Udr, Inc. · NYSE:UDR
Udr — Debt Investor Presentation (May 2019)
48 slides from Udr's debt investor presentation, May 31, 2019
Slide 1: Fixed Income Investor Presentation, June 2019
FIXED INCOME INVESTOR PRESENTATION JUNE 2019 ark Square Lobby |hisdelphis, PA 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 + ~$18.4
Slide 2: Table of Contents
BLE OF CONTEN =| UDR at a Glance 3 Recent News 4 Why REITs? 5-6 Why Apartment REITs? 7 Why UDR? 8-10 KEY BUSINESS AREAS Operating Excellence 12-16 Portfolio Diversification 17 Accretive Capital Allocation 18-22 Balance Sheet Strength 23-28 Culture and ESG 29 2019 Guidance 30 Apartment Demographics a
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 top-tier U.S. markets. Our primary goals are to consistently generate above-peer average total shareholder return (“TSR”) while considering our stakeholders and th
Slide 4: Recent News
RECENT NEW Operating Results: * Through May 29, 2019, QTD same-store (“SS”) blended lease rate growth of 4.6% has averaged 70 bps higher YOY than during the comparable 2018 period. QTD occupancy has averaged >96.9%. Operating Platform: * Implementing our Next Generation operating platform including
Slide 5: Why REITs?
WHY REIT: The public REIT space is an institutionally accepted asset class with nearly $1.2T in market cap and has 87 companies with market caps over $3B. REITs have historically served as a strong inflation hedge, have direct exposure to large-scale drivers of the U.S. economy, and have differentia
Slide 6: Why REITs?
WHY REITS Over the past 20 years Equity REITs have generated better relative TSR versus the broader market in over half of the 3-year rolling measurement periods; all while providing investment diversification (low correlation to broader market returns). Rolling 3-Year Annualized TSR) 54% of the tim
Slide 7: Why Apartment REITs?
WHY APARTMENT REITS Apartment REITs have outperformed other REITs and the broader market by a wide margin over the past 20 years. This outperformance has been driven by (1) an ongoing shortage of U.S. housing, (2) better LT NOI growth/lower cap ex than most other REIT sectors, (3) the sector’s statu
Slide 8: Why UDR?
WHY UDR? Strategy: Our primary goals are to consistently generate above-peer average TSR while considering our stakeholders and the environments we operate in. The attributes below aid us in executing these objectives. OPERATING EXCELLENCE PORTFOLIO DIVERSIFICATION * Generate above-peer median same-
Slide 9: Why UDR? Full-Cycle Investment
WHY UDR FULL-CYCLE INVESTMENT UDR has historically generated above-peer median same-store NOI growth due to its best-in-class operations, with lower volatility resulting from its diversified portfolio. These, when combined with a wide variety of accretive capital deployment opportunities and an inve
Slide 10: Better-than-peer growth driving relative total shareholder return
Our better-than-peer median same-store NOI, FFO as Adjusted, dividend and NAV per share growth rates have driven robust relative total shareholder return over the past five years. 170 160 150 140 130 120 110 100 90 230 210 190 170 150 130 110 90 UDR Per Share Growth (indexed at 100 at YE 2013)() ——S
Slide 11: Key Business Areas
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Slide 12: Operating Excellence
OPERATING EXCELLENCE 2 Our operating platform is founded on (1) efficiently pricing our apartment homes while controlling expense growth (i.e., blocking and tackling), and (2) implementing innovative initiatives that boost our top-/bottom-lines (i.e., innovation) to drive SS outperformance as well a
Slide 13: Operating Excellence: Innovation
OPERATING EXCELLENCE Innovation: UDR has a history of innovative operating initiatives that increase our SS growth rates and expand our controllable margin. Our goal is to continuously implement new long-lived initiatives that contribute to recurring, outsized growth within our markets and are made
Slide 14: The Operating Platform of the Future
OPERATING EXCELLEN 14 The Operating Platform of the Future: UDR will continue to implement a variety of technological and process initiatives over the next 3-5 years to generate greater efficiencies, further expand our controllable margin, and increase resident satisfaction and employee engagement.
