Udr, Inc. · NYSE:UDR
Udr — United Dominion Realty Trust — NAREIT Chicago 2001
30 slides from Udr's conference presentation, Oct 12, 2001
Slide 1: NAREIT Chicago
NAREIT Chicago October 10 - 12, 2001
Slide 2: Overview of Company
Overview of Company • 30 Year History of Quality and Performance • Class B Apartments – Garden Style • Diversified Portfolio Across Growing Markets • 3rd Largest Apartment REIT • Market Capitalization of $4.0 Billion • 25 Consecutive Years of Dividend Increases • 78,000 Units • 62 Markets, No One Ma
Slide 3: Investment Decision Making
Investment Decision Making • Why Invest in REITs? – Liquid investment – Real property assets – Dividends • Why Invest in Apartment REITs? – Relative resiliency of housing fundamentals – Construction and lending remain in check – Only REITs with access to Fannie and Freddie • Why Invest in UDR? – Div
Slide 4: New Management Team
New Management Team Events: • February – New CEO • April – New Management Team - All have multi-family experience - All have worked together Mark Wallis Sr. EVP Strategic Planning, Acquisition & Development Chris Genry CFO Financial Reporting, Technology and Human Resources Ella Neyland EVP Treasure
Slide 5: Management Organization
Management Organization Tom Toomey ---------------------------------------------------- President and CEO Martha Carlin Chris Genry Kevin McCabe Ella Neyland Mark Wallis ---------------------------------------------------- ---------------------------------------------------- ------------------------
Slide 6: Property Management Organization
Property Management Organization • Decentralized Property Management Team - Experienced local experts - Flat organization Area Director & Units Babcock (9,107) Beal (12,297) Connelly (12,101) Ducote (10,395) Perlman (12,996) Pucci (11,232) Sandidge (9,849) UDR Offices Cities with >3,000 units 6
Slide 7: Typical Area Operating Organization
Typical Area Operating Organization • Self Sufficient Organizations • Operate Autonomously to React to Markets in Real Time Area Director Hiring Pricing Asset Improvement District Specialist Specialist Specialist Manager 5 to 6 supervising 10 assets or 2,000 homes 7
Slide 8: Bottom Line Orientation
Bottom Line Orientation • Forced Ranking of Personnel Based Upon Performance • All Incentive Plans Tied to Cash Flow Improvement Over Prior Years • Long-Term Performance and Retention Program via Restricted Stock and Out-Performance Program 8
Slide 9: Business Plan for 2002
Business Plan for 2002 • Increased Operating Efficiency • Continue Improvement in Asset Quality • Portfolio Repositioning Strategy 9
Slide 10: Increased Operating Efficiency: Managing the Business
Increased Operating Efficiency Managing the Business Management has developed a program hereby key metrics are monitored on a timely basis to ensure financial performance is optimized. The discussion that follows highlights those key metrics and their progress since the new management team. Monitore
Slide 11: Managing Revenues
Managing Revenues These metrics are used to manage rental revenues on a weekly basis. Month-to-Month Leases Physical Occupancy Apr-Sep 01 60+ Day Vacants 8000 2001 1999-2001 A v e ra g e N u m b e r o f M T M L e a s e s 1,100 Average 60+ Days Vacant per Month 7500 96.0% 7000 1,000 95.0% 900 P h ysi
Slide 12: Managing Expenses
Managing Expenses Expenses will be managed according to our annual budget. Additionally, management monitors total expenses by asset on a weekly basis comparing to prior year and quarter-to- date. Selected expenses are monitored as stated below. Breakdown of Expenses Projected Category Year End Admi
Slide 13: Managing Expense
Managing Expense Expenses are generally managed through a budget process. Additionally, management monitors total expenses by asset on a weekly basis comparing to prior year and quarter-to- date. Expenses are monitored as stated below. Taxes: • Centralized Operations to One Department in July • Cent
Slide 14: Managing Overhead
Managing Overhead Expenses for overhead are managed through a budget process, and historical budgets and costs have been reassessed for improvement opportunities. Breakdown of Overhead Management Approach Process Other 15% Payroll Box • Specific number of employees based on each department • Bi-Week
