Maryland
(State or other jurisdiction of incorporation or organization) |
54-0857512
(I.R.S. Employer Identification No.) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.01 par value | New York Stock Exchange | |
6.75% Series G Cumulative Redeemable Preferred Stock
|
New York Stock Exchange |
Large accelerated
filer
þ
|
Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Item 1.
BUSINESS
Dividends Declared in 2008
Dividends Paid in 2008
Unadjusted
Adjusted
Unadjusted
Adjusted
$
0.330
$
0.305
$
0.330
$
0.305
0.330
0.305
0.330
0.305
0.330
0.305
0.330
0.305
1.290
1.190
0.330
0.305
$
2.280
$
2.105
$
1.320
$
1.220
own and operate apartments in markets that have the best growth
prospects based on favorable job formation and low home
affordability, thus enhancing stability and predictability of
returns to our stockholders;
manage real estate cycles by taking an opportunistic approach to
buying, selling, and building apartment communities;
empower site associates to manage our communities efficiently
and effectively;
measure and reward associates based on specific performance
targets; and
manage our capital structure to ensure predictability of
earnings and dividends.
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We closed on a two-year unsecured term loan of $240 million
of which $200 million was swapped into a fixed rate of
3.61% and $40 million has a rate of LIBOR plus
85 basis points. Proceeds from this loan were used to
redeem maturing debt.
We closed on a $400 million credit facility which matures
November 2018. At December 31, 2008, we had
$224.8 million outstanding on the facility
$70.0 million at a fixed interest rate of 5.85% and
$154.8 million at a variable interest rate, fixed with two-
and three-year LIBOR swaps at an average rate of 4.32%. The
Company has five years to draw on the additional
$175.2 million of capacity.
We sold 8,661,201 shares of common stock adjusted for the
special dividend (8,000,000 shares of common stock on an
unadjusted basis) in a public offering, resulting in gross
proceeds to us of $194.0 million, which were in part used
to reduce corporate debt.
We completed development on two wholly-owned communities
consisting of 644 apartment homes with an aggregate carrying
value of $44.4 million.
We acquired 4,558 apartment homes in 13 communities for
approximately $976.3 million, two parcels of land for
$20.0 million, certain rights held by joint venture partner
for $1.5 million and a retail property for
$19.2 million.
We sold 86 communities with a total of 25,684 apartment homes
for gross consideration of $1.7 billion.
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population growth, cost of alternative housing, overall
potential for economic growth and the tax and regulatory
environment of the community in which the property is located;
geographic location, including proximity to our existing
communities which can deliver significant economies of scale;
construction quality, condition and design of the community;
current and projected cash flow of the property and the ability
to increase cash flow;
potential for capital appreciation of the property;
ability to increase the value and profitability of the property
through upgrades and repositioning;
terms of resident leases, including the potential for rent
increases;
occupancy and demand by residents for properties of a similar
type in the vicinity;
prospects for liquidity through sale, financing, or refinancing
of the property; and
competition from existing multifamily communities and the
potential for the construction of new multifamily properties in
the area.
2008
2007
2006
2005
2004
4,558
2,671
2,763
2,561
8,060
44,388
65,867
70,339
74,875
78,855
$
5,831,753
$
5,956,481
$
5,820,122
$
5,512,424
$
5,243,296
current market price for an asset compared to projected
economics for that asset;
potential increases in new construction in the market area;
areas where the economy is not expected to grow
substantially; and
markets where we do not intend to establish long-term
concentration.
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Number of
Completed
Cost to
Budgeted
Estimated
Expected
Apartment
Apartment
Date
Cost
Cost
Completion
Homes
Homes
(In thousands)
(In thousands)
Per Home
Date
Plano, TX
200
56
$
13,602
$
17,900
$
89,500
1Q09
Tampa, FL
249
109
51,470
52,000
208,835
1Q09
Dallas, TX
465
32,108
62,900
135,269
2Q10
Surprise, AZ
382
25,698
47,400
124,084
1Q10
Raleigh, NC
359
15,242
46,500
129,526
1Q10
Dallas, TX
392
19,061
66,500
169,643
3Q10
Woodbridge, VA
360
29,642
82,700
229,722
3Q10
2,407
165
$
186,823
$
375,900
$
156,170
Number of
Completed
Cost to
Budgeted
Estimated
Expected
Apartment
Apartment
Date
Cost
Cost
Completion
Homes
Homes
(In thousands)
(In thousands)
Per Home
Date
274
$
43,128
$
49,000
$
178,832
3Q09
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6
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Closed on a $240 million, two-year unsecured term loan
facility of which $200 million was swapped into a fixed
rate of 3.61% and $40 million has a rate of LIBOR plus
85 basis points. Proceeds were used to redeem
$200 million of our 4.5% medium term notes due in March
2008 with the remaining $40 million used for general
corporate purposes.
