144
227,237
156,590
12,161
7,574
582,438
60,567
23,250
59,007
16,175
10,034
13,875
25,175
13,198
33,767
21,633
7,059
15,501
7,683
6,254
72,684
97,182
60,855
3,650
4,923
5,122
6,975
10,718
24,041
1,543
1,101
11
459,159
9,911
12,428
2,719
5,183
1,571
31,812
31,643
10,278
10,870
35,084
87,875
578,846
29,075
15,361
114,384
10,873
1,406
906
172,005
25,999
5,909
14,388
S - 2
Date of
Construction(a)
2010
Date
Acquired
Nov-19
1989
1985
2018
1990
1987
1938
1962/2008
1988
1971
1987/2008
2004
2007
2006/2007
2009
2010
2013
2014
2010
2011
2014
1969/2015
2000
1968
2006
2010
2018
1988
2003
2009
1945
2009
1973/2007
1987
1998
1973/2007
2005
2001
1985/2013
2008
2015
2018
1887/1990
2007
2006
Dec-98
Sep-04
Jan-20
Jun-96
Feb-96
May-02
Apr-02
Aug-02
Dec-03
Sep-05
Mar-07
Dec-07
Mar-08
Jun-11
Mar-07
Sep-07
Jun-11
Oct-15
Oct-15
Oct-15
Oct-15
Oct-15
Oct-15
Aug-19
Nov-19
Dec-20
Mar-04
Mar-08
Aug-10
Apr-19
Nov-19
Sep-95
Sep-97
Nov-03
Dec-91
Apr-11
Aug-11
Jul-11
Aug-11
Feb-19
Aug-19
Sep-10
Sep-10
Apr-11
Table of Contents
14 North
100 Pier 4
345 Harrison
Currents on the Charles
The Commons at Windsor
Gardens
Charles River Landing
Lenox Farms
Lodge at Ames Pond
BOSTON, MA
Park Square
PHILADELPHIA, PA
TOTAL NORTHEAST REGION
SOUTHEAST REGION
Summit West
The Breyley
Lakewood Place
Cambridge Woods
Inlet Bay
MacAlpine Place
The Vintage Lofts at West
End
Peridot Palms
The Preserve at Gateway
The Slade at Channelside
Andover Place at Cross
Creek
TAMPA, FL
Seabrook
Altamira Place
Regatta Shore
Alafaya Woods
Los Altos
Lotus Landing
Seville On The Green
Ashton @ Waterford
Arbors at Lee Vista
ORLANDO, FL
Legacy Hill
Hickory Run
Carrington Hills
Brookridge
Breckenridge
Colonnade
The Preserve at Brentwood
Polo Park
NASHVILLE, TN
The Reserve and Park at
Riverbridge
OTHER FLORIDA
TOTAL SOUTHEAST REGION
SOUTHWEST REGION
Thirty377
Legacy Village
Addison Apts at The Park
Addison Apts at The Park II
Addison Apts at The Park I
Savoye
Savoye 2
UDR, INC.
SCHEDULE III — REAL ESTATE OWNED - (Continued)
DECEMBER 31, 2020
(In thousands)
Initial Costs
Gross Amount at Which
Carried at Close of Period
Encumbrances
72,500
—
—
—
Land and
Land
Improvements
10,961
24,584
32,938
12,580
Buildings
and
Improvements
51,175
—
—
70,149
Land and
Land
Improvements
11,483
24,825
44,894
12,693
Buildings &
Buildings
Improvements
64,576
203,099
316,652
71,607
Accumulated
Depreciation
38,209
61,812
44,083
7,350
Date of
Construction(a)
2005
2015
2018
2015
—
—
94,050
—
271,550
—
—
271,550
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
25,000
90,000
—
—
—
—
—
34,609
17,068
17,692
12,645
196,369
10,365
10,365
501,044
2,176
1,780
1,395
1,791
7,702
10,869
6,611
6,293
4,467
10,216
11,702
65,002
1,846
1,533
757
1,653
2,804
2,185
1,282
3,872
6,692
22,624
1,148
1,469
2,117
708
766
1,460
3,182
4,583
15,433
15,968
15,968
119,027
24,036
16,882
22,041
7,903
10,440
8,432
6,451
225,515
112,777
115,899
70,653
860,160
96,050
96,050
2,042,253
4,710
2,458
10,647
7,166
23,150
36,858
37,663
89,752
43,723
72,786
107,761
436,674
4,155
11,076
6,608
9,042
12,349
8,639
6,498
17,538
12,860
88,765
5,867
11,584
—
5,461
7,714
16,015
24,674
16,293
87,608
56,401
56,401
669,448
32,951
100,102
11,228
554
634
50,483
56,615
Total Initial
Acquisition
Costs
62,136
24,584
32,938
82,729
260,124
129,845
133,591
83,298
1,056,529
106,415
106,415
2,543,297
6,886
4,238
12,042
8,957
30,852
47,727
44,274
96,045
48,190
83,002
119,463
501,676
6,001
12,609
7,365
10,695
15,153
10,824
7,780
21,410
19,552
111,389
7,015
13,053
2,117
6,169
8,480
17,475
27,856
20,876
103,041
72,369
72,369
788,475
56,987
116,984
33,269
8,457
11,074
58,915
63,066
Costs of
Improvements
Capitalized
Subsequent
to Acquisition
Costs
13,923
203,340
328,608
1,571
13,146
1,094
3,002
1,872
612,852
1,321
1,321
786,178
13,247
19,516
13,985
13,118
21,301
14,572
23,410
1,446
1,390
2,015
76
124,076
10,785
23,989
18,996
13,417
14,349
13,198
8,929
7,597
17,453
128,713
11,324
14,873
39,856
7,786
7,329
9,392
11,689
18,537
120,786
17,261
17,261
390,836
21,167
26,248
14,434
7,752
1,883
2,508
1,232
S - 3
Total
Carrying
Value
76,059
227,924
361,546
84,300
273,270
130,939
136,593
85,170
1,669,381
107,736
107,736
3,329,475
20,133
23,754
26,027
22,075
52,153
62,299
67,684
97,491
49,580
85,017
119,539
625,752
16,786
36,598
26,361
24,112
29,502
24,022
16,709
29,007
37,005
240,102
18,339
27,926
41,973
13,955
15,809
26,867
39,545
39,413
223,827
238,657
113,869
118,898
72,525
1,460,550
97,252
97,252
2,813,208
16,106
19,842
22,770
18,463
41,544
49,882
51,816
91,186
45,109
74,759
107,830
539,307
13,592
32,558
23,965
21,241
24,915
20,901
14,789
24,400
29,246
205,607
16,298
25,242
36,957
12,460
14,270
24,427
35,358
33,197
198,209
72,730
72,730
1,015,853
89,630
89,630
1,179,311
51,942
121,841
16,504
5,154
4,504
52,952
57,837
78,154
143,232
47,703
16,209
12,957
61,423
64,298
34,613
17,070
17,695
12,645
208,831
10,484
10,484
516,267
4,027
3,912
3,257
3,612
10,609
12,417
15,868
6,305
4,471
10,258
11,709
86,445
3,194
4,040
2,396
2,871
4,587
3,121
1,920
4,607
7,759
34,495
2,041
2,684
5,016
1,495
1,539
2,440
4,187
6,216
25,618
16,900
16,900
163,458
26,212
21,391
31,199
11,055
8,453
8,471
6,461
Date
Acquired
Apr-11
Dec-15
Nov-11
Jun-19
Aug-19
Nov-19
Nov-19
Nov-19
May-19
Dec-92
Sep-93
Mar-94
Jun-97
Jun-03
Dec-04
Jul-09
Feb-19
May-19
Jan-20
1969
2010
2009
2010
2018
1972
1977/2007
1986
1985
1988/1989
2001
2009
2017
2013
2009
1997/1999
Nov-20
1984/2004
1984/2007
1988/2007
1989/2006
1990/2004
1985/2006
1986/2004
2000
1992/2007
1977
1989
1999
1986
1986
1998
1998
1987/2008
Feb-96
Apr-94
Jun-94
Oct-94
Oct-96
Jul-97
Oct-97
May-98
Aug-06
Nov-95
Dec-95
Dec-95
Mar-96
Mar-97
Jan-99
Jun-04
May-06
1999/2001
Dec-04
1999/2007
2005/06/07
1977/78/79
1970
1975
2009
2011
Aug-06
Mar-08
May-07
May-07
May-07
Nov-19
Nov-19
27,794
8,229
8,616
5,320
344,237
11,306
11,306
937,981
14,234
19,568
18,921
15,045
34,547
36,966
36,077
11,914
5,053
4,719
1,223
198,267
11,946
29,899
21,164
17,240
20,338
15,939
11,816
17,840
22,157
168,339
13,833
18,126
28,441
9,894
10,882
17,504
27,778
27,438
153,896
52,555
52,555
573,057
36,152
79,544
11,917
3,682
2,993
3,868
4,165
Table of Contents
Fiori on Vitruvian Park
Vitruvian West Phase 1
DALLAS, TX
Barton Creek Landing
Residences at the Domain
Red Stone Ranch
Lakeline Villas
AUSTIN, TX
Steele Creek
DENVER, CO
UDR, INC.
SCHEDULE III — REAL ESTATE OWNED - (Continued)
DECEMBER 31, 2020
(In thousands)
Initial Costs
Gross Amount at Which
Carried at Close of Period
Encumbrances
49,553
41,317
205,870
—
—
—
—
—
—
—
Land and
Land
Improvements
7,934
6,273
110,392
3,151
4,034
5,084
4,148
16,417
8,586
8,586
135,395
Buildings
and
Improvements
78,575
61,418
392,560
14,269
55,256
17,646
16,869
104,040
130,400
130,400
627,000
Total Initial
Acquisition
Costs
86,509
67,691
502,952
17,420
59,290
22,730
21,017
120,457
138,986
138,986
762,395
Costs of
Improvements
Capitalized
Subsequent
to Acquisition
Costs
2,090
852
78,166
25,130
15,761
6,068
4,066
51,025
6,012
6,012
135,203
Land and
Land
Improvements
7,938
6,279
127,459
5,439
4,608
5,704
4,674
20,425
8,640
8,640
156,524
Buildings &
Buildings
Improvements
80,661
62,264
453,659
37,111
70,443
23,094
20,409
151,057
136,358
136,358
741,074
Total
Carrying
Value
88,599
68,543
581,118
42,550
75,051
28,798
25,083
171,482
144,998
144,998
897,598
Accumulated
Depreciation
5,878
4,739
152,938
31,281
44,676
13,419
12,009
101,385
25,139
25,139
279,462
Date of
Construction(a)
2013
2018
Date
Acquired
Nov-19
Nov-19
1986/2012
2007
2000
2002
2015
Mar-02
Aug-08
Apr-12
Apr-12
Oct-17
TOTAL SOUTHWEST REGION
205,870
TOTAL OPERATING
COMMUNITIES
REAL ESTATE UNDER
DEVELOPMENT
Vitruvian West Phase 2
Cirrus
5421 at Dublin Station
440 Penn Street
Village at Valley Forge
TOTAL REAL ESTATE UNDER
DEVELOPMENT
LAND
Vitruvian Park®
TOTAL LAND
HELD FOR DISPOSITION
Parallel
TOTAL HELD FOR
DISPOSITION
COMMERCIAL
Brookhaven Shopping Center
TOTAL COMMERCIAL
Other (b)
1745 Shea Center I
TOTAL CORPORATE
TOTAL COMMERCIAL &
CORPORATE
851,550
2,073,308
7,098,613
9,171,921
3,403,819
2,316,045
10,259,695
12,575,740
4,568,457
—
—
—
—
—
6,451
13,853
8,922
27,135
17,341
—
73,702
—
—
—
39,609
39,609
15,181
15,798
—
—
—
—
15,798
4,997
4,997
22,249
13,853
8,922
27,135
17,341
89,500
44,606
44,606
100,595
115,776
—
15,181
100,595
115,776
—
—
—
—
—
—
—
—
3,034
3,034
—
—
—
20,534
20,534
—
—
—
23,568
23,568
—
3,034
20,534
23,568
34,775
53,272
48,877
18,784
2,669
158,377
17,076
17,076
879
879
29,927
29,927
14,007
2,016
16,023
45,950
6,451
13,853
8,922
27,135
17,341
73,702
46,664
46,664
15,184
15,184
7,793
7,793
—
3,086
3,086
10,879
50,573
53,272
48,877
18,784
2,669
57,024
67,125
57,799
45,919
20,010
174,175
247,877
15,018
15,018
61,682
61,682
101,471
116,655
101,471
116,655
22,134
22,134
14,007
22,498
36,505
58,639
29,927
29,927
14,007
25,584
39,591
69,518
1,010
—
—
—
—
1,010
2,818
2,818
13,779
13,779
14,646
14,646
94
4,562
4,656
19,302
Deferred Financing Costs and Other
Non-Cash Adjustments
TOTAL REAL ESTATE OWNED
10,597
862,147
$
$
2,204,834
$
7,240,537
$ 9,445,371
$
3,626,101
$
2,462,474
$
10,608,998
$ 13,071,472
$
4,605,366
(a) Date of original construction/date of last major renovation, if applicable.
(b)
Includes unallocated accruals and capital expenditures.
The aggregate cost for federal income tax purposes was approximately $12.3 billion at December 31, 2020 (unaudited).
The estimated depreciable lives for all buildings in the latest Consolidated Statements of Operations are 30 to 55 years.
S - 4
Table of Contents
UDR, INC.
SCHEDULE III — REAL ESTATE OWNED - (Continued)
DECEMBER 31, 2020
(In thousands)
3-YEAR ROLLFORWARD OF REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION
The following is a reconciliation of the carrying amount of total real estate owned at December 31, (in thousands):
Balance at beginning of the year
Real estate acquired
Capital expenditures and development
Real estate sold
Balance at end of the year
2020
12,602,101
413,488
299,986
(244,103)
13,071,472
$
$
2019
10,196,159
2,241,163
195,981
(31,202)
12,602,101
$
$
$
$
2018
10,177,206
—
214,898
(195,945)
10,196,159
The following is a reconciliation of total accumulated depreciation for real estate owned at December 31, (in thousands):
Balance at beginning of the year
Depreciation expense for the year
Accumulated depreciation on sales
Balance at end of year
2020
4,131,353
560,876
(86,863)
4,605,366
$
$
2019
3,654,160
477,193
$
—
$
4,131,353
2018
3,330,166
426,006
(102,012)
3,654,160
$
$
S - 5
Table of Contents
UNITED DOMINION REALTY, L.P.
SCHEDULE III — REAL ESTATE OWNED
DECEMBER 31, 2020
(In thousands)
Initial Costs
Gross Amount at Which
Carried at Close of Period
Encumbrances
Land and Land
Improvements
Building and
Improvements
Cost of
Improvements
Capitalized
Subsequent to
Acquisition
Costs
Total Initial
Acquisition
Costs
Land and Land
Improvements
Buildings &
Buildings
Improvements
Total Carrying Accumulated
Depreciation
Value
Date of
Construction
(a)
Date Acquired
$
37,780
147,609
27,136
5,837
1965/2003
1979/2013
1970
1969
Jun-03
Oct-04
Jun-03
Dec-03
64,662
1968/2000/2016
Oct-04
1968/2000/2016
Mar-05
WEST REGION
$
Harbor at Mesa Verde
27 Seventy Five Mesa Verde
Huntington Vista
Missions at Back Bay
Eight 80 Newport Beach -
North
Eight 80 Newport Beach -
South
ORANGE COUNTY, CA
2000 Post Street
Birch Creek
Highlands Of Marin
Marina Playa
River Terrace
CitySouth
Bay Terrace
Highlands of Marin Phase II
Edgewater
Almaden Lake Village
SAN FRANCISCO, CA
Crowne Pointe
Hilltop
The Kennedy
Hearthstone at Merrill Creek
Island Square
SEATTLE, WA
Boronda Manor
Garden Court
Cambridge Court
Laurel Tree
The Pointe At Harden Ranch
The Pointe At Northridge
The Pointe At Westlake
MONTEREY PENINSULA, CA
Rosebeach
Tierra Del Rey
LOS ANGELES, CA
Verano at Rancho
Cucamonga Town Square
OTHER SOUTHERN CA
Tualatin Heights
Hunt Club
PORTLAND, OR
TOTAL WEST REGION
MID-ATLANTIC REGION
Ridgewood -apts side
Wellington Place at Olde
Town
Andover House
Sullivan Place
Courts at Huntington Station
Station on Silver
METROPOLITAN D.C.
Calvert's Walk
20 Lambourne
BALTIMORE, MD
TOTAL MID-ATLANTIC
REGION
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27,000
27,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27,000
—
—
—
—
—
—
—
—
—
—
20,476
99,329
8,055
229
62,516
58,785
249,390
9,861
4,365
5,996
6,224
22,161
14,031
8,545
5,353
30,657
594
107,787
2,486
2,174
6,179
6,848
21,284
38,971
1,946
888
3,039
1,304
6,388
2,044
1,329
16,938
8,414
39,586
48,000
13,557
13,557
3,273
6,014
9,287
483,930
5,612
13,753
183
1,137
27,749
16,661
65,095
4,408
11,750
16,158
$
$
28,538
110,644
22,486
14,129
49,014
209,973
30,541
14,358
$
46,082
108,598
50,067
271,946
44,578
16,696
24,868
23,916
40,137
30,537
14,458
18,559
83,872
42,515
340,136
6,437
7,408
22,307
30,922
89,389
156,463
8,982
4,188
12,883
5,115
23,854
8,028
5,334
68,384
17,449
36,679
54,128
3,645
3,645
9,134
14,870
24,004
918,706
108,852
521,336
54,439
21,061
30,864
30,140
62,298
44,568
23,003
23,912
114,529
43,109
447,923
8,923
9,582
28,486
37,770
110,673
195,434
10,928
5,076
15,922
6,419
30,242
10,072
6,663
85,322
25,863
76,265
102,128
17,202
17,202
12,407
20,884
33,291
1,402,636
20,086
25,698
36,059
59,948
103,676
111,878
109,198
440,845
24,692
45,590
70,282
49,812
60,131
104,813
139,627
125,859
505,940
29,100
57,340
86,440
—
81,253
511,127
592,380
$
23,282
106,411
14,742
4,129
46,676
37,225
232,465
24,689
10,462
29,045
14,413
8,941
39,859
7,598
11,361
13,128
9,940
169,436
9,928
6,882
4,403
9,325
7,991
38,529
11,521
6,791
18,790
7,999
34,192
12,411
8,198
99,902
6,859
9,294
16,153
59,704
59,704
9,974
8,861
18,835
635,024
13,198
21,633
7,059
15,438
4,923
11
62,262
9,911
12,428
22,339
84,601
$
22,317
116,177
9,302
11,052
69,331
60,961
289,140
11,126
1,409
8,086
1,336
22,998
16,681
11,679
5,782
30,804
981
110,882
3,237
3,053
6,317
7,311
21,674
41,592
3,363
1,616
5,721
2,469
10,392
3,624
2,361
29,546
8,917
40,031
48,948
24,355
24,355
4,285
6,564
10,849
555,312
6,482
14,971
320
1,870
28,115
16,661
68,419
5,196
12,454
17,650
86,069
49,979
200,207
35,981
7,435
85,943
85,116
464,661
68,002
30,114
51,823
43,217
48,241
67,746
18,922
29,491
96,853
52,068
506,477
15,614
13,411
26,572
39,784
96,990
192,371
19,086
10,251
28,991
11,949
54,042
18,859
12,500
155,678
23,805
45,528
69,333
52,551
52,551
18,096
23,181
41,277
1,482,348
32,414
56,474
66,870
118,381
116,435
109,209
499,783
33,815
57,314
91,129
590,912
S - 6
$
72,296
316,384
45,283
18,487
155,274
146,077
753,801
79,128
31,523
59,909
44,553
71,239
84,427
30,601
35,273
127,657
53,049
617,359
18,851
16,464
32,889
47,095
118,664
233,963
22,449
11,867
34,712
14,418
64,434
22,483
14,861
185,224
32,722
85,559
118,281
59,802
342,826
39,177
18,789
39,256
26,198
33,870
51,728
12,980
21,081
61,120
33,775
337,974
11,696
9,868
17,882
24,773
61,271
125,490
12,517
6,763
19,495
7,870
35,017
12,598
8,071
102,331
17,614
28,994
46,608
1987/2016
1968
1991/2010
1971
2005
1972/2012
1962
1968/2010
2007
1999
1987
1985
2005
2000
2007
1979
1973
1974
1977
1986
1979
1975
1970
1998
2006
1989
1985
76,906
76,906
22,381
29,745
52,126
2,037,660
44,276
44,276
13,414
18,262
31,676
1,031,181
38,896
25,282
1988
71,445
67,190
120,251
144,550
125,870
568,202
39,011
69,768
108,779
43,548
41,876
76,556
39,391
600
227,253
26,175
36,827
63,002
1987/2008
2004
2007
1973
2018
1988
2003
676,981
290,255
Dec-98
Dec-98
Dec-98
Dec-98
Aug-05
Nov-05
Oct-05
Oct-07
Mar-08
Jul-08
Dec-98
Dec-98
Nov-05
May-08
Jul-08
Dec-98
Dec-98
Dec-98
Dec-98
Dec-98
Dec-98
Dec-98
Sep-04
Dec-07
Oct-02
Dec-98
Sep-04
Aug-02
Sep-05
Mar-07
Dec-07
Dec-98
Dec-20
Mar-04
Mar-08
Table of Contents
UNITED DOMINION REALTY, L.P.
SCHEDULE III — REAL ESTATE OWNED - (Continued)
DECEMBER 31, 2020
(In thousands)
Initial Costs
Gross Amount at Which
Carried at Close of Period
Encumbrances
Land and Land
Improvements
Building and
Improvements
Cost of
Improvements
Capitalized
Subsequent to
Acquisition
Costs
Total Initial
Acquisition
Costs
Land and Land
Improvements
Buildings &
Buildings
Improvements
Total Carrying Accumulated Construction
Depreciation
Value
(a)
Date Acquired
Date of
NORTHEAST REGION
10 Hanover Square
95 Wall Street
NEW YORK, NY
14 North
BOSTON, MA
TOTAL NORTHEAST REGION
SOUTHEAST REGION
Inlet Bay
MacAlpine Place
Andover Place at Cross Creek
TAMPA, FL
Legacy Hill
Hickory Run
Carrington Hills
Brookridge
Breckenridge
Polo Park
NASHVILLE, TN
The Reserve and Park at
Riverbridge
OTHER FLORIDA
TOTAL SOUTHEAST REGION
SOUTHWEST REGION
Steele Creek
DENVER, CO
TOTAL SOUTHWEST REGION
TOTAL OPERATING
COMMUNITIES
Other (b)
TOTAL CORPORATE
Deferred Financing Costs
TOTAL REAL ESTATE OWNED
$
—
—
—
72,500
72,500
72,500
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
41,432
57,637
99,069
10,961
10,961
110,030
7,702
10,869
11,702
30,273
1,148
1,469
2,117
708
766
4,583
10,791
15,968
15,968
57,032
8,586
8,586
8,586
218,983
266,255
485,238
51,175
51,175
536,413
23,150
36,858
107,761
167,769
5,867
11,584
—
5,461
7,714
16,293
46,919
56,401
56,401
271,089
130,400
130,400
130,400
260,415
323,892
584,307
62,136
62,136
646,443
30,852
47,727
119,463
198,042
7,015
13,053
2,117
6,169
8,480
20,876
57,710
72,369
72,369
328,121
138,986
138,986
138,986
99,500
—
—
740,831
—
—
2,367,735
—
—
3,108,566
—
—
29,075
10,873
39,948
13,923
13,923
53,871
21,301
14,572
76
35,949
11,324
14,873
39,856
7,786
7,329
18,537
99,705
17,261
17,261
152,915
6,012
6,012
6,012
932,423
2,736
2,736
41,815
58,084
99,899
11,483
11,483
111,382
10,609
12,417
11,709
34,735
2,041
2,684
5,016
1,495
1,539
6,216
18,991
16,900
16,900
70,626
8,640
8,640
8,640
247,675
276,681
524,356
64,576
64,576
588,932
41,544
49,882
107,830
199,256
16,298
25,242
36,957
12,460
14,270
33,197
138,424
72,730
72,730
410,410
136,358
136,358
136,358
289,490
334,765
624,255
76,059
76,059
700,314
52,153
62,299
119,539
233,991
18,339
27,926
41,973
13,955
15,809
39,413
157,415
89,630
89,630
481,036
144,998
144,998
144,998
2005
2008
2005
1988/1989
2001
1997/1999
1977
1989
1999
1986
1986
1987/2008
Apr-11
Aug-11
Apr-11
Jun-03
Dec-04
Nov-20
Nov-95
Dec-95
Dec-95
Mar-96
Mar-97
May-06
1999/2001
Dec-04
2015
Oct-17
116,732
156,590
273,322
38,209
38,209
311,531
34,547
36,966
1,223
72,736
13,833
18,126
28,441
9,894
10,882
27,438
108,614
52,555
52,555
233,905
25,139
25,139
25,139
832,029
—
—
3,208,960
2,736
2,736
4,040,989
2,736
2,736
1,892,011
—
—
(396)
99,104
$
740,831
$
2,367,735
$
3,108,566
$
935,159
$
832,029
$
3,211,696
$
4,043,725
$
1,892,011
(a) Date of original construction/date of last major renovation, if applicable.
