Summary of UDR, INC. - Yahoo! Finance

Item 8.01. Other Events.
The financial results and related information of UDR, Inc. (the "Company") for the quarter ended September 30, 2009 are as follows:
Overview
The Company generated Funds from Operations ("FFO") of $29.8 million, or $0.19 per diluted share, for the quarter ended September 30, 2009, versus $49.6 million, or $0.33 per diluted share, in the third quarter of 2008. The third quarter 2009 results reflect (1) a non-cash equity loss of $0.10 per share on a diluted basis related to the Company's investment in two of its single-asset unconsolidated joint ventures, and (2) a $0.02 per share charge associated with the premium on a tender offer for $37.5 million of the Company's bonds maturing in 2024 with a coupon of 8.5 percent. The 2009 results exclude the negative $0.01 per share effect of the implementation of FASB ASC Subtopic 470-201. Excluding the one-time charge for the premium on the bond tender, the equity loss on the Bellevue assets and the impact of ASC Subtopic 470-20, FFO-Core per diluted share would have been $0.31 versus FFO-Core of $0.30 per diluted share in the prior year period.
For the nine months ended September 30, 2009, the Company generated FFO of $0.90 per diluted share as compared to $1.02 for the comparable period a year ago, exclusive of the impact of ASC Subtopic 470-20. Including the impact of ASC Subtopic 470-20, FFO per share would have been $0.86 per diluted share for the nine months ended September 30, 2009 and $0.99 per diluted share a year ago. Excluding the one-time charge for the premium on the bond tender and gains on debt repurchases and the non-cash equity loss, FFO-Core per diluted share for the nine months ended September 30, 2009 would have been $0.94 excluding the impact of ASC Subtopic 470-20 and $0.93 per diluted share a year ago. A reconciliation of FFO follows below:

                                        Q3 2009         Q3 2008         YTD 2009        YTD 2008

FFO-Core                               $     0.31      $     0.30      $     0.94      $     0.93

Equity Loss on Unconsolidated JV            (0.10 )             -           (0.10 )             -
Debt Gains                                      -            0.02            0.08            0.06
Debt Tender Offer                           (0.02 )                         (0.02 )             -
Asset Sales                                     -               -               -           (0.01 )
Tax Benefits                                    -            0.01               -            0.04


FFO-Reported                           $     0.19      $     0.33      $     0.90      $     1.02


ASC Subtopic 470-20 (Additional
expense plus write-offs from
repurchases)                                (0.01 )         (0.01 )         (0.04 )         (0.03 )


FFO - adjusted for ASC Subtopic
470-20                                 $     0.18      $     0.32      $     0.86      $     0.99

1 Formerly Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).

A reconciliation of FFO to GAAP Net Income can be found below under the heading "Other Information."
In the third quarter of 2009, the Company recognized a non-cash equity loss of $16.0 million or $0.10 per diluted share, representing a decline in fair market value below the carrying value of the Company's investment in two of its single-asset unconsolidated joint venture properties. Operations
The Company experienced a same-store net operating income ("NOI") decline of 3.7 percent for the third quarter 2009. Same-store physical occupancy increased 60 basis points to 95.6 percent year-over-year. Same-store revenue declined by 3.0 percent on a challenging revenue comparable of positive 3.4 percent in the prior year. Same-store expenses were down 1.6 percent due to tight expense controls, allowing the Company to maintain a 67 percent operating margin substantially in line with the third quarter of 2008. Sequentially, revenues declined 1.5 percent, same-store expenses increased by 3.6 percent and net operating income declined 3.9 percent.
Summary Same-Store Results Third Quarter 2009 versus Third Quarter 2008

                Revenue       Expense         NOI         % of Same-                       Number of
                Growth/       Growth/       Growth/         Store         Same-Store      Same-Store
Region          Decline       Decline       Decline       Portfolio1      Occupancy2        Homes3

Western             -4.4 %        -2.9 %        -5.0 %           48.0 %          95.4 %        13,692
Mid-Atlantic        -0.1 %        -0.7 %         0.2 %           27.5 %          96.5 %         9,257
Southeastern        -3.3 %         0.2 %        -5.5 %           21.0 %          95.1 %        10,693
Southwestern        -4.8 %        -6.0 %        -4.1 %            3.5 %          95.3 %         1,469

Total               -3.0 %        -1.6 %        -3.7 %          100.0 %          95.6 %        35,111

1 Based on QTD
2009 NOI.

2 Average same-store occupancy for the quarter.

3 During the third quarter, 35,111 apartment homes, or approximately 78 percent of 45,249 total apartment homes, were classified as same-store. The Company defines same-store as all multifamily communities owned and stabilized for at least one year as of the beginning of the most recent quarter.

Technology Platform
The Company continues to make progress on automating its business as a way to drive operating efficiencies and to better meet the changing needs of our residents. In the third quarter, 64 percent of move-ins were originated through an internet source versus 53 percent in third quarter 2008. Since its launch in January 2009, 80 percent of the Company's residents are utilizing the resident internet portal, and resident electronic payments have increased to 52 percent from 38 percent at the end of June. These incremental improvements in adopting the web as a way to conduct business with the Company have resulted in: 1) higher resident satisfaction, 2) a 7 percent decline in same-store marketing and advertising costs and, 3) improved cash management, reduced collection costs and a reduction in labor-hours associated with the rent collection process.