Slide 15: The Operating Platform of the Future (cont'd)
15 OPERATING EXCELLEN The Operating Platform of the Future (cont’d): To-date, we are seeing strong returns from Phase 1 and the initial implementation of other “next generation” operating initiatives as outlined on page 14. How we will measure our “success” moving forward is highlighted below. Succe
Slide 16: Operating Excellence - Trends
16 PERATING EXCELLENCE - TREN The YOY change in SS blended lease rate growth remains healthy. 3Q 4Q 1Q 2Q 3Q 4Q 1Q QTD2Q 2017. +2017 +2018 #2018 2018 2018 2019 2019”) YoY Blended Rate Growth® YOY Change in Blended Rate Growth (bps) 2.9% 1.9% 2.7% 3.8% 3.5% 3.0% 3.3% 4.6% (120) (50) 20 20 60 110 60 7
Slide 17: 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 d
Slide 18: Accretive Capital Allocation
Our ability to adapt and pivot our investment focus toward opportunities that generate the highest risk-adjusted IRR and which can be funded accretively, is central to UDR’s capital allocation strategy. We have a full suite of options including: DEVELOPMENT DEVELOPER CAPITAL PROGRAM [Me)\|Xe)i 7/70)
Slide 19: Accretive Capital Allocation
ACCRETIVE CAPI LLOCATIO Our capital allocation pivots, in the context of our cost of capital at the time (shown below), have been well-timed to take advantage of accretive growth opportunities throughout the apartment cycle. Capital Allocation During the Apartment Cycle ($B) [wR Prem./(Disc.) to NAV
Slide 20: Year-To-Date Acquisitions
Year-To-Date Transactions: Recently, our growth has been driven by acquisitions due to our strong cost of capital and accretive opportunity set. These transactions generate significant upside via a variety of value creation mechanisms, including predictive analytics, deal sourcing, core operational
Slide 21: Accretive Capital Allocation: Year-To-Date Acquisitions (cont'd)
ACCRETIVE CAPITAL ALLOCATION Year-To-Date Acquisitions (cont’d): Peridot Palms -— St. Petersburg, FL Purchase Price ($M): $98 | Yr-1Proj.NOIYield: Low-5% Value Creation: Funding: Equity at a premium to NAV Market: Predictive Analytics, strong job/wage growth, STEM jobs, Sunbelt iversification Operat
Slide 22: Developer Capital Program
CCRETIVE CAPITAL ALLOCATIO Since 2013, our Developer Capital Program, whereby we provide capital to 34_party developers, has provided an accretive, cost-effective way to gain access to newly constructed multifamily communities in targeted markets while also generating strong risk-adjusted returns an
Slide 23: Balance Sheet Strength
BALANCE SHEET STRENGTH Our balance sheet is safe, liquid and flexible. We are comfortable with our credit metrics, maturity profile, three-year liquidity outlook, $1.0 billion in available capacity as of 3/31/19 and the efficient pricing they provide. 019 UDR BALANCE SHEET STATS Consolidated Debt-to
Slide 24: Balance Sheet Strategy
24 BALANCE SHEET STRATEG Our goal is to maintain a safe, liquid and flexible balance sheet that can fully fund our needs throughout the real estate cycle, and which provides our investors with a compelling risk-adjusted return. Throughout this cycle, UDR has dramatically improved our credit profile
Slide 25: Diverse Access to Capital
DIVERSE ACCESS TO CAPIT, UDR has access to a diverse array of capital sources and has demonstrated an ability to execute on all of them. Public Capital Markets © Since 2014 UDR has raised $3.3B in the public debt and equity markets. * We are committed to maintaining access to the public capital mark
Slide 26: Balance Sheet: Debt Maturities and Covenants
BALANCE SHEET 2 UDR maintains a well laddered maturity schedule, with average duration of 5.5yrs and less than 20% of total debt maturing over the next 3yrs. Consolidated Debt Maturities as of March 31, 2019 TSSsewred Debt mM Unsecured Debt EEE CP / WC Line We maintain safe and strong balance sheet
Slide 27: Balance Sheet Metrics
BALANCE SHEET METRICS Strong Improvement Since 2009 * Since the financial crisis, UDR has worked to improve the strength of our balance sheet and the safety of our cash flow. * Moving forward, improving operating fundamentals should continue to support growth in AFFO and Consolidated EBITDAre. * UDR
Slide 28: Unencumbered Asset Pool
NENC MBER POO The Vast Majority of UDR’s Assets are Unencumbered * 89% of NOI is unencumbered * Only 10 wholly owned assets have secured debt * Total secured debt represents just 17% of total debt encumbered Pool Overview | 3a | Annualized Unencumbered NOI $672M '% of Total NOI 89% Number of Homes 3