(b)
Includes unallocated accruals and capital expenditures.
The aggregate cost for federal income tax purpose was approximately $3.4 billion at December 31, 2020 (unaudited).
The estimated depreciable lives for all buildings in the latest Consolidated Statements of Operations are 30 to 55 years.
S - 7
Table of Contents
UNITED DOMINION REALTY, L.P.
SCHEDULE III — REAL ESTATE OWNED - (Continued)
DECEMBER 31, 2020
(In thousands)
3-YEAR ROLLFORWARD OF REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION
The following is a reconciliation of the carrying amount of total real estate owned at December 31, (in thousands):
Balance at beginning of the year
Real estate acquired
Capital expenditures and development
Real estate sold
Balance at end of year
2020
3,875,160
245,322
52,661
(129,418)
4,043,725
$
$
2019
3,811,985
$
—
63,175
—
$
3,875,160
$
$
2018
3,816,956
—
44,353
(49,324)
3,811,985
The following is a reconciliation of total accumulated depreciation for real estate owned at December 31, (in thousands):
Balance at beginning of the year
Depreciation expense for the year
Accumulated depreciation on sales
Balance at end of year
2020
1,796,568
140,095
(44,652)
1,892,011
$
$
2019
1,658,161
138,407
$
—
$
1,796,568
2018
1,543,652
141,683
(27,174)
1,658,161
$
$
S - 8
Exhibit 4.26
UDR, INC.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (THE “DEPOSITARY”) (55 WATER STREET, NEW YORK,
NEW YORK) TO THE ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT IS MADE TO CEDE & CO.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR
BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
REGISTERED
No. 1
CUSIP No.:
90265EAU4
PRINCIPAL AMOUNT:
$350,000,000
UDR, INC.
MEDIUM-TERM NOTE
SERIES A
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE, FULLY
AND UNCONDITIONALLY
GUARANTEED BY UNITED
DOMINION REALTY, L.P.
(Fixed Rate)
ORIGINAL ISSUE DATE:
December 14, 2020
INTEREST PAYMENT DATE(S)
[X] March 15 and September 15,
commencing March 15, 2021
[ ] Other:
INTEREST RATE: 1.900%
STATED MATURITY DATE:
March 15, 2033
[ ] CHECK IF DISCOUNT NOTE
Issue Price: 99.578% plus accrued interest
from December 14, 2020
INITIAL REDEMPTION
DATE: See Addendum
INITIAL REDEMPTION
PERCENTAGE: See Addendum
ANNUAL REDEMPTION
PERCENTAGE
REDUCTION: See Addendum
OPTIONAL REPAYMENT
DATE(S): See Addendum
SPECIFIED CURRENCY:
[X] United States dollars
[ ] Other:
AUTHORIZED DENOMINATION:
[X] $2,000 and $1,000 integral
EXCHANGE RATE
AGENT: N/A
multiples thereof
[ ] Other:
ADDENDUM ATTACHED
DEFAULT INTEREST RATE: N/A
OTHER/ADDITIONAL
PROVISIONS: N/A
[X] Yes
[ ] No
2
UDR, INC., a Maryland corporation (the “Company”, which term includes any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to
CEDE & Co., as nominee for The Depository Trust Company, or registered assigns, the Principal
Amount of THREE HUNDRED FIFTY MILLION DOLLARS ($350,000,000), on the Stated
Maturity Date specified above (or any Redemption Date or Repayment Date, each as defined on the
reverse hereof, or any earlier date of acceleration of maturity) (each such date being hereinafter
referred to as the “Maturity Date” with respect to the principal repayable on such date) and to pay
interest thereon (and on any overdue principal, premium and/or interest to the extent legally
enforceable) at the Interest Rate per annum specified above, until the principal hereof is paid or duly
made available for payment. The Company will pay interest in arrears on each Interest Payment Date,
if any, specified above (each, an “Interest Payment Date”), commencing with the first Interest
Payment Date next succeeding the Original Issue Date specified above, and on the Maturity Date;
provided, however, that if the Original Issue Date occurs between a Record Date (as defined below)
and the next succeeding Interest Payment Date, interest payment will commence on the Interest
Payment Date immediately following the next succeeding Record Date to the registered holder (the
“Holder”) of this Note on the next succeeding Record Date. Interest on this Note will be computed on
the basis of a 360-day year of twelve 30-day months.
United Dominion Realty, L.P., a Delaware limited partnership (the “Operating Partnership”),
as primary obligor and not merely as surety, hereby irrevocably and unconditionally guarantees to the
Holder and to the Trustee and their successors and assigns (a) the full and punctual payment when
due, whether at the Maturity Date, by acceleration or otherwise, of all obligations of the Company
now or hereafter existing under the Indenture whether for principal of or interest on the Notes (and
premium and Make-Whole Amount, if applicable) and all other monetary obligations of the Company
under the Indenture and the Notes and (b) the full and punctual performance within the applicable
grace periods of all other obligations of the Company under the Indenture and the Notes (all such
obligations guaranteed hereby by the Operating Partnership being the “Guarantee”). The Holder of
this Note may enforce its rights under the Guarantee directly against the Operating Partnership
without first making a demand or taking action against the Company or any other person or entity.
The Operating Partnership may, without the consent of the Holder of this Note, assume all of the
Company’s rights and obligations under this Note and, upon such assumption, the Company will be
released from its liabilities under the Indenture and this Note.
Interest on this Note will accrue from, and including, the immediately preceding Interest
Payment Date to which interest has been paid or duly provided for (or from, and including, the
Original Issue Date if no interest has been paid or duly provided for) to, but excluding, the applicable
Interest Payment Date or the Maturity Date, as the case may be (each, an “Interest Period”). The
interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will,
subject to certain exceptions described herein, be paid to the person in whose name this Note (or one
or more predecessor Notes, as defined on the reverse hereof) is registered at the close of business on
the March 1 or September 1 (whether or not a Business Day, as defined below) immediately
preceding such Interest Payment Date (the “Record Date”); provided, however, that interest payable
on the Maturity Date will be payable to the person to whom the principal hereof and premium, if any,
hereon shall be payable. Any such interest not so punctually paid or duly provided for on any Interest
Payment Date other than the Maturity
3
Date (“Defaulted Interest”) shall forthwith cease to be payable to the Holder on the close of business
on any Record Date and, instead, shall be paid to the person in whose name this Note is registered at
the close of business on a special record date (the “Special Record Date”) for the payment of such
Defaulted Interest to be fixed by the Trustee hereinafter referred to, notice whereof shall be given to
the Holder of this Note by the Trustee not less than 10 calendar days prior to such Special Record
Date or may be paid at any time in any other lawful manner, all as more fully provided for in the
Indenture.
Payment of principal, premium, if any, and interest in respect of this Note due on the Maturity
Date will be made in immediately available funds upon presentation and surrender of this Note (and,
with respect to any applicable repayment of this Note, upon delivery of instructions as contemplated
on the reverse hereof) at the office or agency maintained by the Company for that purpose in the
Borough of Manhattan, The City of New York, currently the corporate trust office of the Trustee
located at 40 Broad Street, 5th Floor, New York, New York 10004, or at such other paying agency in
the Borough of Manhattan, The City of New York, as the Company may determine; provided,
however, that if the Specified Currency (as defined below) is other than United States dollars and
such payment is to be made in the Specified Currency in accordance with the provisions set forth
below, such payment will be made by wire transfer of immediately available funds to an account with
a bank designated by the Holder hereof at least 15 calendar days prior to the Maturity Date, provided
that such bank has appropriate facilities therefor and that this Note is presented and surrendered and,
if applicable, instructions are delivered at the aforementioned office or agency maintained by the
Company in time for the Trustee to make such payment in such funds in accordance with its normal
procedures. Payment of interest due on any Interest Payment Date other than the Maturity Date will
be made at the aforementioned office or agency maintained by the Company or, at the option of the
Company, by check mailed to the address of the person entitled thereto as such address shall appear
in the Security Register maintained by the Trustee; provided, however, that a Holder of
U.S.$10,000,000 (or, if the Specified Currency is other than United States dollars, the equivalent
thereof in the Specified Currency) or more in aggregate principal amount of Notes (whether having
identical or different terms and provisions) will be entitled to receive interest payments on such
Interest Payment Date by wire transfer of immediately available funds if such Holder has delivered
appropriate wire transfer instructions in writing to the Trustee not less than 15 calendar days prior to
such Interest Payment Date. Any such wire transfer instructions received by the Trustee shall remain
in effect until revoked by such Holder.
If any Interest Payment Date or the Maturity Date falls on a day that is not a Business Day,
the required payment of principal, premium, if any, and/or interest shall be made on the next
succeeding Business Day with the same force and effect as if made on the date such payment was
due, and no interest shall accrue with respect to such payment for the period from and after such
Interest Payment Date or the Maturity Date, as the case may be, to the date of such payment on the
next succeeding Business Day.
As used herein, “Business Day” means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or required by law,
regulation or executive order to close in The City of New York; provided, however, that if the
Specified Currency is other than United States dollars, such day must also not be a day on which
commercial banks are authorized or required by law, regulation or executive order to close in the
4
Principal Financial Center (as defined below) of the country issuing the Specified Currency (or, if the
Specified Currency is Euro, such day must also be a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open). “Principal Financial
Center” means the capital city of the country issuing the Specified Currency, except that with respect
to United States dollars, Australian dollars, Canadian dollars, Euros, South African rands and Swiss
francs, the “Principal Financial Center” shall be The City of New York, Sydney, Toronto,
Johannesburg and Zurich, respectively.
The Company is obligated to make payment of principal, premium, if any, and interest in
respect of this Note in the currency in which this Note is denominated above (or, if such currency is
not at the time of such payment legal tender for the payment of public and private debts in the
country issuing such currency or, if such currency is Euro, in the member states of the European
Union that have adopted the single currency in accordance with the Treaty establishing the European
Community, as amended by the Treaty on European Union, then the currency which is at the time of
such payment legal tender in the related country or in the adopting member states of the European
Union, as the case may be) (the “Specified Currency”). If the Specified Currency is other than United
States dollars, except as otherwise provided below, any such amounts so payable by the Company
will be converted by the Exchange Rate Agent specified above into United States dollars for payment
to the Holder of this Note.
Any United States dollar amount to be received by the Holder of this Note will be based on
the highest bid quotation in The City of New York received by the Exchange Rate Agent at
approximately 11:00 A.M., New York City time, on the second Business Day preceding the
applicable payment date from three recognized foreign exchange dealers (one of whom may be the
Exchange Rate Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for United States dollars for settlement on
such payment date in the aggregate amount of the Specified Currency payable to all Holders of Notes
scheduled to receive United States dollar payments and at which the applicable dealer commits to
execute a contract. All currency exchange costs will be borne by the Holder of this Note by
deductions from such payments. If three such bid quotations are not available, payments on this Note
will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the Holder of this Note may elect
to receive all or a specified portion of any payment of principal, premium, if any, and/or interest, if
any, in respect of this Note in the Specified Currency by submitting a written request for such
payment to the Trustee at its corporate trust office in The City of New York on or prior to the
applicable Record Date or at least 15 calendar days prior to the Maturity Date, as the case may be.
Such written request may be mailed or hand delivered or sent by cable, telex or other form of
facsimile transmission. The Holder of this Note may elect to receive all or a specified portion of all
future payments in the Specified Currency in respect of such principal, premium, if any, and/or
interest, if any, and need not file a separate election for each payment. Such election will remain in
effect until revoked by written notice delivered to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the applicable Record Date or at least 15
calendar days prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars and the Holder of this Note shall
have duly made an election to receive all or a specified portion of any payment of principal,
5
premium, if any, and/or interest, if any, in respect of this Note in the Specified Currency, but the
Specified Currency is not available due to the imposition of exchange controls or other circumstances
beyond the control of the Company, the Company will be entitled to satisfy its obligations to the
Holder of this Note by making such payment in United States dollars on the basis of the Market
Exchange Rate (as defined below) determined by the Exchange Rate Agent on the second Business
Day prior to such payment date or, if such Market Exchange Rate is not then available, on the basis
of the most recently available Market Exchange Rate. The “Market Exchange Rate” for the Specified
Currency other than United States dollars means the noon dollar buying rate in The City of New York
for cable transfers for the Specified Currency as certified for customs purposes (or, if not so certified,
as otherwise determined) by the Federal Reserve Bank of New York. Any payment made in United
States dollars under such circumstances shall not constitute an Event of Default (as defined in the
Indenture).
All determinations referred to above made by the Exchange Rate Agent shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on
the Holder of this Note.
The Company agrees to indemnify the Holder of any Note against any loss incurred by such
Holder as a result of any judgment or order being given or made against the Company for any amount
due hereunder and such judgment or order requiring payment in a currency (the “Judgment
Currency”) other than the Specified Currency, and as a result of any variation between (i) the rate of
exchange at which the Specified Currency amount is converted into the Judgment Currency for the
purpose of such judgment or order, and (ii) the rate of exchange at which such Holder, on the date of
payment of such judgment or order, is able to purchase the Specified Currency with the amount of the
Judgment Currency actually received by such Holder, as the case may be. The foregoing indemnity
constitutes a separate and independent obligation of the Company and continues in full force and
effect notwithstanding any such judgment or order as aforesaid. The term “rate of exchange” includes
any premiums and costs of exchange payable in connection with the purchase of, or conversion into,
the relevant currency.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof
and, if so specified on the face hereof, in an Addendum hereto, which further provisions shall have
the same force and effect as if set forth on the face hereof.
Notwithstanding the foregoing, if an Addendum is attached hereto or “Other/Additional
Provisions” apply to this Note as specified above, this Note shall be subject to the terms set forth in
such Addendum or such “Other/Additional Provisions”.
Unless the Certificate of Authentication hereon has been executed by the Trustee by manual
signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory
for any purpose.
6
IN WITNESS WHEREOF, UDR, Inc. has caused this Note to be duly executed by one of its
duly authorized officers.
UDR, INC.
By:
/s/ Joseph D. Fisher
Name:
Title:
Joseph D. Fisher
Senior Vice President and Chief Financial
Officer
ATTEST:
By: _/s/ Deborah J. Shannon_______________________
Name: Deborah J. Shannon
Title: Assistant Secretary
Dated: December 14, 2020
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of
the series designated therein referred
to in the within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
/s/ K. Wendy Kumar
Authorized Signatory
Authentication Date: December 14, 2020
7
[REVERSE OF NOTE]
UDR, INC.
MEDIUM-TERM NOTE, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE, FULLY AND UNCONDITIONALLY
GUARANTEED BY UNITED DOMINION REALTY, L.P.
(Fixed Rate)
This Note is one of a duly authorized series of Debt Securities (the “Debt Securities”) of the
Company issued and to be issued under an Indenture, dated as of November 1, 1995, as supplemented
by the first supplemental indenture thereto, dated as of May 3, 2011, as further amended, modified or
supplemented from time to time (the “Indenture”), between the Company (successor by merger to
United Dominion Realty Trust, Inc., a Virginia corporation) and U.S. Bank National Association,
successor trustee to Wachovia Bank, National Association (formerly known as First Union National
Bank of Virginia), as trustee (the “Trustee”, which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities thereunder of the
Company, the Trustee and the Holders of the Debt Securities, and of the terms upon which the Debt
Securities are, and are to be, authenticated and delivered. This Note is one of the series of Debt
Securities designated as “Medium-Term Notes, Series A Due Nine Months or More From Date of
Issue, Fully and Unconditionally Guaranteed by United Dominion Realty, L.P.” (the “Notes”). All
terms used but not defined in this Note or in an Addendum hereto shall have the meanings assigned to
such terms in the Indenture or on the face hereof, as the case may be.
United Dominion Realty, L.P., a Delaware limited partnership (the “Operating Partnership”),
as primary obligor and not merely as surety, hereby irrevocably and unconditionally guarantees to the
Holder and to the Trustee and their successors and assigns (a) the full and punctual payment when
due, whether at the Maturity Date, by acceleration or otherwise, of all obligations of the Company
now or hereafter existing under the Indenture whether for principal of or interest on the Notes (and
premium and Make-Whole Amount, if applicable) and all other monetary obligations of the Company
under the Indenture and the Notes and (b) the full and punctual performance within the applicable
grace periods of all other obligations of the Company under the Indenture and the Notes (all such
obligations guaranteed hereby by the Operating Partnership being the “Guarantee”). The Holder of
this Note may enforce its rights under the Guarantee directly against the Operating Partnership
without first making a demand or taking action against the Company or any other person or entity.
The Operating Partnership may, without the consent of the Holder of this Note, assume all of the
Company’s rights and obligations under this Note and, upon such assumption, the Company will be
released from its liabilities under the Indenture and this Note.
This Note is issuable only in registered form without coupons in minimum denominations of
U.S. $2,000 and integral multiples of $1,000 or other Authorized Denomination specified on the face
hereof.
8
This Note will not be subject to any sinking fund and, unless otherwise specified on the face
hereof in accordance with the provisions of the following two paragraphs, will not be redeemable or
repayable prior to the Stated Maturity Date.
This Note will be subject to redemption at the option of the Company on any date on or after
the Initial Redemption Date, if any, specified on the face hereof, in whole or from time to time in part
in increments of U.S. $1,000 or other integral multiple of an Authorized Denomination (provided that
any remaining principal amount hereof shall be at least U.S. $1,000 or such other minimum
Authorized Denomination), at the Redemption Price (as defined below), together with unpaid interest
accrued thereon to the date fixed for redemption (the “Redemption Date”), on written notice given to
the Holder hereof (in accordance with the provisions of the Indenture) not more than 60 nor less than
15 calendar days prior to the Redemption Date. The “Redemption Price” shall be an amount equal to
the Initial Redemption Percentage specified on the face hereof (as adjusted by the Annual
Redemption Percentage Reduction, if any, specified on the face hereof) multiplied by the unpaid
principal amount of this Note to be redeemed. The Initial Redemption Percentage, if any, shall
decline at each anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, until the Redemption Price is 100% of unpaid principal amount to be redeemed. In
the event of redemption of this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms and provisions as this Note shall be issued by the
Company in the name of the Holder hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of the Holder hereof on
the Optional Repayment Date(s), if any, specified on the face hereof, in whole or in part in
increments of U.S. $1,000 or other integral multiple of an Authorized Denomination (provided that
any remaining principal amount hereof shall be at least U.S. $1,000 or such other minimum
Authorized Denomination), at a repayment price equal to 100% of the unpaid principal amount to be
repaid, together with unpaid interest accrued thereon to the date fixed for repayment (the “Repayment
Date”). For this Note to be repaid, the Trustee must receive at its corporate trust office in the Borough
of Manhattan, The City of New York, not more than 60 nor less than 30 calendar days prior to the
Repayment Date, such Note and instructions to such effect forwarded by the Holder hereof. Exercise
of such repayment option by the Holder hereof shall be irrevocable. In the event of repayment of this
Note in part only, a new Note of like tenor for the unrepaid portion hereof and otherwise having the
same terms and provisions as this Note shall be issued by the Company in the name of the Holder
hereof upon the presentation and surrender hereof.
If this Note is specified on the face hereof to be a Discount Note, the amount payable to the
Holder of this Note in the event of redemption, repayment or acceleration of maturity will be equal to
the sum of (1) the Issue Price specified on the face hereof (increased by any accruals of the Discount,
as defined below) and, in the event of any redemption of this Note (if applicable), multiplied by the
Initial Redemption Percentage (as adjusted by the Annual Redemption Percentage Reduction, if
applicable) and (2) any unpaid interest accrued thereon to the Redemption Date, Repayment Date or
date of acceleration of maturity, as the case may be. The difference between the Issue Price and 100%
of the principal amount of this Note is referred to herein as the “Discount”.
9
For purposes of determining the amount of Discount that has accrued as of any Redemption
Date, Repayment Date or date of acceleration of maturity of this Note, such Discount will be accrued
so as to cause the yield on the Note to be constant. The constant yield will be calculated using a 30-
day month, 360-day year convention, a compounding period that, except for the Initial Period (as
defined below), corresponds to the shortest period between Interest Payment Dates (with ratable
accruals within a compounding period) and an assumption that the maturity of this Note will not be
accelerated. If the period from the Original Issue Date to the initial Interest Payment Date (the “Initial
Period”) is shorter than the compounding period for this Note, a proportionate amount of the yield for
an entire compounding period will be accrued. If the Initial Period is longer than the compounding
period, then such period will be divided into a regular compounding period and a short period, with
the short period being treated as provided in the preceding sentence.
The covenants set forth in Section 1004(a) and Section 1007 of the Indenture shall not apply
to this Note, and the following covenants shall instead apply to this Note in place of the covenants set
forth in Section 1004(a) and Section 1007 of the Indenture:
“The Trust will, and will cause the Subsidiaries to, have at all times Total
Unencumbered Assets of not less than 150% of the aggregate principal amount of
all of the Trust’s outstanding Unsecured Debt and the outstanding Unsecured Debt
of the Subsidiaries, determined on a consolidated basis in accordance with GAAP.
The Trust will not, and will not permit any Subsidiary to, incur any Debt if,
immediately after giving effect to the incurrence of such additional Debt and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Debt of the Trust and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 65% of the sum of (without
duplication) (i) the Trust’s Total Assets as of the end of the calendar quarter
covered in the Trust’s Annual Report on Form 10-K or Quarterly Report on Form
10-Q, as the case may be, most recently filed with the Commission (or, if such
filing is not permitted under the Exchange Act, with the Trustee) prior to the
incurrence of such additional Debt and (ii) the purchase price of any real estate
assets or mortgages receivable acquired, and the amount of any securities offering
proceeds received (to the extent such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Debt), by the Trust or any
Subsidiary since the end of such calendar quarter, including those proceeds
obtained in connection with the incurrence of such additional Debt.
