UDR(UDR) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents UDR, Inc.'s unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Consolidated Financial Statements This section presents UDR, Inc.'s unaudited consolidated financial statements, including the Balance Sheets, Statements of Operations, Comprehensive Income/(Loss), Changes in Equity, and Cash Flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items for the periods ended June 30, 2025 and 2024 Consolidated Balance Sheets This table presents UDR, Inc.'s consolidated financial position at specific dates, detailing assets, liabilities, and equity Consolidated Balance Sheets Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $10,647,085 | $10,897,586 | | Total liabilities | $6,363,954 | $6,436,691 | | Total equity | $3,325,151 | $3,443,540 | Consolidated Statements of Operations This table outlines UDR, Inc.'s financial performance over specific periods, including revenues, operating income, and net income Consolidated Statements of Operations Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total revenues | $425,399 | $415,320 | $847,347 | $828,954 | | Operating income | $77,389 | $68,666 | $199,584 | $148,425 | | Net income attributable to UDR, Inc. | $37,673 | $28,883 | $114,393 | $72,032 | | Net income attributable to common stockholders | $36,462 | $27,673 | $111,976 | $69,591 | | Diluted EPS | $0.11 | $0.08 | $0.34 | $0.21 | Consolidated Statements of Comprehensive Income/(Loss) This table presents UDR, Inc.'s comprehensive income, including net income and other comprehensive income components Consolidated Statements of Comprehensive Income/(Loss) Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net income/(loss) | $40,229 | $31,013 | $122,300 | $77,323 | | Other comprehensive income/(loss) | $(1,406) | $(1,424) | $(2,665) | $3,246 | | Comprehensive income/(loss) attributable to UDR, Inc. | $36,361 | $27,557 | $111,915 | $75,028 | Consolidated Statements of Changes in Equity This section details the changes in UDR, Inc.'s equity components over time, reflecting contributions, distributions, and comprehensive income - Total equity decreased from $3,443,540 thousand at December 31, 2024, to $3,325,151 thousand at June 30, 2025, primarily due to common stock distributions declared[8][13] Consolidated Statements of Changes in Equity Summary | Equity Component | Balance at Dec 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | | :----------------------------------- | :------------------------------------- | :------------------------------------ | | Preferred Stock | $43,193 | $43,193 | | Common Stock | $3,309 | $3,313 | | Additional Paid-in Capital | $7,572,480 | $7,582,852 | | Distributions in Excess of Net Income | $(4,179,415) | $(4,305,702) | | Accumulated Other Comprehensive Income/(Loss), net | $3,638 | $1,160 | | Noncontrolling Interests | $335 | $335 | | Total Equity | $3,443,540 | $3,325,151 | - Common stock distributions declared for the six months ended June 30, 2025, totaled $(285,014) thousand, compared to $(280,077) thousand for the same period in 2024[13][15] Consolidated Statements of Cash Flows This table summarizes UDR, Inc.'s cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by/(used in) operating activities | $406,545 | $406,061 | | Net cash provided by/(used in) investing activities | $(40,938) | $(79,335) | | Net cash provided by/(used in) financing activities | $(365,925) | $(327,206) | | Net increase/(decrease) in cash, cash equivalents, and restricted cash | $(318) | $(480) | | Cash, cash equivalents, and restricted cash, end of period | $35,109 | $34,386 | Notes to Consolidated Financial Statements These notes provide detailed explanations and disclosures for the consolidated financial statements, covering the Company's organization, significant accounting policies, real estate assets, debt, equity, and segment information, offering context for the reported financial figures Note 1. BASIS OF PRESENTATION UDR, Inc. is a self-administered REIT that owns, operates, acquires, renovates, develops, redevelops, and manages apartment communities in targeted U.S. markets. The unaudited interim financial statements are prepared under GAAP, consolidating wholly-owned and controlled subsidiaries, including the Operating Partnership and DownREIT Partnership, where UDR holds significant ownership interests - UDR's consolidated apartment portfolio consists of 168 communities with 55,808 apartment homes across 21 markets as of June 30, 2025[18] - The Company also holds ownership interests in 10,585 apartment homes through unconsolidated joint ventures or partnerships[18] - UDR owns 92.8% of the Operating Partnership units and 71.3% of the