Closed on a $400 million credit facility which matures
November 2018. At December 31, 2008, we had
$224.8 million outstanding on the facility -
$70.0 million at a fixed interest rate of 5.85% and
$154.8 million at a variable interest rate, fixed with two-
and three-year LIBOR swaps at an average rate of 4.32%. The
Company has five years to draw on the additional
$175.2 million of capacity.
Sold 8,661,201 shares of our common stock adjusted for the
Special Dividend (8,000,000 shares of common stock on an
unadjusted basis) in a public offering, resulting in gross
proceeds to us of $194.0 million.
Obtained five construction loans for a total of
$179.3 million of which the Company has drawn
$53.9 million for our development projects. The
construction loans all have a two- to three-year initial term
with extension provisions ranging from one to two years and
incur interest at variable rates which range from LIBOR plus
140 basis points to LIBOR plus 225 basis points.
Repaid $216.4 million of secured debt and
$793.0 million of unsecured debt (represents the notional
amount of debt repaid and excludes the gain on extinguishment).
The $793.0 million of unsecured debt consisted of
$309.5 million for the revolving credit facility,
$275.8 million for maturing debt instruments and
$207.7 million for the repurchase of unsecured debt
instruments.
Repurchased unsecured debt with a notional amount of
$207.7 million for $176.2 million resulting in a gain
on extinguishment of $29.6 million, net of deferred finance
charges. The debt retired by the Company matured in 2011, 2014,
2015 and 2016.
Repurchased 969,300 shares of our Series G Cumulative
Redeemable Preferred Stock for $20.3 million, less than
their liquidation value of $24.2 million.
a fully integrated organization with property management,
development, redevelopment, acquisition, marketing, sales and
financing expertise;
scalable operating and support systems;
7
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purchasing power;
geographic diversification with a presence in 23 markets across
the country; and
significant presence in many of our major markets that allows us
to be a local operating expert.
8
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9
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48
Chief Executive Officer, President and Director
2001
55
Senior Executive Vice President
2008
58
Senior Executive Vice President
2001
53
Executive Vice President Redevelopment
1985
41
Senior Vice President Acquisitions &
Dispositions
1994
57
Senior Vice President Development
2006
46
Senior Vice President Property Operations
2007
38
Senior Vice President Chief Financial Officer
2002
47
Senior Vice President Human Resources
2007
48
Senior Vice President Treasurer
2006
56
Senior Vice President, Chief Information Officer
2007
48
Senior Vice President Business Development
1998
53
Senior Vice President Transactions
2006
10
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11
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Item 1A.
RISK
FACTORS
downturns in the national, regional and local economic
conditions, particularly increases in unemployment;
declines in mortgage interest rates, making alternative housing
more affordable;
government or builder incentives which enable first time
homebuyers to put little or no money down, making alternative
housing options more attractive;
local real estate market conditions, including oversupply of, or
reduced demand for, apartment homes;
declines in the financial condition of our tenants, which may
make it more difficult for us to collect rents from some tenants;
changes in market rental rates;
the timing and costs associated with property improvements,
repairs or renovations;
declines in household formation; and
rent control or stabilization laws, or other laws regulating
rental housing, which could prevent us from raising rents to
offset increases in operating costs.