‘Total Unencumbered Assets’ means the sum of, without duplication, those
Undepreciated Real Estate Assets which are not subject to a lien securing Debt and
all other assets, excluding accounts receivable and intangibles, of the Trust and the
Subsidiaries not subject to a lien securing Debt, all determined on a consolidated
basis in accordance with GAAP; provided, however, that all investments by the
Trust and the Subsidiaries in unconsolidated joint ventures, unconsolidated limited
partnerships, unconsolidated limited liability
10
companies and other unconsolidated entities shall be excluded from Total
Unencumbered Assets to the extent that such investments would have otherwise
been included.”
If an Event of Default shall occur and be continuing, the principal of the Notes may, and in
certain cases shall, be accelerated in the manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance of (i) the entire indebtedness of the Notes or
(ii) certain covenants and Events of Default with respect to the Notes, in each case upon compliance
with certain conditions set forth therein, which provisions apply to the Notes.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of the Company and the rights of the Holders of the
Debt Securities at any time by the Company and the Trustee with the consent of the Holders of a
majority of the aggregate principal amount of all Debt Securities at the time outstanding and affected
thereby. The Indenture also contains provisions permitting the Holders of a majority of the aggregate
principal amount of the outstanding Debt Securities of any series, on behalf of the Holders of all such
Debt Securities, to waive compliance by the Company with certain provisions of the Indenture.
Furthermore, provisions in the Indenture permit the Holders of a majority of the aggregate principal
amount of the outstanding Debt Securities of any series, in certain instances, to waive, on behalf of all
of the Holders of Debt Securities of such series, certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and other Notes issued upon the
registration of transfer hereof or in exchange heretofore or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay principal,
premium, if any, and interest in respect of this Note at the times, places and rate or formula, and in
the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein and herein set forth, the
transfer of this Note is registrable in the Security Register of the Company upon surrender of this
Note for registration of transfer at the office or agency of the Company in any place where the
principal hereof and any premium or interest hereon are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Company and the Security Registrar
duly executed by, the Holder hereof or by his attorney duly authorized in writing, and thereupon one
or more new Notes having the same terms and provisions, of Authorized Denominations and for the
same aggregate principal amount, will be issued by the Company to the designated transferee or
transferees.
As provided in the Indenture and subject to certain limitations therein and herein set forth, this
Note is exchangeable for a like aggregate principal amount of Notes of different Authorized
Denominations but otherwise having the same terms and provisions, as requested by the Holder
hereof surrendering the same.
11
No service charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Holder as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary, except as required by law.
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
12
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Note, shall be
construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN
ACT
- ________ Custodian ______
TEN ENT
- as tenants by the entireties
(Cust) (Minor)
JT TEN
- as joint tenants with right of
survivorship and not as
tenants
in common
under Uniform Gifts to Minors
Act ____________________
(State)
Additional abbreviations may also be used though not in the above list.
__________________________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(Please print or typewrite name and address including postal zip code of assignee)
this Note and all rights thereunder hereby irrevocably constituting and appointing
Attorney to transfer this Note on the books of the Company, with full power of substitution in the
premises.
Dated:
Notice: The signature(s) on this Assignment
must correspond with the name(s) as written
upon the face of this Note in every particular,
without alteration or enlargement or any
change whatsoever.
13
UDR, INC.
ADDENDUM TO MEDIUM-TERM NOTE
(Fixed Rate)
The Company may redeem all or part of this Note at any time at its option at a redemption
price equal to the greater of (1) the principal amount of this Note being redeemed plus accrued and
unpaid interest to the redemption date or (2) the Make-Whole Amount for the principal amount of
this Note being redeemed. If this Note is redeemed on or after December 15, 2032 (three months
prior to the maturity date) (the “Par Call Date”), the redemption price will equal the principal amount
of this Note being redeemed plus accrued and unpaid interest to the redemption date.
“Make-Whole Amount” means, as determined by the Quotation Agent, the sum of the present
values of the principal amount of this Note to be redeemed, together with the scheduled payments of
interest (exclusive of interest to the redemption date) from the redemption date to the Par Call Date of
this Note being redeemed, in each case discounted to the redemption date on a semi-annual basis,
assuming a 360-day year consisting of twelve 30-day months, at the Adjusted Treasury Rate, plus
accrued and unpaid interest on the principal amount of this Note being redeemed to the redemption
date.
“Adjusted Treasury Rate” means, with respect to any redemption date, the sum of (x) either
(1) the yield for the maturity corresponding to the Comparable Treasury Issue, under the heading that
represents the average for the immediately preceding week, appearing in the most recent published
statistical release designated “H.15” or any successor publication that is published weekly by the
Board of Governors of the Federal Reserve System and that establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant
Maturities” (provided, if no maturity is within three months before or after the remaining term of this
Note, yields for the two published maturities most closely corresponding to the Comparable Treasury
Issue shall be determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from
such yields on a straight line basis, rounded to the nearest month) or (2) if such release (or any
successor release) is not published during the week preceding the calculation date or does not contain
such yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such redemption date, in each
case calculated on the third business day preceding the redemption date, and (y) 0.200%.
“Comparable Treasury Issue” means the United States Treasury security selected by the
Quotation Agent as having a maturity comparable to the remaining term of this Note (assuming, for
this purpose, that this Note matured on the Par Call Date) that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of this Note (assuming, for this purpose, that
this Note matured on the Par Call Date).
“Comparable Treasury Price” means, with respect to any redemption date, (x) the average of
three Reference Treasury Dealer Quotations for such redemption date, after excluding the
highest and lowest Reference Treasury Dealer Quotations so obtained, or (y) if fewer than five
Reference Treasury Dealer Quotations are so obtained, the average of all such Reference Treasury
Dealer Quotations so obtained.
“Quotation Agent” means the Reference Treasury Dealer selected by the indenture trustee
after consultation with the Company.
“Reference Treasury Dealer” means any of BofA Securities, Inc., J.P. Morgan Securities
LLC, a primary U.S. Government securities dealer selected by U.S. Bancorp Investments, Inc. and
two other nationally recognized investment banking firms selected by the Company that are primary
U.S. Government securities dealers and their respective successors and assigns.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the indenture trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the indenture trustee by such Reference Treasury Dealer at
5:00 p.m., New York City time, on the third business day preceding such redemption date.
2
Exhibit 10.22
UDR, INC.
1999 LONG TERM INCENTIVE PLAN
CLASS 1 PERFORMANCE LTIP UNIT AWARD AGREEMENT
Grantee:
Class 1 Performance LTIP
Units:
Date of Award:
Vesting Commencement
Date:
[Name]
[Units]
[Date]
[Date]
1.
Grant of LTIP Units. Pursuant to the Partnership Agreement, the UDR, Inc. 1999 Long-
Term Incentive Plan, as amended, including pursuant to the amended and restated plan (the
“Restated Plan”) to be submitted to the shareholders of UDR, Inc. (the “Company”) for approval at
the 2021 annual meeting (the “Plan”) in consideration of the agreement by the Grantee named above
(the “Grantee”) to provide services to or for the benefit of United Dominion Realty, L.P. (the
“Partnership”), the Partnership hereby (a) grants to the Grantee, as additional compensation for such
services, and subject to Section 2 and the other restrictions and terms and conditions set forth in the
Plan and in this Class 1 Performance Unit Award Agreement (this “Agreement”), the Class 1
Performance LTIP Units indicated above (the “LTIP Units”), and (b) if not already a Partner, admits
the Grantee as a Partner of the Partnership on the terms and conditions set forth herein, in the Plan
and in the Partnership Agreement. The Partnership and the Grantee acknowledge and agree that the
LTIP Units are issued to the Grantee for the performance of services to or for the benefit of the
Partnership in his or her capacity as a Partner or in anticipation of the Grantee becoming a Partner.
To the extent not an existing Partner, the Grantee shall be admitted to the Partnership as an
additional Limited Partner with respect to the LTIP Units only upon the satisfactory completion of
the applicable requirements set forth in the Partnership Agreement, including the requirements set
forth in Section 4 of Exhibit H to the Partnership Agreement. At the request of the Partnership, the
Grantee shall execute the Partnership Agreement or a joinder or counterpart signature page thereto.
The Grantee acknowledges that the Partnership may from time to time issue or cancel (or otherwise
modify) LTIP Units in accordance with the terms of the Partnership Agreement. The LTIP Units
shall have the rights, voting powers, restrictions, limitations as to distributions, qualifications and
terms and conditions of redemption and conversion set forth herein, in the Plan and in the Partnership
Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings
assigned such terms in the Plan and/or the Partnership Agreement, as applicable.
1
2.
Date of Issuance of the LTIP Units. Notwithstanding anything herein to the contrary, the
Class 1 Performance LTIP Units shall be issued as of the Date of Award set forth above.
3.
Certain Additional Terms of the Class 1 Performance LTIP Units. For each of the Class 1
Performance LTIP Units:
(a) The “Expiration Date” is the 10th anniversary of the Date of Award.
(b) The “Initial Sharing Percentage” is __%.
(c) The “Issue Price” is $_____, which is the REIT Share Value on the Date of
Award.
(d) The “Full Distribution Participation Date” is the Conversion Date on which
such Class 1 Performance LTIP Unit is converted into any portion of one or more Class 1 LTIP Units
under Section 12 of Exhibit H to the Partnership Agreement.
(e) Any Class 1 Performance LTIP Unit not yet converted under Section 12 of the
Partnership Agreement as of immediately after the Expiration Date shall be subject to the Partnership
Call Right set forth in Section 7 below.
4.
Vesting of LTIP Units. Subject to the restrictions described in Section 5 below, 100% of
the LTIP Units subject to this Agreement shall vest and cease to be subject to the restrictions set forth
in Section 5 on the first anniversary of the Vesting Commencement Date set forth above or, if earlier,
on the date set forth in paragraph (b) or (c) of Section 6 hereof.
5.
Restrictions. The LTIP Units are subject to each of the following restrictions.
“Restricted Units” means those LTIP Units that have not vested. Without the consent of the
Committee (which it may give or withhold in its sole discretion), Restricted Units may not be sold,
transferred, exchanged, redeemed, assigned, pledged, hypothecated or otherwise encumbered
(collectively, “Transferred”). If the Grantee’s service with the Company or any Parent or
Subsidiary terminates for any reason other than as set forth in paragraph (b) or (c) of Section 6
hereof, all Restricted Units will automatically and without any further action thereupon be cancelled
and forfeited without payment of any consideration therefor, and the Grantee shall have no further
right, title or interest in and to the Restricted Units. No LTIP Units which have not vested as of the
date of the Grantee’s termination of service and do not vest pursuant to paragraph (b) or (c) of
Section 6 hereof shall thereafter become vested unless otherwise determined by the Committee, in its
sole discretion.
The restrictions imposed under this Section 5 shall apply to all securities issued with respect
to Restricted Units hereunder in connection with any merger, reorganization, consolidation, re-
capitalization, stock dividend, unit distribution or other change in corporate structure affecting the
common stock of the Company or the Partnership Units of the Partnership
6.
Expiration and Termination of Restrictions. The restrictions imposed under Section 5
will expire on the earliest to occur of the following:
(a)
On the date the Units vest pursuant to Section 4;
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(b)
On the date of termination of the Grantee’s service with the Company or any
Parent or Subsidiary (or any successor thereof) because of his or her death, Disability or Retirement;
or
(c)
On the date specified by the Committee or (i) if (and only if) the Restated Plan
is not approved by shareholders, pursuant to Section 14.10 of the Existing Plan, upon the occurrence
of a Change of Control) and (ii) if the Restated Plan is approved by shareholders, pursuant to Section
14.10 of the Restated Plan, on the date of termination of the Grantee’s service with the Company or
any Parent or Subsidiary (or any successor thereof) by the Company or any Parent or Subsidiary (or
any successors thereof) without Cause (as defined below) if such termination without Cause occurs
on or within 12 months following the date of a Change of Control. For clarity, if the Restated Plan is
approved by shareholders, the LTIP Units will not vest solely due to a Change of Control pursuant to
Section 14.10 of the Existing Plan.
For purposes of this Agreement, the term “Cause” means, unless an agreement between the Grantee
and the Company states otherwise, (i) failure by the Grantee to perform the duties of the Grantee to
the Company or any Parent or Subsidiary (or any successor thereof) (other than due to his or her
Disability), provided that such conduct shall not constitute Cause unless and until such failure by
Grantee to perform his or her duties has not been cured to the satisfaction of the Company, in its
reasonable discretion, within 15 days after written notice of such failure has been given by the
Company to Grantee; (ii) an act of fraud, embezzlement, theft, breach of fiduciary duty, dishonesty,
or any other misconduct or any violation of law (other than a traffic violation) committed by the
Grantee; (iii) any action by the Grantee intentionally causing damage to or misappropriation of the
Company’s or any Parent’s or Subsidiary’s (or any of their successor’s) assets; (iv) the Grantee’s
wrongful disclosure of confidential information of the Company or any Parent or Subsidiary (or any
successor thereof); (v) the Grantee’s breach of (x) any non-competition, non-solicitation, non-
disparagement or other restrictive covenants related to the Company or any Parent or Subsidiary (or
any successor thereof) to which he or she is subject, and/or (y) the Grantee’s duty of loyalty; or (vi)
performance by the Grantee of his or her duties in a manner deemed by the Committee, in its
reasonable discretion, to be grossly negligent.
7.
Partnership Call Right. Any Class 1 Performance LTIP Unit granted hereunder, upon
becoming a Post-Conversion Period Performance LTIP Unit under the Partnership Agreement, shall
be subject to purchase by the Partnership or its designee under this Section 7 (such repurchase right,
the “Partnership Call Right”). A Partnership Call Right may be exercised with respect to any Post-
Conversion Period Performance LTIP Unit by (a) the delivery of a notice (a “Partnership Call Right
Notice”) in the form attached hereto as Exhibit B to the holder of the applicable Performance LTIP
Units no more than thirty (30) days prior to the Call Date specified in such Partnership Call Right
Notice, and (b) the payment of the applicable purchase price no later than the applicable Call Date.
The purchase price for any Post-Conversion Period Performance LTIP Unit being purchased under
the Partnership Call Right will be the fair market value of such Units as of the applicable Call Date,
as determined in good faith by the General Partner. The General Partner may, in its sole discretion,
permit any Partnership Call Right to be exercised by the Partnership or its designee, and the purchase
price payable in respect of any Partnership Call Right may be paid in any combination of
immediately available funds and REIT Shares (valued using the REIT Share Value as of the
applicable Call Date), as determined by the
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General Partner in its sole discretion. Each Partnership Call Right Notice shall be provided in the
manner provided in Section 12.01 of the Partnership Agreement. Section 5(b) of Exhibit H of the
Partnership Agreement shall not apply to any LTIP Unit purchased pursuant to a Partnership Call
Right, unless the purchasing party is the Partnership.
8.
The LTIP Units will be registered in the name of the Grantee as Restricted Units and may
be held by the Company or the Partnership prior to the lapse of the restrictions thereon as provided in
Section 4 or 6 hereof (the “Restricted Period”). Any certificate for LTIP Units issued during the
Restricted Period shall be registered in the name of the Grantee and shall bear a legend in
substantially the following form:
AND RESTRICTIONS
THIS CERTIFICATE AND THE UNITS REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING
FORFEITURE
TRANSFER)
CONTAINED IN A CLASS 1 PERFORMANCE LTIP UNIT AWARD
AGREEMENT DATED [DATE] BETWEEN THE REGISTERED OWNER
OF THE UNITS REPRESENTED HEREBY, UDR, INC. AND UNITED
DOMINION REALTY, L.P. RELEASE FROM SUCH TERMS AND
CONDITIONS SHALL BE MADE ONLY IN ACCORDANCE WITH THE
PROVISIONS OF SUCH AGREEMENT, COPIES OF WHICH ARE ON
FILE IN THE OFFICE OF UDR, INC.
AGAINST
At the Company’s or the Partnership’s request, the Grantee hereby agrees to promptly
execute, deliver and return to the Partnership any and all documents or certificates that the Company
or the Partnership deems necessary or desirable to effectuate the cancellation and forfeiture of the
Restricted Units, or to effectuate the transfer or surrender of such Restricted Units to the Partnership.
In addition, if requested, the Grantee shall deposit with the Company or the Partnership, a stock/unit
power, or powers, executed in blank and sufficient to re-convey the Restricted Units to the Company
or the Partnership upon termination of the Grantee’s service during the Restricted Period, in
accordance with the provisions of this Agreement.
9.
Covenants, Representations and Warranties. The Grantee hereby represents, warrants,
covenants, acknowledges and agrees on behalf of the Grantee and his or her spouse, if applicable,
that:
(a)
Investment. The Grantee is holding the LTIP Units for the Grantee’s own
account, and not for the account of any other person or entity. The Grantee is holding the LTIP Units
for investment and not with a view to distribution or resale thereof except in compliance with
applicable laws regulating securities.
(b)
Relation to the Partnership. The Grantee is presently a director of the
Company, which is the sole general partner of the Partnership, or is otherwise providing services to
or for the benefit of the Partnership, and in such capacity has become personally familiar with the
business of the Partnership.
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(c)
Access to Information. The Grantee has had the opportunity to ask questions
of, and to receive answers from, the Partnership with respect to the terms and conditions of the
transactions contemplated hereby and with respect to the business, affairs, financial conditions, and
results of operations of the Partnership.
(d)
Registration. The Grantee understands that the LTIP Units have not been
registered under the 1933 Act, and the LTIP Units cannot be transferred by the Grantee unless such
transfer is registered under the 1933 Act or an exemption from such registration is available. The
Partnership has made no agreements, covenants or undertakings whatsoever to register the transfer of
the LTIP Units under the 1933 Act. The Partnership has made no representations, warranties, or
covenants whatsoever as to whether any exemption from the 1933 Act, including, without limitation,
any exemption for limited sales in routine brokers’ transactions pursuant to Rule 144 of the 1933 Act,
will be available. If an exemption under Rule 144 is available at all, it will not be available until at
least six (6) months after the issuance of the LTIP Units and then not unless the terms and conditions
of Rule 144 have been satisfied.
(e)
Public Trading. None of the Partnership’s securities are presently publicly
traded, and the Partnership has made no representations, covenants or agreements as to whether there
will be a public market for any of its securities.
(f)
Tax Advice. The Partnership has made no warranties or representations to the
Grantee with respect to the income tax consequences of the transactions contemplated by this
Agreement (including, without limitation, with respect to the decision of whether to make an election
under Section 83(b) of the Code), and the Grantee is in no manner relying on the Partnership or its
representatives for an assessment of such tax consequences. Grantee hereby recognizes that the
Internal Revenue Service has proposed regulations under Sections 83, 704, and 707 of the Code that
may affect the proper treatment of the LTIP Units for federal income tax purposes. In the event that
those proposed regulations or similar regulations become final or temporary regulations, the Grantee
hereby agrees to cooperate with the Partnership in amending this Agreement and the Partnership
Agreement, and to take such other action as may be required, to conform to such regulations. Further,
Congress recently enacted, and proposed Treasury Regulations were recently issued under, Section
1061 of the Code, which materially alters the taxation of “profits interests” issued in connection with
the provision of services. The Grantee is advised to consult with his or her own tax advisor with
respect to such tax consequences and his or her ownership of the LTIP Units.
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10.
LTIP Units Subject to Partnership Agreement; Restrictions on Transfer. The LTIP Units
are subject to the terms of the Plan and the terms of the Partnership Agreement, including, without
limitation, the restrictions on transfer of Units set forth in Article 9 of the Partnership Agreement.
Any permitted transferee of the LTIP Units shall take such LTIP Units subject to the terms of the
Plan, this Agreement, and the Partnership Agreement. Any such permitted transferee must, upon the
request of the Partnership, agree to be bound by the Plan, the Partnership Agreement, and this
Agreement, and shall execute the same on request, and must agree to such other waivers, limitations,
and restrictions as the Partnership or the Company may reasonably require. Any Transfer of the
LTIP Units which is not made in compliance with the Plan, the Partnership Agreement and this
Agreement shall be null and void and of no effect. Notwithstanding any other provision of this
Agreement, without the consent of the Committee (which it may give or withhold in its sole
discretion), the Grantee shall not Transfer the LTIP Units (whether vested or unvested, but excluding
for the avoidance of doubt any conversion of a Class 1 Performance LTIP Unit to a Class 1 LTIP
Unit) or any corresponding Class 1 LTIP Units into which the Class 1 Performance LTIP Units
convert, including by means of a redemption of such Class 1 LTIP Units by the Partnership, until the
earlier of (i) the occurrence of, and in connection with, a Change of Control (or such earlier time as is
necessary in order for the Grantee to participate in such Change of Control transaction with respect to
the LTIP Units and receive the consideration payable with respect thereto in connection with such
Change of Control) and (ii) the expiration of the two (2) year period following the applicable Date of
Award set forth above, other than by will or the laws of descent and distribution.
11.
Capital Account. The Grantee shall make no contribution of capital to the Partnership in
connection with the issuance of the LTIP Units and, as a result, the Grantee’s Capital Account
balance in the Partnership immediately after his or her receipt of the LTIP Units shall be equal to
zero, unless the Grantee was a Partner in the Partnership prior to such issuance, in which case the
Grantee’s Capital Account balance shall not be increased as a result of his or her receipt of the LTIP
Units.
12.
Stop Transfer Notices. In order to ensure compliance with the restrictions on transfer set
forth in this Agreement, the Plan or the Partnership Agreement, the Company and the Partnership
may issue appropriate “stop transfer” instructions to its transfer agent, if any, and, if the Company or
the Partnership transfers its own securities, it may make appropriate notations to the same effect in its
own records.
13.
Refusal to Transfer. The Partnership shall not be required (a) to transfer on its books any
LTIP Units that have been sold or otherwise transferred in violation of any of the provisions of this
Agreement, the Plan or the Partnership Agreement, or (b) to treat as owner of such LTIP Units or to
accord the right to vote or make distributions to any purchaser or other transferee to whom such LTIP
Units shall have been so transferred.
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14.
Restrictions on Public Sale by the Grantee. To the extent not inconsistent with applicable
law, the Grantee agrees not to effect any sale or distribution of the LTIP Units or any similar security
of the Company or the Partnership, or any securities convertible into or exchangeable or exercisable
for such securities, including a sale pursuant to Rule 144 under the 1933 Act, during the fourteen (14)
days prior to, and for a period of up to 180 days beginning on, the date of the pricing of any public or
private debt or equity securities offering by the Company or the Partnership (except as part of such
offering), if and to the extent requested in writing by the Partnership or the Company in the case of a
non-underwritten public or private offering or if and to the extent requested in writing by the
managing underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be)
and consented to by the Partnership or the Company, which consent may be given or withheld in the
Partnership’s or the Company’s sole and absolute discretion, in the case of an underwritten public or
private offering (such agreement to be in the form of a lock-up agreement provided by the Company,
the Partnership, managing underwriter or underwriters, or initial purchaser or purchasers as the case
may be).
15.
Conformity to Securities Laws. The Grantee acknowledges that the Plan and this
Agreement are intended to conform to the extent necessary with all provisions of all applicable
federal and state laws, rules and regulations (including, but not limited to, the 1933 Act and the 1934
Act and any and all regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation the applicable exemptive conditions of Rule 16b-3 of the
1934 Act) and to such approvals by any listing, regulatory or other governmental authority as may, in
the opinion of counsel for the Partnership or the Company, be necessary or advisable in connection
therewith. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the
award of LTIP Units is made, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan, this Agreement and this award of
LTIP Units shall be deemed amended to the extent necessary to conform to such laws, rules and
regulations.
