Udr, Inc. · NYSE:UDR
Udr — Investor Presentation (November 2022)
40 slides from Udr's investor presentation, Nov 10, 2022
Slide 1: Investor Presentation November 2022
} a | | ] PRESENTATION NOVEMBER 2022 INVESTOR
Slide 2: Table of Contents
TABLE OF CONTENTS C3) Recent Updates and Operating Momentum fo) UDR at a Glance a (3) UDR Value Proposition fo} Operating Competitive Advantages | 12) Accretive Capital Allocation and Value Creation © Market and Resident Attributes @ Strong, Liquid, Flexible Balance Sheet ® ESG and Sustainability Le
Slide 3: Recent Updates
RECENT UPDATES Apartment fundamentals remain strong and relative advantages across operations, capital allocation, balance sheet positioning, and innovation position UDR well for continued strong same-store and earnings growth. AQ 2022 Expectations 96.7%t0 96.9% EY 6.0%t07.0% E 15%to2.0% @ 11.25% to
Slide 4: Robust Demand & Strong Resident Fiscal Health
ROBUST DEMAND & STRONG RESIDENT FISCAL HEALTH) Demand indicators continue to show strength as consumer financial health remains resilient and relative affordability continues to favor multifamily renting. Further, concession usage is minimal and we see no evidence of doubling-up. Higher Traffic More
Slide 5: Historically Strong Operating Momentum
HISTORICALLY STRONG OPERATING MOMENTUM Pricing strategy to push rental rate has resulted in well-above historical average lease rate growth, revenue growth, and embedded 2023 growth. Pricing Strategy Effectiveness Lease-over-Lease Pricing) 3Q 2022 Same-Store Revenue growth Remains at least 2x higher
Slide 6: UDR at a Glance
UDR AT A GLANCE?) UDR is a full-cycle investment that consistently generates strong total shareholder return (“TSR”) through innovation, bestin- class operations, and disciplined capital allocation. e &P 500 000 a A 50 Year i eran 59,000 ace Full-Cycle ff Continuous History Ce Apartment ff 21 Market
Slide 7: Diversified Portfolio Composition
DIVERSIFIED PORTFOLIO COMPOSITION UDR is diversified across markets and price points to generate robust growth with less risk. Northeast/Mid Atlantic: ¢ 39% of NOI West Coast Sunbelt N 37% of NOL 24% of NOL Price Point and L¢ = A-Quality B-Quality = Coastal A = Sunbelt A Coastal B ‘Sunbelt B 67% 53%
Slide 8: UDR Value Proposition
UDR VALUE PROPOSITION NextGen Operating, Differentiated e> Platform and Market OG? Innovation Selection - Self-service and improved Durable competitive - Predictive analytics and resident experience advantages boost yields qualitative analyses to identify investment/ divestment markets - Expand marg
Slide 9: Operating Competitive Advantages
OPERATING COMPETITIVE ADVANTAGES Best-in-class operations enables monetization of value proposition and drives long-term outperformance versus peers. UDR’s relative operating advantages and controllable operating margin should expand further with additional innovation. >$20M NOI Upside Realized >$40
Slide 10: Operating Platform Accomplishments
OPERATING PLATFORM ACCOMPLISHMENTS UDR’s history of innovation has delivered better SS NOI growth and controllable operating margin versus peers. Long-Term Same-Store Outperformance Increased Efficiencies Versus Peers UDR vs. Peer Median SS NOI Growth (2014-3922) Apartment Homes Managed per Employee
Slide 11: Innovation - Future Operating Initiatives
INNOVATION - FUTURE OPERATING INITIATIVES Accomplishments Future Initiatives >$40M NOI over next 24-36 months >$20M NOI ide realized $ upside realize Max potential of >$140M NOI on current portfolio Zz Reduce Vacant Days Foundational Technologies Customer Pricing Engine Self-Service Optimization Pla
Slide 12: Accretive Capital Allocation