DownREIT Partnership units as of June 30, 2025[20] Note 2. SIGNIFICANT ACCOUNTING POLICIES This note outlines UDR's key accounting policies, including recent pronouncements, principles of consolidation, real estate sales gain recognition, allowance for credit losses, notes receivable, comprehensive income, income taxes, forward sales agreements, and lease receivables, providing context for how financial transactions are recorded and reported - FASB ASU 2024-03 (Disaggregation of Income Statement Expenses) is effective for the Company for the year ended December 31, 2027[24] - FASB ASU 2023-09 (Improvements to Income Tax Disclosures) is effective for the Company for the year ended December 31, 2025[25] - The Company applies the CECL impairment model for financial assets, excluding operating lease receivables[31] Net Credit Recoveries/(Losses) Data | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net credit recoveries/(losses) | $0.2 | <$(0.1) | $0.2 | <$(0.1) | Notes Receivable Summary | Notes Receivable, net (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Notes receivable | $144,083 | $286,282 | | Allowance for credit losses | $(591) | $(38,433) | | Total notes receivable, net | $143,492 | $247,849 | - The Company acquired the developer's equity interest in a 478-apartment home community in Philadelphia in May 2025, leading to consolidation and a $3.9 million recognition of previously unaccrued interest and a $0.3 million gain on consolidation[36] Note 3. REAL ESTATE OWNED This note details UDR's real estate assets, including income-producing properties, properties under development, and those held for disposition. It covers changes due to acquisitions and dispositions, and the capitalization of predevelopment, development, and redevelopment costs Real Estate Owned Summary | Real Estate Owned (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Real estate owned | $16,311,298 | $16,213,363 | | Accumulated depreciation | $(7,157,371) | $(6,901,026) | | Real estate owned, net | $9,153,927 | $9,312,337 | - In May 2025, the Company acquired the developer's equity interest in a 478-apartment home community in Philadelphia, increasing real estate assets by approximately $166.0 million and recognizing a $0.3 million gain on consolidation[58] - In January 2025, the Company sold two operating communities (Brooklyn, NY and Englewood, NJ) for gross proceeds of $211.5 million, resulting in a total gain of approximately $47.9 million[59][60] Capitalized Costs Summary | Capitalized Costs (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Predevelopment, development, and redevelopment costs (excluding direct costs and interest) | $1,400 | $4,400 | $4,000 | $8,600 | | Total capitalized interest | $2,100 | $2,400 | $4,100 | $5,300 | Note 4. VARIABLE INTEREST ENTITIES UDR has identified the Operating Partnership and DownREIT Partnership as Variable Interest Entities (VIEs) and consolidates them. This is based on UDR's role as the sole general partner, which grants it the power to direct activities significantly impacting economic performance and the obligation/right to absorb/receive significant benefits - The Operating Partnership and DownREIT Partnership are classified as VIEs because limited partners lack substantive kick-out and participating rights[65] - UDR consolidates these entities as the primary beneficiary, directing their activities and absorbing/receiving potentially significant losses/benefits[68] Note 5. JOINT VENTURES AND PARTNERSHIPS This note details UDR's investments in unconsolidated joint ventures and partnerships, which are accounted for under the equity method. It summarizes the Company's investment balances, income/losses from these entities, and significant transactions such as new preferred equity investments and repayments Total Investment in and Advances to Unconsolidated Joint Ventures Data | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | | Total investment in and advances to unconsolidated joint ventures, net | $879,781 | $917,483 | Income/(Loss) from Unconsolidated Entities Data | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Income/(loss) from unconsolidated entities | $3,629 | $4,046 | $9,443 | $13,131 | | Joint venture management and other fees | $2,398 | $1,992 | $4,510 | $3,957 | - In April 2025, UDR entered a new preferred equity investment of $13.0 million in a Daly City, California operating community, earning a 12.0% preferred return[76] - In June 2025, the Company received full repayment of its approximately $54.8 million preferred equity investment in a Queens, New York community[77] Combined Unconsolidated Joint Ventures Summary | Combined Unconsolidated JVs (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $93,206 | $78,013 | $183,327 | $154,269 | | Net income/(loss) | $(23,808) | $(17,613) | $(40,705) | $(12,219) | Note 6. LEASES This note details UDR's lease arrangements, both as a lessee (ground leases) and a lessor (apartment, retail, and commercial space). It outlines the carrying amounts of right-of-use assets and lease liabilities, lease terms, discount rates, and future minimum lease payments Lease Metrics Summary | Lease Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $185,125 | $186,997 | | Operating lease liabilities | $180,433 | $182,275 | - The weighted average remaining lease term for ground leases is 41.1 years, with a weighted average discount rate of 5.0% as of June 30, 2025[88] Operating Lease Expense Summary | Operating Lease Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating lease expense | $3,416 | $3,393 | $6,829 | $6,783 | - Future minimum lease payments from retail and commercial leases total $196.2 million, with apartment home leases generally having initial terms of 12 months or less[92] Note 7. SECURED AND UNSECURED DEBT, NET This note provides a comprehensive overview of UDR's secured and unsecured debt, including principal outstanding, interest rates, and maturities. It details various credit facilities, commercial paper programs, and medium-term notes, highlighting the Company's compliance with debt covenants Secured and Unsecured Debt Summary | Debt Category (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total Secured Debt, net | $1,136,046 | $1,139,331 | | Total Unsecured Debt, net | $4,639,537 | $4,687,634 | | Total Debt, net | $5,775,583 | $5,826,965 | - As of June 30, 2025, the weighted average interest rate on total debt was 3.35%, with a weighted average of 4.7 years to maturity[97] - Secured debt encumbered approximately 13% of UDR's total real estate owned as of June 30, 2025[99] Unsecured Debt Program Summary | Unsecured Debt Program (in thousands) | June 30, 2025 Outstanding | Dec 31, 2024 Outstanding | June 30, 2025 Wtd Avg Rate | Dec 31, 2024 Wtd Avg Rate | | :------------------------------------ | :------------------------ | :----------------------- | :------------------------- | :------------------------ | | Commercial paper program | $220,000 | $289,900 | 4.65% | 5.4% | | Working capital credit facility | $30,215 | $9,361 | 5.17% | 6.0% | - UDR was in compliance with all debt instrument covenants at June 30, 2025[120] Note 8. INCOME/(LOSS) PER SHARE This note details the calculation of basic and diluted income/(loss) per share for UDR, Inc., including the impact of common shares, OP/DownREIT Units, convertible preferred stock, and other equity instruments. It also mentions the Company's ATM sales agreement for common stock issuance Net Income Attributable to Common Stockholders and EPS | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income/(loss) attributable to common stockholders | $36,462 | $27,673 | $111,976 | $69,591 | | Basic EPS | $0.11 | $0.08 | $0.34 | $0.21 | | Diluted EPS | $0.11 | $0.08 | $0.34 | $0.21 | Weighted Average Shares Outstanding | Shares Outstanding (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Weighted average common shares outstanding (Basic) | 330,778 | 329,056 | 330,703 | 328,940 | | Weighted average common shares outstanding (Diluted) | 331,715 | 329,572 | 331,717 | 329,334 | - As of June 30, 2025, 14.0 million shares of common stock were available for future issuance under the ATM program[122] Note 9. NONCONTROLLING INTERESTS This note explains the accounting for redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, which are reported at their redemption value based on UDR's stock price. It also covers non-redeemable noncontrolling interests in other consolidated affiliates Redeemable Noncontrolling Interests Summary | Redeemable Noncontrolling Interests (in thousands) | Amount | | :------------------------------------------------- | :----- | | Redeemable noncontrolling interests at December 31, 2024 | $1,017,355 | | Mark-to-market adjustment | $(46,751) | | Conversion of OP Units/DownREIT Units | $(12,443) | | Net income attributable to redeemable noncontrolling interests | $7,884 | | Distributions to redeemable noncontrolling interests | $(20,888) | | Redeemable Long-Term and Short-Term Incentive Plan Units | $13,010 | | Allocation of other comprehensive income/(loss) | $(187) | | Redeemable noncontrolling interests at June 30, 2025 | $957,980 | - Redeemable noncontrolling interests are recorded outside of permanent equity and reported at their redemption value, based on the Company's stock price at each balance sheet date[128] Note 10. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS This note outlines UDR's fair value measurements for financial instruments, categorizing them into a three-level hierarchy (Level 1, 2, 3) based on observability of inputs. It provides fair value estimates for notes receivable, equity securities, derivatives, and debt instruments, explaining the valuation methodologies used Fair Value of Financial Instruments | Financial Instrument (in thousands) | Fair Value at June 30, 2025 | Fair Value at December 31, 2024 | | :---------------------------------- | :-------------------------- | :------------------------------ | | Notes receivable, net (Level 3) | $141,300 | $243,546 | | Equity securities (Level 1) | $725 | $1,281 | | Derivatives - Interest rate contracts (Level 2) | $16 | $3,227 | | Secured debt instruments - fixed rate (Level 3) | $1,057,679 | $1,039,482 | | Unsecured notes (Level 3) | $4,032,636 | $3,897,187 | - Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership are classified as Level 2, as their valuation is based on the fair value of the Company's common stock[142] - No transfers into or out of any fair value hierarchy levels occurred during the six months ended June 30, 2025[136] Note 11. DERIVATIVES AND HEDGING ACTIVITY This note details UDR's use of derivative financial instruments, primarily interest rate swaps and caps, to manage interest rate risk and stabilize interest expense. It outlines the fair value of these instruments and their impact on comprehensive income and interest expense - UDR uses interest rate swaps and caps as cash flow hedges to manage interest rate risk and add stability to interest expense[145] - As of June 30, 2025, the Company had 3 outstanding interest rate derivatives designated as cash flow hedges, with a total notional value of $183.977 million[151] - An estimated $0.3 million will be reclassified as a decrease to Interest expense from Accumulated other comprehensive income/(loss), net through June 30, 2026[150] Derivative and Hedging Activity Impact | Derivative Impact (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Unrealized holding gain/(loss) recognized in OCI | $(27) | $567 | $81 | $7,232 | | Gain/(Loss) Reclassified from Accumulated OCI into Interest expense | $1,379 | $1,991 | $2,746 | $3,986 | Note 12. STOCK BASED COMPENSATION This note reports the stock-based compensation expense recognized by UDR, inclusive of awards granted to non-employee directors, which is included in General and Administrative expenses Stock Based Compensation Expense | Stock Based Compensation (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock based compensation expense | $8,800 | $9,400 | $16,300 | $16,700 | Note 13. COMMITMENTS AND CONTINGENCIES This note outlines UDR's financial commitments, primarily for real estate development, and discusses ongoing legal proceedings, including antitrust lawsuits related to revenue management software. The Company believes these legal matters will not have a material adverse effect on its financial condition Real Estate Commitments Summary | Real Estate Commitments (in thousands) | UDR's Investment (June 30, 2025) | UDR's Remaining Commitment | | :------------------------------------- | :------------------------------- | :------------------------- | | Wholly-owned — under development | $41,108 | $92,492 | | Real estate technology and sustainability investments | $128,404 | $40,596 | | Total | $169,512 | $133,088 | - UDR is a defendant in consolidated antitrust lawsuits related to its use of RealPage, Inc.'s revenue management software, with similar allegations filed by the District of Columbia, Maryland, and Washington[162] - Governmental investigations regarding antitrust matters in the multifamily industry are ongoing, but the Company believes any liability will not have a material adverse effect[162] Note 14. REPORTABLE SEGMENTS This note details UDR's two reportable segments: Same-Store Communities and Non-Mature Communities/Other. It provides a breakdown of rental income, operating expenses, and Net Operating Income (NOI) by segment and geographic region, along with a reconciliation of NOI to Net income attributable to UDR, Inc - UDR's two reportable segments are Same-Store Communities and Non-Mature Communities/Other, with performance evaluated based on rental income and Net Operating Income (NOI)[168][171] Segment Rental Income, Operating Expenses, and NOI | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total segment and consolidated rental income | $423,001 | $413,328 | $842,837 | $824,997 | | Total segment and consolidated operating expenses | $132,621 | $129,327 | $267,356 | $261,600 | | Total segment and consolidated NOI | $290,380 | $284,001 | $575,481 | $563,397 | - Same-Store Communities comprised 54,915 apartment homes for the three months ended June 30, 2025, and 54,442 for the six months ended June 30, 2025[178][179] Reportable Apartment Home Segment Assets | Reportable Apartment Home Segment Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------------ | :------------ | :---------------- | | Total segment assets | $16,311,298 | $16,213,363 | | Total segment assets — net book value | $9,153,927 | $9,312,337 | - Geographic segments include West, Mid-Atlantic, Northeast, Southeast, and Southwest Regions[180][184] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on UDR's financial condition and operational results, analyzing key trends, liquidity, capital resources, and segment performance. It also includes forward-looking statements, critical accounting policies, and a reconciliation of non-GAAP financial measures like FFO, FFOA, and AFFO Forward-Looking Statements This section highlights the inherent uncertainties and risks associated with future projections and business outlook - The report contains forward-looking statements regarding property acquisitions, development, capital raising, rent growth, occupancy, and rental expense growth[187] - Future results could differ materially due to factors such as general market and economic conditions, inflation, competitive factors, debt financing risks, natural disasters, cybersecurity breaches, and changes in laws[188] - The Company disclaims any obligation to update or revise forward-looking statements[191] Business Overview This section provides a summary of UDR's core business as a REIT, its real estate portfolio, and operational metrics - UDR is a self-administered REIT that owns, operates, acquires, renovates, develops, redevelops, disposes of, and manages multifamily apartment communities in targeted U.S. markets[192] - As of June 30, 2025, the consolidated real estate portfolio included 168 communities with 55,808 apartment homes[193] - The Company also has an ownership interest in 10,585 apartment homes through unconsolidated joint ventures or partnerships[193] Same-Store Communities Key Metrics | Same-Store Communities (June 30, 2025) | Three Months Ended | Six Months Ended | | :--------------------------------------- | :----------------- | :--------------- | | Weighted Average Physical Occupancy | 96.9% | 97.0% | | Monthly Income per Occupied Home | $2,572 | $2,562 | Liquidity and Capital Resources This section discusses UDR's sources of funds, debt facilities, and capital management strategies to meet financial obligations - Primary sources of liquidity include cash flow from operations, property sales, borrowings under credit agreements, and issuance of debt/equity securities[201] - The Company has a $1.3 billion unsecured revolving credit facility (maturing August 31, 2028) and a $350.0 million unsecured term loan (maturing January 31, 2027)[206] - As of June 30, 2025, $220.0 million of commercial paper was outstanding (weighted average rate of 4.65%), leaving $480.0 million of unused capacity under the $700.0 million program[207][209] - Remaining debt maturities for 2025 include approximately $175.1 million of secured debt and $220.0 million of unsecured debt (commercial paper)[211] Guarantor Subsidiary Summarized Financial Information This section provides summarized financial data for the Operating Partnership, which guarantees certain of UDR's debt securities - The Operating Partnership fully and unconditionally guarantees payment of principal, premium, and interest for certain of UDR's registered debt securities[215] Operating Partnership Summarized Financials | Operating Partnership (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total assets | $2,751,228 | $2,797,868 | | Total liabilities | $2,206,738 | $2,130,698 | | Total capital | $544,490 | $667,170 | Operating Partnership Net Income Data | Operating Partnership Net Income (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income/(loss) | $23,833 | $18,872 | $48,375 | $37,499 | Critical Accounting Policies and Estimates and New Accounting Pronouncements This section outlines key accounting judgments and assumptions, along with the impact of recently adopted or issued accounting standards - Critical accounting policies include capital expenditures, impairment of long-lived assets, real estate investment properties, and revenue recognition[219] - No significant changes in critical accounting policies from the Annual Report on Form 10-K filed February 18, 2025[220] Statements of Cash Flows Analysis This section analyzes UDR's cash flow trends from operating, investing, and financing activities over specified periods Cash Flow