16. No Right of Continued Service. Nothing in this Agreement shall interfere with or limit in
any way the right of the Company or any Parent or Subsidiary to terminate the Grantee’s service at
any time, nor confer upon the Grantee any right to continue in the service of the Company or any
Parent or Subsidiary.
17.
Payment of Taxes.
(a)
The Grantee covenants that the Grantee shall make a timely election under
Section 83(b) of the Code (and any comparable election in the state of the Grantee’s residence) with
respect to the LTIP Units, and the Partnership hereby consents to the making of such election(s). In
connection with such election, the Grantee and the Grantee’s spouse, if applicable, shall promptly
provide a copy of such election to the Partnership. A form of election under Section 83(b) of the
Code is attached hereto as Exhibit A. The Grantee represents that the Grantee has consulted any tax
advisor(s) that the Grantee deems advisable in connection with the filing of an election under Section
83(b) of the Code and similar state tax provisions. The Grantee acknowledges that it is the Grantee’s
sole responsibility and not the Company’s or the Partnership’s to timely file an election under Section
83(b) of the Code (and any comparable state election), even if the Grantee requests that the Company,
the Partnership or any representative
A-7
thereof make such filing on the Grantee’s behalf. The Grantee should consult his or her tax advisor to
determine if there is a comparable election to file in the state of his or her residence.
(b)
The Grantee will, no later than the date as of which any amount related to the
LTIP Units first becomes includable in the Grantee’s gross income for federal income tax purposes,
pay to the Company, or make other arrangements satisfactory to the Committee regarding payment
of, any federal, state and local taxes of any kind required by law to be withheld with respect to such
amount. For the avoidance of doubt, the Grantee may satisfy such payment by permitting the
Company or the Partnership to reduce the number of LTIP Units by an amount sufficient to satisfy
the minimum amount (and not any greater amount) required to be withheld for tax purposes. The
obligations of the Company and the Partnership under this Agreement will be conditional on such
payment or arrangements, and the Company, and, where applicable, its Subsidiaries will, to the extent
permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise
due to the Grantee.
(c)
Prior to any event in connection with the Award that the Company determines
may result in any tax withholding obligation, whether U.S. federal, state, local or non-U.S., including
any social insurance, employment tax, payment on account or other tax-related obligation (the “Tax
Withholding Obligation”), the Grantee must arrange for the satisfaction of the minimum amount of
such Tax Withholding Obligation in a manner acceptable to the Company.
18.
Profits Interests. The Partnership and the Grantee intend that (i) the LTIP Units be treated
as “profits interests” as defined in Internal Revenue Service Revenue Procedure 93-27, as clarified by
Revenue Procedure 2001-43, (ii) the issuance of such units not be a taxable event to the Partnership
or the Grantee as provided in such revenue procedures, and (iii) the Partnership Agreement, the Plan
and this Agreement be interpreted consistently with such intent. In furtherance of such intent,
effective immediately prior to the issuance of the LTIP Units, the Partnership may revalue all
Partnership assets to their respective gross fair market values, and make the resulting adjustments to
the Capital Accounts of the Partners, in each case, as set forth in the Partnership Agreement.
19. Ownership Information. The Grantee hereby covenants that so long as the Grantee holds
any LTIP Units, at the request of the Partnership, the Grantee shall disclose to the Partnership in
writing such information relating to the Grantee’s ownership of the LTIP Units as the Partnership
reasonably believes to be necessary or desirable to ascertain in order to comply with the Code or the
requirements of any other appropriate taxing authority.
20. Grantee’s Covenant. The Grantee hereby agrees to use his or her best efforts to provide
services to the Company in a workmanlike manner and to promote the Company’s interests.
21. Amendment. The Committee may amend, modify or terminate this Agreement without
approval of the Grantee; provided, however, that such amendment, modification or termination shall
not, without the Grantee’s consent, reduce or diminish the value of this award determined as if it had
been fully vested on the date of such amendment or termination.
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22.
Plan Controls. The terms contained in the Plan are incorporated into and made a part of
this Agreement and this Agreement shall be governed by and construed in accordance with the Plan.
In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of
this Agreement, the provisions of the Plan shall be controlling and determinative.
23.
Successors. This Agreement shall be binding upon any successor of the Company or the
Partnership, in accordance with the terms of this Agreement and the Plan.
24.
Severability. If any one or more of the provisions contained in this Agreement is invalid,
illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if
the invalid, illegal or unenforceable provision had never been included.
25. Notice. Notices and communications under this Agreement must be in writing and either
personally delivered or sent by registered or certified United States mail, return receipt requested,
postage prepaid. Notices to the Company or the Partnership must be addressed to:
UDR, Inc.
1745 Shea Center Dr., Suite 200
Highlands Ranch, Colorado 80129
Attn: Corporate Secretary
or any other address designated by the Company or the Partnership in a written notice to the Grantee.
Notices to the Grantee will be directed to the address of the Grantee then currently on file with the
Company, or at any other address given by the Grantee in a written notice to the Company.
26. Dispute Resolution. The provisions of this Section 26 shall be the exclusive means of
resolving disputes arising out of or relating to the Plan and this Agreement. The Company, the
Grantee, and the Grantee’s assignees (the “parties”) shall attempt in good faith to resolve any disputes
arising out of or relating to the Plan and this Agreement by negotiation between individuals who have
authority to settle the controversy. Negotiations shall be commenced by either party by notice of a
written statement of the party’s position and the name and title of the individual who will represent
the party. Within thirty (30) days of the written notification, the parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the
dispute. If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or
proceeding arising out of or relating to the Plan or this Agreement shall be brought in the United
States District Court for the District of Colorado (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a state court in Colorado) and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any
objection the party may have to the laying of venue for any such suit, action or proceeding brought in
such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY
HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or
more provisions of this Section 26 shall for any reason be held invalid or unenforceable, it is the
specific intent of the parties that such provisions shall be modified to the minimum extent necessary
to make it or its application valid and enforceable.
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IN WITNESS WHEREOF, the Company, the Partnership and the Grantee have executed this
Agreement and agree that the LTIP Units are to be governed by the terms and conditions of this
Agreement, the Partnership Agreement and the Plan.
UDR, INC.
By:
Name:
Title:
UNITED DOMINION REALTY, L.P.,
a Delaware limited partnership
By:
UDR, Inc.,
a Maryland corporation, its General Partner
By:
Name:
Title:
The Grantee acknowledges receipt of a copy of the Plan, the Partnership Agreement and this
Agreement and represents that he or she is familiar with the terms and provisions thereof, and hereby
accepts the LTIP Units subject to all of the terms and provisions hereof and thereof. The Grantee has
reviewed this Agreement, the Partnership Agreement and the Plan in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands
all provisions of this Agreement, the Partnership Agreement and the Plan. The Grantee hereby agrees
that all disputes arising out of or relating to this Agreement and the Plan shall be resolved in
accordance with Section 26 of this Agreement. The Grantee further agrees to notify the Company
upon any change in the residence address indicated in this Agreement.
GRANTEE:
_________________________________
[Name]
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Exhibit A
FORM OF SECTION 83(b) ELECTION
[Attached]
A-1
ELECTION PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE
The undersigned hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of
1986, as amended, to include in the undersigned’s gross income for the taxable year in which the
property was transferred the excess (if any) of the fair market value of the property described below,
over the amount the undersigned paid for such property, if any, and supplies herewith the following
information in accordance with the Treasury regulations promulgated under Section 83(b):
1.
The name, taxpayer identification number and address of the undersigned, and
the taxable year for which this election is being made, are:
TAXPAYER’S NAME:
TAXPAYER’S SOCIAL SECURITY NUMBER:
ADDRESS:
TAXABLE YEAR:
The name, taxpayer identification number and address of the undersigned’s spouse are
(complete if applicable):
SPOUSE’S NAME:
SPOUSE’S SOCIAL SECURITY NUMBER:
ADDRESS:
2.
The property which is the subject of this election is Class 1
Performance LTIP Units (the “Units”) of United Dominion Realty, L.P. (the “Company”),
representing an interest in the future profits, losses and distributions of the Company.
3.
.
The date on which the above property was transferred to the undersigned was
4.
The above property is subject to the following restrictions: The Units are subject to
forfeiture to the extent unvested upon a termination of service with the Company under certain
circumstances. These restrictions lapse upon the satisfaction of certain conditions as set forth in an
agreement between the taxpayer and the Company. In addition, the Units are subject to certain
transfer restrictions pursuant to such agreement and the Amended and Restated Agreement of
Limited Partnership of United Dominion Realty, L.P., as amended (or amended and restated) from
time to time, should the taxpayer wish to transfer the Units.
5.
The fair market value of the above property at the time of transfer (determined without
regard to any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax
Regulations) was $0.
1
6.
7.
The amount paid for the above property by the undersigned was $0.
The amount to include in gross income is $0.
The undersigned taxpayer will file this election with the Internal Revenue Service office with
which taxpayer files his or her annual income tax return not later than 30 days after the date of
transfer of the property. A copy of this election will be furnished to the person for whom the services
were performed. The undersigned is the person performing the services in connection with which the
property was transferred.
Dated: _________________
Dated: _________________
____________________________________
____________________________________
2
Exhibit B
PARTNERSHIP CALL RIGHT NOTICE
United Dominion Realty, L.P. (the “Partnership”) hereby irrevocably elects, in accordance
with the terms of Section 7 of that certain Class 1 Performance Unit Award Agreement dated as of
[DATE] by and between the Partnership and [GRANTEE] (the “Award Agreement”), to exercise the
Partnership Call Right with respect to certain Post-Conversion Period Performance LTIP Units that
were issued under such agreement (the “Post-Conversion Period Class 1 Performance LTIP Units”).
The Call Date applicable to such exercise and the subject Post-Conversion Period Class 1
Performance LTIP Units are set forth below. In accordance with the terms of the Award Agreement,
you will be paid the fair market value of such Class 1 Performance LTIP Units as of the Call Date, as
determined in good faith by the General Partner of the Partnership, which price the General Partner
subsequently will provide on the Call Date if not stated below. Such amount may be paid in cash or in
stock of UDR, Inc., a Maryland corporation, or in any combination thereof, as determined by the
General Partner in its sole discretion.
Name of Post-Conversion Period Class 1 Performance LTIP Unit Holder:
Name as Registered with Partnership
Number of Post-Conversion Period Class 1 Performance LTIP Units to be Purchased:
______
Date of Award of Post-Conversion Period Class 1 Performance LTIP Units to be Purchased:
______
Call Date:
Aggregate Purchase Price:
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UDR, INC.
1999 LONG-TERM INCENTIVE PLAN
Exhibit 10.23
NOTICE OF CLASS 2 PERFORMANCE LTIP UNIT AWARD
Grantee’s Name and Address:
In consideration of the agreement by the Grantee named above (the “Grantee”) to provide services to
or for the benefit of United Dominion Realty, L.P. (the “Partnership”), the Partnership hereby grants to the
Grantee an award (the “Award”) of the Class 2 Performance LTIP Units listed below (the “LTIP Units”),
subject to the terms and conditions of this Notice of Class 2 Performance LTIP Unit Award (the “Notice”),
the UDR, Inc. (the “Company”) 1999 Long-Term Incentive Plan (as amended through the date hereof, the
“Existing Plan”), to the extent approved and effective, the amendment and restatement of the Existing Plan,
to be effective upon UDR, Inc., shareholder approval (the “Restated Plan” and, together with the Existing
Plan, the “Plan”), the Amended and Restated Agreement of Limited Partnership of United Dominion Realty,
L.P., as amended from time to time (the “Partnership Agreement”), and the Class 2 Performance LTIP Unit
Agreement (including Appendix A thereto) attached hereto (the “Agreement”). Unless otherwise provided
herein, the capitalized terms in this Notice shall have the same meaning as those defined in the Plan, the
Partnership Agreement and/or the Agreement, as applicable.
Award Number
Total Class 2 Performance LTIP Units:
Date of Award:
Date of Issue Price:
[Units]
[Date]
[Date]
Vesting Schedule:
Subject to the Grantee’s continuing employment, except as set forth below, and subject to the other
limitations set forth in this Notice, the Agreement, the Partnership Agreement, and the Plan, the LTIP Units
will vest only to the extent the established metrics set forth in the Agreement are met for the applicable
performance periods set forth in the Agreement. If the Grantee would become vested in a fraction of an LTIP
Unit, such LTIP Unit shall not vest until the Grantee becomes vested in the entire LTIP Unit.
The portions of the Award based upon the Relative Peer TSR Metric, the Relative REIT TSR Metric
and the FFO as Adjusted Relative Growth Metric will vest on the date the Committee determines
performance (the “Determination Date”) in January or February 20__. The portions of the Award based
upon the FFO as Adjusted Metric will be measured and vest 50% on the Determination Date in January or
February 20__ and 50% (the “Earned but Unvested FFO as Adjusted Metric Portion”) on the one-year
anniversary thereof. Employment through the applicable vesting date generally is required except as
otherwise provided below.
1
Except as otherwise determined by the Committee, in its sole discretion, vesting shall cease upon the
date the Grantee’s employment is terminated for any reason other than a termination (i) due to the Grantee’s
death or Disability or (ii) if the Restated Plan is approved by shareholders, (x) by the Company or any Parent
or Subsidiary (or any successors thereof) without Cause (as defined in Section 4 of the Agreement) or (y) by
the Grantee for Good Reason (as defined in Section 4 of the Agreement), in either case, on or within 12
months following the date of a Change of Control (such termination described in (i) or (ii), a “Qualifying
Termination”), and no Unvested Units shall thereafter become vested. If a Qualifying Termination occurs
prior to the applicable Determination Date (or, with respect to any Earned but Unvested FFO as Adjusted
Metric Portion, prior to the vesting thereof), any Earned but Unvested FFO as Adjusted Metric Portion that is
then outstanding will vest in full and all other outstanding Unvested Units will vest at target levels on the
date of the Qualifying Termination. In the event the Grantee’s employment is terminated for any reason
other than a Qualifying Termination, and the LTIP Units do not otherwise vest, then all Unvested Units held
by the Grantee immediately upon such termination of the Grantee’s employment shall automatically and
without any further action thereupon be cancelled and forfeited without payment of any consideration
therefor, and the Grantee shall have no further right, title or interest in or to the Unvested Units. Section 14.9
(Acceleration Upon Retirement) of the Plan shall not apply to the LTIP Units.
If (and only if) the Restated Plan is not approved by shareholders, pursuant to Section 14.10 of the
Existing Plan, upon the occurrence of a Change of Control any Earned but Unvested FFO as Adjusted Metric
Portion that is then outstanding will vest in full and all other outstanding Unvested Units will vest at target
levels. If the Restated Plan is approved by shareholders, the Unvested Units will not vest solely due to a
Change of Control pursuant to Section 14.10 of the Existing Plan, but the LTIP Units will be eligible to vest
pursuant to Section 14.10 of the Restated Plan due to a Qualifying Termination, as described in the preceding
paragraph.
IN WITNESS WHEREOF, the Company, the Partnership and the Grantee have executed this Notice
and agree that the Award is to be governed by the terms and conditions of this Notice, the Plan, the
Partnership Agreement and the Agreement.
UDR, Inc.,
a Maryland corporation
By:
Title:
Date: [Date]
United Dominion Realty, L.P.,
a Delaware limited partnership
By: UDR, Inc., a Maryland corporation
By:
Title:
Date: [Date]
2
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE LTIP UNITS SHALL VEST, IF AT
ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S EMPLOYMENT OR AS OTHERWISE
SPECIFICALLY PROVIDED HEREIN (NOT THROUGH THE ACT OF BEING HIRED OR BEING
GRANTED THIS AWARD). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS NOTICE, THE AGREEMENT, THE PARTNERSHIP AGREEMENT NOR IN THE
PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION
OF THE GRANTEE’S EMPLOYMENT, NOR SHALL IT INTERFERE IN ANY WAY WITH THE
GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE GRANTEE’S
EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.
THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN
EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEE’S
STATUS IS AT WILL.
Grantee:
_________________________________
[Name]
3
CLASS 2 PERFORMANCE LTIP UNIT AWARD AGREEMENT
under the
UDR, INC.
1999 LONG-TERM INCENTIVE PLAN
1. Grant of LTIP Units. In consideration of the agreement by the Grantee to provide services to or
for the benefit of the Partnership, the Partnership hereby (a) grants to the Grantee an award (the “Award”) of
the LTIP Units set forth in the Notice of Class 2 Performance LTIP Unit Award (the “Notice”) to which this
Class 2 Performance LTIP Unit Agreement (this “Agreement”) is attached, subject to the terms and
provisions of the Notice, this Agreement, the Partnership Agreement and the Plan, and (b) if not already a
Partner, admits the Grantee as a Partner of the Partnership on the terms and conditions set forth in the Notice,
this Agreement, the Partnership Agreement and the Plan. The Partnership and the Grantee acknowledge and
agree that the LTIP Units are hereby granted to the Grantee for the performance of services to or for the
benefit of the Partnership in his or her capacity as a Partner or in anticipation of the Grantee becoming a
Partner. To the extent not an existing Partner, the Grantee shall be admitted to the Partnership as an
additional Limited Partner with respect to the LTIP Units only upon the satisfactory completion of the
applicable requirements set forth in the Partnership Agreement, including the requirements set forth in
Section 4 of Exhibit H to the Partnership Agreement. At the request of the Partnership, the Grantee shall
execute the Partnership Agreement or a joinder or counterpart signature page thereto. The Grantee
acknowledges that the Partnership may from time to time issue or cancel (or otherwise modify) LTIP Units in
accordance with the terms of the Partnership Agreement. The LTIP Units shall have the rights, voting
powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption and
conversion set forth in the Notice, this Agreement, the Plan and the Partnership Agreement.
2. Date of Issuance of the LTIP Units. Notwithstanding anything herein to the contrary the LTIP
Units shall be issued as of the Date of Award.
3. Certain Additional Terms of the LTIP Units. For each of the LTIP Units:
(a) The “Date of Award” is the applicable date identified as such in the Notice.
(b) The “Expiration Date” with respect to any LTIP Unit is the 10th anniversary of the Date
of Award.
(c) The “Full Distribution Participation Date” with respect to any LTIP Unit is the
Conversion Date on which such LTIP Unit is converted into any portion of one or more Class 2 LTIP Units
under Section 12 of Exhibit H to the Partnership Agreement (but in no event earlier than the applicable
Determination Date).
(d) The “Initial Sharing Percentage” with respect to any LTIP Unit is ___%.
(e) The “Issue Price” with respect to any LTIP Unit is $_____, which is the REIT Share
Value on the Date of Award.
(f) Any LTIP Unit not yet converted under Section 12 of the Partnership Agreement as of
immediately after the Expiration Date shall be subject to the Partnership Call Right set forth in Section 7
below.
1
4. Definitions. For purposes of this Agreement, the following terms shall have the meanings set
forth below. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in the Notice, the Plan, the Partnership Agreement and/or Appendix A, as applicable.
(a) “Base Units” means the number of LTIP Units designated as Base Units on Appendix A
attached hereto.
(b) “Cause” means, unless an agreement between the Grantee and the Company or a Parent or
Subsidiary (or successor thereof) states otherwise, (i) failure by the Grantee to perform the duties of the
Grantee to the Company or a Parent or Subsidiary (or successor thereof) (other than due to his or her
Disability), provided that such conduct shall not constitute Cause unless and until such failure by Grantee to
perform his or her duties has not been cured to the satisfaction of the Company or a Parent or Subsidiary (or
successor thereof), in its reasonable discretion, within 15 days after written notice of such failure has been
given by the Company to the Grantee; (ii) an act of fraud, embezzlement, theft, breach of fiduciary duty,
dishonesty, or any other misconduct or any violation of law (other than a traffic violation) committed by the
Grantee; (iii) any action by the Grantee intentionally causing damage to or misappropriation of the
Company’s or a Parent’s or Subsidiary’s (or any of their successor’s) assets; (iv) the Grantee’s wrongful
disclosure of confidential information of the Company or a Parent or Subsidiary (or successor thereof); (v)
the Grantee’s breach of (x) any non-competition, non-solicitation, non-disparagement or other restrictive
covenants related to the Company or a Parent or Subsidiary (or successor thereof) to which he or she is
subject, and/or (y) the Grantee’s duty of loyalty; (vi) the Grantee’s material breach of any written or
published employment policy of the Company; or (vii) performance by the Grantee of his or her employment
duties in a manner deemed by the Committee, in its reasonable discretion, to be grossly negligent.
(c) FFO as Adjusted Metric:
(i) “FFO as Adjusted” means the Company’s 20__ Funds From Operations as Adjusted
as reported in Attachment 2, Funds From Operations (unaudited) of the Earnings
Press Release Supplement, excluding the impact of acquisition-related costs and
adjusted for other non-recurring items, including, but not limited to, prepayment
costs/benefits associated with early debt retirement, gains on sales of marketable
securities and taxable REIT subsidiary property, severance costs, joint venture
promotes, disposition fee income, NOI on the sale of non-depreciated real estate
owned, casualty related recoveries/charges and legal costs.
(ii) “FFO as Adjusted Metric” means the following metric, pursuant to which a
percentage of __% of the target award will be earned based on the Company’s FFO
as Adjusted as follows:
1-Year FFO as Adjusted
Percentage of % Earned*
Below $___
$___ (“threshold”)
$___ (“target”)
$___ (“maximum”)
2
0%
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of 30% of the target award earned will be determined by linear interpolation.
(iii) “FFO as Adjusted Metric Base Units” means the number of Base Units designated
as FFO as Adjusted Metric Base Units on Appendix A attached hereto.
(iv) “FFO as Adjusted Metric Performance Period” means January 1, 20__ to
December 31, 20__.
(v) “FFO as Adjusted Metric Performance Vesting Percentage” means the percentage
determined using the calculation as set forth on Exhibit 3 attached hereto, which is a
function of the Company FFO as Adjusted during the FFO as Adjusted Metric
Performance Period.
(vi) “FFO as Adjusted Metric Vested Base Units” means the product of (A) the total
number of FFO as Adjusted Metric Base Units, and (B) the applicable FFO as
Adjusted Metric Performance Vesting Percentage.
(d) FFO as Adjusted Relative Growth Rate Metric:
(i) “FFO as Adjusted Relative Growth Rate Metric” means the following metric,
pursuant to which a percentage of ___% of the target award may be earned based on
the relative spread of the Company’s cumulative 3-year FFO as Adjusted growth rate
to the weighted average cumulative 3-year FFO as Adjusted Equivalent for the
Apartment Peers (as calculated by management using the methodology set forth on
Exhibit 2, excluding non-recurring items) for the Performance Period as follows:
Relative 3-Year FFO as Adjusted Growth Rate
Percentage of % Earned*
Below ___ bps to Weighted Average FFO as
Adjusted
___ bps to Weighted Average FFO as Adjusted
(“threshold”)
Weighted Average FFO as Adjusted (“target”)
___bps to Weighted Average FFO as Adjusted
(“maximum”)
0%
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of ___% of the target award earned will be determined by linear interpolation.