ACCRETIVE CAPITAL ALLOCATION UDR has a track record of being a proficient steward of capital and can utilize various external growth value creation drivers. UDR’s Capital Allocation Throughout the Apartment Cycle ($M) ([W0R Prem./(Disc.) to NAV (Ins) ——Net Acquisitions (rhs) issue equity at a premiu
Slide 13: Accretive Capital Allocation
ACCRETIVE CAPITAL ALLOCATION Our wide variety of value creation drivers provides UDR the latitude to pivot toward investment opportunities that generate the highest riskadjusted IRRs and the greatest eamings/NAV accretion. These include: ACQUISITIONS Station on Silver| Herndon, VA (Washington, DC MS
Slide 14: Repeatable Value Creation
REPEATABLE VALUE CREATION UDR has a proven track record of achieving 10% to 15% NOI growth above market rent growth on acquisitions over the first three years of ownership. This enduring competitive advantage is repeatable and scalable. Yield Expansion Drivers of UDR’ 2. 2BY) of 2019-21 Third-Party
Slide 15: Diversified and High-Quality Resident Base
DIVERSIFIED AND HIGH-QUALITY RESIDENT BASE) Household income, wage growth, and resident credit quality support current and future demand. $160K Average annual household income Seattle ‘Avg. Household Income ($000s): $166 vs. MSA Median Income: 147% 4% Highncome MSA Jobs: * ‘San Francisco BayArea ‘Av
Slide 16: Resident Attributes and Trends
RESIDENT ATTRIBUTES AND TRENDS Balanced resident composition minimizes risk of exposure to specific age cohorts. 30% ‘Average Resident Age. 35 27% 25% Median Resident Age: 33 1% 20% 15% 10% 5% 0% Under 25 45+ Pre-COVID:Feb-20 Current Resident Tumover since 2018 Robust demand and our focus on residen
Slide 17: Strong, Liquid, Flexible Balance Sheet
STRONG, LIQUID, FLEXIBLE BALANCE SHEET Sectorleading interest rate and liquidity outlook ($1.18, including ~$180M in unsettled forward equity sale agreements) plus strong leverage metrics support growth opportunities and reduce risk. Strong Leverage Metrics Well Laddered Maturity Schedule BBB+ 27.2%
Slide 18: Improving Metrics and Strong Liquidity
IMPROVING METRICS AND STRONG LIQUIDITY Proactive liability management and moderately sized development drives strong liquidity, while EBITDAre growth supports improved leverage metrics. Leverage Metrics Trending Back to Pre-2020 Levels Well Balanced Sources and Uses Consolidated Net Debt-o-EBITDAre
Slide 19: ESG and Sustainability Leadership
ESG AND SUSTAINABILITY LEADERSHIP UDRis a recognized global ESG leader and is committed to further enhancing our ESG profile.) GRESB Score of 87 LEED Certifications Sustainalytics SDG Alignment Eamed a 5 Star Developed, redeveloped, or Classified “Low Risk” with a Aligned with 10 United Designation,
Slide 20: Innovative Culture and ESG Leadership
INNOVATIVE CULTURE AND ESG LEADERSHIP UDR’s culture is innovative, empowering and rewards success. Proactive engagement with associates and residents support UDR’s maximum GRESB score in Social Responsibility. Resident Engagement and Satisfaction Associate Engagement and DEI? ~90% of associates feel
Slide 21: Appendix
APPENDIX 399 Fremont| San Francisco, CA
Slide 22: The Case for Apartment REITs
THE CASE FOR APARTMENT REITS Apartment REIT TSR has outperformed other REITs and the broader market by a wide margin over the past 20 years due to: Ongoing shortage Increased Housing's status as Better long-term NOI of U.S. housing propensity to rent a necessary, non- J growth + lower capex discreti
Slide 23: Apartment Demographics and Fundamentals
APARTMENT DEMOGRAPHICS AND FUNDAMENTALS Long-term demographics remain strong for apartments. Since 2010, approximately 28% fewer total housing units have been produced versus total households formed over the same period. U.S. POPULATION BY AGE COHORT (MILLIONS) PROPENSITY TO RENT BY AGE COHORT oe m=
Slide 24: Apartment Demographics and Fundamentals
