Udr, Inc. · NYSE:UDR
Udr — United Dominion Realty Trust — Investor Presentation (March 2002)
30 slides from Udr's investor presentation, Mar 6, 2002
Slide 1: Celebrating our 30th Anniversary: A Tradition in Excellence, A New Standard of Performance
UNITEDOMINION Realty Trust Celebrating our 30" Anniversary... A Tradition in Excellence, A New Standard of Performance
Slide 2: Today's Agenda
UNITED)OMINION Really Trust Today’s Agenda ™ Business Overview ~ A Clear Growth Strategy » Financial
Slide 3: UDR: A Mid-Market Leader
UNITED)OMINION Really Trust UDR: A Mid-Market Leader ~ 30-Year History +» New management began February 2001 + Focus on operating efficiency » 4" Largest Apartment REIT ~ Diversified National Portfolio + 62 markets; no single market > 7% ~ Concentrating on growing markets + Market Capitalization: $4
Slide 4: A Macro Look at the Market Conditions
UNITED)OMINION Really Trust A Macro Look at the <4 Market Conditions ~ Overall: Still Uncertain ~ Four Key Indicators + Occupancy level — appears to be level with last year + Apartment market — labor market uncertain + Construction starts — expected down in 2002 +» New home sales — look flat with la
Slide 5: Why Invest in UDR?
UNITED)OMINION Really Trust Why Invest in UDR? ~ Building Predictable Business + FFO estimate for 2002 unchanged from 9/11 + Expect 11% FFO growth in 2002 ~ Dividend yield of 7-8%, well-covered ~ Clearly Defined Growth Strategy + Further improve operating efficiency + Upgrade asset quality + Reposit
Slide 6: Management's One-Year Report Card
UNITED)OMINION Management’s One-Year 74 Report Card [Criteria Goal Result Reduced expenses, increased revenue efficiency Operations Streamline Began to prune portfolio, shift to growth Portfolio Upgrade amis Fannie Mae refinancing, strengthened Financial Flexibility balance sheet Shareholder Increas
Slide 7: Overview of 2001 Events
UNITED)OMINION Feeally Trust Overview of 2001 Events United Dominion Realty Trust sa2TX tad 9/17: VA 128: Completed $16 Se TOpRTY Maa $2.7 S2m offering Fords Properties reorganization. Payroll for $129 milion redstions of $500k J $14 t 90; Closed doves 200 ion Divider 1214: Coed PAM eh Saba ra creat
Slide 8: Today's Agenda
UNITED)OMINION Really Trust Today’s Agenda ~ Business Overview ™ A Clear Growth Strategy ~ Financial
Slide 9: A Clear Short-Term Growth Strategy
UNITED)OMINION Really Trust A Clear Short-Term Growth Strate ~ Improve Operating Efficiency ~ Upgrade Asset Quality ~ Reposition Portfolio ~ Strengthen Balance Sheet
Slide 10: A Clear Long-Term Growth Strategy
UNITEDOMINION Really Trust A Clear Long-Term Growth Strategy IN| + Competitive Landscape + Fragmented Industry + Cost of Capital or Operations + Operations + Example: A Typical 300 unit apartment community + Annual Net Operating Income $1,695,000 ~ CapEx $120,000 + Value (Assuming 8.5% Capitalizatio
Slide 11: Improve Operating Efficiency — Progress
UNITED)OMINION Really Trust Improve Operating Efficiency — Progress + Revenues + Manage lease maturities + Reduced month-to-month leases + Reduced 60+ days vacant ~ Expenses ~ Reduced head count + Rebid vendors ~ Overhead + Reduce Headcount + Technology investment ail
Slide 12: Managing Revenues
UNITEDOMINION Really Trust Managing Revenues Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Physical Occupancy, 1999-2001 95.0% 94.5% 394.0% 593.5% s 393.0% 92.5% + 92.0% 91.5% 1999 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2
Slide 13: Managing Revenues
UNITED)OMINION Really Trust Managing Revenues Month-to-Month Leases, 2001 a —— Average number of MTM Leases. Apr May Jun Jul.“ Aug Sep Oct Nov Dec 60+ Days Vacant, 2001 ry 8 8 B ‘Average 60+ Days Vacant per Month 13 Mar Apr May Jun Jul Aug Sept Oct Nov Dec
Slide 14: Managing Expenses
UNITED)OMINION Really Trust Managing Expenses Annuaili; Expen: r Unit $179 1999 2000 a @ Admin 2001 mRaM Insurance 2002 est. $153 |0 Marketing @ Personell $119 |m Tax 1B Utilities $821 14
Slide 15: Improve Operating Efficiency — Goals
UNITED)OMINION Really Trust Improve Operating Efficiency — Goals ~ Revenues $8,085 per unit ~ Expenses $2,960 per unit ~ Overhead $359 per unit 15