Cumulative 3-Year FFO as Adjusted growth rate is the percentage increase in FFO (determined as set forth in
Exhibit 2 attached hereto and incorporated herein), excluding the impact of acquisition-related costs and
other non-recurring items, including, but not limited to, prepayment costs/benefits associated with early debt
retirement, gains on sales of marketable securities and taxable REIT subsidiary property,
3
severance costs, joint venture promotes, disposition fee income, NOI on the sale of non-depreciated real
estate owned, casualty related recoveries/charges and legal costs.
(ii) “FFO as Adjusted Relative Growth Rate Metric Base Units” means the number of
Base Units designated as FFO as Adjusted Relative Growth Rate Metric Base Units
on Appendix A attached hereto.
(iii) “FFO as Adjusted Relative Growth Rate Metric Performance Period” means
January 1, 20__ to December 31, 20__.
(iv) “FFO as Adjusted Relative Growth Rate Metric Performance Vesting
Percentage” means the percentage determined as set forth in the table in Section 2(d)
(i) above.
(v) “FFO as Adjusted Relative Growth Rate Metric Vested Base Units” means the
product of (A) the total number of FFO as Adjusted Relative Growth Rate Metric
Base Units, and (B) the applicable FFO as Adjusted Relative Growth Rate Metric
Performance Vesting Percentage.
(e) “Good Reason” means, unless an agreement between the Grantee and the Company or a
Parent or Subsidiary (or successor thereof) states otherwise, a termination of employment by the Grantee
within 60 days following the occurrence of (i) a material diminution in, or material adverse alteration to, the
Grantee’s title, base salary or other compensation, position, or duties and responsibilities, or (ii) the
relocation of the Grantee’s principal office outside the area within a 30 mile radius from the Grantee’s
principle place of business prior to the Change of Control or from such other location as may be mutually
agreed by the Grantee and the Company, provided that the events described in clauses (i) and (ii) above shall
not constitute Good Reason (x) until the Grantee provides written notice to the Company of the existence of
such material diminution, material alteration, or relocation, as the case may be, within 30 days of its
occurrence and (y) unless such material diminution, material alteration, or relocation, as the case may be, has
not been cured within 30 days after written notice of such noncompliance has been given by the Grantee to
the Company.
(f) Relative Peer TSR Metric:
(i) “Relative Peer TSR Metric” means the following metric, pursuant to which a
percentage of ___% of the target award may be earned based on the relative spread of
the Company’s TSR against the weighted average TSR of each of the large cap
apartment REITs, consisting of _________collectively the “Apartment Peers”, for the
Relative Peer TSR Metric Performance Period as follows:
Relative Cumulative 3-Year TSR Spread
to Apartment Peers
Below ___bps to Weighted Average TSR
___ bps to Weighted Average TSR (“threshold”)
Weighted Average TSR (“target”)
___ bps to Weighted Average TSR (“maximum”)
4
*
Percentage of % Earned*
0%
50%
100%
200%
*For results between threshold and target, or between target and maximum, the percentage of 35% of the
target award earned shall be based on interpolation.
(ii) “Relative Peer TSR Metric Base Units” means the number of Base Units designated
as Relative Peer TSR Metric Base Units on Appendix A attached hereto.
(iii) “Relative Peer TSR Metric Performance Period” means January 1, 20__ to
December, 31 20__.
(iv) “Relative Peer TSR Metric Performance Vesting Percentage” means the
percentage determined as set forth in the table in Section 4(f)(i) above.
(v) “Relative Peer TSR Metric Vested Base Units” means the product of (A) the total
number of Relative Peer TSR Metric Base Units, and (B) the applicable Relative Peer
TSR Metric Performance Vesting Percentage.
(g) Relative REIT TSR Metric:
(i) “Relative REIT TSR Metric” means the following metric, pursuant to which a
percentage of ___% of the target award may be earned based on the relative spread of
the Company’s TSR against the NAREIT Equity REITs Total Return Index
(FNRETR) for the Relative REIT TSR Metric Performance Period as follows:
Relative Cumulative 3-Year TSR Spread
vs. REITs
Percentage of % Earned*
Below ___ bps to Weighted Average TSR
___ bps to Weighted Average TSR (“threshold”)
Weighted Average TSR (“target”)
___ bps to Weighted Average TSR (“maximum”)
0%
50%
100%
200%
*For results between threshold and target, or between target and maximum, the percentage of ___% of the
target award earned shall be based on interpolation.
(ii) “Relative REIT TSR Metric Base Units” means the number of Base Units
designated as Relative REIT TSR Metric Base Units on Appendix A attached hereto.
(iii) “Relative REIT TSR Metric Performance Period” means January 1, 20__ to
December 31, 20__.
(iv) “Relative REIT TSR Metric Performance Vesting Percentage” means the
percentage determined as set forth in the table in Section 4(g)(i) above.
5
(v) “Relative REIT TSR Metric Vested Base Units” means the product of (i) the total
number of Relative REIT TSR Metric Base Units, and (ii) the applicable Relative
REIT TSR Metric Performance Vesting Percentage.
TSR Calculations
For purposes of the 20__ LTI Program, the Company’s TSR shall be calculated by using the twenty (20)-day
trailing average share price (“TSR”) expressed as a percentage rounded to the nearest tenth of a percent
(0.10%) at the beginning and end of the performance period, as calculated by management using the
methodology set forth in Exhibit 1 attached hereto and incorporated herein for the measurement of TSR. The
Committee shall make equitable adjustments to the Company’s TSR and the Grantee’s target numbers of
RSUs and/or Units to take into account any extraordinary, unusual or non-recurring corporate events
affecting the Company as described in Article 15 of the Plan, such as spin-offs, stock splits, reverse splits,
special dividends, recapitalizations, reorganizations, and similar events.
The relative TSR vs. apartment peers shall be calculated by management by taking a weighted average as of
the first day of the performance period (using beginning of year equity market capitalization as the
weighting) of the three-year apartment peer total shareholder returns and thereafter calculating the difference
between the Company’s absolute total shareholder return and the relative comparison, expressed in basis
points. Weighted average shall be calculated by management using the methodology set forth on Exhibit 1.
The TSR of each of the member companies comprising the Apartment Peers will be calculated by
management using a methodology analogous in all material respects to that used for the calculation of the
Company’s TSR, to provide a fair comparison of TSRs. The Committee shall make equitable adjustments to
the Company’s TSR and the Grantee’s target numbers of RSUs and/or Units to take into account any
extraordinary, unusual or non-recurring corporate events affecting the Apartment Peers as described in
Article 15 of the Plan, such as spin-offs, stock splits, reverse splits, special dividends, recapitalizations,
reorganizations, and similar events.
To the extent a member of the Apartment Peers ceases to be a separate publicly traded company during the
entire performance period, it will be excluded from the calculations of all TSR rankings. To the extent during
the performance period a member of the Apartment Peers is the subject of an acquisition proposal or publicly
reported speculation regarding acquisition, a going private transaction or other event and such event has an
impact (positive or negative) on the member’s TSR, such member will similarly be excluded from the
calculations of all TSR rankings. Also, any member of the Apartment Peers that files for bankruptcy during
the performance period shall have a minus 100% value assigned to its TSR for purposes of ranking such
company within the index.
(h) “Restrictions” means the exposure to forfeiture set forth in the Notice.
(i) “Unvested Unit” means any LTIP Unit that has not become fully vested pursuant to
Section 6 hereof and remains subject to the Restrictions.
5. LTIP Units Subject to Partnership Agreement; Transfer Restrictions. The LTIP Units are subject
to the terms of the Plan and the terms of the Partnership Agreement, including, without limitation, the
restrictions on transfer of Units set forth in Article 9 of the Partnership Agreement. Any permitted transferee
of the LTIP Units shall take such LTIP Units subject to the terms of the Plan, this Agreement, the Notice and
the Partnership Agreement. Any such permitted transferee must, upon the request of the
6
Partnership, agree to be bound by the Plan, the Partnership Agreement, the Notice and this Agreement, and
shall execute the same on request, and must agree to such other waivers, limitations, and restrictions as the
Partnership or the Company may reasonably require. Any sale, transfer, exchange, redemption, assignment,
pledge, hypothecation or other encumbrance (each, a “Transfer”) of the LTIP Units which is not made in
compliance with the Plan, the Partnership Agreement, the Notice and this Agreement shall be null and void
and of no effect. Notwithstanding any other provision of this Agreement, without the consent of the
Committee (which it may give or withhold in its sole discretion), the Grantee shall not convert the LTIP
Units (or any corresponding Class 2 LTIP Units into which the Class 2 Performance LTIP Units convert) into
Partnership Common Units or Transfer (including by means of a redemption but excluding any conversion of
Class 2 Performance LTIP Units to Class 2 LTIP Units) the LTIP Units or any corresponding Class 2 LTIP
Units into which the Class 2 Performance LTIP Units convert, in each case whether vested or unvested, until
the earlier of (i) the occurrence of, and in connection with, a Change of Control (or such earlier time as is
necessary in order for the Grantee to participate in such Change of Control transaction with respect to LTIP
Units and receive the consideration payable with respect thereto in connection with such Change of Control)
and (ii) the expiration of the two (2) year period following the Date of Award set forth in the Notice, other
than by will or the laws of descent and distribution.
6. Performance Vesting.
(a) FFO as Adjusted Metric Units. As soon as reasonably practicable (but in no event more
than 60 days) following the completion of the FFO as Adjusted Metric Performance Period, the Committee
shall determine: the Company FFO as Adjusted; the FFO as Adjusted Metric Performance Vesting
Percentage and the number of LTIP Units granted hereby that have become FFO as Adjusted Metric Vested
Base Units, in each case as of the completion of the FFO as Adjusted Metric Performance Period. Upon
such determination by the Committee (the “FFO Determination Date”), the Restrictions set forth in the
Notice shall lapse with respect to fifty-percent (50%) of the FFO as Adjusted Metric Performance Vested
Base Units and such FFO as Adjusted Metric Performance Vested Base Units shall become fully vested
subject to Grantee’s continued employment through the Determination Date, except as provided in the Notice
or as otherwise determined by the Committee, in its sole discretion. The Restrictions shall lapse with respect
to the remaining fifty-percent (50%) of the FFO as Adjusted Metric Performance Vested Base Units and such
FFO as Adjusted Metric Performance Vested Base Units shall become fully vested on the first anniversary of
the FFO Determination Date, subject to Grantee’s continued employment through such date, except as
provided in the Notice or as otherwise determined by the Committee, in its sole discretion. Any FFO as
Adjusted Metric Base Units granted hereby which have not become FFO as Adjusted Metric Performance
Vested Base Units as of the FFO Determination Date will automatically be cancelled and forfeited without
payment of any consideration therefor, and the Grantee shall have no further right to or interest in such FFO
as Adjusted Metric Base Units.
(b) Relative Peer TSR Metric Units. As soon as reasonably practicable (but in no event more
than 60 days) following the completion of the Relative Peer TSR Metric Performance Period, the Committee
shall determine: the Company’s TSR; the Relative Peer TSR Performance Vesting Percentage; and the
number of LTIP Units granted hereby that have become Relative Peer TSR Metric Vested Base Units, in
each case as of the completion of the Relative Peer TSR Metric Performance Period. Upon such
determination by the Committee (the “Relative Peer TSR Metric Determination Date”), the Restrictions
shall lapse with respect to the Relative Peer TSR Metric Performance Vested Base Units and such Relative
Peer TSR Metric Performance Vested Base Units shall become fully vested subject to Grantee’s continued
employment through the Relative Peer TSR Metric Determination Date, except as provided in the Notice or
as otherwise determined by the Committee, in its sole discretion. Any Relative Peer TSR Metric Base
7
Units granted hereby which have not become Relative Peer TSR Metric Performance Vested Base Units as of
the Relative Peer TSR Metric Determination Date will automatically be cancelled and forfeited without
payment of any consideration therefor, and the Grantee shall have no further right to or interest in such
Relative Peer TSR Metric Base Units.
(c) Relative REIT TSR Metric Units. As soon as reasonably practicable (but in no event more
than 60 days) following the completion of the Relative REIT TSR Metric Performance Period, the
Committee shall determine: the extent to which the Relative REIT TSR Metric has been achieved; the
Relative REIT TSR Metric Performance Vesting Percentage; and the number of LTIP Units granted hereby
that have become Relative REIT TSR Metric Vested Base Units, in each case as of the completion of the
Relative REIT TSR Metric Performance Period. Upon such determination by the Committee (the “Relative
REIT TSR Determination Date”), the Restrictions shall lapse with respect to the Relative REIT TSR
Metric Performance Vested Base Units and such Relative REIT TSR Metric Performance Vested Base Units
shall become fully vested, subject to Grantee’s continued employment through such vesting date, except as
provided in the Notice or as otherwise determined by the Committee, in its sole discretion. Any Relative
REIT TSR Metric Base Units granted hereby which have not become Relative REIT TSR Metric
Performance Vested Base Units as of the Relative REIT TSR Determination Date will automatically be
cancelled and forfeited without payment of any consideration therefor, and the Grantee shall have no further
right to or interest in such Relative REIT TSR Metric Base Units.
(d) FFO as Adjusted Relative Growth Rate Metric Units. As soon as reasonably practicable
(but in no event more than 60 days) following the completion of the FFO as Adjusted Relative Growth Rate
Metric Performance Period, the Committee shall determine: the extent to which the FFO as Adjusted Relative
Growth Rate has been achieved; the FFO as Adjusted Relative Growth Rate Metric Performance Vesting
Percentage; and the number of LTIP Units granted hereby that have become FFO as Adjusted Relative
Growth Rate Metric Vested Base Units, in each case as of the completion of the FFO as Adjusted Relative
Growth Rate Metric Performance Period. Upon such determination by the Committee (the “FFO as
Adjusted Relative Growth Rate Determination Date”), the Restrictions shall lapse with respect to the FFO
as Adjusted Relative Growth Rate Metric Performance Vested Base Units and such FFO as Adjusted
Relative Growth Rate Metric Performance Vested Base Units shall become fully vested, subject to Grantee’s
continued employment through such vesting date, except as provided in the Notice or as otherwise
determined by the Committee, in its sole discretion. Any FFO as Adjusted Relative Growth Rate Metric
Base Units granted hereby which have not become FFO as Adjusted Relative Growth Rate Metric
Performance Vested Base Units as of the FFO as Adjusted Relative Growth Rate Determination Date will
automatically be cancelled and forfeited without payment of any consideration therefor, and the Grantee shall
have no further right to or interest in such FFO as Adjusted Relative Growth Rate Metric Base Units.
8
7. Partnership Call Right. Any LTIP Unit granted hereunder, upon becoming an Expired
Performance LTIP Unit under the Partnership Agreement, shall be subject to purchase by the Partnership or
its designee under this Section 7 (such repurchase right, the “Partnership Call Right”). A Partnership Call
Right may be exercised with respect to any Expired Performance LTIP Unit by (a) the delivery of a notice (a
“Partnership Call Right Notice”) in the form attached hereto as Appendix C to the holder of the applicable
Performance LTIP Units no more than thirty (30) days prior to the Call Date specified in such Partnership
Call Right Notice, and (b) the payment of the applicable purchase price no later than the applicable Call Date.
The purchase price for any Expired Performance LTIP Unit being purchased under the Partnership Call
Right will be the fair market value of such Units as of the applicable Call Date, as determined by the General
Partner in its sole discretion. The General Partner may, in its sole discretion, permit any Partnership Call
Right to be exercised by the Partnership or its designee, and the purchase price payable in respect of any
Partnership Call Right may be paid in any combination of immediately available funds and REIT Shares
(valued using the REIT Share Value as of the applicable Call Date), as determined by the General Partner in
its sole discretion. Each Partnership Call Right Notice shall be provided in the manner provided in Section
12.01 of the Partnership Agreement. Section 5(b) of Exhibit H of the Partnership Agreement shall not apply
to any LTIP Unit purchased pursuant to a Partnership Call Right unless the purchasing party is the
Partnership.
8. Delivery of Units. The LTIP Units will be registered in the name of the Grantee and may be held
by the Company or the Partnership prior to the vesting of such LTIP Units as provided in the Notice and this
Agreement (the “Restricted Period”). Any certificate for LTIP Units issued during the Restricted Period
shall be registered in the name of the Grantee and shall bear a legend in substantially the following form:
THIS CERTIFICATE AND THE LTIP UNITS REPRESENTED HEREBY ARE SUBJECT
TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE AND
RESTRICTIONS AGAINST TRANSFER) CONTAINED IN A NOTICE OF CLASS 2
PERFORMANCE LTIP UNIT AWARD AND CLASS 2 PERFORMANCE LTIP UNIT
AGREEMENT DATED [DATE] BETWEEN THE REGISTERED OWNER OF THE LTIP
UNITS REPRESENTED HEREBY, UDR, INC. AND UNITED DOMINION REALTY, L.P.
RELEASE FROM SUCH TERMS AND CONDITIONS SHALL BE MADE ONLY IN
ACCORDANCE WITH THE PROVISIONS OF SUCH AGREEMENTS, COPIES OF
WHICH ARE ON FILE IN THE OFFICE OF UDR, INC.
At the Company’s or the Partnership’s request, the Grantee hereby agrees to promptly execute,
deliver and return to the Partnership any and all documents or certificates that the Company or the
Partnership deems necessary or desirable to effectuate the cancellation and forfeiture of the Unvested Units,
or to effectuate the transfer or surrender of such Unvested Units to the Partnership. In addition, if requested,
the Grantee shall deposit with the Company or the Partnership, a stock/unit power, or powers, executed in
blank and sufficient to re-convey the Unvested Units to the Company or the Partnership upon termination of
the Grantee’s service during the Restricted Period, in accordance with the provisions of the Notice and this
Agreement.
9. Determinations by Committee. Notwithstanding anything contained herein, all determinations,
interpretations and assumptions relating to the vesting of the Award (including, without limitation,
determinations, interpretations and assumptions with respect to the Company’s Relative Peer TSR Metric,
Relative REIT TSR Metric, FFO as Adjusted Metric and FFO as Adjusted Relative Growth Rate Metric)
shall be made by the Committee and shall be applied consistently and uniformly to all similar
9
Awards granted under the Plan (including, without limitation, similar awards which provide for payment in
the form of cash or shares of Stock). In making such determinations, the Committee may employ attorneys,
consultants, accountants, appraisers, brokers, or other persons, and the Committee, the Board, the Company,
the Partnership and their officers and directors shall be entitled to rely upon the advice, opinions or the
valuations of any such persons. All actions taken and all interpretations and determinations made by the
Committee in good faith and absent manifest error shall be final and binding upon the Grantee, the Company
and all other interested persons. In addition, the Committee, in its discretion, may adjust or modify the
methodology for calculations relating to the vesting of the Award (including, without limitation, the
methodology for calculating the Company’s Relative Peer TSR Metric, Relative REIT TSR Metric, FFO as
Adjusted Metric and FFO as Adjusted Relative Growth Rate Metric), other than the Relative Peer TSR
Metric Performance Vesting Percentage, the Relative REIT TSR Metric Performance Vesting Percentage, the
FFO as Adjusted Metric Performance Vesting Percentage and the FFO as Adjusted Relative Growth Rate
Metric Performance Vesting Percentage, as necessary or desirable to account for events affecting the value of
the Stock or Company FFO as Adjusted which, in the discretion of the Committee, are not considered
indicative of Company performance, which may include events such as the issuance of new stock, stock
repurchases, stock splits, issuances and/or exercises of stock grants or stock options, and similar events, all in
order to properly reflect the Company’s intent with respect to the performance objectives underlying the
Award or to prevent dilution or enlargement of the benefits or potential benefits intended to be made
available with respect to the Award.
10. Covenants, Representations and Warranties. The Grantee hereby represents, warrants, covenants,
acknowledges and agrees on behalf of the Grantee and his or her spouse, if applicable, that:
(a)
Investment. The Grantee is holding the LTIP Units for the Grantee’s own account, and
not for the account of any other person or entity. The Grantee is holding the LTIP Units for investment and
not with a view to distribution or resale thereof except in compliance with applicable laws regulating
securities.
(b)
Relation to the Partnership. The Grantee is presently an executive officer of the
Company, which is the sole general partner of the Partnership, or is otherwise providing services to or for the
benefit of the Partnership, and in such capacity has become personally familiar with the business of the
Partnership.
(c)
Access to Information. The Grantee has had the opportunity to ask questions of, and
to receive answers from, the Partnership with respect to the terms and conditions of the transactions
contemplated hereby and with respect to the business, affairs, financial conditions, and results of operations
of the Partnership.
(d)
Registration. The Grantee understands that the LTIP Units have not been registered
under the 1933 Act, and the LTIP Units cannot be transferred by the Grantee unless such transfer is
registered under the 1933 Act or an exemption from such registration is available. The Partnership has made
no agreements, covenants or undertakings whatsoever to register the transfer of the LTIP Units under the
1933 Act. The Partnership has made no representations, warranties, or covenants whatsoever as to whether
any exemption from the 1933 Act, including, without limitation, any exemption for limited sales in routine
brokers’ transactions pursuant to Rule 144 of the 1933 Act, will be available. If an exemption under Rule
144 is available at all, it will not be available until at least six (6) months after the issuance of the LTIP Units
and then not unless the terms and conditions of Rule 144 have been satisfied.
10
(e)
Public Trading. None of the Partnership’s securities are presently publicly traded, and
the Partnership has made no representations, covenants or agreements as to whether there will be a public
market for any of its securities.
(f)
Tax Advice. The Partnership has made no warranties or representations to the Grantee
with respect to the income tax consequences of the transactions contemplated by this Agreement (including,
without limitation, with respect to the decision of whether to make an election under Section 83(b) of the
Code), and the Grantee is in no manner relying on the Partnership or its representatives for an assessment of
such tax consequences. The Grantee hereby recognizes that the Internal Revenue Service has proposed
regulations under Sections 83, 704, and 707 of the Code that may affect the proper treatment of the LTIP
Units for federal income tax purposes. In the event that those proposed regulations or similar regulations
become final or temporary regulations, the Grantee hereby agrees to cooperate with the Partnership in
amending this Agreement and the Partnership Agreement, and to take such other action as may be required,
to conform to such regulations. Further, Congress recently enacted, and proposed Treasury Regulations were
recently issued under, Section 1061 of the Code, which materially alters the taxation of “profits interests”
issued in connection with the provision of services. The Grantee is advised to consult with his or her own tax
advisor with respect to such tax consequences and his or her ownership of the LTIP Units.
11. Capital Account. The Grantee shall make no contribution of capital to the Partnership in
connection with the issuance of the LTIP Units and, as a result, the Grantee’s Capital Account balance in the
Partnership immediately after his or her receipt of the LTIP Units shall be equal to zero, unless the Grantee
was a Partner in the Partnership prior to such issuance, in which case the Grantee’s Capital Account balance
shall not be increased as a result of his or her receipt of the LTIP Units..
12. Restrictions on Public Sale by the Grantee. To the extent not inconsistent with applicable law,
the Grantee agrees not to effect any sale or distribution of the LTIP Units or any similar security of the
Company or the Partnership, or any securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 under the 1933 Act, during the fourteen (14) days prior to,
and for a period of up to 180-days beginning on, the date of the pricing of any public or private debt or equity
securities offering by the Company or the Partnership (except as part of such offering), if and to the extent
requested in writing by the Partnership or the Company in the case of a non-underwritten public or private
offering or if and to the extent requested in writing by the managing underwriter or underwriters (or initial
purchaser or initial purchasers, as the case may be) and consented to by the Partnership or the Company,
which consent may be given or withheld in the Partnership’s or the Company’s sole and absolute discretion,
in the case of an underwritten public or private offering (such agreement to be in the form of a lock-up
agreement provided by the Company, the Partnership, managing underwriter or underwriters, or initial
purchaser or purchasers as the case may be).
