Udr, Inc. · NYSE:UDR
Udr — United Dominion Realty Trust — Non-Deal Roadshow (September 2004)
49 slides from Udr's roadshow presentation, Sep 7, 2004
Slide 1: $1.1 Billion in Acquisition & Sales Road Show
$1.1 Billion in Acquisition & Sales Road Show September 7 - 13, 2004
Slide 2: Safe Harbor Statement
Safe Harbor Statement The Calvert Washington D.C. Pine Avenue Long Beach, CA Statements contained in this press release, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. You can identify these forward-look
Slide 3: Executive Summary
Executive Summary $1.1 billion in transactions* further repositions United Dominion into higher-growth markets $897 million acquisitions $174 million dispositions With $2.7 billion of transactions in the last three years, United Dominion successfully repositioned 67% of its portfolio Resulting in ap
Slide 4: Acquisition growth rates and upside in core markets
Growth Rate of acquisitions is 6% to 8%, while assets sold are 0% to (2%) Approximately 25% of 2005E NOI from California - representing the fastest growing state in terms of population and jobs and the lowest housing affordability Approximately 50% of our 2005E NOI from California, Florida, and Wash
Slide 5: Acquisitions Closed or Under Contract
Acquisitions Closed or Under Contract* Executive Summary Four Transactions totaling $897 million, closing: 3Q04 $319 4Q04 409 1Q05 - 2Q05 106 3Q05 63 Blended Cap rate 5.7%** Cost per home $145,241 Essex portfolio is in green and Charlotte portfolio is in yellow. S. California 81.6% *During 3Q04 ** B
Slide 6: Dispositions Closed or Under Contract
Executive Summary Dispositions Closed or Under Contract* Once these transactions have been completed, United Dominion will operate in 42 markets. Blended cap rate 8.0%** Sale price per home $49,417 *During 3Q04 **Based on trailing 12-month NOI Five Transactions totaling $174 million, closing: 3Q04 $
Slide 7: Funding...Balance Sheet
Executive Summary Funding...Balance Sheet Our existing $500 million credit facility has a current line balance of $145 million and a capacity to increase to $650 million
Slide 8: FFO Impact
Executive Summary FFO Impact These acquisitions are expected to be financed through the assumption of $181 million of 5.2% secured debt with a weighted average term-to-maturity of 8 years. The balance will be paid in cash to be generated from several sources including funding under our existing $500
Slide 9: Made the Company Safe and Predictable
Made the Company Safe and Predictable... 2001-2003 Fixed the Company Changed culture to focus on sales and service with middle market apartment focus "Right-Sized" the organization Restored Balance Sheet - $2 billion of refinancing Improved Asset Base...Almost Done...2001-2005 Reposition location an
Slide 10: History/Future Operations
History/Future Operations Recruited a new management team, replacing 70% of senior management Reduced annualized associate turnover from 68% to 38%* No non-recurring income Access to Capital* Issued $347 million in stock and equivalents Converted $150 million of Series D Cumulative Convertible Redee
Slide 11: $2.7 billion in transactions since Jan. 2001
$2.7 billion in transactions since Jan. 2001 Acquisitions $1.9 billion 18,888 homes Average cap rate 6.2% $100,593 per home $932 average monthly rent Dispositions $804 million 17,033 homes Average cap rate 7.7% $47,202 per home $742 average monthly rent Characteristics: Rent and Margin Reinvest in a
Slide 12: Phase III - Further Value Creation
History/Future With restored financial strength and repositioned asset base, we will move to our next phase focusing on value-creating activities Operations - Asset enhancement skills - Markets The upside of which is the potential for multiple expansion Phase III - Further Value Creation......Starte
Slide 13: Phase III - Operations
History/Future Phase III - Operations Occupancy/Margin(s) - During the recent real estate cycle occupancy rates and operating margins have contracted. Restoring them to historical levels of 95% and 65%, respectively, will create $11 million to $17 million of earnings or $0.08 to $0.12 per share. Mar
Slide 14: Phase III - Asset Enhancement Skills
History/Future Opportunity - 40% of the U.S. Apartment stock is middle market, with the majority built during the '80s. These apartments are at a point in their life cycle where renovations and upgrades can be performed at attractive returns. We have built a team of 17 associates and vendor relation
Slide 15: Phase III - Markets
History/Future With approximately 50% of 2005E NOI from CA, FL and DC, these markets are expected to deliver twice the national average growth in the near future and are anticipated to exceed the national average over an extended term. Individual Markets - Repositioning within markets will continue,