Slide 16: Upgrade Asset Quality — Progress
UNITED)OMINION Really Trust Upgrade Asset Quality — Progress ~ Portfolio —’96-’00 v Development + Reinvestment + Performance Average Rent |, $500-$700 Property Age J 15-12 yrs. Minimized Exposure, Maintain Discipline Execute 5 Year Plan Replacing Weak Properties with Stronger Properties 16
Slide 17: Upgrading Through Acquisitions and Dispositions
UNITEDOMINION Keeally Trust Upgrading Through Acquisitions and Dispositions Disposition Acquisition Property Name Cleary Court Jefferson on the Cliffs Location Plantation, Florida Arlington, Texas Price $13.4 million $21.9 million Cap Rate 71.7% 9% No. of Units 192 400 Year Built 1985 1992
Slide 18: Upgrading Through New Development
UNITED)OMINION Upgrading Through New aly Tut Development 18
Slide 19: Reinvesting in Assets
Asset Quality ... Reinvesting in Assets UNITEDOMINION Keeally Trust $2,500 i Maintenance G Enhancements $2,000 @ Asset Preservation $1,500 $672 $1,000 $469 $471 $443, $500 $818 $323 $417 $400 $0 1998 1999 2000 2001 2002 Total $: $2,367 $1,841 $984 $1,123 $1,121 19
Slide 20: Reposition Portfolio — Progress
UNITED)OMINION Really Trust Reposition Portfolio — Progress ~ Shift Portfolio to Growing Markets » Dispositions - 2002 + Asset sales under contract: $105 million + Expect total of $300+ million ~ Acquisitions — 2002 + Acquired properties totaling $22 million + Match acquisitions with asset sales 20
Slide 21: Repositioning Strategy
UNITED)OMINION Really Trust Repositioning Strategy ~ Focus on 20-30 Markets vs. 62 ~ Market Selection Criteria + Size + Rent and growth prospects + Portfolio diversification + Location of current holdings ~ Goals for Selection + Opportunities to add value + Create operational synergies + Potential f
Slide 22: Repositioning in Growing Markets
UNITED)OMINION Really Trust Repositioning in Growing Markets ~ Build Primary Market Concentrations, including: + West Coast: + Southwest: + West: » East: Orange County, Oakland, Portland, Seattle Austin Denver Washington D.C. 22
Slide 23: Geographic Distributions
UNITEDOMINION Really Trust Overview ... Geographic Distributions Today Future Tacoma Fredericksburg Dallas otner f Font Meyers Other Oakland | No. Virginia Orlando: ayetieulle Detrot Washington Washington Houston _-7 Pottland ‘Sacramento ‘San Francisco = calle s Ws ‘ortland range County Proeni Cra P
Slide 24: Growth Strategy: The Result
UNITED)OMINION Really Trust Growth Strategy: The Result ... ~ Additional Increase in Operating Efficiency ~ Continued Improvement in Asset Quality » Strong Portfolio Performance 11% FFO Growth Plus 7-8% Dividend Yield 18-19% Total Return 24
Slide 25: Today's Agenda
UNITED)OMINION Really Trust Today’s Agenda ~ Business Overview ~ A Clear Growth Strategy = Financial 25
Slide 26: Financial Projections
UNITEDOMINION Really Trust Financial Projections
Slide 27: Internal Growth
UNITED)OMINION Really Trust Internal Growth Status + 2001 Actual FFO $1.48 ~ 2002 Incremental Earnings Range: + One-Time Write-Off (added back) $.07 Done + Same Store Sales Growth O01 + Capital Transactions .02 Done + 10% Work Force Reduction 01 Done + Insurance Change 02 Done + Refinancing .05 Done
Slide 28: Overview of Cash Flow
Overview of Cash Flow FFO $1.65 Capital Replacements (0.24) AFFO $1.41 Dividends (1.11) Cash Flow 0.30 28
Slide 29: Increasing the Balance Sheet's Flexibility
UNITED)OMINION Really Trust Increasing the Balance Sheet’s Flexibility ~ Fannie Mae Financing: $600 Million + Reduced interest rate by 150 basis points + Fixes average maturity at 8-10 years, up from 3.5 years + Goal for floating rate debt to be at 20% of total ~ Key Financial Metrics are Improving
Slide 30: Lasting Impressions
UNITED)OMINION Really Trust Lasting Impressions ~ Potential for 2002 Total Return: 18-19% + FFO estimate unchanged from 9/11 + FFO growth expectation: 11% + Dividend: 7-8%, well covered » Clearly Defined Growth Strategy + Further improve operating efficiency +» Upgrade asset quality + Reposition to
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