Portfolio Investment Activities
The Company has six active development projects and two active redevelopment projects underway, comprising 2,666 homes, at a total cost of $405 million. Management anticipates delivery of the majority of the apartment homes in 2010, which should align with improving market conditions. During the quarter, the Company purchased a recently completed 289 home community in Dallas via our last pre-sale agreement for $28.3 million and the property is currently 97 percent leased.
The Company does not intend to start additional development projects in 2009 and did not complete any dispositions during the quarter. Capital Markets Activity
During the third quarter of 2009, the Company completed a number of activities geared toward managing the term and cost structure of its debt. As previously announced, the Company closed on a $200 million, 10-year, secured credit facility with Fannie Mae at a blended interest rate of 5.28 percent, the proceeds of the second draw will be used to prepay substantially all of its 2010 secured debt. Additionally, the Company completed a $37.5 million tender offer of its 2024, 8.5 percent coupon bonds and anticipates that the retirement of this debt will result in a savings of $15 million to $17 million in future interest payments. The bonds were retired at a 10 percent premium to face value and resulted in a $3.8 million one-time charge to FFO.
In August, the Company announced the closing of a $450 million joint venture with Kuwait Finance House. The joint venture will have a minimum of 60 percent leverage with an equity contribution from the Company of $54 million when fully invested. The joint venture will invest in high barrier to entry markets and may provide a way for the Company to expand its geographic footprint. In addition, involvement in the joint venture does not preclude the Company from pursuing other acquisition opportunities.
In September, the Company initiated an "At the Market" equity offering program whereby it can sell up to 15 million shares. The program is intended to allow the Company to opportunistically issue equity based on current market conditions. During the quarter, the Company sold approximately 2.3 million shares under the program at a weighted average price of $14.89.

Balance Sheet
At September 30, 2009, the Company had capacity of more than $1 billion in a combination of cash and undrawn capacity on its credit facilities, giving the Company ample flexibility to meet its capital needs for debt maturities and development activities through 2011. Additional capacity, if needed, could be raised via its $3.2 billion unencumbered asset base (on a historical non-depreciated cost basis).
The Company's total indebtedness at September 30, 2009 was $3.3 billion. The Company ended the third quarter with 83 percent fixed-rate debt, a total blended interest rate of 4.5 percent and a weighted average maturity of 5.8 years. The Company's fixed charge coverage ratio improved to 2.1 times as compared to 1.9 times at the end of the third quarter 2008 when adjusted for non-recurring items.

Statement of Operations Information
                                      UDR
                     Consolidated Statements of Operations
                                  (Unaudited)

                                             Three Months Ended            Nine Months Ended
                                               September 30,                 September 30,
In thousands, except per share amounts      2009           2008           2009           2008

Rental income                             $ 150,311      $ 147,414      $ 452,769      $ 413,955

Rental expenses:
Real estate taxes and insurance              18,908         19,101         57,771         47,775
Personnel                                    13,049         12,675         38,464         36,523
Utilities                                     8,207          8,113         23,924         22,017
Repair and maintenance                        8,315          8,318         23,423         22,544
Administrative and marketing                  3,636          3,635         10,553         10,784
Property management                           4,134          4,054         12,452         11,384
Other operating expenses                      1,172          1,153          4,437          3,183

                                             57,421         57,049        171,024        154,210

Non-property income:
Loss from unconsolidated entities (1)       (16,742 )       (1,897 )      (18,187 )       (3,286 )
Tax benefit/(expense) for taxable REIT
subsidiary                                      (14 )          829            (65 )        5,743
Interest and other income                     1,627          9,969         10,609         21,286

                                            (15,129 )        8,901         (7,643 )       23,743

Other expenses:
Real estate depreciation and
amortization                                 69,695         65,551        207,747        180,493
Interest                                     33,909         39,860        105,794        118,381
Net gain on debt extinguishment (2)               -         (2,523 )       (9,849 )       (8,595 )
Amortization of convertible debt
premium                                         967          1,670          3,316          5,010
Expenses related to tender offer              3,764              -          3,764              -

Total interest                               38,640         39,007        103,025        114,796
Hurricane related expenses                        -            833            127            833
General and administrative                    8,924          9,835         27,797         29,535
Other depreciation and amortization             858          1,140          3,730          3,013

                                            118,117        116,366        342,426        328,670

Loss from continuing operations             (40,356 )      (17,100 )      (68,324 )      (45,182 )
Income from discontinued operations             601          6,736          2,486        806,908

Consolidated net (loss)/income              (39,755 )      (10,364 )      (65,838 )      761,726
Net loss/(income) attributable to
non-controlling interests                     1,779            450          3,175        (48,598 )

Net (loss)/income attributable to UDR,
Inc.                                        (37,976 )       (9,914 )      (62,663 )      713,128
Distributions to preferred
stockholders - Series E (Convertible)          (931 )         (931 )       (2,793 )       (2,793 )
Distributions to preferred
stockholders - Series G                      (1,869 )       (1,989 )       (5,607 )       (6,545 )
Discount on preferred stock
repurchases, net                                  -          3,056              -          3,056