13. Conformity to Securities Laws. The Grantee acknowledges that the Plan, the Notice and this
Agreement are intended to conform to the extent necessary with all provisions of all applicable federal and
state laws, rules and regulations (including, but not limited to, the 1933 Act and the 1934 Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without
limitation the applicable exemptive conditions of Rule 16b-3 of the 1934 Act) and to such approvals by any
listing, regulatory or other governmental authority as may, in the opinion of counsel for the Partnership or the
Company, be necessary or advisable in connection therewith. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the award of LTIP Units is made, only
11
in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable
law, the Plan, this Agreement and this award of LTIP Units shall be deemed amended to the extent necessary
to conform to such laws, rules and regulations.
14. Taxes.
(a) Tax Liability. The Grantee is ultimately liable and responsible for all taxes owed by the
Grantee in connection with the Award, regardless of any action the Company or any Related Entity takes
with respect to any tax withholding obligations that arise in connection with the Award. Neither the
Company nor any Related Entity makes any representation or undertaking regarding the treatment of any tax
withholding in connection with any aspect of the Award, including the grant, vesting, assignment, release or
cancellation of the LTIP Units, the subsequent sale of any LTIP Units and the receipt of any Partnership
distributions. The Company does not commit and is under no obligation to structure the Award to reduce or
eliminate the Grantee’s tax liability. For purposes of this Award, “Related Entity” shall mean a Parent or
Subsidiary.
(b) Payment of Withholding Taxes. Prior to any event in connection with the Award that the
Company determines may result in any tax withholding obligation, whether United States federal, state, local
or non-U.S., including any social insurance, employment tax, payment on account or other tax-related
obligation (the “Tax Withholding Obligation”), the Grantee must arrange for the satisfaction of the
minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company.
(c) Section 83(b) Election. The Grantee covenants that the Grantee shall make timely
elections under Section 83(b) of the Code (and any comparable election in the state of the Grantee’s
residence) with respect to the LTIP Units, and the Partnership hereby consents to the making of such
election(s). In connection with such election, the Grantee and the Grantee’s spouse, if applicable, shall
promptly provide a copy of such election to the Partnership. A form of election under Section 83(b) of the
Code is attached hereto as Appendix B. The Grantee represents that the Grantee has consulted any tax
advisor(s) that the Grantee deems advisable in connection with the filing of an election under Section 83(b)
of the Code and similar state tax provisions. The Grantee acknowledges that it is the Grantee’s sole
responsibility and not the Company’s or the Partnership’s to timely file an election under Section 83(b) of the
Code (and any comparable state election), even if the Grantee requests that the Company, the Partnership or
any representative thereof make such filing on the Grantee’s behalf. The Grantee should consult his or her tax
advisor to determine if there is a comparable election to file in the state of his or her residence.
15. Profits Interests. The Partnership and the Grantee intend that (i) the LTIP Units be treated as
“profits interests” as defined in Internal Revenue Service Revenue Procedure 93-27, as clarified by Revenue
Procedure 2001-43, (ii) the issuance of such units not be a taxable event to the Partnership or the Grantee as
provided in such revenue procedures, and (iii) the Partnership Agreement, the Plan, the Notice and this
Agreement be interpreted consistently with such intent. In furtherance of such intent, effective immediately
prior to each issuance of the LTIP Units, the Partnership may revalue all Partnership assets for Capital
Account purposes to their respective gross fair market values (as determined for purposes of Treasury
Regulations Section 1.704-1), and make the resulting adjustments to the Capital Accounts of the Partners, in
each case, as set forth in the Partnership Agreement.
16. Ownership Information. The Grantee hereby covenants that so long as the Grantee holds any
LTIP Units, at the request of the Partnership, the Grantee shall disclose to the Partnership in writing such
12
information relating to the Grantee’s ownership of the LTIP Units as the Partnership reasonably believes to
be necessary or desirable to ascertain in order to comply with the Code or the requirements of any other
appropriate taxing authority.
17. Entire Agreement; Governing Law. The Notice, the Plan, the Partnership Agreement and this
Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company, the Partnership and the
Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s interest
except by means of a writing signed by the Company, the Partnership and the Grantee. These agreements are
to be construed in accordance with and governed by the internal laws of the State of Maryland without giving
effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Maryland to the rights and duties of the parties. Should any provision of the
Notice or this Agreement be determined to be illegal or unenforceable, the other provisions shall nevertheless
remain effective and shall remain enforceable.
18. Construction. The captions used in the Notice and this Agreement are inserted for convenience
and shall not be deemed a part of the Award for construction or interpretation. Except when otherwise
indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of
the term “or” is not intended to be exclusive unless the context clearly requires otherwise.
19. Administration and Interpretation. Any question or dispute regarding the administration or
interpretation of the Notice, the Plan, the Partnership Agreement or this Agreement shall be submitted by the
Grantee, the Partnership or the Company to the Committee. The resolution of such question or dispute by the
Committee shall be final and binding on all persons.
20. Venue and Jurisdiction. The parties agree that any suit, action, or proceeding arising out of or
relating to the Notice, the Plan, the Partnership Agreement or this Agreement shall be brought exclusively in
the United States District Court for Colorado (or should such court lack jurisdiction to hear such action, suit
or proceeding, in a Colorado state court) and that the parties shall submit to the jurisdiction of such court.
The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the
laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions
of this Section 20 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties
that such provisions shall be modified to the minimum extent necessary to make it or its application valid and
enforceable.
21. Plan Controls. The terms contained in the Plan are incorporated into and made a part of the
Notice and this Agreement, and the Notice and this Agreement shall be governed by and construed in
accordance with the Plan. In the event of any actual or alleged conflict between the provisions of the Plan and
the provisions of the Notice and this Agreement, the provisions of the Plan shall be controlling and
determinative.
22. Successors. The Notice and this Agreement shall be binding upon any successor of the Company
or the Partnership, in accordance with the terms of the Notice, this Agreement and the Plan.
23. Severability. If any one or more of the provisions contained in the Notice or this Agreement is
invalid, illegal or unenforceable, the other provisions of the Notice and this Agreement will be construed and
enforced as if the invalid, illegal or unenforceable provision had never been included.
13
24. Notices. Any notice required or permitted hereunder shall be given in writing and shall be
deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized
express mail courier service or upon deposit in the United States mail by certified mail (if the parties are
within the United States), with postage and fees prepaid, addressed to the other party at its address as shown
in these instruments, or to such other address as such party may designate in writing from time to time to the
other party.
25. Amendment. The Committee may amend, modify or terminate this Agreement without approval
of the Grantee; provided, however, that such amendment, modification or termination shall not, without the
Grantee’s consent, reduce or diminish the value of this award determined as if it had been fully vested on the
date of such amendment or termination.
26. Amendment and Delay to Meet the Requirements of Section 409A. The Grantee acknowledges
that the Company, in the exercise of its sole discretion and without the consent of the Grantee, may amend or
modify this Agreement in any manner to the minimum extent necessary to meet the requirements of
Section 409A of the Code as amplified by any Treasury regulations or guidance from the Internal Revenue
Service as the Company deems appropriate or advisable. In addition, the Company makes no representation
that the Award will comply with Section 409A of the Code and makes no undertaking to prevent Section
409A of the Code from applying to the Award or to mitigate its effects on any deferrals or payments made in
respect of the Units. The Grantee is encouraged to consult a tax adviser regarding the potential impact of
Section 409A of the Code.
END OF AGREEMENT
14
Definitions
APPENDIX A
Capitalized terms not defined herein shall have the meanings set forth in the Class 2
Performance LTIP Unit Agreement to which this Appendix is attached.
“Base Units” means _______ Class 2 Performance LTIP Units.1
“FFO as Adjusted Metric Base Units” means _______ Base Units.2
“FFO as Adjusted Relative Growth Rate Metric Base Units” means _______ Base Units.3
“Relative PEER TSR Metric Base Units” means _______Base Units.4
“Relative REIT TSR Metric Base Units” means _______ Base Units.5
“TSR Calculation” shall be calculated as set forth on Exhibit 1 or Exhibit 2, attached hereto, as
applicable.
.
1 Total number of Base Units will represent total base units (Relative Peer TSR Metric Base Units + Relative REIT TSR
Metric Base Units + FFO as Adjusted Metric Base Units + FFO as Adjusted Relative Growth Rate Metric Base Units) at
target performance, and will exclude the estimated number of units attributable to dividend value.
2 FFO as Adjusted Metric Base Units will represent __% of the total Base Units.
3 FFO as Adjusted Relative Growth Rate Metric Base Units will represent __% of the total Base Units.
4 Relative PEER TSR Metric Base Units will represent __% of the total Base Units.
5 Relative REIT TSR Metric Base Units will represent __% of the total Base Units.
A-1
APPENDIX B
FORM OF SECTION 83(b) ELECTION
[Attached]
B-1
ELECTION PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE
The undersigned hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of
1986, as amended, to include in the undersigned’s gross income for the taxable year in which the
property was transferred the excess (if any) of the fair market value of the property described below,
over the amount the undersigned paid for such property, if any, and supplies herewith the following
information in accordance with the Treasury regulations promulgated under Section 83(b):
1.
The name, taxpayer identification number and address of the undersigned, and
the taxable year for which this election is being made, are:
TAXPAYER’S NAME:
TAXPAYER’S SOCIAL SECURITY NUMBER:
ADDRESS:
TAXABLE YEAR:
The name, taxpayer identification number and address of the undersigned’s spouse are
(complete if applicable):
SPOUSE’S NAME:
SPOUSE’S SOCIAL SECURITY NUMBER:
ADDRESS:
2.
The property which is the subject of this election is Class 2
Performance LTIP Units (the “Units”) of United Dominion Realty, L.P. (the “Company”),
representing an interest in the future profits, losses and distributions of the Company.
3.
The date on which the above property was transferred to the undersigned was .
4.
The above property is subject to the following restrictions: The Units are subject to
forfeiture to the extent unvested upon a termination of service with the Company under certain
circumstances and/or to the extent that certain performance conditions are not satisfied. These
restrictions lapse upon the satisfaction of certain conditions as set forth in an agreement between the
taxpayer and the Company. In addition, the Units are subject to certain transfer restrictions pursuant
to such agreement and the Amended and Restated Agreement of Limited Partnership of United
Dominion Realty, L.P., as amended (or amended and restated) from time to time, should the taxpayer
wish to transfer the Units.
5.
The fair market value of the above property at the time of transfer (determined without
regard to any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax
Regulations) was $0.
6.
The amount paid for the above property by the undersigned was $0.
1
7.
The amount to include in gross income is $0.
The undersigned taxpayer will file this election with the Internal Revenue Service office with
which taxpayer files his or her annual income tax return not later than 30 days after the date of
transfer of the property. A copy of this election will be furnished to the person for whom the services
were performed. The undersigned is the person performing the services in connection with which the
property was transferred.
Dated: _________________
Dated: _________________
____________________________________
____________________________________
2
APPENDIX C
PARTNERSHIP CALL RIGHT NOTICE
United Dominion Realty, L.P. (the “Partnership”) hereby irrevocably elects, in accordance
with the terms of Section 7 of that certain Class 2 Performance Unit Award Agreement dated as of
[Date] by and between the Partnership and [Grantee] (the “Award Agreement”), to exercise the
Partnership Call Right with respect to certain Expired Performance LTIP Units that were issued
under such agreement (the “Expired Class 2 Performance LTIP Units”). The Call Date applicable to
such exercise and the subject Expired Class 2 Performance LTIP Units are set forth below. In
accordance with the terms of the Award Agreement, you will be paid the fair market value of such
Class 2 Performance LTIP Units as of the Call Date, as determined in the sole discretion of the
General Partner of the Partnership, which price the General Partner subsequently will provide on the
Call Date if not stated below. Such amount may be paid in cash or in stock of UDR, Inc., a Maryland
corporation, or in any combination thereof, as determined by the General Partner in its sole
discretion.
Name of Expired Class 2 Performance LTIP Unit Holder:
Name as Registered with Partnership
Number of Expired Class 2 Performance LTIP Units to be Purchased:
Date of Award of Expired Class 2 Performance LTIP Units to be Purchased:
Call Date:
Aggregate Purchase Price:
C-1
UDR, INC.
1999 LONG-TERM INCENTIVE PLAN
NOTICE OF CLASS 2 PERFORMANCE LTIP UNIT AWARD
(Short-Term Incentive Program)
Grantee’s Name and Address:
Exhibit 10.24
In consideration of the agreement by the Grantee named above (the “Grantee”) to provide services to
or for the benefit of United Dominion Realty, L.P. (the “Partnership”), the Partnership hereby grants to the
Grantee an award of Class 2 Performance LTIP Units (the “Award”), subject to the terms and conditions of
this Notice of Class 2 Performance LTIP Unit Award (Short-Term Incentive Program) (the “Notice”), the
UDR, Inc. (the “Company”) 1999 Long-Term Incentive Plan, as amended from time to time, including the
amendment and restatement (the “Restated Plan”) to be submitted for approval of the shareholders of the
Company at the annual meeting in 2021 (the “Plan”), the Amended and Restated Agreement of Limited
Partnership of United Dominion Realty, L.P., as amended from time to time (the “Partnership Agreement”),
and the Class 2 Performance LTIP Unit Agreement (Short-Term Incentive Program) (including Appendix A
thereto) attached hereto (the “Agreement”). Unless otherwise provided herein, the capitalized terms in this
Notice shall have the same meaning as those defined in the Plan, the Partnership Agreement and/or the
Agreement, as applicable.
Award Number
Date of Award
Total Number of Class 2 Performance
LTIP Units Awarded
(the “Class 2 Performance LTIP Units”)
Vesting Schedule:
[Date]
Subject to the Grantee’s continuing employment, except as set forth below, and other limitations set
forth in this Notice, the Agreement, the Partnership Agreement and the Plan, the Class 2 Performance LTIP
Units will vest only to the extent set forth in the Agreement. If the Grantee would become vested in a
fraction of a Class 2 Performance LTIP Unit, such Class 2 Performance LTIP Unit shall not vest until the
Grantee becomes vested in the entire Class 2 Performance LTIP Unit.
The 20__ Short-Term Incentive Program STI Awards will vest on the date the Committee determines
performance, including with respect to the metrics set forth in the Agreement (the “Determination Date”), in
January or February 20__. Employment through the vesting date is generally required except as otherwise
provided in the Plan (except for Section 14.9 thereof), the applicable award agreement or as determined by
the Committee, in its sole discretion.
Except as otherwise determined by the Committee, in its sole discretion, vesting shall cease upon the
date the Grantee’s employment is terminated for any reason other than a termination (i) due to the Grantee’s
death or Disability or (ii) if the Restated Plan is approved by shareholders, (x) by the Company or any Parent
or Subsidiary (or any successors thereof) without Cause (as defined in the Restated Plan) or
1
(y) by the Grantee for Good Reason (as defined in the Restated Plan) in either case, on or within 12 months
following the date of a Change of Control (such termination described in (i) or (ii), a “Qualifying
Termination”), and no Class 2 Performance LTIP Unit that has not vested (an “Unvested Unit”) shall
thereafter become vested. If a Qualifying Termination occurs prior to the Determination Date all outstanding
Unvested Units will vest at target levels on the date of the Qualifying Termination. In the event the
Grantee’s employment is terminated for any reason other than a Qualifying Termination, and the Class 2
Performance LTIP Units do not otherwise vest, then all Unvested Units held by the Grantee immediately
upon such termination of the Grantee’s employment shall automatically and without any further action
thereupon be cancelled and forfeited without payment of any consideration therefor, and the Grantee shall
have no further right, title or interest in or to the Unvested Units. Section 14.9 (Acceleration Upon
Retirement) of the Plan shall not apply to the Units.
If (and only if) the Restated Plan is not approved by shareholders, pursuant to Section 14.10 of the
Existing Plan, upon the occurrence of a Change of Control all outstanding Unvested Units will vest at target
levels. If the Restated Plan is approved by shareholders, the Unvested Units will not vest solely due to a
Change of Control pursuant to Section 14.10 of the Existing Plan, but the Units will be eligible to vest
pursuant to Section 14.10 of the Restated Plan due to a Qualifying Termination, as described in the preceding
paragraph.
IN WITNESS WHEREOF, the Company, the Partnership and the Grantee have executed this Notice
and agree that the Award is to be governed by the terms and conditions of this Notice, the Plan, the
Partnership Agreement and the Agreement.
UDR, Inc.,
a Maryland corporation
By:
Title:
Date: [Date]
United Dominion Realty, L.P.,
a Delaware limited partnership
By: UDR, Inc., a Maryland corporation
By:
Title:
Date: [Date]
2
IF AT ALL,
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE CLASS 2 PERFORMANCE LTIP
UNITS SHALL VEST,
ONLY DURING THE PERIOD OF THE GRANTEE’S
EMPLOYMENT OR AS OTHERWISE SPECIFICALLY PROVIDED HEREIN (NOT THROUGH THE
ACT OF BEING HIRED OR BEING GRANTED THIS AWARD). THE GRANTEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE AGREEMENT, THE
PARTNERSHIP AGREEMENT NOR IN THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO CONTINUATION OF THE GRANTEE’S EMPLOYMENT, NOR SHALL IT
INTERFERE IN ANY WAY WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE THE GRANTEE’S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE, AND
WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE
HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE
GRANTEE’S STATUS IS AT WILL.
Grantee:
_________________________________
[Name]
3
Award Number: __________________
UDR, INC.
1999 LONG-TERM INCENTIVE PLAN
CLASS 2 PERFORMANCE LTIP UNIT AGREEMENT
(Short-Term Incentive Program)
1.
Issuance of Class 2 LTIP Units. In consideration of the agreement by the Grantee to provide
services to or for the benefit of the Partnership, the Partnership hereby (a) issues to the Grantee an award
(the “Award”) of the Total Number of Class 2 Performance LTIP Units set forth in the Notice of Class 2
Performance LTIP Unit Award (the “Notice”) to which this Class 2 Performance LTIP Unit Agreement
(Short-Term Incentive Program) (this “Agreement”) is attached (the “Class 2 Performance LTIP Units”),
subject to the terms and provisions of the Notice, this Agreement, the Partnership Agreement and the
Plan, and (b) if not already a Partner, admits the Grantee as a Partner of the Partnership on the terms and
conditions set forth in the Notice, this Agreement, the Partnership Agreement and the Plan. The
Partnership and the Grantee acknowledge and agree that the Class 2 LTIP Units are hereby issued to the
Grantee for the performance of services to or for the benefit of the Partnership in his or her capacity as a
Partner or in anticipation of the Grantee becoming a Partner. To the extent not an existing Partner, the
Grantee shall be admitted to the Partnership as an additional Limited Partner with respect to the Class 2
Performance LTIP Units only upon the satisfactory completion of the applicable requirements set forth in
the Partnership Agreement, including the requirements set forth in Section 4 of Exhibit H to the
Partnership Agreement. At the request of the Partnership, the Grantee shall execute the Partnership
Agreement or a joinder or counterpart signature page thereto. The Grantee acknowledges that the
Partnership may from time to time issue or cancel (or otherwise modify) LTIP Units in accordance with
the terms of the Partnership Agreement. The Class 2 Performance LTIP Units shall have the rights,
voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of
redemption and conversion set forth in the Notice, this Agreement, the Plan and the Partnership
Agreement.
2. Units Earned. (a) ___percent (___%) of the Total Number of Class 2 Performance Units
constituting the Award shall be earned based upon the Committee’s subjective determination, in their
sole discretion, of the Grantee’s performance with respect to the Grantee’s individual performance
objectives.
(b) An aggregate of ___percent (___%), in the percentages set forth below, of the Total Number
of Class 2 Performance LTIP Units constituting the Award shall be earned based upon the indicated
metric.
1-Year FFO as
Adjusted
Transaction
Volume
Transaction
FFOA
Operating
Platform
Execution
Same Stores
Wins
ESG/DEI
Associate
Engagement
___%
___%
___%
___%
___%
___%
___%
3. Definitions. For purposes of this Agreement, the following terms shall have the meanings set
forth below. All capitalized terms used but not otherwise defined herein shall have the meanings
1
ascribed to such terms in the Notice, the Plan, the Partnership Agreement and/or Appendix A, as
applicable.
(a) Associate Engagement Metric:
(i) “Associate Engagement” means the Company’s “Overall Health of UDR
Workforce” score as calculated in the annual Human Capital Scorecard for 20__
provided by the Company’s human resources department, using the most recent
available date prior to the end of calendar year 20__.
(ii) “Associate Engagement Metric” means a percentage of ___% of the target award
will be earned based on the Company’s Associate Engagement as follows:
Associate Engagement
Percentage of_ % Earned*
___ (“threshold”)
___ (“target”)
___ (“maximum”)
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of 7% of the target award earned will be determined by linear interpolation. If achievement is
less than the threshold no award will be earned and if achievement is greater than maximum the award
will be made at maximum.
(iii) “Associate Engagement Metric Base Units” means the number of Base Units
designated as Associate Engagement Metric Base Units on Appendix A attached
hereto.
(iv) “Associate Engagement Metric Performance Vesting Percentage” means the
percentage determined as set forth in the table in Section 3(a)(ii) above.
(v) “Associate Engagement Metric Vested Base Units” means the product of (A) the
total number of Associate Engagement Metric Base Units, and (B) the Associate
Engagement Metric Performance Vesting Percentage.
(b) “Base Units” means the number of Class 2 Performance LTIP Units designated as Base
Units on Appendix A attached hereto.
(c) ESG/DEI Metric:
(i) “ESG/DEI” means the Company’s ESG/DEI score based on a three metric index
consisting of absolute GRESB score, GRESB score relative to the GRESB average
and the absolute GRESB Social score as weighted and described in Exhibit 1.
(ii) “ESG/DEI Metric” means a percentage of ___% of the target award will be earned
based on the Company’s 20__ ESG/DEI as follows:
2
ESG/DEI
___% (“threshold”)
___% (“target”)
___% (“maximum”)
Percentage of % Earned*
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of ___% of the target award earned will be determined by linear interpolation. If achievement
is less than the threshold no award will be earned and if achievement is greater than maximum the award
will be made at maximum.
(iii) “ESG/DEI Base Units” means the number of Base Units designated as ESG/DEI
Base Units on Appendix A attached hereto.
(iv) “ESG/DEI Metric Performance Vesting Percentage” means the percentage
determined as set forth in the table in Section 3(c)(ii) above.
(v) “ESG/DEI Metric Vested Base Units” means the product of (A) the total number
of ESG/DEI Metric Base Units, and (B) the ESG/DEI Metric Performance Vesting
Percentage.
(d) FFO as Adjusted Metric:
(i) “FFO as Adjusted” means the Company’s 20__ Funds From Operations as
reported in Attachment 2, Funds From Operations (unaudited) of the Earnings Press
Release Supplement, excluding the impact of acquisition-related costs and adjusted
for other non-recurring items, including, but not limited to, prepayment
costs/benefits associated with early debt retirement, gains on sales of marketable
securities and taxable REIT subsidiary property, severance costs, joint venture
promotes, disposition fee income, NOI on the sale of non-depreciated real estate
owned, casualty related recoveries/charges and legal costs.
(ii) “FFO as Adjusted Metric” means a percentage of ___% of the target award will
be earned based on the Company’s FFO as Adjusted as follows:
1-Year FFO as Adjusted
Percentage of % Earned*
$___ (“threshold”)
$___ (“target”)
$___ (“maximum”)
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of ___% of the target award earned will be determined by linear interpolation. If achievement
is less than the threshold no award will be earned and if achievement is greater than maximum the award
will be made at maximum.