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a significant portion of the proceeds from our overall property
sales may be held by intermediaries in order for some sales to
qualify as like-kind exchanges under Section 1031 of the
Internal Revenue Code, so that any related capital gain can be
deferred for federal income tax purposes. As a result, we may
not have immediate access to all of the cash flow generated from
our property sales;
federal tax laws limit our ability to profit on the sale of
communities that we have owned for fewer than four years, and
this limitation may prevent us from selling communities when
market conditions are favorable; further
in March 2008, we sold a portfolio of properties for total
consideration of approximately $1.7 billion, including a
note receivable in the amount of $200 million. The note is
secured by a pledge, security agreement and a guarantee by the
buyers parent entity. If we fail to receive payment on
this note, or if the payment of the note is delayed, it could
have an adverse effect on our financial condition.
we may be unable to obtain financing for acquisitions on
favorable terms or at all;
even if we enter into an acquisition agreement for an apartment
community, we may be unable to complete the acquisition after
incurring certain acquisition-related costs;
an acquired apartment community may fail to perform as we
expected in analyzing our investment, or a significant exposure
related to the acquired property may go undetected during our
due diligence procedures;
when we acquire an apartment community, we may invest additional
amounts in it with the intention of increasing profitability,
and these additional investments may not produce the anticipated
improvements in profitability; and
we may be unable to quickly and efficiently integrate acquired
apartment communities and new personnel into our existing
operations, and the failure to successfully integrate such
apartment
13
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communities or personnel will result in inefficiencies that
could adversely affect our expected return on our investments
and our overall profitability.
we may be unable to obtain construction financing for
development activities under favorable terms, including but not
limited to interest rates, maturity dates
and/or
loan
to value ratios, or at all which could cause us to delay or even
abandon potential developments;
we may be unable to obtain, or face delays in obtaining,
necessary zoning, land-use, building, occupancy and other
required governmental permits and authorizations, which could
result in increased development costs, could delay initial
occupancy dates for all or a portion of a development community,
and could require us to abandon our activities entirely with
respect to a project for which we are unable to obtain permits
or authorizations;
if we are unable to find joint venture partners to help fund the
development of a community or otherwise obtain acceptable
financing for the developments, our development capacity may be
limited;
we may abandon development opportunities that we have already
begun to explore, and we may fail to recover expenses already
incurred in connection with exploring such opportunities;
we may be unable to complete construction and
lease-up
of
a community on schedule, or incur development or construction
costs that exceed our original estimates, and we may be unable
to charge rents that would compensate for any increase in such
costs;
occupancy rates and rents at a newly developed community may
fluctuate depending on a number of factors, including market and
economic conditions, preventing us from meeting our
profitability goals for that community; and
when we sell to third parties communities or properties that we
developed or renovated, we may be subject to warranty or
construction defect claims that are uninsured or exceed the
limits of our insurance.
14
Table of Contents
inability to accurately evaluate local apartment market
conditions and local economies;
inability to hire and retain key personnel;
lack of familiarity with local governmental and permitting
procedures; and
inability to achieve budgeted financial results.
15
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16
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the national and local economies;
local real estate market conditions, such as an oversupply of
apartment homes;
tenants perceptions of the safety, convenience, and
attractiveness of our communities and the neighborhoods where
they are located;
our ability to provide adequate management, maintenance and
insurance;
rental expenses, including real estate taxes and utilities;
changes in interest rates and the availability of
financing; and
changes in tax and housing laws, including the enactment of rent
control laws or other laws regulating multi-family housing.
17
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18
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19
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20
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Item 1B.
UNRESOLVED
STAFF COMMENTS
Item 2.