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Slide 17: Acquisitions Overview
Overview Four transactions, totaling $897 million Essex Portfolio Acquisition (16 Communities) Charlotte Portfolio Acquisition (Two Communities) California Portfolio (Three Communities) Lakeline Villas in Austin, TX Total Homes: 6,172 Acquisitions Acquisitions NOI By Acquired Market S. California 81
Slide 18: Essex Portfolio Acquisition Overview
Essex Portfolio Acquisition Overview Essex Portfolio Acquisition Overview 16 garden-style communities 4,646 homes Purchase price of $756 million Capitalization rate of 5.5% Cost per home $162,721 86.1% NOI from Southern California Staggered closing from 3Q04 through 3Q05 Acquisitions
Slide 19: Essex Portfolio - Upside
The Company will continue the $33.0 million of extensive renovations started by Essex by investing an additional $13.3 million over the next two years. Potential to increase income from 1,350 homes by installing washers and dryers Potential to rehab the exterior on 889 homes Potential to rehab 65% o
Slide 20: Essex Portfolio - Excellent Fit with our Existing Portfolio
Eleven out of 16 Essex communities are adjacent to or within 10 miles of an existing United Dominion community San Diego community is located within six miles of existing United Dominion communities Newport Beach communities are adjacent to each other creating a small city of 14,000 homes Most new m
Slide 21: California Acquisitions
California Acquisitions Communities in Green denote Essex Portfolio Communities in Green denote Essex Portfolio
Slide 22: California Acquisitions
California Acquisitions Average rent and occupancy as of July, 2004 *Average asking rents
Slide 23: Oregon Acquisitions
Oregon Acquisitions Area Highlights: In close proximity to the Round at Beaverton, a mixed- use development built around the mass transit center Unemployment rate of 5.5%, well below state and national rates Average rent and occupancy as of July, 2004 *Average asking rent *Average asking rent *Avera
Slide 24: Austin, TX Acquisitions
Austin, TX Acquisitions Area Highlights: Lakeline is located in the northwest Austin area The community has excellent access to State Highway 183, with a short 15- minute commute to downtown Average rent and occupancy as of July, 2004 *Average asking rent *Average asking rent *Average asking rent
Slide 25: Charlotte, NC Acquisitions
Charlotte, NC Acquisitions Area Highlights: Charlotte is one of the most rapidly growing residential and commercial areas in North Carolina Also known as "University City," this area is defined by the presence of University Research Park, University of North Carolina at Charlotte, and the University
Slide 26: Detail by Community: 2001 to YTD Dispositions
Detail by Community 2001 to YTD Dispositions Upon the completion of these transactions, the Company will have exited the states of Michigan and Kentucky and the city of Pullman, Washington. Blended capitalization rate 7.7% $804 million 2001 to YTD At the time this presentation went to print, Terraci
Slide 27: Impact of $1.1 Billion of Acquisitions & Sales Activity
Impact of $1.1 Billion of Acquisitions & Sales Activity Balance Sheet We have one of the strongest Balance Sheets in the sector $181 million of debt assumed at current market terms $562 million of growth market assets added to unencumbered pool Balanced Maturity Schedule with no more than 10% to 12%
Slide 28: Maintaining a Strong Balance Sheet
Maintaining a Strong Balance Sheet Balance Sheet Proforma numbers assume the following transactions:
Slide 29: Investment Grade Rating - One of Two Upgrades in the Sector
Investment Grade Rating - One of Two Upgrades in the Sector Over Last Six Years Balance Sheet
Slide 30: Capital Structure...Market Capitalization
Capital Structure...Market Capitalization (in billions) Balance Sheet
Slide 31: Detail of Assumed Debt from Essex Portfolio
Detail of Assumed Debt from Essex Portfolio Balance Sheet $181 million of assumed debt at favorable current market terms Agency Debt with loan to value of 50% Fits into existing maturity schedule such that no year has greater than 10% to 12% debt maturity Adds unencumbered assets of $435 million loc
Slide 32: Continued Improvement in Unencumbered Pool
Balance Sheet Continued Improvement in Unencumbered Pool UDR's unencumbered asset pool continues to increase in size and quality Since 2001, significant additions include: 12 communities in Southern California with a total cost of $573 million 4 communities in Metropolitan D.C. with a total cost of
Slide 33: Debt Maturity Schedules - Percentage of Total Debt
Debt Maturity Schedules - Percentage of Total Debt Balance Sheet GAAP Maturities 2Q04 Maturities with Recent Acquisitions Proforma 4Q05
Slide 34: Fannie Mae Credit Facilities
