Udr, Inc. · NYSE:UDR
Udr — United Dominion Realty Trust — Investor Presentation (May 2006)
41 slides from Udr's investor presentation, May 8, 2006
Slide 1: UDR Investor Presentation May 2006
UDR | United Dominion Realty Trust Investor Presentation May 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements contained in this presentation, 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-looking statements by the Company's use of words such as, "e
Slide 3: UDR Overview
UDR Overview © 4 Largest Apartment REIT + Approximately 75,000 apartment homes + $7.3 billion total market cap + Portfolio positioned to capture job and demographic trends © Proven Record of Delivering Shareholder Return + 1Year: 29% + 2Years: 30% + 5 Years: 24% + 10 Years: 15% + 30 consecutive year
Slide 4: Top States for 2006 Projected Net Operating Income
Top States for 2006 Projected Net Operating Income California: 25% Florida: 15% Metro D.C.: 14% Texas: 11% North Carolina: 10% Our Holdings as of May 2006 UDR - Overview UDR - Overview
Slide 5: Executing a 3-Pronged Approach to Grow FFO and Create Value
UDR Overview We Are Executing A 3-Pronged Approach To Grow FFO And Create Value TODAY
Slide 6: Strong Operating Trends
UDR - Operations Strong Operating Trends * Guidance Range
Slide 7: Strong Trend in Revenue Per Home
Strong Trend in Revenue Per Home UDR - Operations *Includes Non-Mature Communities * Guidance Range *
Slide 8: Solid Operating Trends: 2006 First Quarter Results
Rents & Reimbursements Per occupied home = $852 Up $45 over prior year Up 5.6% over prior year Occupancy 94.8% - Up 60 bps over prior year Highest level in over four years Concessions Down 26% vs. prior year 2006 First Quarter Results Expenses Up 5.7% over prior year Bottom Line NOI Up 6.6% over pri
Slide 9: Net Rents & Occupancy Continue To Trend Higher
UDR - Operations Net Rents & Occupancy Continue To Trend Higher
Slide 10: Markets - First Quarter Y/Y Revenue Growth
Markets - First Quarter Y/Y Revenue Growth Property Operations
Slide 11: 2006 Guidance
UDR - Operations 2006 Guidance * Amounts based on same store properties
Slide 12: Managing Expenses
UDR - Operations Managing Expenses Utilities Total utility costs: $46 M Current reimbursement: 15 Law disallow rebilling: 22 Opportunity $9 M Insurance Renewed policy March 15, 2006 Annual premium: $6 million vs. $4 million in 2005 5% wind deductible Self insurance appropriate for company our size
Slide 13: Technology - Our Approach
UDR - Operations Technology - Our Approach Adopt Proven Workflow Technology Improve Accessibility to Prospects Search engine optimization Multiple sources Ease of use/navigation Feed Higher Rates of Quality Traffic Reduce Work at Sites and Focus on Customer
Slide 14: Technology - Adopting Proven Workflow Technology
UDR - Operations Technology - Adopting Proven Workflow Technology OneSite Web-based platform Online Transactions Application Leasing Rent collection Service requests Yield Management Jury not in... too early to tell If there is a revenue "pop," ours is down the road
Slide 15: Technology - Feeding Traffic
UDR - Operations Technology - Feeding Traffic Minisites for Each Property Active with Major Internet Listing Services Apartment.com Rent.com Early Adopter of Vaultware to Give Prospects Access to Inventory Staff for Responding to Internet Leads Pioneering Relationships with Yahoo and Google to Drive
Slide 16: Technology - Reducing Work At Sites
UDR - Operations Technology - Reducing Work At Sites We Have Been Electronically Processing Expenses for Two Years Ops Technology Centralized A/P Inventory Management Processes ? Just In Time Purchase and Delivery Reducing Manual Traffic Generation Efforts Streamlined "Content Updates" of ILS's Thro
Slide 17: Asset Development: Dollars Invested Translate to Higher NAV
UDR - Asset Development Dollars Invested Translate to Higher NAV Expected Returns: 8% to 10% for Kitchen & Bath Rehabs 7% to 8% for Developments
Slide 18: Kitchen/Bath Program: 11,000 Completed; 50,000 in Pipeline
11,000 Completed; 50,000 in Pipeline Upgraded Appliances, Cabinets, Lighting, Flooring, Etc. Targeting 8% to 10% Stabilized ROI Kitchen/Bath Program Before After UDR - Asset Development Providence Court - Charlotte, NC
Slide 19: Kitchen/Bath Program Goals
Kitchen/Bath Program Before After UDR - Asset Development Dominion Park Green - Raleigh, NC Goals of K/B Program Increase NAV Low-Risk Redevelopment Attract Higher Quality/New Resident Higher rent Better care of asset Neighborhood quality Flexibility/Modernization Standardization ? Lower cost mainte
Slide 20: Kitchen/Bath Program: How We Are Doing It Better
Before After UDR - Asset Development Legacy at Mayland - Richmond, VA How We Are Doing It Better? Complexity of execution Cross department cohesion Start with good location Cutting edge design Better cabinets Granite Stainless Steel New lighting Flexibility/adaptation Reconfiguration/modernization F
Slide 21: Kitchen & Bath Program - Short Term Impacts
Negative Occupancy loss Positive Lower risk development Faster ROI Drives traffic Re-tenant/higher turnover Can "test the market" on a small scale Kitchen & Bath Program - Short Term Impacts UDR - Asset Development