PROPERTIES
Average
Number of
Number of
Percentage of
Carrying
Average
Home Size
Apartment
Apartment
Carrying
Value
Encumbrances
Cost per
Physical
(Square
Communities
Homes
Value
(In thousands)
(In thousands)
Home
Occupancy
Feet)
14
4,363
13.6
%
$
793,915
$
352,965
$
181,965
95.0
%
832
11
2,339
8.8
%
512,266
27,000
219,011
95.7
%
805
8
1,678
7.3
%
425,413
198,693
253,524
86.3
%
983
9
1,725
5.1
%
299,035
92,862
173,354
94.3
%
832
5
1,123
2.9
%
171,177
40,566
152,428
95.0
%
797
7
1,565
2.6
%
149,033
95,229
95.3
%
724
3
1,074
2.6
%
148,952
77,208
138,689
93.8
%
886
2
914
1.1
%
66,746
48,563
73,026
91.5
%
820
3
716
1.1
%
66,316
11,313
92,620
94.3
%
918
12
3,985
11.9
%
693,658
163,468
174,067
93.0
%
957
10
2,120
4.2
%
243,712
20,010
114,958
96.5
%
952
7
2,211
3.2
%
187,988
27,685
85,024
95.4
%
966
6
1,438
1.4
%
81,493
33,688
56,671
94.4
%
1,016
5
1,132
1.3
%
75,073
66,319
94.5
%
830
10
3,567
4.7
%
271,486
51,877
76,110
91.8
%
963
11
3,167
4.6
%
265,514
74,558
83,838
91.5
%
978
8
2,260
3.0
%
174,892
73,462
77,386
95.3
%
933
5
1,857
2.6
%
152,415
15,656
82,076
92.5
%
913
4
1,184
1.9
%
110,097
92,987
93.2
%
1,035
9
2,991
5.1
%
299,899
43,167
94,965
93.7
%
872
5
1,363
2.0
%
118,060
35,661
86,618
85.0
%
976
2
640
1.4
%
79,621
124,408
92.4
%
1,141
3
811
1.0
%
57,521
35,646
89,316
75.6
%
858
159
44,223
93.4
%
$
5,444,282
$
1,424,048
$
123,110
92.4
%
911
2
165
3.2
%
186,823
18,695
2.6
%
152,015
0.8
%
48,633
19,728
161
44,388
100.0
%
$
5,831,753
$
1,462,471
(a)
The Company is currently developing seven wholly-owned
communities with 2,242 apartment homes that have not yet been
completed.
21
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Item 3.
LEGAL
PROCEEDINGS
Item 4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
22
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Item 5.
MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
2008
2007
Adjusted
Unadjusted
Adjusted
Unadjusted
Distributions
Distributions
Distributions
Distributions
High
Low
Declared(a)
Declared
High
Low
Declared(a)
Declared
$
25.91
$
18.29
$
0.305
$
0.33
$
34.10
$
30.01
$
0.305
$
0.33
$
25.95
$
22.11
$
0.305
$
0.33
$
31.24
$
25.76
$
0.305
$
0.33
$
28.50
$
21.42
$
0.305
$
0.33
$
27.68
$
21.03
$
0.305
$
0.33
$
25.50
$
10.00
$
1.190
$
1.29
$
26.12
$
19.51
$
0.305
$
0.33
(a)
Distributions declared per share have been retroactively
adjusted for the effect of the Special Dividend, which increased
the number of shares outstanding by 8.27%.
23
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24
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Total Number
of Shares
Maximum Number
Purchased as
of Shares
Total Number of
Average
Part of Publicly
that May Yet Be
Shares
Price per
Announced Plans or
Purchased Under the
Purchased
Share
Programs
Plans or Programs
9,114,200
$
23.97
9,114,200
15,885,800
15,885,800
15,885,800
15,885,800
Total Number
of Shares
Maximum Number
Purchased as
of Share
Total Number of
Average
Part of Publicly
that May Yet Be
Shares
Price per
Announced Plans or
Purchased Under the
Purchased
Share
Programs
Plans or Programs
9,867,490
$
22.14
9,867,490
15,132,510
15,132,510
15,132,510
15,132,510
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Three-year
Total
Return Performance
Total
Return
Performance
Period Ended
Index
01/31/08
02/29/08
03/31/08
04/30/08
05/31/08
06/30/08
07/31/08
08/31/08
09/30/08
10/31/08
11/30/08
12/31/08
$
100.00
$
97.90
$
107.40
$
112.22
$
109.82
$
99.34
$
115.03
$
111.61
$
117.78
$
90.78
$
69.51
$
64.83
100.00
98.93
105.21
108.40
109.56
98.47
110.17
108.49
110.81
81.07
69.04
70.65
100.00
96.20
102.53
108.73
108.86
96.93
99.99
102.31
102.17
69.67
52.97
62.27
100.00
96.75
96.33
101.03
102.33
93.71
92.92
94.26
85.86
71.44
66.32
67.02
100.00
96.44
102.45
108.45
109.29
97.40
100.79
103.01
102.81
70.25
54.06
62.92
Period Ended
Index
12/31/05
06/30/06
12/31/06
06/30/07
12/31/07
06/30/08
12/31/08
$
100.00
$
122.35
$
141.84
$
119.79
$
92.69
$
107.69
$
70.27
100.00
121.04
139.95
132.56
104.36
108.90
78.14
100.00
113.48
135.92
127.15
113.06
109.17
70.13
100.00
102.71
115.79
123.85
122.16
107.60
76.96
100.00
112.92
135.06
127.11
113.87
109.77
70.91
26
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Five-year
Total
Return Performance
Period Ended
Index
12/31/03
12/31/04
12/31/05
12/31/06
12/31/07
12/31/08
$
100.00
$
137.37
$
136.96
$
194.20
$
126.96
$
102.45
100.00
134.72
154.46
216.16
161.99
121.28
100.00
131.49
147.44
200.40
166.70
103.40
100.00
110.88
116.33
134.70
142.10
89.53
100.00
131.58
147.58
199.32
168.05
104.65
27
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Item 6.