Slide 29: Culture and ESG
CULTURE AND ESG 2 UDR’s culture is innovative, empowering and rewards success. Reporting on our ESG initiatives will continue to ramp up in 2019. Associate Engagement Resident Satisfaction of our associates would recommend UDR asa great place to workin 2018. ite satisfaction scores by Increased asso
Slide 30: 2019 Guidance
2019 GUIDANCE" ‘Arbors at Lee Vista | Olan, FL EARNINGS PER SHARE GUIDANCE | 2020198 =| — FY2019E Income/(loss) per wtd. avg. common share, diluted $0.08 to $0.10 $0.36 to $0.40 FFO per common share and unit, diluted $0.50 to $0.52 $2.05 to $2.09 FFOA per common share and unit, diluted $0.50 to $0.5
Slide 31: x a Zz iu o o =e |
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Slide 32: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS 2 Long-term demographics remain strong for apartments. Domestically born age cohorts <20 years old are, on average, 600K larger than the primary renter cohorts aged 20-34 years. Whether the “population wave” continues unabated will depend on the intensity of foreign born
Slide 33: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS 33 Renter household (“HH”) formation has outpaced owner formation since the mid-2000s. But, the U.S. is not producing enough housing to satisfy HH growth. 16% fewer total housing units have been completed YTD 2019 than in 2001 despite 19% HH growth over that time period a
Slide 34: Near-Term Rental Drivers
NEAR-TERM REN DRIVERS “ Similar to long-term, demographic drivers of rentership growth, near-term demand drivers such as employment and wage growth screen beneficial for apartments; especially in UDR’s markets. LTM Employment + Wage Growth (Total Income Growth) CoNational ——-UDR Markets 5.8% prong n
Slide 35: Near-Term Rental Drivers: Supply
NEAR TERM RE L DRIVERS Working to counteract the strong employment environment is elevated new apartment supply. 2019 national deliveries are expected to be relatively stable-to-slightly increasing versus 2018 after delivery slippage is factored in. At a more granular level, only 5% of anticipated 2
Slide 36: 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
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Slide 38: 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 39: 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 40: 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 41: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aS 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 measu
Slide 42: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ie In thousands 102019 402018 302018202018 102018 Net income/(Ioss) attributable to UDR, Inc. $ 24503 82139 $ 18610 § 206018 81,756 Property management 7,103 7,280 7,240 7,057 6,888 Other operating expenses 5,646 3,952 3314 2,825 2,009 Real estate depreciation and amo
Slide 43: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a9 Redevelopment Projected Weighted Average Return on Incremental Capital Invested: The projected weighted average return on incremental capital invested for redevelopment projects is NOI as set forth in the definition of Stabilization Period for Redevelopment Yield,
Slide 44: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Management considers Total Revenue per Occupied Home a useful metric for investors as it serves as a proxy for Portfolio quality, both geographic and physical. TRS: The Company's taxable REIT subsidiary ("TRS") focuses on development, land entitlement and short-ter
Slide 45: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae 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 2019 and second quarter of 2019 to forecasted FFO, FFO as Adj
Slide 46: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS BD Quarter Ended Coverage Ratios March 31, 2019 Net income/(loss) s 26,602 Adjustments Interest expense, including costs associated with debt extinguishment 33,542 Real estate depreciation and amortization 112,468 Other depreciation and amortization 1,656 Tax (provisi
Slide 47: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aeB ‘Three Months Ended March 31, in thousands, except per share and unit amounts 2019 2018 Net incomei(loss) attributable to common stockholders $ 23,492 § 80,801 Realestate depreciation and amortization 112,468 108,136 Noncontrolling interests, 2,099 7,469 Realestat
Slide 48: 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