Activities Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $406,545 | $406,061 | | Net cash used in investing activities | $(40,938) | $(79,335) | | Net cash used in financing activities | $(365,925) | $(327,206) | - The decrease in cash used in investing activities was primarily due to increased proceeds from real estate sales ($203.6 million in H1 2025 vs $98.7 million in H1 2024) and decreased development spend[17][224] - Total capital expenditures for the six months ended June 30, 2025, were $119.9 million, a 2.8% decrease from $123.4 million in the comparable 2024 period[227][231] - Significant financing activities included repaying $69.9 million (net) on the unsecured commercial paper program and paying $283.2 million in distributions to common stockholders[245] Results of Operations Analysis This section provides a detailed analysis of UDR's financial performance, including revenue drivers, expense trends, and segment contributions Net Income Attributable to Common Stockholders and Total Property NOI | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $36,462 | $27,673 | $111,976 | $69,591 | | Total property NOI | $290,380 | $284,001 | $575,481 | $563,397 | - Same-Store NOI increased by 2.9% ($7.9 million) for Q2 2025 and 2.6% ($14.2 million) for H1 2025, driven by higher rental income and partially offset by increased operating expenses[261][264] - Non-Mature Communities/Other NOI decreased by 17.6% ($1.5 million) for Q2 2025 and 10.1% ($2.1 million) for H1 2025, primarily due to the sale of two operating communities[268][269] - Gain on sale of real estate owned for H1 2025 was $47.9 million, significantly higher than $16.9 million in H1 2024, due to the sale of two communities[270] - Other depreciation and amortization increased by $5.5 million for H1 2025, primarily due to $5.9 million in software transition-related costs[276][277] Funds from Operations, Funds from Operations as Adjusted, and Adjusted Funds from Operations This section reconciles and presents key non-GAAP financial measures used to evaluate REIT performance, including FFO, FFOA, and AFFO Funds from Operations (FFO, FFOA, AFFO) Summary | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | FFO attributable to common stockholders and unitholders, diluted | $216,592 | $215,729 | $424,884 | $429,184 | | FFOA attributable to common stockholders and unitholders, diluted | $227,543 | $221,124 | $446,614 | $438,820 | | AFFO attributable to common stockholders and unitholders, diluted | $198,342 | $194,834 | $399,008 | $395,222 | Funds from Operations Per Share/Unit | Per Share/Unit (Diluted) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | FFO | $0.61 | $0.60 | $1.19 | $1.20 | | FFOA | $0.64 | $0.62 | $1.25 | $1.23 | | AFFO | $0.56 | $0.55 | $1.12 | $1.11 | Supplemental U.S. Federal Income Tax Considerations This section outlines recent legislative changes impacting UDR's federal income tax status and REIT compliance - The 'One Big Beautiful Bill Act' (OBBB), enacted July 4, 2025, introduces changes to the Code affecting REITs[292] - For taxable years beginning on or after January 1, 2026, the REIT asset test requirement for taxable REIT subsidiaries (TRS) is relaxed from 20% to 25% of gross asset value[294] - The Section 199A pass-through qualified business income deduction (20% of qualified REIT dividends) has been permanently extended[294] Item 3. Quantitative and Qualitative Disclosures About Market Risk UDR is exposed to interest rate risk from variable rate debt and refinancing risk on fixed-rate debt, which it manages using derivative financial instruments. The Company's market risk profile has not materially changed since its Annual Report on Form 10-K for the year ended December 31, 2024 - The Company is exposed to interest rate risk associated with variable rate notes payable and maturing debt that needs refinancing[293] - As of June 30, 2025, UDR had $452.2 million in variable rate debt not subject to interest rate swap contracts[246] - A hypothetical 100 basis point increase in market interest rates would increase interest expense for the six months ended June 30, 2025, by $2.6 million[246] - The Company uses derivative financial instruments, primarily cash flow hedges, to manage interest rate risk[248] - Market risk has not materially changed from the amounts reported in the Annual Report on Form 10-K for the year ended December 31, 2024[295] Item 4. Controls and Procedures UDR's management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, concluding they are effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the fiscal quarter - The Company's disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of June 30, 2025[298] - There have been no material