Udr, Inc. · NYSE:UDR
Udr — Investor Presentation (August 2019)
44 slides from Udr's investor presentation, Aug 30, 2019
Slide 1: Investor Presentation September 2019
INVESTOR PRESENTATION SEPTEMBER 2019 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 + ~$19.9 Billion Enterprise Value + 2019 Annualiz
Slide 2: Table of contents
UDR at a Glance Recent News 4 Why REITs? 5-6 Why Apartment REITs? D Why UDR? 8-10 Operating Excellence 12-16 Portfolio Diversification 17 Accretive Capital Allocation 18-22 Balance Sheet Strength 23 Culture and ESG 24 2019 Guidance 25 Apartment Demographics and Fundamentals 27-30 Lodge at Ames Pond
Slide 3: UDR at a Glance
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 above-peer average total shareholder return (“TSR”) while considering our stakeholders and th
Slide 4: Recent News
RECENT NEW Capital Deployment/Sourcing: * Year-to-date, the Company has acquired or announced the pending acquisition of 21 operating communities for $1.8 billion and $67 million in under-development communities/land sites; funded by new equity issued at a wtd. avg. 5% premium to NAV, JV disposition
Slide 5: Why REITs
WHY REIT: The public REIT space is an institutionally accepted asset class with over $1.2T in market cap and has 86 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 differentiate
Slide 6: Why REITs
WHY REITS Over the past 20 years Equity REITs have generated better relative TSR versus the broader market in 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) 54% of the tim
Slide 7: Why Apartment REITs
WHY APARTMENT REITS 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 statu
Slide 8: Why UDR?
WHY UDR? Strategy: Our primary goals are to consistently generate above-peer average TSR while considering our stakeholders and the environments we operate in. The attributes below aid us in executing these objectives. OPERATING EXCELLENCE PORTFOLIO DIVERSIFICATION * Generate above-peer median same-
Slide 9: Why UDR
WHY UDR FULL-CYCLE INVESTMENT UDR has historically generated above-peer median same-store NOI growth due to its best-in-class operations, with lower volatility resulting from its diversified portfolio. These, when combined with a wide variety of accretive capital deployment opportunities and an inve
Slide 10: Why UDR
WHY UDR The Result: Our strong same-store NOI, FFO as Adjusted, dividend and NAV per share growth rates compare well versus peer-median growth and have driven robust relative total shareholder return over the past five+ years. UDR Per Share Growth (indexed at 100 at YE 2013)() 70 ——SSNOl_ ——FFOasAdj
Slide 11: Key Business Areas
Slide 12: Operating Excellence
OPERATING EXCELLENCE 2 Our operating platform is founded on (1) efficiently pricing our apartment homes while controlling expense growth (i.e., blocking and tackling), and (2) implementing innovative initiatives that boost our top-/bottom-lines (i.e., innovation) to drive SS outperformance as well a
Slide 13: Operating Excellence: Innovation
OPERATING EXCELLENCE Innovation: UDR has a history of innovative operating initiatives that increase our SS growth rates and expand our controllable operating margin. We continuously implement new long-lived initiatives that contribute to recurring, outsized growth within our markets and are made su
Slide 14: Operating Excellence: Next Generation Operating Platform
OPERATING EXCELLENCE # Next Generation Operating Platform: UDR will continue to implement a variety of technological and process initiatives over the next 3-5 years to generate greater efficiencies, further expand our controllable operating margin, and increase resident satisfaction and employee eng
Slide 15: Operating Excellence: Next Generation Operating Platform (cont'd)
OPERATING EXCELLEN © Next Generation Operating Platform (cont’d): To-date, we are seeing strong returns from Phase 1 and the initial implementation of other “next generation” operating initiatives as outlined on page 14. How we will measure our “success” moving forward is highlighted below. Successe
Slide 16: Operating Excellence - Trends
OPERATING EXCELLENCE - TRENDS & Same-Store blended lease rate growth remains healthy. Pima hind ea ee hicied) Annualized YTD SS Turnover Growth as of August 28" SS. QTD SS QTD {YTD Market 2Q19 3q19”) 3Q18? 1 2018 Washington, D.C. ' Orange County 13.5% 1.9% 2.6% 60.9% | 58.9% SanFranciscoBayArea 13.3
Slide 17: Portfolio Diversification
PORTFOLIO DIVERSIFICATION 2 Our diversified portfolio, as defined by geographic mix, price point and location within markets, is a differentiating factor versus peers, appeals to a wide renter and investor audience and lessens volatility in our long-term same-store growth. Diversification is a key d
Slide 18: Accretive Capital Allocation
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: ma ‘One William | Englewood, NJ * Complete complicated
Slide 19: Accretive Capital Allocation
ACCRETIVE CAPITAL ALLOCATIO Historically, we have created significant value through development, DCP and acquisitions. 201: 018 Investments pcp Life-to-Date Committed Capital: $503M t Life-To-Date Income Development Cost: $1.7B | Current Value Excl. 2014-2018 — Current Value Excl. 2014-2018 Market G
Slide 20: Accretive Capital Allocation: Acquisitions