SELECTED
FINANCIAL DATA
Years Ended December 31,
(In thousands, except per share data and
apartment homes owned)
2008
2007
2006
2005
2004
$
563,408
$
501,618
$
467,511
$
410,120
$
309,382
(60,089
)
(78,083
)
(82,317
)
(54,068
)
(47,561
)
757,136
172,165
197,363
205,250
140,245
706,929
221,348
128,605
155,166
97,152
12,138
13,910
15,370
15,370
19,531
697,847
205,177
113,235
139,796
71,892
175,271
177,540
168,408
163,690
152,203
177,074
$
(0.42
)
$
0.23
$
(0.58
)
$
(0.44
)
$
(0.49
)
5.37
1.18
1.36
1.39
1.01
4.95
1.41
0.78
0.95
0.52
140,982
145,092
144,785
147,395
138,684
154,715
159,365
160,212
162,550
157,896
$
2.11
$
1.22
$
1.15
$
1.11
$
1.08
$
5,831,753
$
5,956,481
$
5,820,122
$
5,512,424
$
5,243,296
1,078,689
1,371,759
1,253,727
1,123,829
1,007,887
4,753,064
4,584,722
4,566,395
4,388,595
4,235,409
5,144,295
4,801,121
4,675,875
4,541,593
4,332,001
1,462,471
1,137,936
1,182,919
1,116,259
1,197,924
1,811,576
2,364,740
2,155,866
2,043,518
1,682,058
3,274,047
3,502,676
3,338,785
3,159,777
2,879,982
1,570,677
1,019,392
1,055,255
1,107,724
1,195,451
148,781
144,336
146,189
145,088
147,706
44,388
65,867
70,339
74,875
78,855
46,149
69,662
73,731
76,069
76,873
$
179,754
$
269,281
$
237,881
$
248,186
$
251,747
302,304
(90,100
)
(158,241
)
(219,017
)
(595,966
)
(472,537
)
(178,105
)
(93,040
)
(21,530
)
347,299
210,710
$
247,408
$
244,471
$
238,254
$
211,670
214,434
251,132
248,197
241,980
219,557
(a)
Reclassified to conform to current
year presentation in accordance with FASB Statement
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, as described in Note 3 to the
consolidated financial statements.
28
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(b)
Funds from operations, or FFO, is
defined as net income (computed in accordance with generally
accepted accounting principles), excluding gains (or losses)
from sales of depreciable property, premiums or original
issuance costs associated with preferred stock redemptions, plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. This definition
conforms with the National Association of Real Estate Investment
Trusts definition issued in April 2002. We consider FFO in
evaluating property acquisitions and our operating performance
and believe that FFO should be considered along with, but not as
an alternative to, net income and cash flows as a measure of our
activities in accordance with generally accepted accounting
principles. FFO does not represent cash generated from operating
activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available
to fund cash needs.
RE
3
is our subsidiary that focuses on development, land entitlement
and short-term hold investments.