changes in the Company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[299] PART II — OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures not covered in the financial statements Item 1. Legal Proceedings UDR is involved in various legal proceedings and claims, including antitrust lawsuits related to its use of RealPage, Inc.'s revenue management software. While the Company intends to vigorously defend these suits, the outcome and potential loss cannot be predicted at this early stage, and no liability has been recorded as of June 30, 2025 - UDR is a defendant in consolidated antitrust lawsuits related to its use of RealPage, Inc.'s revenue management software, with similar allegations filed by the District of Columbia, Maryland, and Washington[162][302] - The Company believes there are factual and legal defenses and intends to vigorously defend these suits[162] - As of June 30, 2025, it is not possible to predict the outcome or estimate the amount of loss, if any, and no liability has been recorded[162] Item 1A. Risk Factors This section details numerous factors that could materially and adversely affect UDR's business, financial condition, and results of operations. Key risks include unfavorable market and economic conditions, geographic concentration, competition, inflation, development and construction challenges, joint venture complexities, insurance limitations, regulatory changes (including rent control), litigation, and financial market disruptions - Unfavorable apartment market and economic conditions, such as increased supply, job losses, or recession, could adversely affect occupancy levels, rental rates, and property values[304] - Approximately 73.6% of UDR's total NOI for the six months ended June 30, 2025, was generated from eight major geographic markets, increasing exposure to regional economic or regulatory downturns[305] - Development and construction activities are subject to risks including financing difficulties, supply chain constraints, permitting delays, cost overruns, and failure to achieve anticipated yields[315] - Property ownership through partnerships and joint ventures may limit UDR's ability to act exclusively in its own interest, and partners may fail to perform as expected, requiring additional capital contributions[320] - The adoption of, or changes to, rent control, rent stabilization, eviction, and tenants' rights laws could limit UDR's ability to raise rents or charge fees, adversely affecting results of operations and property values[337] - Changing interest rates could increase interest costs on variable rate debt and refinancing, adversely affecting cash flows and the market price of common stock[366] - Failure to qualify as a REIT would subject UDR to federal income tax at corporate rates and eliminate dividend deductions, significantly impacting financial condition and stock value[380][381] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the second quarter of 2025, UDR issued 1,838 shares of common stock in exchange for Operating Partnership units tendered for redemption. The Company did not repurchase any shares under its publicly announced share repurchase program, but did repurchase a small number of shares from employees to satisfy tax obligations related to restricted stock vesting - During the three months ended June 30, 2025, UDR issued 1,838 shares of common stock upon redemption of OP Units[403] - No shares were repurchased under the 15 million share repurchase program during the three months ended June 30, 2025[404] - Less than 1 thousand shares were repurchased from employees at an average price of $40.45 per share to satisfy statutory minimum tax obligations related to restricted stock vesting[405] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[406] Item 4. Mine Safety Disclosures This item is not applicable to UDR, Inc.'s operations - Mine Safety Disclosures are not applicable to the Company[407] Item 5. Other Information During the three months ended June 30, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[408] Item 6. Exhibits This section lists all exhibits filed as part of the 10-Q report, including corporate organizational documents, certifications from the CEO and CFO, and Inline XBRL data - Exhibits include Articles of Restatement, Articles of Amendment, Amended and Restated Bylaws, List of Guarantor Subsidiaries, Rule 13a-14(a) Certifications (CEO, CFO), Section 1350 Certifications (CEO, CFO), and Inline XBRL data[409] Signatures The report is officially signed by the Company's Senior Vice President and Chief Financial Officer - The report was signed by David D. Bragg, Senior Vice President and Chief Financial Officer, on July 31, 2025[411]