Udr, Inc. · NYSE:UDR
Udr — Debt Investor Presentation (June 2020)
48 slides from Udr's debt investor presentation, Jun 1, 2020
Slide 1: Fixed Income Investor Presentation June 2020
upky =FIXED INCOME INVESTOR PRESENTATION JUNE 2020 ning doors to the future 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 + ~$17.2 B
Slide 2: Table of Contents
BLE OF CONTEN KEY MESSAGES AND UPDATES PAGE UDR at a Glance 3 Recent News and Outlook 4 Operating Update 5 Adaptability 6-7 Responding to Challenges and Maximizing Revenue 8-9 Next Generation Operating Platform 10-11 Value Proposition 13-14 Operating Excellence 15-17 Accretive Capital Allocation 18-
Slide 3: 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 strong total shareholder return (“TSR”) while considering stakeholders and the environments we operate in. UD
Slide 4: Recent News and Outlook
RECENT NEWS AN OOK UDR’s primary goal is to produce strong total shareholder return. The Company is well positioned for a recession and the recovery afterwards. Strong Collections and Operating Results May’s robust results continue to bolster UDR’s consistent execution as a top operator. * May cash
Slide 5: Operating Update
OPERATING UPDATE Operating results remain strong through May. UDR’s surgical approach to growing blended lease rates and active management of occupancy has preserved our rent roll and gross potential rent. Operating Takeaways: * May collections are consistent with April at the same time of the month
Slide 6: Proven Ability to Adapt
PROVEN ABILITY TO ADAPT UDR has an innovative culture that embraces new technologies. While the COVID-19 pandemic has altered how our business is conducted, UDR has a proven history of quickly and effectively adapting to changing market conditions while also deploying new technologies to drive opera
Slide 7: Adapting Operations During COVID-19
ADAPTING OPERATI DURING COVI UDR has consistently embraced new technologies that drive greater efficiencies throughout our operations. Prior to the pandemic, we were already well into the implementation of a touchless, self-service operating model due to investments made over the past three years in
Slide 8: Responding to Leasing Challenges
RE DING TO LEASING CHALLEN Since declining by 35% and 45% year-over-year in late-March, leasing traffic (“traffic”) and applications have incrementally improved as states have begun to re-open. Traffic is now 6% higher and applications are roughly flat compared to the same time in 2019. To accommoda
Slide 9: Operating Strategy Maximizes Revenue
OPERATING STRATEGY MAXIMIZES REVENUE Maximizing revenue growth through a surgical approach to pricing homes and accommodating residents in need. UDR’s surgical approach to pricing homes and accommodating our residents throughout the pandemic has relied on market-by-market, asset-by-asset, and even h
Slide 10: Next Generation Operating Platform
NEXT GENERATION OPERATING PLATFORM UDR’s Next Generation Operating Platform was originally conceived three years ago to enhance our margin by minimizing controllable expense growth through centralizing/outsourcing certain functions, moving to an efficient self-service model, and utilizing big data t
Slide 11: Next Generation Operating Platform
NEXT GENERATION OPERATING PLATFORM ~ #4 COVID-19 has shifted the conversation away from the Platform’s economic upside, but progress continues which will benefit 2020 and beyond. (2) A far more efficient company... TTM(") SS Controllable NOI per Employee ($000s) 00 $768 $700 coo ($502 28% expansion
Slide 12: Reasons to Invest in UDR
7 Reasons to Invest in UDR <a
Slide 13: Why UDR? Value Proposition
WHY UDR? x UDR’s Value Proposition Strong Earnings, Dividend and NAV per Share Growth have contributed to robust Total { Pageia Shareholder Return over time, driven by... Operating Excellence: * Next Generation Operating Platform has enhanced, and is | Pages expected to continue to enhance, our perf
Slide 14: Why UDR
WHY UDR Our same-store NOI, FFO as Adjusted, dividend and NAV per share growth rates compare favorably versus peer-median growth rates over the past six plus years. 14 UDR Per Share Growth Rates (indexed at 100 at YE 2013)() 220 —SSNOl —FFOasAdj./sh Growth —Dividend/sh Growth © —=NAV/sh Growth 170 4
Slide 15: Operating Excellence
OPERATING EXCELLENCE UDR Creates Value Through Operations Better than peer long-termsame- —_ With lower NOI volatility (i. store NOI growth... 2010 - 1Q 2020 NOI Growth CAGR 15 , tisk)... 2010 - 1Q 2020 NOI Volatility”) UDR 45% UDR 0s Peer Median 4.2% Peer Median 0.6 Next Generation Operating Platfo
Slide 16: Operating Excellence
OPERATING EXCELLENCE Outsized “market wins')” illustrate our ability to consistently outperform peers at the market-level over time and better represent our operating abilities, as they are agnostic to geographic portfolio concentrations. Onatrailing 12 month basis, UDR has, on average, generated th
Slide 17: Operating Excellence: Case Study
OPERATING EXCELLENCE: CASE DY u UDR’s Operational Value Proposition in Action UDR creates a significant amount of value through its operations platform, expertise, and culture. Our relative NOI growth outperformance in Orlando over time (shown below) serves as an illustrative example of what our ope
Slide 18: Accretive Capital Allocation
ACCRETIVE CAPITAL ALLOCATION © Creating Value Through Capital Allocation G) Expertise in a Wide Variety of Investment Opportunities Page 19 * Acquisitions; development; Developer Capital Program (mezz/pref lending platform; “DCP”); redevelopment; operating platform; revenue-enhancing capital expendi
Slide 19: Accretive Capital Allocation
ACCRETIVE CAPIT, LLOCATION 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: ONE-OFF/PORTFOLIO ACQS. DEVE
Slide 20: Accretive Capital Allocation
ACCRETIVE CAPITAI LOCATION 2 UDR has a strong track record of heeding cost of capital growth signals from the public market, as exhibited by our disciplined use of equity issuances versus dispositions to fund our external growth over time. Capital Allocation During the Apartment Cycle ($M) [wor Prem