Slide 22: Kitchen & Bath Program - Long Term Impacts
New Market Competes Well with Newer Product Higher ROIC than Acquisition/Development Higher Traffic Reduced Turnover Opportunity - Future Acquisitions Reduce Repair/Maintenance Energy Efficiency Re-Gain Lost Occupancy Competitive Price Point Kitchen & Bath Program - Long Term Impacts UDR - Asset Dev
Slide 23: Value Creation - Program Potential
50,000 Homes x $8,000 Investment = $400 million Average Rent Increase = $100 per Month or $1,200 Annually 95% Occupancy = $1,140 Annual Benefit $1,140 x 50,000 Homes = $57 million 6% Cap Rate = $950 million Value Creation - Program Potential UDR - Asset Development
Slide 24: Full Scope Rehabs
Reinvest with Exterior Upgrades and Interior Renovations 9 Communities Underway, 2,943 Homes Targeting 8% to 10% Stabilized ROI 7,000 Homes Under Study Full Scope Rehabs Before After UDR - Asset Development Legacy at Mayland - Richmond, VA
Slide 25: Full Scope Rehabs: Parkers Landing - Tampa, FL
Full Scope Rehabs At March 31, 2006 UDR - Asset Development Before After Parkers Landing - Tampa, FL
Slide 26: Full Scope Rehabs: Parkers Landing - Tampa, FL
Before After UDR - Asset Development Parkers Landing - Tampa, FL Full Scope Rehabs
Slide 27: Acquisitions/Dispositions
Acquisitions/Dispositions UDR - Market Cycle Investments
Slide 28: Essex Portfolio Acquisition, September 2004
16 garden-style communities 4,646 homes Purchase price: $755 million Current market value: $925 million Condo/density/Etc. market value: $1,100 million Cap rate at purchase: 5.5% Realized cap rate: 6.1% Cost per home: $162,721 Current value: $198,900 Condo/density/etc.: $238,000 At Current Values, t
Slide 29: Proven Track Record
Proven Track Record UDR - Market Cycle Investments
Slide 30: Ground-Up Developments - Over 2,200 Homes in Pipeline
Land Pipeline # of Homes Avg. Cost per Home Investment (M) Under contract 1,236 $150,000 $185 Owned 250 280,000 70 LOI 1,000 160,000 160 2,486 $415 Ground-Up Developments - Over 2,200 Homes in Pipeline UDR - Market Cycle Investments
Slide 31: Developments - Verano
New Development in Rancho Cucamonga, CA 414 Homes $66 million Budget $160,100 Cost per Home 7.5% to 8.0% Return as Apartment Homes In Lease-Up: 42% Leased Developments - Verano UDR - Market Cycle Investments UDR - Market Cycle Investments UDR - Market Cycle Investments
Slide 32: Developments - Mandalay on the Lake
Developments - Mandalay on the Lake UDR - Market Cycle Investments New Development in Los Colinas, TX 369 Homes $31 million Budget $83,700 Cost per Home 7.5% to 8.3% Return as Apartment Homes Expected Completion - 2Q06 2Q06 2Q06 2Q06 2Q06 2Q06 2Q06 2Q06 2Q06
Slide 33: Developments - Waterside Towers
Developments - Waterside Towers UDR - Market Cycle Investments Purchased December 2003 Located in SW Washington D.C., 15 Minute Walk from National Mall Ten-Story Mid-Rise Structure 550 Existing Homes Current Rent: 1 Bed - $1,275 2 Bed - $1,725
Slide 34: Waterside Towers Planned Expansion
UDR - Market Cycle Investments Developments - Waterside Towers Developments - Waterside Towers Developments - Waterside Towers ^ Planned Expansion on Existing Property ? 11 story tower ? 200 to 220 homes ? 12,000 to 18,000 sq. ft. for retail ? Estimated cost: $70 million ? Timing: Zoning - 18 mos. P
Slide 35: Developments - Joint Venture: JPI
JPI - National Apartment Developer Negotiated new development in Marina Del Rey, CA 298 homes $130 million budget $435,000 cost per home 6% to 6.5% return as apartment homes Developments - Joint Venture UDR - Market Cycle Investments UDR - Market Cycle Investments
Slide 36: Condo Activity
Business that will Produce $2.5 million to $5.0 million of Quarterly FFO for Several Years Opportunity to Create Value and Reduce Exposure in Selected Markets at Attractive After-Tax Cap Rates Extensive Pipeline (over 15,000 homes) to Feed the Business for Many Years Condo Activity UDR - Market Cycl
Slide 37: Condo Pipeline
Condo Pipeline UDR - Market Cycle Investments
Slide 38: Strong Balance Sheet
*Dollars in millions except Share Price Strong Balance Sheet GAAP Maturities as % of Total Debt UDR - Market Cycle Investments Average Interest Rate on Debt Maturing: 6.7% for 2006
Slide 39: 2006 Guidance Summary Per Share
UDR - Sumi 2006 Guidance Per Share 2005 FFO $ 1.61 2006 Items Mid-Point of Range Same Store NOI Growth $ 0.09 2004 Acquisitions 0.05 Developments 0.02 Reduced Share Count 0.03 Interest Expense (0.03) G&A Growth (0.01) Lost NOI on Rehab (0.05) Non-Recurting Rent.com, Insurance (0.03) 0.07 2006 Guidan
Slide 40: Compelling Value Creation Strategy - Summary
Strong Operator Delivering Stable, Predictable Returns Committed to Asset Development Asset development investments $150 investment in 2006 Achieving 8% to 10% ROI NAV creation - $1.50 increase in real estate value per $1 invested Focused on Value Creation through Market Cycle Investments Developmen
Slide 41: Funds From Operations (FFO) definition
Funds From Operations (FFO) - The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (GAAP)), excluding gains (or loss
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