3
(iii) “FFO as Adjusted Metric Base Units” means the number of Base Units
designated as FFO as Adjusted Metric Base Units on Appendix A attached hereto.
(iv) “FFO as Adjusted Metric Performance Vesting Percentage” means the
percentage determined using the calculation as set forth on Exhibit 1 attached
hereto, which is a function of the Company FFO as Adjusted during the
Performance Period.
(v) “FFO as Adjusted Metric Vested Base Units” means the product of (A) the total
number of FFO as Adjusted Metric Base Units, and (B) the applicable FFO as
Adjusted Metric Performance Vesting Percentage.
(e) Individual Performance Objective:
(i) “Individual Performance Objective Base Units” means the number of Base Units
designated as Individual Performance Objective Base Units on Appendix A attached
hereto.
(ii) “Individual Performance Objective Vesting Percentage” means the percentage
determined by the Committee in their sole discretion.
(iii) “Individual Performance Objective Vested Base Units” means the product of (A)
the total number of Individual Performance Objective Base Units, and (B) the
Individual Performance Objective Vesting Percentage.
(f) Operating Platform Execution Metric:
(i) “Operating Platform Execution Metric” means a percentage of ___% of the
target award will be earned based on the Company’s performance with respect to its
Operating Platform relative to the Platform Execution Scorecard described in
Exhibit 1 attached hereto:
Operating Platform Execution
Percentage of___% Earned*
___% (“threshold”)
___% (“target”)
___%(“maximum”)
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of ___% of the target award earned will be determined by linear interpolation. If achievement
is less than the threshold no award will be earned and if achievement is greater than maximum the award
will be made at maximum.
(ii) “Operating Platform Execution Metric Base Units” means the number of Base
Units designated as Operating Platform Execution Metric Base Units on Appendix
A attached hereto.
4
(iii) “Operating Platform Execution Metric Performance Vesting Percentage”
means the percentage determined as set forth in the table in Section 3(f)(ii) above.
(iv) “Operating Platform Execution Metric Vested Base Units” means the product of
(A) the total number of Operating Platform Execution Metric Base Units, and
(B) the Operating Platform Execution Metric Performance Vesting Percentage.
(g) “Performance Period” Means January 1, 20__ to December 31, 20__.
(h) Same-Store Wins Metric:
(i) “Same-Store Wins Metric” means a percentage of ___% of the target award will
be earned based on the percentage of markets in which the Company’s same-store
revenue is at or above the median in the market compared to peers as follows:
Same-Store Win Percentage
___% (“threshold”)
___% (“target”
___% (“maximum”)
Percentage of ___% Earned*
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of ___% of the target award earned shall be based on linear interpolation. If achievement is
less than the threshold no award will be earned and if achievement is greater than maximum the award
will be made at maximum.
(ii)
“Same-Store Win Metric Base Units” means the number of Base Units designated
as Acquisition NOI Metric Base Units on Appendix A attached hereto.
(iii) “Same-Store Win Metric Performance Vesting Percentage” means the
percentage determined as set forth in the table in Section 3(h)(i) above.
(iv) “Same-Store Win Metric Vested Base Units” means the product of (A) the total
number of Same-Store Win Metric Base Units, and (B) the applicable Same-Store
Win Metric Performance Vesting Percentage.
(i) Transaction FFOA Metric:
(i) “Transaction FFOA” means the net 20__ FFO as Adjusted from transactional
sources and uses, including acquisitions, developer capital program, and buybacks
less dispositions, developer capital program maturities, and equity issuances.
5
(ii) “Transaction FFOA Metric” means a percentage of ___% of the target award will
be earned based on the Company’s Transaction FFOA during the Performance
Period as follows:
Transaction Volume
$___ Million (“threshold”)
$___ Million (“target”)
$___ Million (“maximum”)
Percentage of __%
Earned*
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of ___% of the target award earned shall be based on linear interpolation. If achievement is
less than the threshold no award will be earned and if achievement is greater than maximum the award
will be made at maximum.
(iii)
“Transaction FFOA Metric Base Units” means the number of Base Units
designated as Transaction Volume Metric Base Units on Appendix A attached
hereto.
(iv) “Transaction FFOA Metric Performance Vesting Percentage” means the
percentage determined as set forth in the table in Section 3(i)(ii) above.
(v) “Transaction FFOA Metric Vested Base Units” means the product of (i) the total
number of Transaction FFOA Metric Base Units, and (ii) the Transaction FFOA
Metric Performance Vesting Percentage.
(j) Transaction Volume Metric:
(i) “Transaction Volume” means the sum of total acquisitions, including land,
development and redevelopment spend, new Developer Capital Program
commitments, total dispositions and equity issuances, in each case at the Company’s
ownership share, if applicable, and during the Performance Period.
(ii) “Transaction Volume Metric” means a percentage of ___% of the target award
will be earned based on the Company’s Transaction Volume during the
Performance Period as follows:
Transaction Volume
$___ Million (“threshold”)
$___ Million (“target”)
$___ Million (“maximum”)
*
Percentage of __%
Earned*
50%
100%
200%
*If achievement is greater than the threshold and falls between any two points on the chart above, the
percentage of ___% of the target award earned shall be based on linear interpolation. If
6
achievement is less than the threshold no award will be earned and if achievement is greater than
maximum the award will be made at maximum.
(iii)
“Transaction Volume Metric Base Units” means the number of Base Units
designated as Transaction Volume Metric Base Units on Appendix A attached
hereto.
(iv) “Transaction Volume Metric Performance Vesting Percentage” means the
percentage determined as set forth in the table in Section 3(j)(ii) above.
(v) “Transaction Volume Metric Vested Base Units” means the product of (i) the
total number of Transaction Volume Metric Base Units, and (ii) the Transaction
Volume Metric Performance Vesting Percentage.
(k) “Restrictions” means the exposure to forfeiture set forth in the Notice and this
Agreement, and the restrictions on sale or other transfer set forth in Section 4 hereof.
(l) “Unvested Unit” means any Class 2 Performance LTIP Unit that has not become fully
vested pursuant to Section 4 hereof and remains subject to the Restrictions.
4. Class 2 Performance LTIP Units Subject to Partnership Agreement; Transfer Restrictions.
The Class 2 Performance LTIP Units are subject to the terms of the Plan and the terms of the Partnership
Agreement, including, without limitation, the restrictions on transfer of Units (including, without
limitation, Class 2 Performance LTIP Units) set forth in Article 9 of the Partnership Agreement. Any
permitted transferee of the Class 2 Performance LTIP Units shall take such Class 2 Performance LTIP
Units subject to the terms of the Plan, this Agreement, the Notice and the Partnership Agreement. Any
such permitted transferee must, upon the request of the Partnership, agree to be bound by the Plan, the
Partnership Agreement, the Notice and this Agreement, and shall execute the same on request, and must
agree to such other waivers, limitations, and restrictions as the Partnership or the Company may
reasonably require. Any sale, transfer, exchange, redemption, assignment, pledge, hypothecation or other
encumbrance (each, a “Transfer”) of the Class 2 Performance LTIP Units which is not made in
compliance with the Plan, the Partnership Agreement, the Notice and this Agreement shall be null and
void and of no effect. Notwithstanding any other provision of this Agreement, without the consent of the
Committee (which it may give or withhold in its sole discretion), the Grantee shall not convert the Class
2 Performance LTIP Units (or any Class 2 LTIP Units into which the Class 2 Performance LTIP Units
convert) into Partnership Common Units, or Transfer (including by means of a redemption but excluding
any conversion of Class 2 Performance LTIP Units to Class 2 LTIP Units) the Class 2 Performance
LTIP Units or any corresponding Class 2 LTIP Units into which the Class 2 Performance LTIP Units
convert, in each case whether vested or unvested, until the earlier of (i) the occurrence of, and in
connection with, a Change of Control (or such earlier time as is necessary in order for the Grantee to
participate in such Change of Control transaction with respect to the Class 2 Performance LTIP Units and
receive the consideration payable with respect thereto in connection with such Change of Control) and
(ii) the expiration of the two (2) year period following the Date of Award set forth in the Notice, other
than by will or the laws of descent and distribution.
5. Vesting. As soon as reasonably practicable (but in no event more than 60 days) following the
completion of the Performance Period, the Committee shall determine the Company’s performance with
respect to Associate Engagement, the ESG/DEI Metric, FFO as Adjusted, the Operating Platform
7
Execution Metric, the Same-Store Wins Metric, Transaction FFOA and Transaction Volume and
determine Grantee’s Individual Performance Objective Vesting Percentage, and the number of Class 2
LTIP Units granted hereby that have become Associate Engagement Metric Vested Base Units, ESG/DEI
Metric Vested Base Units, FFO as Adjusted Metric Vested Base Units, Individual Performance Objective
Vested Base Units, Operating Platform Execution Metric Vested Base Units, Same-Store Wins Metric
Vested Base Units, Transaction FFOA Metric Vested Base Units and Transaction Volume Metric Vested
Base Units, in each case as of the completion of the Performance Period. Upon such determination by
the Committee (the “Determination Date”), the Restrictions shall lapse with respect to the Associate
Engagement Metric Vested Base Units, ESG/DEI Metric Vested Base Units, FFO as Adjusted Metric
Vested Base Units, Individual Performance Objective Vested Base Units, Operating Platform Execution
Metric Vested Base Units, Same-Store Wins Metric Vested Base Units, Transaction FFOA Metric Vested
Base Units and Transaction Volume Metric Vested Base Units, except as provided in the Plan, except
Section 14.9 thereof, this Agreement or as otherwise determined by the Committee, in its sole discretion.
Any Base Units granted hereby which have not become Associate Engagement Metric Vested Base
Units, ESG/DEI Metric Vested Base Units, FFO as Adjusted Metric Vested Base Units, Individual
Performance Objective Vested Base Units, Operating Platform Execution Metric Vested Base Units,
Same-Store Wins Metric Vested Base Units, Transaction FFOA Metric Vested Base Units and
Transaction Volume Metric Vested Base Units as of the Determination Date will automatically be
cancelled and forfeited without payment of any consideration therefor, and the Grantee shall have no
further right to or interest in such Base Units.
6. Partnership Call Right. Any Class 2 Performance LTIP Unit granted hereunder, upon
becoming an Expired Performance LTIP Unit under the Partnership Agreement, shall be subject to
purchase by the Partnership or its designee under this Section 6 (such repurchase right, the “Partnership
Call Right”). A Partnership Call Right may be exercised with respect to any Expired Performance LTIP
Unit by (a) the delivery of a notice (a “Partnership Call Right Notice”) in the form attached hereto as
Appendix C to the holder of the applicable Class 2 Performance LTIP Units no more than thirty (30) days
prior to the Call Date specified in such Partnership Call Right Notice, and (b) the payment of the
applicable purchase price no later than the applicable Call Date. The purchase price for any Expired
Performance LTIP Unit being purchased under the Partnership Call Right will be the fair market value of
such Units as of the applicable Call Date, as determined by the General Partner in its sole discretion. The
General Partner may, in its sole discretion, permit any Partnership Call Right to be exercised by the
Partnership or its designee, and the purchase price payable in respect of any Partnership Call Right may
be paid in any combination of immediately available funds and REIT Shares (valued using the REIT
Share Value as of the applicable Call Date), as determined by the General Partner in its sole discretion.
Each Partnership Call Right Notice shall be provided in the manner provided in Section 12.01 of the
Partnership Agreement. Section 5(b) of Exhibit H of the Partnership Agreement shall not apply to any
LTIP Unit purchased pursuant to a Partnership Call Right unless the purchasing party is the Partnership.
7. Delivery of Units. The Class 2 Performance LTIP Units will be registered in the name of the
Grantee and may be held by the Company or the Partnership prior to the vesting of such Class 2
Performance LTIP Units as provided in the Notice and this Agreement (the “Restricted Period”). Any
certificate for Class 2 Performance LTIP Units issued during the Restricted Period shall be registered in
the name of the Grantee and shall bear a legend in substantially the following form:
8
THIS CERTIFICATE AND THE CLASS 2 PERFORMANCE LTIP UNITS REPRESENTED
HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE
AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN A NOTICE OF CLASS 2
PERFORMANCE LTIP UNIT AWARD AND CLASS 2 LTIP UNIT AGREEMENT DATED
[DATE] BETWEEN THE REGISTERED OWNER OF THE CLASS 2 PERFORMANCE LTIP
UNITS REPRESENTED HEREBY, UDR, INC. AND UNITED DOMINION REALTY, L.P.
RELEASE FROM SUCH TERMS AND CONDITIONS SHALL BE MADE ONLY IN
ACCORDANCE WITH THE PROVISIONS OF SUCH AGREEMENTS, COPIES OF WHICH
ARE ON FILE IN THE OFFICE OF UDR, INC.
At the Company’s or the Partnership’s request, the Grantee hereby agrees to promptly execute,
deliver and return to the Partnership any and all documents or certificates that the Company or the
Partnership deems necessary or desirable to effectuate the cancellation and forfeiture of the Unvested
Units, or to effectuate the transfer or surrender of such Unvested Units to the Partnership. In addition, if
requested, the Grantee shall deposit with the Company or the Partnership, a stock/unit power, or powers,
executed in blank and sufficient to re-convey the Unvested Units to the Company or the Partnership upon
termination of the Grantee’s service during the Restricted Period, in accordance with the provisions of the
Notice and this Agreement.
8. Determinations by Committee.
Notwithstanding anything contained herein,
all
determinations, interpretations and assumptions relating to the vesting of the Award shall be made by the
Committee and shall be applied consistently and uniformly to all similar Awards granted under the Plan
(including, without limitation, similar awards which provide for payment in the form of cash or shares of
Stock). In making such determinations, the Committee may employ attorneys, consultants, accountants,
appraisers, brokers, or other persons, and the Committee, the Board, the Company, the Partnership and
their officers and directors shall be entitled to rely upon the advice, opinions or the valuations of any such
persons. All actions taken, and all interpretations and determinations made by the Committee in good
faith and absent manifest error shall be final and binding upon the Grantee, the Company and all other
interested persons. In addition, the Committee, in its discretion, may adjust or modify the methodology
for calculations relating to the vesting of the Award, as necessary or desirable to account for events
affecting the value of the Stock or Company FFO as Adjusted which, in the discretion of the Committee,
are not considered indicative of Company performance, which may include events such as the issuance of
new stock, stock repurchases, stock splits, issuances and/or exercises of stock grants or stock options, and
similar events, all in order to properly reflect the Company’s intent with respect to the performance
objectives underlying the Award or to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available with respect to the Award.
9. Covenants, Representations and Warranties. The Grantee hereby represents, warrants,
covenants, acknowledges and agrees on behalf of the Grantee and his or her spouse, if applicable, that:
(a)
Investment. The Grantee is holding the Class 2 Performance LTIP Units for the
Grantee’s own account, and not for the account of any other person or entity. The Grantee is holding the
Class 2 Performance LTIP Units for investment and not with a view to distribution or resale thereof
except in compliance with applicable laws regulating securities.
(b)
Relation to the Partnership. The Grantee is presently an executive officer of the
Company, which is the sole general partner of the Partnership, or is otherwise providing services to or
9
for the benefit of the Partnership, and in such capacity has become personally familiar with the business
of the Partnership.
(c)
Access to Information. The Grantee has had the opportunity to ask questions of,
and to receive answers from, the Partnership with respect to the terms and conditions of the transactions
contemplated hereby and with respect to the business, affairs, financial conditions, and results of
operations of the Partnership.
(d)
Registration. The Grantee understands that the Class 2 Performance LTIP Units
have not been registered under the 1933 Act, and the Class 2 Performance LTIP Units cannot be
transferred by the Grantee unless such transfer is registered under the 1933 Act or an exemption from
such registration is available. The Partnership has made no agreements, covenants or undertakings
whatsoever to register the transfer of the Class 2 Performance LTIP Units under the 1933 Act. The
Partnership has made no representations, warranties, or covenants whatsoever as to whether any
exemption from the 1933 Act, including, without limitation, any exemption for limited sales in routine
brokers’ transactions pursuant to Rule 144 of the 1933 Act, will be available. If an exemption under Rule
144 is available at all, it will not be available until at least six (6) months after the grant of the Class 2
Performance LTIP Units and then not unless the terms and conditions of Rule 144 have been satisfied.
(e)
Public Trading. None of the Partnership’s securities are presently publicly traded,
and the Partnership has made no representations, covenants or agreements as to whether there will be a
public market for any of its securities.
(f)
Tax Advice. The Partnership has made no warranties or representations to the
Grantee with respect to the income tax consequences of the transactions contemplated by this Agreement
(including, without limitation, with respect to the decision of whether to make an election under Section
83(b) of the Code), and the Grantee is in no manner relying on the Partnership or its representatives for
an assessment of such tax consequences. Grantee hereby recognizes that the Internal Revenue Service
has proposed regulations under Sections 83, 704 and 704 of the Code that may affect the proper treatment
of the Class 2 Performance LTIP Units for federal income tax purposes. If those proposed regulations or
similar regulations become final or temporary regulations, the Grantee hereby agrees to cooperate with
the Partnership in amending this Agreement and the Partnership Agreement, and to take such other action
as may be required, to conform to such regulations. Further, Congress recently enacted, and proposed
Treasury Regulations were recently issued under, Section 1061 of the Code, which materially alters the
taxation of “profits interests” issued in connection with the provision of services. The Grantee is advised
to consult with his or her own tax advisor with respect to such tax consequences and his or her ownership
of the Class 2 Performance LTIP Units.
10. Capital Account. The Grantee shall make no contribution of capital to the Partnership in
connection with the issuance of the Class 2 Performance LTIP Units and, as a result, the Grantee’s
Capital Account balance in the Partnership immediately after his or her receipt of the Class 2
Performance LTIP Units shall be equal to zero, unless the Grantee was a Partner in the Partnership prior
to such issuance, in which case the Grantee’s Capital Account balance shall not be increased as a result of
his or her receipt of the Class 2 Performance LTIP Units.
10
11. Restrictions on Public Sale by the Grantee. To the extent not inconsistent with applicable
law, the Grantee agrees not to effect any sale or distribution of the Class 2 Performance LTIP Units or
any similar security of the Company or the Partnership, or any securities convertible into or exchangeable
or exercisable for such securities, including a sale pursuant to Rule 144 under the 1933 Act, during the
fourteen (14) days prior to, and for a period of up to 180-days beginning on, the date of the pricing of any
public or private debt or equity securities offering by the Company or the Partnership (except as part of
such offering), if and to the extent requested in writing by the Partnership or the Company in the case of a
non-underwritten public or private offering or if and to the extent requested in writing by the managing
underwriter or underwriters (or initial purchaser or initial purchasers, as the case may be) and consented
to by the Partnership or the Company, which consent may be given or withheld in the Partnership’s or the
Company’s sole and absolute discretion, in the case of an underwritten public or private offering (such
agreement to be in the form of a lock-up agreement provided by the Company, the Partnership, managing
underwriter or underwriters, or initial purchaser or purchasers as the case may be).
12. Conformity to Securities Laws. The Grantee acknowledges that the Plan, the Notice and this
Agreement are intended to conform to the extent necessary with all provisions of all applicable federal
and state laws, rules and regulations (including, but not limited to, the 1933 Act and the 1934 Act and any
and all regulations and rules promulgated by the Securities and Exchange Commission thereunder,
including without limitation the applicable exemptive conditions of Rule 16b-3 of the 1934 Act) and to
such approvals by any listing, regulatory or other governmental authority as may, in the opinion of
counsel for the Partnership or the Company, be necessary or advisable in connection therewith.
Notwithstanding anything herein to the contrary, the Plan shall be administered, and the award of Class 2
Performance LTIP Units is made, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan, this Agreement and this award of Class 2
Performance LTIP Units shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
13. Taxes.
(a) Tax Liability. The Grantee is ultimately liable and responsible for all taxes owed by
the Grantee in connection with the Award, regardless of any action the Company or any Related Entity
takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the
Company nor any Related Entity makes any representation or undertaking regarding the treatment of any
tax withholding in connection with any aspect of the Award, including the grant, vesting, assignment,
release or cancellation of the Class 2 Performance LTIP Units, the subsequent sale of any Class 2
Performance LTIP Units and the receipt of any Partnership distributions. The Company does not commit
and is under no obligation to structure the Award to reduce or eliminate the Grantee’s tax liability. For
purposes of this Award, “Related Entity” shall mean a Parent or Subsidiary.
(b) Payment of Withholding Taxes. Prior to any event in connection with the Award that
the Company determines may result in any tax withholding obligation, whether United States federal,
state, local or non-U.S., including any social insurance, employment tax, payment on account or other
tax-related obligation (the “Tax Withholding Obligation”), the Grantee must arrange for the satisfaction
of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company.
11
(c) Section 83(b) Election. The Grantee covenants that the Grantee shall make a timely
election under Section 83(b) of the Code (and any comparable election in the state of the Grantee’s
residence) with respect to the Class 2 Performance LTIP Units, and the Partnership hereby consents to
the making of such election(s). In connection with such election, the Grantee and the Grantee’s spouse, if
applicable, shall promptly provide a copy of such election to the Partnership. A form of election under
Section 83(b) of the Code is attached hereto as Appendix B. The Grantee represents that the Grantee has
consulted any tax advisor(s) that the Grantee deems advisable in connection with the filing of an election
under Section 83(b) of the Code and similar state tax provisions. The Grantee acknowledges that it is the
Grantee’s sole responsibility and not the Company’s or the Partnership’s to timely file an election under
Section 83(b) of the Code (and any comparable state election), even if the Grantee requests that the
Company, the Partnership or any representative thereof make such filing on the Grantee’s behalf. The
Grantee should consult his or her tax advisor to determine if there is a comparable election to file in the
state of his or her residence.
14. Profits Interests. The Partnership and the Grantee intend that (i) the Class 2 Performance
LTIP Units be treated as “profits interests” as defined in Internal Revenue Service Revenue Procedure
93-27, as clarified by Revenue Procedure 2001-43, (ii) the issuance of such units not be a taxable event to
the Partnership or the Grantee as provided in such revenue procedures, and (iii) the Partnership
Agreement, the Plan, the Notice and this Agreement be interpreted consistently with such intent. In
furtherance of such intent, effective immediately prior to the issuance of the Class 2 Performance LTIP
Units, the Partnership may revalue all Partnership assets to their respective gross fair market values (as
determined for purposes of Treasury Regulations Section 1.704.1), and make the resulting adjustments to
the Capital Accounts of the Partners, in each case, as set forth in the Partnership Agreement.
15. Ownership Information. The Grantee hereby covenants that so long as the Grantee holds any
Class 2 Performance LTIP Units, at the request of the Partnership, the Grantee shall disclose to the
Partnership in writing such information relating to the Grantee’s ownership of the Class 2 Performance
LTIP Units as the Partnership reasonably believes to be necessary or desirable to ascertain in order to
comply with the Code or the requirements of any other appropriate taxing authority.
16. Entire Agreement; Governing Law. The Notice, the Plan, the Partnership Agreement and this
Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company, the Partnership and the
Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee’s
interest except by means of a writing signed by the Company, the Partnership and the Grantee. These
agreements are to be construed in accordance with and governed by the internal laws of the State of
Maryland without giving effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of Maryland to the rights and duties of the
parties. Should any provision of the Notice or this Agreement be determined to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.
