Udr, Inc. · NYSE:UDR
Udr — Investor Presentation (November 2016)
43 slides from Udr's investor presentation, Nov 15, 2016
Slide 1: Investor Presentation November 2016
INVESTOR PRESENTATION NOVEMBER 2016 ‘gen Beane and TENZ | Blowo, WA ‘ete «92016 AU AL UDR, Inc. (NYSE: UDR), has a demonstrated history of successfully managing, buying, selling, developing and redeveloping attractive real estate properties in primarily coastal, core U.S. markets. + S&P 500 Company
Slide 2: Table of contents
UDR at a Glance Why Invest in Multifamily? 4-10 Why Invest in UDR? 11-12 Portfolio Diversification 23 Operating Platform 14-15 External Growth 16-20 Alternative Investments 21 Balance Sheet and Self-FundingModel 22-23 Cash Flow Growth and Value Creation 24 Recent Information and Operating Trends 25-
Slide 3: UDR at a Glance
UDR AT A GLANCE 3 UDR is a multifaceted apartment REIT that owns, operates, develops and redevelops apartment homes across a diverse portfolio. UDR AT A GLANCE () * Establishedin1972 * 20Markets * 171Communities + 51,129 Homes * Same-Store Revenue per Occupied Home: $1,966 * Total Portfolio Revenue
Slide 4: Why Invest in Multifamily Stocks?
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Slide 5: Why Invest in Multifamily Stocks?
WHY INVEST IN MULTIFAMILY STOCKS? 5 Private market apartment valuation drivers are supportive. DEMAND Millennials and Baby Boomers represent the two largest population cohorts in U.S. history...and both are renting more. Steady job growth persists, renter household formations remain elevated and Mil
Slide 6: Why Invest in Multifamily? Demographics
WHY INVEST IN MULTIFAMILY? 8 Positive demographic trends in the largest (Millennials) and second largest (Baby Boomers) population cohorts signal continued sustainable and elevated demand for rental housing. The former has a high propensity to rent. Both have an increasing propensity to rent. U.S. P
Slide 7: Why Invest in Multifamily? Employment and Renter Household Growth
WHY INVEST IN MULTIFAMILY? 7 Employment and renter household growth are primary drivers of multifamily demand and are expected to remain elevated over the coming years. Employment and Renter Household Growth ™ etl me iiiiriremel ULE TTI LHIIT 0% + Renter HH growth never went negative auras the “Grea
Slide 8: Why Invest in Multifamily? Supply
WHY INVEST IN MULTIFAMILY? 8 Multifamily supply growth remains reasonable versus historical standards, especially after adjusting for renter household growth over time. Concentrated new supply is pressuring lease rate growth in select coastal markets, but job growth continues to drive excess demand
Slide 9: Why Invest in Multifamily? Homeownership
WHY INVEST IN MULTIFAMILY? 9 for t Single-family housing, ’s primary has slowly recovered since the “Great Recession.” Prices are up, but inventories and new construction remain depressed. These factors, when combined with a tight lending environment, are positive for long-term multifamily demand. H
Slide 10: Why Invest in Multifamily? Public Market Valuations
WHY INVEST IN MULTIFAMILY? 10 Relative public market valuations for apartment REITs are attractive when considering expected 2017 AFFO per share growth and current valuation. Assorted peer apartment REITs sold large portfolios in 2016, thereby “depressing” their 2017 expected AFFO per share growth.
Slide 11: UDR, Inc. Growth, Predictability, Experience and Safety
Slide 12: Why Invest in UDR?