Slide 21: Diversified Portfolio Composition
DIVERSIFIED PORTFOLIO COMPOSITION a Our diversified portfolio, as defined by geographic mix, price point and location within markets, is a differentiating factor versus peers, appeals toa wide renter and investor audience and lessens volatility in long-term same- store growth. Predictive analytics i
Slide 22: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHT: z UDR’s strong balance sheet is positioned to provide liquidity and safety in current times and throughout the real estate cycle. Robust Li ity Our balance sheet remains fully capable of supporting current business operations and future growth. * Our $1.175B in revolving cre
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, available LOC capacity and the efficient pricing they provide, which serve as a competitive advantage versus the private market. 2020 UDR
Slide 24: Balance Sheet Strategy
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. 24 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 2015 UDR has raised $4.9B in the public debt and equity markets. * We are committed to maintaining access to the public capital mark
Slide 26: 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 27: Unencumbered Pool
MBERED POO The Vast Majority of UDR’s Assets are Unencumbered * 84% of NOI is unencumbered. * Only 20 wholly owned assets have secured debt. * Total secured debt represents just 23% of total debt. Inencumbered Pool Overview — Annualized Unencumbered NOI $760M % of Total NOI 84% Number of Homes 39,51
Slide 28: Culture and ESG
UDR’s culture is innovative, empowering and rewards success. Reporting on our ESG initiatives increased dramatically during 2019. Corporate Responsibility = Participated in Global Real Estate Sustainability Benchmark , (“GRESB”) in 2019; achieved ESG public disclosure score of “A” « “a GRESB SUSTAIN
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Slide 30: Why REITs?
WHY REITS? 30 The public REIT space is an institutionally accepted asset class with over $1T in market cap and has 71 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 31: Why REITs?
WHY REITS Over the past 20 years Equity REITs have generated better relative TSR versus the broader market in slightly 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) 53% o
Slide 32: Why Apartment REITs?
WHY APARTMENT REIT 3 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 stat
Slide 33: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS Long-term demographics remain strong for apartments. Domestically born age cohorts <20 years old are, on average, 192K larger than the primary renter cohorts aged 20-34 years. Whether the “population wave” continues unabated is expected to depend on the intensity of forei
Slide 34: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS Cumulative renter household (“HH”) formation has outpaced cumulative owner HH formation since the mid-2000s. But the U.S. is not producing enough housing to satisfy overall HH growth. Since 2010, 21% fewer total housing units have been produced than total HH formation ove
Slide 35: Notes
NOTES
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 development and redevelopment activity, that did not achieve stabilization as of the most recent quarter. Acquired JV Same-Store Portfolio Commun
Slide 39: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ag Management considers Consolidated Interest Coverage Ratio - 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 consolidate
Slide 40: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a DownREIT: A DownREIT is structured much like an UPREIT, but the REIT also owns and operates properties other than its interest in a controlled partnership that owns and operates a separate group of properties Earnings Before Interest, Taxes, Depreciation and Amortiz
Slide 41: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aS Estimated Quarter of Completion: The Company defines Estimated Quarter of Completion of a development or redevelopment project as the date on which construction is expected to be completed, but it does not represent the date of stabilization. Funds from Operations
Slide 42: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Joint Venture Reconciliation at UDR's weighted average ownership interest: In thousands 1Q 2020 Income/ (loss) from unconsolidated entities S$ 3,367 Management fee 600 Interest expense 5,067 Depreciation 8,816 General and administrative 66 West Coast Development JV
Slide 43: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a9 Nominal Cap Rate: Nominal cap rates represent the expected unleveraged first year yield a property buyer expects to realize on its investment. NOI Enhancing Capital Expenditures ("Cap Ex"): The Company defines NOI Enhancing Capital Expenditures as expenditures that
Slide 44: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae 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 45: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae UPREIT: In the typical umbrella partnership REIT (UPREIT), the partners of the existing partnerships and a REIT become partners in a new partnership termed the operating partnership. For their respective interests in the operating partnership (OP units), the partne
Slide 46: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS BD Quarter Ended Coverage Rat March 31,2020 Wet comers) 3 0 Attner: Ite eee, ing cots asc wih det exnouehnet wai Healedat deprecation and anoriaton ‘85.076 otter deoredn ad emorztan 2028 Texpoveoneet) nt tee adjsinrsoelect the Compan share otEBITDAre of moansolite pet
Slide 47: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aeB Three Months Ended March 31, In thousands, except per share and unit amounts 2020 2019 Net income!(loss) attributable to common stockholders 8 4455s 23,492 Real estate deprecation and amortization 155,476 112,468 Noncontroling interests 319 2,099 Real estate depre
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