17. Construction. The captions used in the Notice and this Agreement are inserted for
convenience and shall not be deemed a part of the Award for construction or interpretation. Except when
otherwise indicated by the context, the singular shall include the plural and the plural shall
12
include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.
18. Administration and Interpretation. Any question or dispute regarding the administration or
interpretation of the Notice, the Plan, the Partnership Agreement or this Agreement shall be submitted by
the Grantee, the Partnership or the Company to the Committee. The resolution of such question or
dispute by the Committee shall be final and binding on all persons.
19. Venue and Jurisdiction. The parties agree that any suit, action, or proceeding arising out of or
relating to the Notice, the Plan, the Partnership Agreement or this Agreement shall be brought
exclusively in the United States District Court for Colorado (or should such court lack jurisdiction to hear
such action, suit or proceeding, in a Colorado state court) and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any
objection the party may have to the laying of venue for any such suit, action or proceeding brought in
such court. If any one or more provisions of this Section 19 shall for any reason be held invalid or
unenforceable, it is the specific intent of the parties that such provisions shall be modified to the
minimum extent necessary to make it or its application valid and enforceable.
20. Plan Controls. The terms contained in the Plan are incorporated into and made a part of the
Notice and this Agreement, and the Notice and this Agreement shall be governed by and construed in
accordance with the Plan. In the event of any actual or alleged conflict between the provisions of the Plan
and the provisions of the Notice and this Agreement, the provisions of the Plan shall be controlling and
determinative.
21. Successors. The Notice and this Agreement shall be binding upon any successor of the
Company or the Partnership, in accordance with the terms of the Notice, this Agreement and the Plan.
22. Severability. If any one or more of the provisions contained in the Notice or this Agreement
is invalid, illegal or unenforceable, the other provisions of the Notice and this Agreement will be
construed and enforced as if the invalid, illegal or unenforceable provision had never been included.
23. Notices. Any notice required or permitted hereunder shall be given in writing and shall be
deemed effectively given upon personal delivery, upon deposit for delivery by an internationally
recognized express mail courier service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed to the other party at its
address as shown in these instruments, or to such other address as such party may designate in writing
from time to time to the other party.
24. Amendment. The Committee may amend, modify or terminate this Agreement without
approval of the Grantee; provided, however, that such amendment, modification or termination shall not,
without the Grantee’s consent, reduce or diminish the value of this award determined as if it had been
fully vested on the date of such amendment or termination.
25. Amendment and Delay to Meet the Requirements of Section 409A. The Grantee
acknowledges that the Company, in the exercise of its sole discretion and without the consent of the
Grantee, may amend or modify this Agreement in any manner to the minimum extent necessary to meet
the requirements of Section 409A of the Code as amplified by any Treasury regulations or
13
guidance from the Internal Revenue Service as the Company deems appropriate or advisable. In
addition, the Company makes no representation that the Award will comply with Section 409A of the
Code and makes no undertaking to prevent Section 409A of the Code from applying to the Award or to
mitigate its effects on any deferrals or payments made in respect of the Units. The Grantee is encouraged
to consult a tax adviser regarding the potential impact of Section 409A of the Code.
END OF AGREEMENT
14
Definitions
APPENDIX A
Capitalized terms not defined herein shall have the meanings set forth in the Class 2 Performance
LTIP Unit Agreement to which this Appendix is attached.
“Associate Engagement Metric Base Units” means ________ Base Units.
“Base Units” means _______ Class 2 LTIP Units.
“ESG/DEI Base Units” means ___________ Base Units.
“FFO as Adjusted Metric Base Units” means _______ Base Units.
“Individual Performance Objective Base Units” means _______ Base Units.
“Operating Platform Execution Metric Base Units” means ____________ Base Units.
“Same-Store Win Metric Base Units” means ________ Base Units.
“Transaction FFOA Metric Base Units” means __________ Base Units.
“Transaction Volume Metric Base Units” means _____ Base Units.
A-1
APPENDIX B
FORM OF SECTION 83(b) ELECTION
[Attached]
B-1
ELECTION PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE
The undersigned hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of
1986, as amended, to include in the undersigned’s gross income for the taxable year in which the
property was transferred the excess (if any) of the fair market value of the property described below,
over the amount the undersigned paid for such property, if any, and supplies herewith the following
information in accordance with the Treasury regulations promulgated under Section 83(b):
1.
The name, taxpayer identification number and address of the undersigned, and the
taxable year for which this election is being made, are:
TAXPAYER’S NAME:
TAXPAYER’S SOCIAL SECURITY NUMBER:
ADDRESS:
TAXABLE YEAR:
The name, taxpayer identification number and address of the undersigned’s spouse are
(complete if applicable):
SPOUSE’S NAME:
SPOUSE’S SOCIAL SECURITY NUMBER:
ADDRESS:
2.
The property which is the subject of this election is Class 2
Performance LTIP Units (the “ Units”) of United Dominion Realty, L.P. (the “Company”),
representing an interest in the future profits, losses and distributions of the Company.
3.
.
The date on which the above property was transferred to the undersigned was
4.
The above property is subject to the following restrictions: The Units are subject to
forfeiture to the extent unvested upon a termination of service with the Company under certain
circumstances and/or to the extent that certain performance conditions are not satisfied. These
restrictions lapse upon the satisfaction of certain conditions as set forth in an agreement between the
taxpayer and the Company. In addition, the Units are subject to certain transfer restrictions pursuant
to such agreement and the Amended and Restated Agreement of Limited Partnership of United
Dominion Realty, L.P., as amended (or amended and restated) from time to time, should the taxpayer
wish to transfer the Units.
5.
The fair market value of the above property at the time of transfer (determined without
regard to any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax
Regulations) was $0.
6.
The amount paid for the above property by the undersigned was $0.
1
7.
The amount to include in gross income is $0.
The undersigned taxpayer will file this election with the Internal Revenue Service office with
which taxpayer files his or her annual income tax return not later than 30 days after the date of
transfer of the property. A copy of this election will be furnished to the person for whom the services
were performed. Additionally, the undersigned will include a copy of the election with his or her
income tax return for the taxable year in which the property is transferred. The undersigned is the
person performing the services in connection with which the property was transferred.
Dated: _________________
Dated: _________________
____________________________________
____________________________________
2
Appendix C
PARTNERSHIP CALL RIGHT NOTICE
United Dominion Realty, L.P. (the “Partnership”) hereby irrevocably elects, in accordance
with the terms of Section 66 of that certain Class 2 Performance LTIP Unit Award Agreement dated
as of [Date] by and between the Partnership and [Grantee] (the “Award Agreement”), to exercise the
Partnership Call Right with respect to certain Expired Performance LTIP Units that were issued
under such agreement (the “Expired Class 2 Performance LTIP Units”). The Call Date applicable to
such exercise and the subject Expired Class 2 Performance LTIP Units are set forth below. In
accordance with the terms of the Award Agreement, you will be paid the fair market value of such
Class 2 Performance LTIP Units as of the Call Date, as determined in the sole discretion of the
General Partner of the Partnership, which price the General Partner subsequently will provide on the
Call Date if not stated below. Such amount may be paid in cash or in stock of UDR, Inc., a Maryland
corporation, or in any combination thereof, as determined by the General Partner in its sole
discretion.
Name of Expired Class 2 Performance LTIP Unit Holder:
Name as Registered with Partnership
Number of Expired Class 2 Performance LTIP Units to be Purchased:
Date of Award of Expired Class 2 Performance LTIP Units to be Purchased:
Call Date:
Aggregate Purchase Price:
C-1
The Company has the following subsidiaries. Joint Venture entities are shown in italics. United Dominion Realty, L.P.
is a limited partnership with outside limited partners holding minimal percentage interests. The Company owns general and
limited partnership interests in United Dominion Realty, L.P. constituting 95.3% of the aggregate partnership interest. Entities
marked with an asterisk are those entities in which United Dominion Realty, L.P. is either a member or a partner. UDR
Lighthouse DownREIT L.P. is also a limited partnership with outside limited partners. The Company owns general and limited
partnership interests in UDR Lighthouse DownREIT L.P. constituting 57.8% of the aggregate partnership interest. Entities
marked with a double asterisk are those entities in which UDR Lighthouse DownREIT L.P. owns an interest. All other entities
are wholly owned.
EXHIBIT 21
Subsidiary
1020 Tower GP LLC
1020 Tower, LP
1211 &. Olive REIT GP LLC
1211 & Olive REIT LP
1211 S. Olive Street Development, L.P.
1211 &. Olive GP LLC
13th And Market Properties LLC
1745 LLC
2000 Post Owners Association
345 Harrison LLC
399 Fremont LLC
AAC Funding II, Inc.
AAC Funding III LLC**
AAC Funding IV LLC*
AAC Funding Partnership II*
AAC/FSC Crown Pointe Investors, LLC
AAC/FSC Hilltop Investors, LLC
AAC/FSC Seattle Properties, LLC*
AmberGlen Development LLC
Andover House LLC
Andover Member 1 LLC
Andover Member 2 LLC
Apartments on Chestnut Limited Partnership
Ashton at Dublin Station, LLC
Ashwood Commons North LLC
Bella Terra Villas LLC
CMP-1, LLC
Cambridge Woods LLC
Cedar Street High-Rise, L.P.
Circle Towers LLC**
CityLine Development Phase I LLC
CityLine Development Phase II, LLC
Coastal Monterey Properties, LLC*
Columbia City Apartments REIT LP
Columbia City Apartments REIT GP LLC
Columbus Square 775 LLC
Columbus Square 795 LLC
Columbus Square 801 LLC
Columbus Square 805 LLC
Columbus Square 808 LLC
Consolidated-Hampton, LLC
Cross Creek LLC
DCO 2400 14th Street LLC
DCO 3033 Wilshire LLC
State of Incorporation
or Organization
Delaware
Delaware
Delaware
Delaware
California
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
California
Delaware
Washington
Washington
Delaware
Oregon
Delaware
Delaware
Delaware
Delaware
Delaware
Washington
Delaware
Delaware
Delaware
Delaware
Delaware
Washington
Washington
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Maryland
Delaware
Delaware
Delaware
Subsidiary
DCO Addison at Brookhaven LP
DCO Arbors at Lee Vista LLC
DCO Beach Walk LLC
DCO Borgata LLC
DCO Caroline Development LLC
DCO Market LLC
DCO Mission Bay LP
DCO Pacific City LLC
DCO Realty, Inc.
DCO Realty LP LLC
DCO Talisker LP
Domain Mountain View LLC
Domus SPE General Partner, LLC
Eastern Residential, Inc.
Easton Partners I, LP
Fiori LLC
Foxborough Lodge Limited Partnership
Garrison Harcourt Square LLC
Governour’s Square of Columbus Co. L.P.*
HPI 2161 Sutter LP
Hawthorne Apartments LLC
Heritage Communities LLC**
Inlet Bay at Gateway, LLC
Jamestown of St. Matthews Limited Partnership*
Jefferson at Marina del Rey, L.P.
K/UDR Venture LLC
Katella Grand II GP LLC
Katella Grand II REIT LP
Kelvin and Jamboree Properties, LLC
Kelvin Jamboree LLC
L.A. Southpark High Rise, LP
Lenox Farms Limited Partnership
Lightbox LLC
Lodge at Ames Pond Limited Partnership
Lofts at Charles River Landing, LLC
MacAlpine Place Apartment Partners, Ltd.*
Management Company Services, Inc.
MCS Insurance Sub Producer Services LLC
Ninety Five Wall Street LLC*
Northbay Properties II, L.P.*
Olive Way High-Rise LP
One William Urban Renewal LLC
Pacific Los Alisos LLC
Park Square KOP Owner LLC
Park Square Mezzanine LLC
Park Square Mezzanine Owner LLC
Park Square Philly Owner LLC
Park Square Subsidiary 1 LLC
Park Square Subsidiary 2 LLC
Pier 4 LLC
Platinum Vista Apartments, LP
Polo Park Apartments LLC*
Rancho Cucamonga Town Square Owners Association
Rodgers Forge Condominiums, Inc.
Savoye LLC
State of Incorporation
or Organization
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Ohio
Delaware
Delaware
Delaware
Delaware
Ohio
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Delaware
Delaware
Delaware
California
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
California
Delaware
California
Maryland
Delaware
Subsidiary
Savoye 2 LLC
Station on Silver LLC
Strata Properties, LLC
Tennessee Colonnade LLC*
THC/UDR Domain College Park LLC
The Domain Condominium Association, Inc.
Thomas Circle Properties LLC
Town Square Commons, LLC
Towson Promenade, LLC
Trilon Townhouses, LLC
TSTW LLC
UDR 10 Hanover LLC*
UDR 345 Harrison LLC
UDR 500 Penn LLC
UDR 1590 Grove LLC
UDR 1818 Platinum LLC
UDR 1200 East West LLC
UDR Altamira Place LLC
UDR AP Block 11 Investor LLC
UDR AP Block 11 Owner LLC
UDR Arbor Park LLC**
UDR Barton Creek LLC**
UDR Blake LLC
UDR California GP, LLC*
UDR California GP II, LLC
UDR California Properties, LLC
UDR Calvert, LLC*
UDR Calvert’s Walk Associates Limited Partnership
UDR Calverts Walk GP, LLC
UDR Carriage Homes, LLC
UDR Chelsea LLC
UDR Courts at Dulles LLC**
UDR Courts at Huntington LLC*
UDR Crane Brook LLC*
UDR Currents on the Charles LLC
UDR Delancey at Shirlington LLC**
UDR Developers, Inc.
UDR Domain Brewers Hill LLC
UDR EAS LLC
UDR Eight80 I LP*
UDR Eight80 II LP*
UDR Eleven55 Ripley LLC**
UDR Garrison Square LLC
UDR Harbor Greens, L.P.*
UDR Huntington Vista, L.P.*
UDR Inwood LLC**
UDR/K Venture Member LLC
UDR Lakeline Villas LLC
UDR Legacy at Mayland LLC
UDR Legacy Village LLC**
UDR Leonard Pointe LLC
UDR Lighthouse DownREIT L.P.*
UDR Lighthouse EAS LLC**
UDR Marina Pointe LLC
UDR/MetLife GP II LLC
State of Incorporation
or Organization
Delaware
Delaware
Delaware
Delaware
Delaware
Texas
Delaware
District of Columbia
Delaware
District of Columbia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Delaware
Maryland
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Subsidiary
UDR/MetLife Master Limited Partnership
UDR/MetLife Master Limited Partnership II
UDR Milehouse LLC
UDR/ML Venture LLC
UDR/ML Venture 2 LLC
UDR Midlands Acquisition, LLC*
UDR Newport Village LLC**
UDR NYL Deals GP LLC
UDR of Tennessee, L.P.*
UDR Okeeheelee LLC*
UDR Peridot Palms LLC
UDR Pinebrook, L.P.*
UDR Preserve at Gateway LLC
UDR Presidential Greens, L.L.C.
UDR Rancho Cucamonga, L.P.
UDR Red Stone Ranch LLC
UDR Ridgewood (II) Garden, LLC*
UDR Ridge at Blue Hills LLC**
UDR River Terrace LLC
UDR Rivergate LLC
UDR Rodgers Forge LLC
UDR Slade LLC
UDR Steele Creek LLC*
UDR Texas Properties LLC
UDR Towers By The Bay LLC
UDR Valley Forge LLC
UDR Virginia Properties, LLC
UDR Wellington Place LLC
UDR Whitmore LLC**
UDR Windsor Gardens LLC
UDR WJV Member LLC
UDR Woodland Apartments II, L.P.
UDR Woodland GP, LLC
UDRLP EAS LLC*
UDRT of Delaware 4 LLC*
United Dominion Realty, L.P.
View 14 Investments LLC
VP West 1 LLC
VP West 2 LLC
VPDEV 1 LLC
VPDEV 2 LLC
Washington Vue LLC
Waterscape Village LLC
Waterside Towers, L.L.C.
West El Camino Real, LLC
Western Residential, Inc.
Wilshire Crescent Heights, LLC
Windemere at Sycamore Highlands, LLC
Winterland San Francisco Partners*
WREP II Non-REIT Investments, L.P.
WREP II/UDR AmberGlen, L.P.
WREP II/UDR AmberGlen General Partner LLC
State of Incorporation
or Organization
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
California
Delaware
Delaware
Delaware
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8 No 333-75897) pertaining to the Company’s 1999 Long-Term Incentive Plan
(2) Registration Statement (Form S-3 No 333-129743) pertaining to the registration of 11,000,000 shares of Common
Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock, issuable under the
Company’s Dividend Reinvestment and Stock Purchase Plan Registration Statement
(3) Registration Statement (Form S-8 No 333-160180) pertaining to the Company’s 1999 Long-Term Incentive Plan
(4) Registration Statement (Form S-3 No 333-167270) pertaining to the registration of 3,882,187 shares of Common Stock
(5) Registration Statement (Form S-3 No 333-180553) pertaining to the registration of 2,569,606 shares of Common Stock
(6) Registration Statement (Form S-3 No 333-183510) pertaining to the registration of 1,802,239 shares of Common Stock
(7) Registration Statement (Form S-8 No 333-201192) pertaining to the Company’s 1999 Long-Term Incentive Plan
(8) Registration Statement (Form S-3 No 333-212727) pertaining to the registration of 16,137,973 shares of Common Stock
(9) Shelf Registration Statement (Form S-3 ASR No 333-217491), pertaining to the registration of an indeterminate amount
of Common Stock, Preferred Stock, Depositary Shares, Debt Securities, Guarantees of Debt Securities, Warrants,
Subscription Rights, Purchase Contracts and Purchase Units
(10) Shelf Registration Statement (Form S-3 ASR No 333-236846) pertaining to the registration of an indeterminate amount
of Common Stock, Preferred Stock, Depositary Shares, Debt Securities, Guarantees of Debt Securities, Warrants,
Subscription Rights, Purchase Contracts and Purchase Units
of our reports dated February 18, 2021, with respect to the consolidated financial statements and schedule of UDR, Inc. and the
effectiveness of internal control over financial reporting of UDR, Inc. included in this Annual Report (Form 10-K) of UDR, Inc.
for the year ended December 31, 2020.
/s/Ernst & Young LLP
Denver, Colorado
February 18, 2021
Consent of Independent Registered Public Accounting Firm
Exhibit 23.2
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8 No 333-75897) pertaining to the Company’s 1999 Long-Term Incentive Plan
(2) Registration Statement (Form S-3 No 333-129743) pertaining to the registration of 11,000,000 shares of Common
Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock, issuable under the
Company’s Dividend Reinvestment and Stock Purchase Plan Registration Statement
(3) Registration Statement (Form S-8 No 333-160180) pertaining to the Company’s 1999 Long-Term Incentive Plan
(4) Registration Statement (Form S-3 No 333-167270) pertaining to the registration of 3,882,187 shares of Common
Stock
(5) Registration Statement (Form S-3 No 333-180553) pertaining to the registration of 2,569,606 shares of Common
Stock
(6) Registration Statement (Form S-3 No 333-183510) pertaining to the registration of 1,802,239 shares of Common
Stock
(7) Registration Statement (Form S-8 No 333-201192) pertaining to the Company’s 1999 Long-Term Incentive Plan
(8) Registration Statement (Form S-3 No 333-212727) pertaining to the registration of 16,137,973 shares of Common
Stock
(9) Shelf Registration Statement (Form S-3 ASR No 333-217491), pertaining to the registration of an indeterminate
amount of Common Stock, Preferred Stock, Depositary Shares, Debt Securities, Guarantees of Debt Securities,
Warrants, Subscription Rights, Purchase Contracts and Purchase Units
(10) Shelf Registration Statement (Form S-3 ASR No 333-236846) pertaining to the registration of an indeterminate
amount of Common Stock, Preferred Stock, Depositary Shares, Debt Securities, Guarantees of Debt Securities,
Warrants, Subscription Rights, Purchase Contracts and Purchase Units
of our report dated February 18, 2021, with respect to the consolidated financial statements and schedule of United
Dominion Realty, L.P. included in this Annual Report (Form 10-K) of United Dominion Realty, L.P. for the year ended
December 31, 2020.
/s/ Ernst & Young LLP
Denver, Colorado
February 18, 2021
I, Thomas W. Toomey, certify that:
1.
I have reviewed this Annual Report on Form 10-K of UDR, Inc.;
CERTIFICATION
EXHIBIT 31.1
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such
evaluation; and
(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 18, 2021
/s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
I, Joseph D. Fisher, certify that:
1.
I have reviewed this Annual Report on Form 10-K of UDR, Inc.;
CERTIFICATION
EXHIBIT 31.2
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report, based on such
evaluation; and
(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 18, 2021
/s/ Joseph D. Fisher
Joseph D. Fisher
Chief Financial Officer and Senior Vice President
(Principal Financial Officer)
I, Thomas W. Toomey, certify that:
1.
I have reviewed this Annual Report on Form 10-K of United Dominion Realty, L.P.;
CERTIFICATION
EXHIBIT 31.3
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such
evaluation; and
(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 18, 2021
/s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer) of UDR, Inc.,
general partner of United Dominion Realty, L.P.
I, Joseph D. Fisher, certify that:
1.
I have reviewed this Annual Report on Form 10-K of United Dominion Realty, L.P.;
CERTIFICATION
EXHIBIT 31.4
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this Report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report, based on such
evaluation; and
(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 18, 2021
/s/ Joseph D. Fisher
Joseph D. Fisher
Chief Financial Officer and Senior Vice President
(Principal Financial Officer) of UDR, Inc.,
general partner of United Dominion Realty, L.P.
CERTIFICATION
EXHIBIT 32.1
In connection with the periodic report of UDR, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2020, as filed with the
Securities and Exchange Commission (the “Report”), I, Thomas W. Toomey, Chairman of the Board and Chief Executive Officer of the Company,
hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my
knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company at the dates and for the periods indicated.
Date: February 18, 2021
/s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION
EXHIBIT 32.2
In connection with the periodic report of UDR, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2020, as filed with the
Securities and Exchange Commission (the “Report”), I, Joseph D. Fisher, Senior Vice President and Chief Financial Officer of the Company, hereby
certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company at the dates and for the periods indicated.
Date: February 18, 2021
/s/ Joseph D. Fisher
Joseph D. Fisher
Chief Financial Officer and Senior Vice President
(Principal Financial Officer)
CERTIFICATION
EXHIBIT 32.3
In connection with the periodic report of United Dominion Realty, L.P. (the “Operating Partnership”) on Form 10-K for the year ended
December 31, 2020, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas W. Toomey, Chairman of the Board and Chief
Executive Officer of UDR, Inc., the general partner of the Operating Partnership, hereby certify as of the date hereof, solely for purposes of Title 18,
Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Operating Partnership at the dates and for the periods indicated.
Date: February 18, 2021
/s/ Thomas W. Toomey
Thomas W. Toomey
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer) of UDR, Inc.,
general partner of United Dominion Realty, L.P.
CERTIFICATION
EXHIBIT 32.4
In connection with the periodic report of United Dominion Realty, L.P. (the “Operating Partnership”) on Form 10-K for the year ended
December 31, 2020, as filed with the Securities and Exchange Commission (the “Report”), I, Joseph D. Fisher, Senior Vice President and Chief
Financial Officer of UDR, Inc., the general partner of the Operating Partnership, hereby certify as of the date hereof, solely for purposes of Title 18,
Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
(2)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Operating Partnership at the dates and for the periods indicated.
Date: February 18, 2021
/s/ Joseph D. Fisher
Joseph D. Fisher
Chief Financial Officer and Senior Vice President
(Principal Financial Officer) of UDR, Inc.,
general partner of United Dominion Realty, L.P.