WHY INVEST IN UDR? 2 UDR is built to deliver superior, yet predictable growth in a variety of economic scenarios. DIVERSIFIED PORTFOLIO UDR’s portfolio is differentiated from peers by its breadth of market mix (20 markets), asset quality (~50%/50% A/B), asset type (high-rise, mid-rise, garden), loca
Slide 13: Portfolio Diversification
PORTFOLIO DIVERSIFICATION 2B UDR owns a highly diversified multifamily portfolio as measured by market mix, asset quality, asset type and location within markets. These attributes help to reduce risk as compared to a more concentrated real estate owner and appeal to a wider renter audience. @ Primar
Slide 14: Operating Platform
OPERATING PLATFORM 1“ UDR’s operating platform drives the majority of our annual AFFO per share growth and is widely recognized as our most valuable asset. Good forecasting (i.e., maintaining or being able to raise FY same-store (“SS”) growth guidance), is a primary indicator of an apartment REIT’s
Slide 15: Operating Platform
OPERATING PLATFORM 45 Margin expansion is the other half of the earnings growth and value creation equation. Squeezing incremental profits out of every revenue dollar has been a long-term primary objective for UDR and one that we have excelled at. UDR Operating Margin Over Time Ts 71.3% Current oper
Slide 16: External Growth
EXTERNAL GROWTH 16 UDR has built a highly capable development platform over time. External growth is a core competency and will continue to compliment the organic growth generated from our operations. UNDERWAY DEVELOPMENT PIPELINE (AS OF 9/30/2016)" Size: $1.18 # of Homes: ~2,425 Target: Gateway, Co
Slide 17: External Growth: UDR Development 101
EXTERNAL GROWTH v7 UDR Development 101: Development comes with inherent risks, but these can be mitigated. Pris | WHATISTHERISK? [HOW UDR MITIGATES RISK | Entity Risk funsing commitment puts Limit development to $900 million to $1.4 billion ntity at risk or 6-9% of assets. Construction ea overruns;
Slide 18: External Growth
EXTERNAL GROWTH 8 UDR targets $400-$500 million per year in development spend. Of late, the vast majority of our projects are expected to or have generated development spreads in excess of our 150 basis point targeted minimum. ESTIMATED NAV CREATION > COST TO CONSTRUCT OF RECENT PROJECTS) > 55% 35%-
Slide 19: External Growth: Recent Developments
EXTERNAL GROWTH Recent developments are presented below. COMPLETED DEVELOPMENTS low On 18 | Washngion, opt oe Los alto | Masen vi, cA Commits 10 2013 YY” Competes 10 2014 =—1 = UNDER CONSTRUCTION DEVELOPMENTS a. Complotin: 10 2019) Wishire Crescent Heights | Los Anges, CA Homes: 150, aL Complotin: 3
Slide 20: External Growth: Redevelopment
EXTERNAL GROWTH 20 Targeted redevelopment contributes to earnings and dividend growth while also refreshing well-located communities. 9 Lnctn | Maina Del Rey, ‘Competed 2013
Slide 21: Alternative Investments
ALTERNATIVE INVESTMENTS a UDR has two value-add joint venture i ips in the industry that contribute to our diversification. The first is a ~50%/50%, $3.2 billion operating / development joint venture with MetLife. This relationship: * partners us with a committed, long-term player in the multifamily
Slide 22: Balance Sheet
BALANCE SHEET 2 UDR’s investment grade balance sheet fully self-funds our internal and external capital needs through retained earnings, debt refinancings and asset sales in a low-risk manner. BALANCE SHEET METRIC AS OF SEPTEMBER 30, 2016 FUTURE Debt-to-Assets 33.5% (38.9% with JVs) Decline Net Debt
Slide 23: Self Funding Examples
SELF FUNDING EXAMPLES 23 Examples of our self-funding model at work are presented below. Selling communities that have exhausted their value creation potential to reinvest into well-located eS on anol dilutive basis, makes sense. = ~ cath Wao OX Dekada ns “345 Hartson | Boson, MA Estimated Gomplebon
Slide 24: Cash Flow Growth, Value Creation
CASH FLOW GROWTH, VALUE CREATION 2 Mixing together our operations, external growth, self funding capabilities and unique JV relationships yields strong cash flow, dividend and NAV per share growth. UDR Per Share Growth (indexed at 100 in 2007) 160 ——AFFO/sh Growth ——Dividend/sh Growth — — NAV/sh Gro
Slide 25: Recent Information and Operating Trends
Slide 26: Recent Highlights
RECENT HIGHLIGHTS ze GENERATED STRONG THIRD QUARTER 2016 SAME-STORE RESULTS SS Revenue and NOI Growth of 5.3% and 6.4%, respectively. Revenue was 2" highest of the nine public apartment REITs ey a) See THIRD QUARTER 2016 YEAR-t NER -YEAR FFO AS ADJUSTED AND AFFO PER IARE BY 7% AND 9%, RESPECTIVEL\ *
Slide 27: Operating Trends Update
