Udr, Inc. · NYSE:UDR
Udr — Investor Presentation (November 2018)
40 slides from Udr's investor presentation, Nov 6, 2018
Slide 1: Investor Presentation November 2018
INVESTOR PRESENTATION NOVEMBER 2018 y é i y 4 y 4 Baad SEasees UDR, Inc. (NYSE: UDR) has a demonstrated history of successfully managing, buying, selling, developing and redeveloping attractive multifamily real estate properties in a variety of U.S. markets. + S&P 500 Company + ~$16.4 Billion Enterp
Slide 2: Table of Contents
ABLE OF CONTENT UDR at a Glance 3 Why Invest in UDR? 4 UDR Recent News 5 UDR’s Execution Over Time 6 Full-Cycle Investment What Makes UDRa Full-Cycle Investment? 8 Operating Excellence 9-11 Portfolio Diversification 12 Accretive Capital Allocation Sei; Balance Sheet Strength 16 Components of Long-Te
Slide 3: UDR at a Glance
UDR AT A GLANCE UDR is a multifamily REIT that owns, operates, develops and redevelops a diversified portfolio of apartment homes across various top-tier U.S. markets. UDR AT A GLANCE") + Establishedin 1972 + 20 Markets + 163Communities + 49,464 Homes + Same-Store (“SS”) Revenue per Occupied Home: $
Slide 4: Why Invest in UDR?
WHY INVEST IN UDR? UDR’s core objective is to generate high-quality and predictable earnings, dividend and net asset value (“NAV”) per share growth. The attributes below aid us in executing this objective, which over time, should drive better-than-average total shareholder return (“TSR”). OPERATING
Slide 5: UDR Recent News
UDR RECENT NEW Operations: * On a QTD basis, YOY same-store blended lease rate growth of 3.5% has averaged 100 bps higher than what was realized in October of 2017; an expansion from the 60 bp YOY growth rate differential reported in 3Q 2018. * The combination of improving blended lease rate growth,
Slide 6: UDR's Execution Over Time
UDR’S EXECUTION OVER TIME The Result: Our cumulative same-store NOI, AFFO, dividend and NAV per share growth have driven robust relative total shareholder return since 2013, when our inaugural multiyear Strategic Outlook was published. UDR Per Share Growth (indexed at 100 at YE 2012)() 160 ——SSNOl —
Slide 7: Full-Cycle Investment
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Slide 8: Better than Peer Median Growth
Better than Peer Median Growth UDR Annual SS Revenue/NOI Growth vs. Peer Median Since 2000() MUDRGrowth li Peer Median Growth UDR’s Operating Platform + Strong Blocking and Tackling + Continuous Innovation SS Rev UDR’s SS revenue and NOI growth has outpaced peer median growth by ~40 and “80 bps annu
Slide 9: Operating Excellence
OPERATING EXCELLENCE Two attributes define our operating platform: strong blocking and tackling and continuous innovation. Efficient/proactive pricing of our portfolio and controlling expense growth (i.e., blocking and tackling) maintain market growth. Implementing innovative initiatives that boost
Slide 10: Operating Excellence: Continuous Innovation
10 ERATING EXCELLENC Continuous Innovation: On average, “85 bps of our annual incremental NOI growth since YE 2013 has been generated by our revenue-enhancing and expense-growth reducing operating initiatives. Long-lived, consistent innovation will continue to enhance our growth and margin for years
Slide 11: Operating Excellence - Trends
PERATING EXCELLENCE - TRENDS The YOY change in SS blended lease rate growth is expanding. 1 1Q-2Q.—3Q.s Qs Qs 2Q_ 3Q_—s QTDQ 2017 2017 2017 2017 2018 2018 2018 2018” yO Blended, Rate 2.5% 3.6% 2.9% 19% 2.7% 3.8% 3.5% 3.5% Growth) YOY Change in Blended ate Gr bps) (280) (170) (120) (50) 20 20 60 100
Slide 12: Portfolio Diversification
PORTFOLIO DIVERSIFICATION 2 Our diversified portfolio, as defined by geographic mix, price point and location within markets, is a differentiating factor versus peers, appeals to a wide renter and investor audience and lessens volatility in our long-term, same-store growth. Diversification is a key
Slide 13: Capital allocation options and pivot strategy
Our ability to pivot our investment focus toward opportunities that generate the highest risk-adjusted IRR, and can be funded internally through free cash flow and modest asset sales, is central to UDR’s capital allocation strategy. We havea full suite of options including: DEVELOPMENT DEVELOPER CAP
Slide 14: Accretive Capital Allocation
14 ACCRETIVE CAPITAL ALLOCATIO Executing accretively, acknowledging our cost of capital, and pivoting accordingly are vital. Below is a sampling of some of UDR’s larger-scale capital allocation decisions over the past decade and how they compare against the apartment cycle. Capital Allocation During
Slide 15: Accretive Capital Allocation: Development
CCRETIVE CAPIT LLOCATIO DEVELOPMENT" Development has been our preferred method of external growth over the past five years. Pipeline sizing fluctuates with our cost of capital, the opportunity set, and is conservatively funded (i.e., FCF and asset sales). Pro-Rata Size: $809M % Funded: 98% # of Home
Slide 16: Balance Sheet Strength
BALANCE SHEET STRENGTH Our balance sheet is safe, liquid and flexible. We are comfortable with our credit metrics and the efficient pricing they provide. 3Q 2018 UDR BALANCE SHEET STATS Debt-to-Gross Asset Value 33.7% Consolidated Net Debt-to-EBITDAre 5.7K fe Safely investment grade Consolidated Fix
Slide 17: Components of LT AFFO/SH Growth
COMPONENTS OF LT AFFO/SH GROWTH a When we consider UDR’s long-term earnings growth potential, we target AFFO per share growth ~350 basis points above the national apartment rent index. This target is driven by our operating platform/diversified portfolio, capital structure and accretive external gro
Slide 18: 2018 Guidance
Barton Creek Landing | Austin, FY 2018E FFO per common share and uni $0.48 to $0.49 $1.92 to $1.93 FFO as Adj. per common share and unit, diluted $0.49 to $0.50 $1.95 to $1.96 AFFO per common share and unit, diluted $0.45 to $0.46 $1.79 to $1.80 Annualized Dividend per common share and unit $1.29 AM
