Udr, Inc. · NYSE:UDR
Udr — Investor Presentation (March 2018)
40 slides from Udr's investor presentation, Mar 5, 2018
Slide 1: Investor Presentation March 2018
INVESTOR PRESENTATION MARCH 2018 Vintage Lofts at West End | Tam, FL UDR, Inc. (NYSE: UDR) has a demonstrated history of successfully managing, buying, selling, developing and redeveloping attractive multifamily real estate properties in core U.S. markets. + S&P 500 Company Investor Relations: + “$1
Slide 2: Table of Contents
ABLE OF CONTENT UDR at a Glance 3 Why Invest in UDR? 45 Full-Cycle Investment What Makes UDR a Full-Cycle Investment? 67 Operating Excellence 89 Portfolio Diversification 10 Accretive Capital Allocation 11-12 Balance Sheet Strength 13 Components of Long-Term AFFO per Share Growth 14 Business Area Up
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 various top-tier U.S. markets. UDR AT A GLANCE") + Establishedin 1972 + 20 Markets + 164Communities + 49,728 Homes + Same-Store (“SS”) Revenue per Occupied Home: $
Slide 4: Why Invest in UDR?
WHY INVEST IN UDR? f UDR’s core objective is to generate high-quality and predictable earnings, dividend and net asset value (“NAV”) per share growth. The attributes below aid us in executing this objective, which over time, should drive better-than-average total shareholder return (“TSR”). OPERATIN
Slide 5: UDR's Execution Over Time
UDR’S EXECUTION OVER TIME The Result: Our cumulative same-store NOI, AFFO, dividend and NAV per share growth have driven robust relative total shareholder return since 2013, when our inaugural multiyear Strategic Outlook was published. UDR Per Share Growth (indexed at 100 at YE 2012) (1) 160 ——SSNOl
Slide 6: Full-Cycle Investment
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Slide 7: Better-than-Peer Median Growth
Better-than-Peer Median Growth UDR Annual SS Revenue/NOI Growth vs. Peer Median Since 2000() MUDRGrowth li Peer Median Growth UDR’s Operating Platform Strong Blocking and Tackling + Continuous Innovation 4 UDR’s SS revenue and NOI growth has outpaced peer median growth by ~30 and ~70 bps annually si
Slide 8: Operating Excellence
OPERATING EXCELLENCE Two attributes define our operating platform, strong blocking and tackling and continuous innovation. Efficient/proactive pricing of our portfolio and controlling expense growth (i.e., blocking and tackling) maintain market growth. Implementing innovative initiatives that boost
Slide 9: Operating Excellence
ERATING EXCELLENC Continuous Innovation: On average, ~85 bps of our annual incremental NOI growth since YE 2013 (“$5 million in 2017) has been generated by our revenue-enhancing and expense-growth reducing operating initiatives. Long-lived, consistent innovation will continue to enhance our growth a
Slide 10: Portfolio Diversification
RTFOLIO DIVERSIFICATION o 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 isa key dri
Slide 11: Accretive Capital Allocation
Our ability to pivot our investment focus toward opportunities that generate the highest risk-adjusted IRR, and can be funded internally through free cash flow and modest asset sales, is central to UDR’s capital allocation strategy. We havea full suite of options including: DEVELOPMENT DEVELOPER CAP
Slide 12: Accretive Capital Allocation
ACCRETIVE CAPI LLOCATIO Executing accretively on our capital allocation pivots is as vital as being able to pivot. Below is a sampling of some of UDR’s larger-scale capital allocation decisions over the past decade and how they compare against the apartment cycle. Capital Allocation During the Apart
Slide 13: 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. 2017 UDR BALANCE SHEET STATS Debt-to-Gross Asset Value 33.2% Net Debt-to-EBITDA 5.3x fe Safely investment grade Fixed Charge Coverage 4.8x % of NO
Slide 14: 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 operating platform / diversified portfolio, capital structure and accretive external g
Slide 15: Business Area Updates
Slide 16: Operating Trends
OPERATING TREN Effective YOY Blended Rate Punt ic hata Growth of End of February SS QTD SS QTD 1Q18 1Q17 Washington, D.C. San Francisco Bay Area Orange County 11.0% 1.6% 3.3% 48.1% | 47.4% New York 10.5% 0.9% 2.1% 16.9% | 21.3% Boston 6.3% 3.6% 1.7% 34.0% | 30.8% Seattle 5.8% 3.3% 2.9% 45.1% H 44.6%