Slide 15: Improvement in Asset Quality
Improvement in Asset Quality • Continue the Trend of Improving Age and Rents • Disciplined Development Activities • Reinvesting in Assets Through Maintenance and Capital Spending 15
Slide 16: Asset Quality: Age and Rents
Asset Quality … Age and Rents $700 20 $650 19 18 Average Rent Average Age $600 17 $550 16 $500 15 $450 14 13 $400 12 $350 11 $300 10 1995 1997 1999 2001 16
Slide 17: Asset Quality: New Development
Asset Quality … New Development • $300 Million Over 5 Years (In Millions) Average Return: 9-10% $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 1998 1999 2000 2001 2002 17
Slide 18: UDR Development Pipeline
UDR Development Pipeline # of Units Cost Cost to Total Location # of Units Completed % Leased To Date Complete Cost Scheduled Completion Wholly-Owned Development Dominion Place at Kildaire Farm Raleigh, NC 332 156 64% $ 18,400 $ 7,300 $ 25,700 March 31, 2002 Red Stone Ranch Austin, TX 324 285 41% 17
Slide 19: Asset Quality: Reinvesting in Assets
Asset Quality … Reinvesting in Assets $2500 5 98 $ $2000 72 Asset Preservation $6 59 $1500 $6 Capital Enhancements 51 $1000 $3 3 Maintenance $ 44 45 5 10 $ ,1 $500 23 18 18 $1 8 5 84 $ 3 $2 $8 $2 $1 $0 '98 '99 '00 '01 19
Slide 20: Repositioning the Portfolio for the Future
Repositioning the Portfolio for the Future • Focus on Fewer Markets (20-30) • Market Concentration – Minimum of 1,500 – 2,000 units – Maximum of 10,000 – 12,000 units • Market Selection Criteria – Size – Rent and growth prospects – Portfolio diversification – Location of current holdings 20
Slide 21: Overview: Geographic Distributions
Overview … Geographic Distributions Today Future Other Oakland Tacoma Fredericksburg No. Virginia Dallas Fort Meyers Dallas Other Fayetteville Washington Orlando Detroit Washington Orlando Portland Houston Seattle Sacramento Portland Orange County San Francisco Denver Houston Phoenix Jacksonville, F
Slide 22: The Result
The Result … • Increased Operating Efficiency • Continued Improvement in Asset Quality • Portfolio Repositioning Strategy 8-10% FFO Growth Plus 7-8% Dividend Yield 15-18% Total Return 22
Slide 23: Financial Projections
Financial Projections FFO Earnings 2001 $1.48 2002 $1.65 FFO Growth 2001-02 11% Dividends/Yield $1.08/7.6% Net Asset Value* $15.20 * As of September 30, 2001 NAV on website at udrt.com 23
Slide 24: Internal Growth
Internal Growth Pre Post 9/11 9/11 • 2001 Consensus $1.48 $1.48 • 2002 Incremental Earnings Range: – One-Time Write-Off (added back) $.07 - $.07 – Same Store Sales Growth .03 - .01 – Capital Transactions .02 - .02 – 10% Work Force Reduction .02 - .01 – Insurance Change .01 - .02 – Refinancing .02 -
Slide 25: Balance Sheet: September 30
Balance Sheet … September 30 Liabilities Credit Ratios 1 Secured debt $ 870 Debt/gross asset value 60.5% Unsecured notes 760 Debt/undepreciated real estate 54.2% Unsecured term loan 100 Debt + perp. pfd./undepreciated real estate 57.7% Unsecured revolver 347 Debt + perp. + conv. pfd./undepreciated r
Slide 26: Debt Maturity Schedule
Debt Maturity Schedule • Debt Maturities are Managed • $2.2 Billion of Unencumbered Assets 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Thereafter 26 •Secured •Unsecured •Credit Facilit
Slide 27: Peer Comparison of Debt
Peer Comparison of Debt Secured debt Unsecured debt Perpetual preferred equity 7.7% 6.9% 4.6% 6.0% 7.7% 14.8% 13.0% 15.8% 15.1% 17.2% 17.9% 42.6% 49.1% 38.9% 38.6% 76.9% 69.5% 70.5% 44.3% 47.6% 50.6% 92.3% 82.1% 34.4% 46.3% 48.4% 44.0% 38.5% 33.5% 37.3% 25.9% 23.6% 23.0% 23.1% Actual credit statisti
Slide 28: Internal Growth
Internal Growth Pre Post 9/11 9/11 • 2001 Consensus $1.48 $1.48 • 2002 Incremental Earnings Range: – One-Time Write-Off (added back) $.07 - $.07 – Same Store Sales Growth .03 - .01 – Capital Transactions .02 - .02 – 10% Work Force Reduction .02 - .01 – Insurance Change .01 - .02 – Refinancing .02 -
Slide 29: Impact of A Recession
Impact of A Recession • Negative – Decreasing occupancy levels – Restricts ability to raise rents – Bad debt and concessions increase – Slower sales • Positive – Fewer residents buy homes – Lower interest rates – Acquisition opportunities 29
Slide 30: Lasting Impressions: Total Return of 15-18%
Lasting Impressions … • FFO Growth of 8-10% • Dividend Yield of 7-8% Total Return of 15-18% 30