Balance Sheet The Fannie Mae Credit Facilities provide UDR with virtually the same flexibility as unsecured debt, and represent 67% of total secured debt. Substitution Rights - UDR can move assets in and out of these facilities for a minimal fee. Allows the company to deliver unencumbered assets to
Slide 35: Peer Comparison
Peer Comparison Earnings Balance Sheet Operations Dividend Growth Asset Quality VALUE Any way you look at the underlying facts, United Dominion is a great value. Multiple expansion - 2005 earnings - expanding NOI from high-growth markets
Slide 36: Peer Comparison - Balance Sheet
Peer Comparison Balance Sheet All figures as of June 30, 2003, except Proforma which is as of December 31, 2005. Source: SNL Analytics
Slide 37: Operational Performance Peer Comparison
Operational Performance Peer Comparison Source: Company reports and Wachovia Capital Markets, LLC Wachovia four-year performance rankings are designated on the basis of the performance attributes of two measures: (Meth 1) a percentile score (lower is better) aggregating the relative quarterly revenu
Slide 38: 2004 Dividend Growth & Yield
Peer Comparison 2004 Dividend Growth & Yield Middle of the Pack Source: SNL Financial as of June 30, 2004 Companies that have reduced their dividend payments in the last year are in red. Companies that have increased their dividend payments in the last year are in green. Dividend Yield ESS AVB SMT B
Slide 39: Asset Quality Peer Comparison
Asset Quality Peer Comparison Source: Axiometric, Morgan Stanely data is as of June 23, 2004; Merril Lynch data is as of July 16, 2004; Lehman Brothers is as of June 25, 2004 and Smith and Barney is as of August 6, 2004. *Calculated by UDR using Market Cap/# of Homes. The sell-side has not reviewed
Slide 40: Multiple Expansion
Peer Comparison Multiple Expansion The information on this chart is based on the Company's expectations based on peer companies that are similarly situated. This information does not constitute guidance or a guarantee of price appreciation. Amongst our peers those with the highest multiple have sign
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Slide 42: Southern California Market Overview
Southern California Market Overview UDR has continued to grow its investment in Southern California Markets: Why is Southern California hot? High rental demand Supply constant Low vacancy Employment growth Will it remain hot?... YES! All well above national average
Slide 43: Southern California Housing Affordability
According to the most recent census conducted in 2000, the state of California estimates that approximately 41% of its population lives in rental housing. The high costs associated with owning housing in California, particularly in the most highly populated counties of Southern California and Northe
Slide 44: Why is it Hot? - Supply Constraints
Supply in California's most sought after submarkets is extremely limited. Permits as a percentage of stock over the past twelve months is estimated at approximately 0.5%-1.5% in California's major counties. Property values stand at record high levels in California due to supply constraints observed
Slide 45: Why is it Hot? - Low Vacancy Rates
During the last 20 years southern California vacancy rates typically have been below the national average Vacancy rates as of 1Q04: Los Angeles 4.3% Oakland 4.8% Orange County 4.8% San Diego 4.4% Southern California Why is it Hot? - Low Vacancy Rates Overall Vacancy Rates Rest of Country Los Angeles
Slide 46: Will it Stay Hot? - Employment Growth
Across Southern California employment growth is above the national average of 1.1%. Population growth in the region should range from 1.1% to 3.5% annually. Southern California Will it Stay Hot? - YES...Employment Growth Year-Over-Year Employment Growth Rest of Country Los Angeles County Orange Coun
Slide 47: Will it Stay Hot? - Rent Growth
Orange County and Los Angeles MSA's are all poised for substantial rental growth in the near term as a result of the U.S. economic recovery. Rents in Orange and Los Angeles Counties are projected to increase 9% and 7%, respectively, in 2005. Southern California Will it Stay Hot? - YES...Rent Growth
Slide 48: Will it Stay Hot? - Low Affordability
According to the California Association of Realtors, less than 30% of California residents can afford to own a home in comparison to the national average of approximately 50%. Southern California Will it Stay Hot? - YES...Low Affordability Rest of Country Los Angeles County Orange County Inland Empi
Slide 49: Will it Stay Hot? - Supply Constraints
Supply remains constrained into the foreseeable future. Southern California Will it Stay Hot? -YES... Supply Constraints Rest of Country Los Angeles County Orange County Inland Empire San Diego County 1981 0.02 1982 0.025 1983 0.04 1984 0.035 1985 0.031 0.024 0.0374 0.1381 0.0932 1986 0.025 0.0367 0
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