Slide 17: Operating Trends
OPERATING TREND The YOY comparison in our blended lease rate growth turned positive. 2Q 3Q 4Q 1Q 2Q 3Q 4Q QiD1Q 2016 2016 2016 2017 2017 2017 2017 2018) YoY Blended Rate Growth® YOY Change in Blended Rate Growth (bps) 5.3% 4.1% 24% 2.5% 3.6% 2.9% 1.9% 2.4% (200) (330) (290) (280) (170) (120) (50) 20
Slide 18: Development Platform
DEVELOPMENT PLATFORM © Development has been our preferred method of external growth over the past five years. Pipeline sizing fluctuates with the investment opportunity set and is conservatively funded (i.e., FCF and modest asset sales). NON-STABILIZED DEVELOPMENT PIPELINE (AS OF 12/31/2017) Size: $
Slide 19: Developer Capital Program
DEVELOPER CAPI PROGRA\ 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 returns. 19 Tightening Constructio
Slide 20: Guidance
8 GUIDANCE Barton Creek Landing | Austin, EARNINGS PER SHARE GUIDANCE 1Q 2018E FY 2018E FFO per common share and unit $0.46 to $0.48 $1.91 to $1.95 FFO as Adj. per common share and unit $0.46 to $0.48 $1.91 to $1.95 AFFO per common share and unit $0.44 to $0.46 $1.76 to $1.80 Annualized Dividend per
Slide 21: 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 23 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
Slide 24: Near-Term Rental Drivers
NEAR-TERM REN DRIVERS a“ Demographic drivers will continue to provide a beneficial tailwind to apartments. But, near-term demand is generated by employment and wage growth. UDR’s markets compare favorably vs. the nation as a whole. LTM Employment + Wage Growth (Total Income Growth) CoNational ——-UDR
Slide 25: Near-Term Rental Drivers
NEAR-TERM RE L DRIVERS 25 Employment growth in UDR’s same-store portfolio is expected to decelerate from 1.8% in 2017 to 1.6% in 2018. But, wage growth in UDR’s markets remains strong. Recent market-level results are varied, but Total Income Growth (employment growth + wage growth) still points to s
Slide 26: Near-Term Rental Drivers
NEAR TERM REN DRIVERS 26 Working to counteract the strong employment environment is elevated new apartment supply. 2016 through 2018E deliveries have been, or are forecasted to be, near or above long-term trend. Deflating deliveries by household growth (i.e., similar concept to constant dollars) mak
Slide 27: Near-Term Rental Drivers
NEAR-TERM REN DRIVERS a7 Year-over-year forecasted apartment supply growth in UDR’s same-store submarkets varies widely by MSA. 2018 UDR SAME-STORE SUBMARKET APARTMENT DELIVERY EXPECTATIONS TOTAL 1H18 V5 2H18 VS. % OF DELIVERIES IN DELIVERIES 1H17 2H17 1H18 Total UDR SS Submarkets 42,169 / or 52% **
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
Slide 29: UDR Definitions and Reconciliations
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 concessions for the new lease term (current effective rent) versus prior effective rent for the prior lease term on re
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: Nominal cap rates represent the expected unleveraged first year yield a property buyer expects to realize on its investment. Non-Mature Communities: The Company defines Non-Mature Communities as those communities that have not. met the criteria to
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 2018 and first quarter of 2018 to forecasted FFO, FFO as Adju
Slide 38: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS BD Quarter Ended Coverage Ratios December 31, 2017 Net income/{loss) s 75,627 Adjustments: Interest expense 34.211 Real estate depreciation and amortization 109,401 Real estate depreciation and amortization on unconsolidated joint ventures 14,128 Other depreciation an
Slide 39: Definitions and Reconciliations
DEFINITIONS AND RECONCILIATIONS ae Three Months Ended Twelve Months Ended December 31 December 31 In thousands, except per share and unit amounts 2047 2016 2047 2046 Net income((loss) attributable to common stockholders $ 68,356 S$ 236687 $117,850 § 289,001 Realestate depreciation and amortization 1
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