APARTMENT DEMOGRAPHICS AND FUNDAMENTALS Low absolute and relative affordability represent a barrier to single-family ownership, resulting in a larger potential multifamily renter pool. Third-party forecasts indicate ~5 million additional apartments will be needed by 2030 to satisfy housing demand, t
Slide 25: Notes
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Slide 27: Notes
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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: Definitions and Reconciliations
022 ESG REPoRr 9022 GRESB 5 STAR RATINg zt | DEFINITIONS AND RECONCILIATIONS NOVEMBER 2022
Slide 30: Definitions and Reconciliations A2
DEFINITIONS AND RECONCILIATIONS A2 ‘Acquired Communities: The Company defines Acquired Communities as these communities acquired by the Company, other than development and redevelopment activity, that did not achieve stabilization as of the most recent quarter. ‘Adjusted Funds from Operations (“AFFO
Slide 31: Definitions and Reconciliations A3
DEFINITIONS AND RECONCILIATIONS AS Controllable Expenses: The Company refers to property operating and maintenance expenses as Controllable Expenses. Controtiable Operating Margin: The Company defines Controllable Operating Margin as (i) rental income less Controllable Expenses (il) divided by renta
Slide 32: Definitions and Reconciliations A4
DEFINITIONS AND RECONCILIATIONS AA Effective Blended Lease Rate Growth: The Company defines Effective Blended Lease Rate Growth as the combined proportional growth as a result of Effective New Lease Rate Growth and Effective Renewal Lease Rate Growth. Management considers Effective Blended Lease Rat
Slide 33: Definitions and Reconciliations A5
DEFINITIONS AND RECONCILIATIONS AS Funds From Operations (“FFO’) attributable to common stockholders and unitholders: The Company defines FFO attributable to common stockholders and unitholders. as net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding im
Slide 34: Definitions and Reconciliations A6
DEFINITIONS AND RECONCILIATIONS A6 Net Operating Income ("NOI"): The Company defines NOI as rental income less direct property rental expenses. Rental income represents gross market rent and other revenues less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real esta
Slide 35: Definitions and Reconciliations A7
DEFINITIONS AND RECONCILIATIONS AT Physical Ocaupancy: The Company defines Physical Occupancy as the number of occupied homes divided by the total homes available at a community. Proposition 13: In California, an amendment enacted in 1978 that limits the tax rate on real estate. The proposition decr
Slide 36: Definitions and Reconciliations A8
DEFINITIONS AND RECONCILIATIONS AS ‘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 c
Slide 37: Definitions and Reconciliations A9
DEFINITIONS AND RECONCILIATIONS Ag 2022 Guidance: 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 fourth quarter of 2022 and full-year 2022 to forecasted
Slide 38: Definitions and Reconciliations A10
DEFINITIONS AND RECONCILIATIONS A10 Quarter Ended Coverage Ratios September 30, 2022 Net income/(|oss) $ 25,145 Adjustments: Interest expense, induding debt extinguishment and other associated costs 39,905 Real estate depreciation and amortization 166,784 Other depreciation and amortization 3,430 Ta
Slide 39: Definitions and Reconciliations A11
DEFINITIONS AND RECONCILIATIONS AAL ‘Three Months Ended ‘ine Morths Ended ‘Sepember 30, ‘Sepember 30, In thousands, exept per shore and unit amounts oa 2 Et Net inceme/ (es) atibible w commen smctacers $ 22am § tees $= soar § case es estate cepresaton ana anortaston 306,781 ss2838 497,987 auza0s onc
Slide 40: 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