RE
3
tax
benefits and gain on sales, net of taxes, is defined as net
sales proceeds less a tax provision and the gross investment
basis of the asset before accumulated depreciation. We consider
FFO with RE3 tax benefits and gain on sales, net of taxes, to be
a meaningful supplemental measure of performance because the
short-term use of funds produce a profit that differs from the
traditional long-term investment in real estate for REITs.
For 2008, FFO includes a gain of
$29.6 million due to the extinguishment of unsecured debt
and $1.6 million of net hurricane related recoveries,
partially offset by a charge of $1.7 million incurred for
exiting the condominium business, $1.7 million for
cancelling a pre-sale contract, $4.7 million related to
penalties and the write off of the associated deferred financing
costs for debt refinancing and $0.7 million for severance
For 2005, FFO includes
$2.5 million of hurricane related insurance recoveries. For
2004, FFO includes a charge of $5.5 million to cover
hurricane related expenses. For the years ended
December 31, 2007 and 2004, distributions to preferred
stockholders exclude $2.6 million and $5.7 million,
respectively, related to premiums on preferred stock repurchases.
Item 7.
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
29
Table of Contents
(a)
Total Income per Occupied Home
represents total revenues per weighted average number of
apartment homes occupied.
(b)
The Company is currently developing
seven wholly-owned communities with 2,242 apartment homes that
have not yet been completed.
30
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31
Table of Contents
Year Ended December 31,
(dollars in thousands, except for per apartment homes)
Per Apartment Home
2008
2007
% Change
2008
2007
% Change
$
9,342
$
13,362
30.1
%
$
202
$
194
4.1
%
19,737
31,071
36.5
%
428
452
5.3
%
29,079
44,433
34.6
%
630
646
2.5
%
50,059
78,209
36.0
%
1,085
1,138
4.7
%
51,823
71,785
27.8
%
1,123
1,045
7.5
%
$
130,961
$
194,427
32.6
%
$
2,838
$
2,829
0.3
%
$
32,679
$
42,518
23.1
%
$
708
$
619
14.4
%
46,149
68,723
32
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33
Table of Contents
Purchase
Market
Acquisition Date
Units
Price(a)
Orlando, FL
January 2008
371
$
50,132
Baltimore, MD
March 2008
264
57,690
Metro D.C.
March 2008
241
85,000
San Francisco, CA
March 2008
193
115,000
Metro D.C.
March 2008
606
138,378
(b)
Dallas, TX
March 2008
1,043
118,500
Orange County, CA
May 2008
296
87,320
Seattle, WA
May 2008
220
38,000
Seattle, WA
July 2008
235
112,202
San Francisco, CA
July 2008
250
47,270
Austin, TX
August 2008
390
59,500
Phoenix, AZ
August 2008
200
23,666
Tampa, FL
August 2008
249
43,672
(c)
4,558
$
976,330
(a)
The purchase price is the
contractual amount paid by UDR to the seller and does not
include any costs that the Company incurred as a result of the
acquisition of the property.
(b)
The purchase price does not include
the $5.9 million allocated to the commercial space acquired
in the transaction.
(c)
This community was acquired by the
Company while under development and is projected to be completed
in the first quarter of 2009.
34
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35
Table of Contents
Closed on a $240.0 million, two-year unsecured term loan
facility of which $200 million was swapped into a fixed
rate of 3.61% and $40.0 million has a rate of LIBOR plus
85 basis points. Proceeds were used to redeem
$200.0 million of our 4.5% medium term notes due in March
2008 with the remaining $40.0 million used for general
corporate purposes.
Closed on a $400 million credit facility which matures
November 2018. At December 31, 2008, we had
$224.8 million outstanding on the facility -
$70.0 million at a fixed interest rate of 5.85% and
$154.8 million at a variable interest rate, fixed with two-
and three-year LIBOR swaps at an average rate of 4.32%. The
Company has five years to draw on the additional
$175.2 million of capacity. This facility replaced a debt
instrument with an outstanding balance of $138.9 million
that matured on April 1, 2010 that had a stated rate of
6.09%. As a result of this refinancing the Company incurred a
charge to earnings of $4.7 million related to the write off
of deferred financing charges and prepayment penalties
associated with the retired debt instrument. Some of the
incremental proceeds from this note were used to purchase
unsecured long term debt at a discount to par.
