Udr, Inc. · NYSE:UDR
Udr — Investor Presentation (August 2017)
40 slides from Udr's investor presentation, Aug 9, 2017
Slide 1: Investor Presentation August 2017
INVESTOR PRESENTATION AUGUST 2017 Verve Mountain View | Mountain View, CA UDR, Inc. (NYSE: UDR) has a demonstrated history of successfully managing, buying, selling, developing and redeveloping attractive multifamily real estate properties in top-tier U.S. markets. UDR + S&P 500 Company Investor Rel
Slide 2: Table of Contents
BLE OF CONTEN UDR at a Glance 3 Why Invest in UDR? 46 Operating Excellence 78 Portfolio Diversification 9 Accretive Capital Allocation 10-13 Balance Sheet Strength 14 Components of Long-Term AFFO per Share Growth 15 Wrap Up — How UDR Creates Value 16 Operating Trends Update 17-19 2017 Guidance 20 Ap
Slide 3: UDR at a Glance
UDR AT A GLANCE 2 UDR is a multifamily REIT that owns, operates, develops and redevelops a diversified portfolio of apartment homes across various top-tier U.S. markets. UDR AT A GLANCE") * Established in 1972 * 20 Markets * 167Communities * 50,338Homes + Same-Store (“SS”) Revenue per Occupied Home:
Slide 4: Why Invest in UDR?
WHY INVEST IN UDR? f UDR’s core objective is to grow high-quality and predictable Adjusted Funds From Operations (“AFFO”), dividend and net asset value (“NAV”) per share. The attributes below aid us in executing this objective, which over time, should drive above-average total shareholder return (“T
Slide 5: UDR's Execution Over Time
UDR’S EXECUTION OVER TIME We have executed well on our core objective of driving accretive growth by generating strong AFFO, dividend and NAV per share growth since the publication of our initial Strategic Outlook in February 2013. UDR Per Share Growth (indexed at 100 at YE 2012)() 450 —— AFFO/sh Gr
Slide 6: UDR Is a Full-Cycle Investment
UDR IS AFULL-CYCLE INVES Best-in-Class Operating Platform + Our Diversified Portfolio = Better Long- Term, Risk-Adjusted Same-Store Growth Full-cycle investments generate better-than-median risk-adjusted growth versus peers over multiple cycles. Our best-in-class operating platform drives our long-t
Slide 7: Operating Excellence
OPERATING EXCELLENCE The strength of UDR’s best-in-class operating platform is founded on our in- depth market knowledge, our overall operating acumen and continuously innovating to drive results. “Winning” markets is a good gauge of an operator’s expertise. We “win” more than our fair share of mark
Slide 8: Operating Excellence
OPERATING EXCELLENCE Market revenue and expense growth act as governors on how quickly we can grow same-store NOI. Beating the market demands continuous innovation by implementing revenue-enhancing or expense-constraining initiatives. On average, “80 bps of our annual incremental NOI growth since ye
Slide 9: Portfolio Diversification
RTFOLIO DIVERSIFICATION Our diversified portfolio is a differentiating factor versus peers, appeals toa wide renter and investor audience, lessens market-concentration risk and reduces volatility in our long-term, same-store growth. Diversification is a key component of being a full-cycle investment
Slide 10: Accretive Capital Allocation
ACCRETIVE CAPI LOCATION We create value for shareholders in a variety of ways through accretive capital allocation. Development has been our preferred use of accretive capital since emerging from the “Great Recession.” Recent UDR Developments f sees] © : to0Pire|soson | SS F299 Fremont sen Farcaco I
Slide 11: Accretive Capital Allocation: Development Platform
ACCRETIVE CAPI LOCATION a DEVELOPMENT PLATFORM Development augments our low-risk operating growth and refreshes our portfolio. We target a pipeline between $900 M and $1.4 B, a size which can be fully funded through free cash flow and modest asset sales. NON-STABILIZED DEVELOPMENT PIPELINE (AS OF 6/
Slide 12: Accretive Capital Allocation: Developer Capital Program
ACCRETIVE CAPITAL ALLOCATION DEVELOPER CAPITAL PROGRAM Access to apartment construction financing has tightened since mid-2015 while construction costs have increased. We have taken advantage of this dislocation by investing in alternative development structures that generate strong risk-adjusted re
Slide 13: Accretive Acquisitions
ACCRETIVE ACQUISITIONS Home Properties Portfolio Completed: Oct.2015 Location: + Washington, D.C. Homes: 3,246 Size($M): $901 qa PET LLL ** Purchased 6 high-quality assets in a bottoming market with accretive OP units priced at a premium to NAV, resulting in FFO accretion and deleveraging 14041 PEEL
Slide 14: Balance Sheet Strength
BALANCE SHEET STRENGTH # Our balance sheet is safe, liquid and flexible. We are comfortable with our credit metrics and the efficient pricing they provide. 2Q 2017 UDR BALANCE SHEET STATS Debt-to-Gross Asset Value 33.3% Net Debt-to-EBITDA 5.3x fe Safely investment grade Fixed Charge Coverage 4.9x %
Slide 15: Components of LT AFFO/SH Growth
COMPONENTS OF LT AFFO/SH GROWTH ® When we consider UDR’s long-term earnings growth potential, we target AFFO per share growth ~450 basis points above the national apartment rent index. This target is driven by our historical operating performance, diversified portfolio, capital structure and accreti
Slide 16: Wrap-Up — How UDR Creates Value
WRAP-UP — HOW UDR CREATES VALUE 4 UDR is a FULL-CYCLE INVESTMENT ** Better Risk-Adjusted Growth ** Best-In-Class Operating Platform Portfolio Diversification * Generates above peer-median SS AND *_ Eessvolatile SS growth. vs. peer- growth throughoutthe cycle median throughout the cycle * Drives marg
Slide 17: Operating Trends Update
OPERATING TRENDS UPDATE @ SEE PAGE 18 FOR MARKET-LEVEL COMMENTARY ON THE BELOW DATA % SS NOI Growth ss QTD ss QTD i Market 2Q17 3q170) 3Q16() ' Washington, D.C. 21.6% 2.3% | 3.5% 46.0% | 45.5% San Francisco Bay Area 12.3% 25% | 2.7% 53.4% | 59.2% New York 11.1% 1.2% =| 2.1% 38.4% | 39.8% Orange Coun