Net (loss)/income available to common
stockholders                              $ (40,776 )    $  (9,778 )    $ (71,063 )    $ 706,846


Earnings per weighted average common
share - basic and diluted: (3)
Loss from continuing operations
available to common stockholders          $   (0.27 )    $   (0.12 )    $   (0.50 )    $   (0.71 )
Income from discontinued operations       $    0.00      $    0.05      $    0.02      $    5.79
Net (loss)/income available to common
stockholders                              $   (0.27 )    $   (0.07 )    $   (0.48 )    $    5.08

Common distributions declared per
share (2)                                 $   0.180      $   0.305      $   0.665      $   0.915

Weighted average number of common
shares outstanding - basic (2)              150,000        137,329        149,048        139,266
Weighted average number of common
shares outstanding - diluted (2)            150,000        137,329        149,048        139,266

(1) Includes $16,000 equity loss on Bellevue Plaza and Ashwood Commons joint ventures for the three and nine months ended September 30, 2009.

(2) Includes $0 and $3,365 write-off of convertible debt premium for the three and nine months ended September 30, 2009.

(3) Amounts for all periods represented have been adjusted to reflect the issuance of 11.4 million common shares issued in connection with the Company's January 29, 2009 special dividend.

Other Information
                                      UDR
                             Funds From Operations
                                  (Unaudited)

                                             Three Months Ended             Nine Months Ended
                                               September 30,                  September 30,
In thousands, except per share amounts      2009           2008           2009            2008

Net (loss)/income attributable to UDR,
Inc.                                      $ (37,976 )    $  (9,914 )    $ (62,663 )    $  713,128

Distributions to preferred
stockholders                                 (2,800 )       (2,920 )       (8,400 )        (9,338 )
Real estate depreciation and
amortization, including discontinued
operations                                   69,695         65,551        207,747         180,493
Non-controlling interest                     (1,779 )         (450 )       (3,175 )        48,598
Real estate depreciation and
amortization on unconsolidated joint
ventures                                      1,276          1,302          3,584           3,364
Net gains on the sale of depreciable
property in discontinued operations,
excluding RE3                                  (555 )       (6,566 )       (2,440 )      (787,555 )

Funds from operations ("FFO") - basic     $  27,861      $  47,003      $ 134,653      $  148,690


Distribution to preferred stockholders
- Series E (Convertible)                        931            931          2,793           2,793


Funds from operations - diluted           $  28,792      $  47,934      $ 137,446      $  151,483


FFO per common share - basic              $    0.18      $    0.32      $    0.86      $     1.00

FFO per common share - diluted            $    0.18      $    0.32      $    0.86      $     0.99


Write-off of convertible debt premium
for repurchases (1)                               -              -          3,365               -
Amortization of convertible debt
premium (1)                                     967          1,670          3,316           5,010


Funds from operations as adjusted -
diluted                                   $  29,759      $  49,604      $ 144,127      $  156,493


FFO as adjusted per common share -
diluted                                   $    0.19      $    0.33      $    0.90      $     1.02


Weighted average number of common
shares and OP Units outstanding -
basic (2)                                   156,317        146,899        156,001         148,899
Weighted average number of common
shares, OP Units, and common stock
equivalents outstanding - diluted (2)       160,197        151,185        159,357         153,160

(1) FASB ASC
Subtopic 470-20, formerly Staff Position APB 14-1, requires companies to expense, on a current and retroactive basis, certain implied costs of the option value related to convertible debt and is effective for fiscal years beginning on or after December 15, 2008. The adoption results in the recognition of non-cash charges.

(2) Amounts for all periods represented have been adjusted to reflect the issuance of 11.4 million common shares issued in connection with the Company's January 29, 2009 special dividend.

FFO is defined as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable property, premiums or original issuance costs associated with preferred stock redemptions, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust's definition issued in April 2002. UDR considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of UDR's activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs.

Balance Sheet Information
                                      UDR
                          Consolidated Balance Sheets

                                                            September 30,      December 31,
In thousands, except share and per share amounts                2009               2008
                                                             (unaudited)         (audited)
ASSETS

Real estate owned:
Real estate held for investment                            $     5,835,852     $   5,644,930
Less: accumulated depreciation                                  (1,284,227 )      (1,078,637 )

                                                                 4,551,625         4,566,293
Real estate under development
(net of accumulated depreciation of $482 and $52)                  232,957           186,771

Total real estate owned, net of accumulated depreciation         4,784,582         4,753,064
Cash and cash equivalents                                           24,954            12,740
Marketable securities                                               37,020                 -
Restricted cash                                                      8,280             7,726
Deferred financing costs, net                                       26,002            29,168
Notes receivable                                                     7,300           207,450
Investment in unconsolidated joint ventures                         53,598            47,048
Other assets                                                        68,521            85,842
Other assets - real estate held for disposition                          -               767

Total assets                                               $     5,010,257     $   5,143,805