ACCRETIVE CAPI LLOCATIO Recently, acquisitions have driven our growth due to our strong cost of capital and accretive opportunity set. Upside, beyond market growth, is driven by market selection via predictive analytics, deal sourcing acumen, core operations, and the overlaying of our Next Generatio
Slide 21: UDR/MetLife JV Transaction
UDR/MetLife JV Transaction: The Company recently announced a transaction, involving 15 operating communities, one community under construction and development land sites, that will effectively halve the size of the existing 50%/50% JV. The transaction is scheduled to close in 4Q19 subject to customa
Slide 22: Accretive Capital Allocation: Developer Capital Program
CCRETIVE CAPITAL ALLOCATIO Since 2013, our Developer Capital Program, whereby we provide capital to 34_party developers, has provided an accretive, cost-effective way to gain access to newly constructed multifamily communities in targeted markets while also generating strong risk-adjusted returns an
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. 019 UDR BALANCE SHEET STATS Consolidated Debt-to-Gross Asset Value 32.1% C
Slide 24: Culture and ESG
CULTURE AND ESG UDR’s culture is innovative, empowering and rewards success. Reporting on our ESG initiatives has ramped up in 2019. Associate Engagement 97% of associates are proud to work for UDR. 87% of associates feel that p diverse backgrounds can su le from d at UDR. 84% of associates feel tha
Slide 25: 2019 Guidance
2019 GUIDANCE" ‘Arbors at Lee Vista | Olan, FL EARNINGS PER SHARE GUIDANCE | 3q20198 =| FY2019E Income/(loss) per wtd. avg. common share, diluted $0.09 to $0.11 $0.74 to $0.77 FFO per common share and unit, diluted $0.50 to $0.52 $2.08 to $2.11 FFOA per common share and unit, diluted $0.51 to $0.53
Slide 26: x a Zz iu o o =e |
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Slide 27: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS a7 Long-term demographics remain strong for apartments. Domestically born age cohorts <20 years old are, on average, 325K larger than the primary renter cohorts aged 20-34 years. Whether the “population wave” continues unabated will depend on the intensity of foreign born
Slide 28: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS 28 Renter household (“HH”) formation has outpaced owner formation since the mid-2000s. But, the U.S. is not producing enough housing to satisfy HH growth. 23% fewer total housing units are forecast to be completed in 2019 than in 2001 despite 17% HH growth over that time
Slide 29: Near-Term Rental Drivers
NEAR-TERM REN DRIVERS Similar to long-term, demographic drivers of rentership growth, near-term demand drivers such as employment and wage growth screen beneficial for apartments; especially in UDR’s markets. LTM Employment + Wage Growth (Total Income Growth) Coational ——-UDR Markets oft aie td is P
Slide 30: Near-Term Rental Drivers
NEAR TERM RE L DRIVERS Working to counteract the strong employment environment is elevated new apartment supply. 2019 national deliveries are expected to be relatively stable-to-slightly increasing versus 2018 after construction slippage is factored in. At a more granular level, only 4% of anticipat
Slide 31: Notes
NOTES 31
Slide 32: 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 33: UDR Definitions and Reconciliations
Slide 34: 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 35: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ag Management considers Consolidated Net Debt-to-EBITDAre - 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 consolidated d
Slide 36: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a Effective New Lease Rate Growth: The Company defines Effective New Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior resident effective rent for the prior lease term on ne
Slide 37: Definitions and Reconciliations
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 imp
Slide 38: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Management considers NOI a useful metric for investors as it is a more meaningful representation of a community's continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital struc
Slide 39: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a9 Real Estate Investment Trust (“REIT”): A REIT is a company dedicated to owning and, in most cases, operating income-producing real estate, such as apartments, shopping centers, offices and warehouses. Some REITs also are engaged in financing real estate. Recurring
Slide 40: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Total Revenue per Occupied Home: The Company defines Total Revenue per Occupied Home as rental and other revenues, calculated in accordance with GAAP, divided by the product of occupancy and the number of apartment homes. Management considers Total Revenue per Occu
Slide 41: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae 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 full year 2019 and third quarter of 2019 to forecasted FFO, FFO as Adju
Slide 42: Definitions and Reconciliations
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Slide 43: Definitions and Reconciliations
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Slide 44: 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