OPERATING TRENDS UPDATE”) % Total %SS NOI NOI Market 3Qq16 3016 /ashington, lo.c. 18.9% 13.9% jorange County] 12.4% 12.2% INew York 12.1% 12.9% fsan Francisco lbay Area 11.8% 12.7% IBoston 7.1% 4.8% seattle 5.9% 6.5% Jbatias 4.3% 3.9% lLos Angeles | 4.0% 5.1% lortando 3.3% 4.5% INashvitle 3.1% 4.3%
Slide 28: Operating Trends Takeaways
OPERATING TRENDS TAKEAWAYS 8 In our 3Q earnings release, we reaffirmed our full year same-store reven: and NOI growth guidance ranges of % and %, respectively. Year-to-Date 2016 Growth Facts: * YTD revenue growth of 5.9% was 130bps higher than the MF peer average of 4.6%; 24 highest of the 9 public
Slide 29: 2016 Market Growth Expectations
2016 MARKET GROWTH EXPECTATIONS 2 West Coast: % of SS NOI: 44: % of Total NOI: 40% UDR Same-Store Markets Northeast . Revenue Growth!) % of SSNOT 18% y3 geattle % of Total NOI 20% e Portland Ds Mid-Atlantic: / i i 9% of 8S NOI:, 19% ey | of Totat Nj 2a% 2 New vor! Metto Washingtonrbc HBattimore Bast
Slide 30: 2016 Guidance
2016 GUIDANCE") 2 EARNINGS PER SHARE GUIDANCE 4Q 2016E FULL-YEAR 2016E() FFO per common share and unit $0.44 to $0.46 $1.77 to $1.80 FFO as Adjusted per common share and unit $0.45 to $0.47 $1.78 to $1.80 ‘Adjusted Funds from Operations (“AFFO”) per $58% Boa Settee common share and unit hi id $1.18
Slide 31: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward Looking Statements Certain statements made in this presentation may constitute “forward-looking statements.” ds such as “expects,” “intends,” “believes,” “anticipates,” “plans,” “likely,” “will,” “seeks,” “estimates” and variations of such words and similar express
Slide 32: View
View 34 New York:NY
Slide 33: 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. Adjusted Funds From Operations ("“AFFO”
Slide 34: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Marsgemert coreldere EffeciveRenswal Lanse\ Rat Grow a usefl met for ivestors as Itasseases, market level, in-place demand tre Equity Market Cap: The market value of all outstanding common stock and equivalents of a company based on the trading price of the common
Slide 35: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aa Actvitis of ou taxable REIT subsciary (TRS), nude development and land enilement. From time to time, we develop and subsequently sell a TRS property which results in a short-term use of funds that produces a profit that difers rom the traditional long-term investme
Slide 36: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a JV Return on Invested Capital (“JV ROIC”): The Company defines JV ROIC as the pro rata share of property NOI plus property and asset management fee revenue divided by the average of beginning and ending invested capital for the quarter. Management! considers ROIC a
Slide 37: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a Nominal Cap Rate: When the term “cap rate" is used by most market participants, they are refering to a “nominal cap rate”. Nc first year yield a property buyer on his/her investment. Like bond yields, nominal cap rates move inversely with property values - when valu
Slide 38: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aa Return on Invested Capital (“ROIC”): The Company defines ROIC as a referenced quarter's NOI, annualized, divided by the average of beginning and ending invested capital for the quarter. Management! considers ROIC a useful metric for Hive a prea i iio We Company is
Slide 39: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a 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 anes REIT subsidiary ("TRS") focuses on development, land entitlement and short-term ho
Slide 40: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a) Al guidance is based on curent expectations of future economic condtions and he judgment ofthe Company’s The following reconciles from GAAP Net inoomafiss) por sara for ul year 2016 ane fourth quarter of 2016 to forecasted FFO, FFO as Adjusted and AFFO per share an
Slide 41: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS 9 Quarter Ended September 30, 2016 Net income/(loss) attributable to UDR, Inc. $ 26,956 Adjust imoreste Real estat opreiaion and amortization Other depreciation and amortization Noncontrolling interests Income tax provision/(benefit) EBITDA Long-term incentive plan tr
Slide 42: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ‘Three Months Ended September 30, 6 All ‘Nine Months Ended Net income((loss) attributable to common stockholders Real estate depreciation and amortization "Noncontroling interests Seta on of women! Sei mer 3 the sale of depreciable real estate Distributions to preferr
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