Slide 19: Apartment Demographics and Fundamentals
Slide 20: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS 20 Positive demographic trends in the largest (Millennials) and second largest (Baby Boomers) population age cohorts signal continued sustainable and elevated demand for rental housing. U.S. Population by Age Cohort (M) Non-Foreign Born © Foreign Born The Pig in the Pytho
Slide 21: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS a The combination of stron cohorts, rising propensity t ig population growth in primary renter age ‘O rent across all age cohorts and a variety of other factors has resulted in renter household formation outpacing owner formation since the mid-2000s. Household Growth by T
Slide 22: Near-Term Rent Drivers
NEAR-TERM REN DRIVERS 2 Demographic drivers will continue to provide a beneficial tailwind to apartments. But, near-term demand is generated by employment and wage growth. UDR’s markets compare favorably vs. the nation as a whole. LTM Employment + Wage Growth (Total Income Growth) National = =-UDR M
Slide 23: Near-Term Rent Drivers
NEAR-TERM RE L DRIVERS 23 YOY Employment growth in UDR’s same-store portfolio is expected to be 1.9% in 2018, flat versus 2017 and wage growth is forecast to remain strong. Recent market-level results are varied, but Total Income Growth (employment growth + wage growth) still points to solid overall
Slide 24: Near-Term Rent Drivers
NEAR TERM REN DRIVERS Working to counteract the strong employment environment is elevated new apartment supply. 2016 through 2018E deliveries have been, or are forecasted to be, near or above long-term trend. Deflating deliveries by household growth (i.e., similar concept to constant dollars) makes
Slide 25: Near-Term Rent Drivers
NEAR-TERM REN DRIVERS 25 Year-over-year forecasted apartment supply growth in UDR’s same-store submarkets varies widely by MSA. 2018 UDR SAME-STORE SUBMARKET APARTMENT DELIVERY EXPECTATIONS TOTAL 1H18 V5 2H18 VS. % OF DELIVERIES IN DELIVERIES 1H17 2H17 1H18 Total UDR SS Submarkets 33,877 + + 46% **
Slide 26: Notes
NOTES 26
Slide 27: Notes
NOTES 27
Slide 28: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward Looking Statements Certain statements made in this presentation may constitute “forward-looking statements.” Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar expr
Slide 29: UDR Definitions and Reconciliations
Slide 30: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Acquired Communities: The Company defines Acquired Communities as those communities acquired by the Company, other than through development and redevelopment activity, that did not achieve stabilization as of the most recent quarter. Adjusted Funds from Operations
Slide 31: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ag Management considers Consolidated Net Debt-to-EBITDAre - adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company's ability to service its consolidated d
Slide 32: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a Effective Renewal Lease Rate Growth: The Company defines Effective Renewal Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior effective rent for the prior lease term on ren
Slide 33: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aS A reconciliation from net income/(loss) attributable to common stockholders to FFO is provided on page A-11 of this presentation. Held For Disposition Communities: The Company defines Held for Disposition Communities as those communities that were held for sale as
Slide 34: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Nominal Cap Rate: Nominal cap rates represent the expected unleveraged first year yield a property buyer expects to realize on its investment. Non-Mature Communities: The Company defines Non-Mature Communities as those communities that have not. met the criteria to
Slide 35: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a9 Stabilization/Stabilized: The Company defines Stabilization/Stabilized as when a community's occupancy reaches 90% or above for at least three consecutive months. Stabilized, Non-Mature Communities: The Company defines Stabilized, Non-Mature Communities as those co
Slide 36: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a YTD Same-Store Communities: The Company defines YTD Same-Store Communities as those communities Stabilized for two full consecutive calendar years. These communities were owned and had stabilized operating expenses as of the beginning of the prior year, were not in
Slide 37: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS All guidance is based on current expectations of future economic conditions and the judgment of the Company's management team. The following reconciles from GAAP Net income/(loss) per share for full year 2018 and fourth quarter of 2018 to forecasted FFO, FFO as Adjust
Slide 38: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS BD Quarter Ended Coverage Ratios September 30, 2018 Net income/(loss) s 20,258 Adjustments Interest expense, including costs associated with debt extinguishment 34.401 Real estate depreciation and amortization 107,881 Other depreciation and amortization 1,682 Income t
Slide 39: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ‘Three Months Ended AL Nine Months Ended September 30, September 30 in thousands, except per share and unit amounts 2018 207 2018 207 Net incomeioss atributableto common stockholders rr a cc Real estate depreciation and amortzaton so7sst sor.a7t 2.807 aes Noncontoling
Slide 40: Forward Looking Statements
Forward Looking Statements Certain statements made in this presentation may constitute “forward-looking statements.” Words such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” "will," “seeks,” “estimates” and variations of such words and similar expressions are intended to ide