Slide 18: Operating Trends Update
OPERATING TRENDS UPDATE 2 The YOY change in our blended lease rate growth") is improving. 1Q 2Q 3Q 4Q 1Q 2Q QTD 3Q 2016 2016 2016 2016 2017 2017 2017”) YOY Blended Rate 53% 5.3% 41% 24% 25% 3.6% 3.0% Growth YOY Change in Blended nate Grane (pa) 30 (200) (330) (290) (280) (170) (150) YOY UDR SS Blend
Slide 19: Operating Trends Update
OPERATING TRENDS UPDATE Below is a property clock that outlines where we believe growth is trending in our major-market, same-store portfolios at this point in the real estate cycle. Note that markets can move clockwise and counter clockwise. Orange County — eo Tampa oe | Peaking Market _® . Boston
Slide 20: 2017 Guidance
2017 GUIDANCE”) FFO per common share and u $0.46 to $0.47 $1.83 to $1.87 FFO as Adjusted per common share and unit $0.46 to $0.47 $1.84 to $1.88 AFFO per common share and unit $0.42 to $0.43 $1.69 to $1.73 lend per common share and unit $1.24 Revenue growth 3.25% to 4.00% Expense growth 2.50% to 3.5
Slide 21: Appendix: Apartment Demographics and Fundamentals
Slide 22: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS 2 Positive demographic trends in the largest (Millennials) and second largest (Baby Boomers) population age cohorts signal continued sustainable and elevated demand for rental housing. U.S. Population by Age Cohort (M) Non-Foreign Born © Foreign Born The Pig in the Python
Slide 23: Rental Housing Demographics
RENTAL HOUSING DEMOGRAPHICS The combination of strong population growth in primary renter age cohorts, rising propensity to rent across all age cohorts and a variety of other factors has resulted in renter household formation outpacing owner formation since the mid-2000s. Household Growth by Type (0
Slide 24: Near-Term Rental Drivers
NEAR-TERM REN DRIVE Demographic drivers have and will continue to provide a beneficial tailwind to apartments. But, employment growth typically drives near- term demand. The overall employment outlook remains solid. Employment Growth [SoTotel Employment Growth ==-Miillennial Employment Growth (3)% +
Slide 25: Near-Term Rental Driver
NEAR-TERM RENTAL DRIVER Employment growth in UDR’s same-store portfolio is expected to decelerate from 2.2% in 2016 to 1.6% in 2017. Market-level forecasts are more varied, but still point to generally solid employment growth moving forward. UDR’S MARKET-LEVEL EMPLOYMENT OVERVIEW) %OF2Q17 2017EJOB V
Slide 26: Near-Term Rental Drivers
NEAR TERM REN DRIVERS Working to counteract the strong employment environment is elevated new apartment supply. 2015 through 2018E deliveries have been, or are forecasted to be, near or above long-term trend. Deflating deliveries by household growth makes for more useful new supply comparisons over
Slide 27: Near-Term Rental Driver
NEAR-TERM RENTAL DRIVER Year-over-year forecast apartment supply growth in UDR’s same-store submarkets varies widely by MSA. On a total same-store basis, the majority of competing supply should be delivered in the 2™ half of 2017. 2017 UDR SAME-STORE SUBMARKET APARTMENT DELIVERY EXPECTATIONS TOTAL 1
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
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Slide 30: 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 31: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ag Effective Renewal Lease Rate Growth: The Company defines Effective Renewal Lease Rate Growth as the increase in gross potential rent realized less all concessions for the new lease term (current effective rent) versus prior effective rent for the prior lease term o
Slide 32: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a depreciation and amortization, and after adjustments for noncontrolling interests, unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust's definition issued in April 2002. In the comput
Slide 33: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS aS JV Return on Invested Capital (“JV ROIC”): The Company defines JV ROIC as its share of property NOI plus property and asset management fee revenue, annualized, divided by the average of beginning and ending invested capital for the quarter. Management considers JV
Slide 34: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Nominal Cap Rate: When the term “cap rate” is used by most market participants, they are referring to a “nominal cap rate”. Nominal cap rates represent the expected unleveraged first year yield a property buyer expects to realize on his/her investment. Like bond yi
Slide 35: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS a9 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 investors as it provides a widely
Slide 36: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae TRS: The Company's taxable REIT subsidiary ("TRS") focuses on development, land entitlement and short-term hold investments. TRS gains on sales, net of taxes, is defined as net sales proceeds less a tax provision and the gross investment basis of the asset before a
Slide 37: 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 2017 and third quarter of 2017 to forecasted FFO, FFO as Adju
Slide 38: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS BD Quarter Ended Coverage Ratios June 30, 2017 Net income/{loss) s 11,062 Adjustments: Interest expense 33,866 Real estate depreciation and amortization 108,450 Real estate depreciation and amortization on unconsolidated joint ventures 14,497 Other depreciation and am
Slide 39: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ‘Three Months Ended AL Six Months Ended June 30, June 30, In thousands, except per shareand unit amounts 2017 2016 2017 2016 Net income((loss) attributable to common stockholders 9228 $ 17017 $ 34,266 $26,481 Real state depreciation and amortization 108,450 405937 243
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