Sold 8,661,201 shares of our common stock adjusted for the
Special Dividend (8,000,000 shares of common stock on an
unadjusted basis) in a public offering resulting in gross
proceeds of $194.0 million.
Obtained five construction loans for a total of
$179.3 million of which the Company has drawn
$53.9 million for our development projects. The
construction loans all have a three-year initial terms with an
extension provision(s) and incur interest at a variable rates
which range from LIBOR plus 140 basis points to LIBOR plus
225 basis points.
Repaid $216.4 million of secured debt and
$793.0 million of unsecured debt (represents the notional
amount of debt repaid and excludes the gain on extinguishment).
The $793.0 million of unsecured debt consisted of
$309.5 million for the revolving credit facility,
$275.8 million for maturing debt and $207.7 million
for the repurchase of unsecured debt.
Repurchased unsecured debt with a notional amount of
$207.7 million for $176.2 million resulting in a gain
on extinguishment of $29.6 million, net of deferred finance
charges. The unsecured debt repurchased by the Company matured
in 2011, 2014, 2015 and 2016, respectively. As a result of these
repurchases, the gain is presented as a reduction to interest
expense on the Consolidated Statement of Operations.
Repurchased 969,300 shares of our Series G Cumulative
Redeemable Preferred Stock for $20.3 million, less than
their liquidation value of $24.2 million.
36
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37
Table of Contents
For The Year Ended December 31,
2008
2007
2006
$
706,929
$
221,348
$
128,605
(12,138
)
(13,910
)
(15,370
)
251,984
257,450
243,889
46,491
11,807
7,360
4,502
1,980
(113,799
)
(787,058
)
(117,468
)
(120,013
)
$
210,710
$
247,408
$
244,471
3,724
3,724
3,726
$
214,434
$
251,132
$
248,197
150,457
153,496
154,198
154,715
159,365
160,212
38
Table of Contents
For the Year Ended December 31,
2008
2007
2006
150,457
153,496
154,198
(9,475
)
(8,404
)
(9,413
)
140,982
145,092
144,785
154,715
159,365
160,212
(9,475
)
(8,404
)
(9,413
)
(445
)
(682
)
(833
)
(777
)
(442
)
(212
)
(74
)
(1,709
)
(1,859
)
(3,036
)
(3,036
)
(3,036
)
140,982
145,092
144,785
For the Year Ended December 31,
2008
2007
2006
$
179,754
$
269,281
$
237,881
302,304
(90,100
)
(158,241
)
(472,537
)
(178,105
)
(93,040
)
39
Table of Contents
An increase of $547.3 million in the gains on the
disposition of our property inclusive of gains on sale to a
joint venture;
A decrease of $42.1 million in total interest expense due
in part to the Company recognizing gains of $29.6 on the
extinguishment of certain unsecured debt instruments;
An increase of $16.9 million related to interest income
generated by the Company; and
A gain of $3.1 million related to the repurchase of shares
of our Series G Cumulative Redeemable Preferred Stock at
less than their liquation value
$98.7 million more in gains recognized from the sale of
depreciable property in 2007;
$11.4 million more in apartment community operating results
in 2007;
$3.2 million less in interest expense in 2007; and
$1.5 million less in distributions on preferred shares in
2007.
Year Ended December 31,
Year Ended December 31,
2008
2007
% Change
2007
2006
% Change
$
601,998
$
735,293
18.1
%
$
735,293
$
736,329
0.1
%
(205,842
)
(258,895
)
20.5
%
(258,895
)
(271,297
)
4.6
%
$
396,156
$
476,398
16.8
%
$
476,398
$
465,032
2.4
%
(a)
Excludes depreciation, amortization, and property management
expenses.
40
Table of Contents
December 31,
2008
2007
2006
$
396,156
$
476,398
$
465,032
831
2,713
(350
)
36,903
21,431
11,858
(1,310
)
(256,850
)
(261,038
)
(246,934
)
(135,876
)
(178,020
)
(181,183
)
(63,762
)
(59,881
)
(51,463
)
(653
)
(4,333
)
(4,569
)
(1,442
)
(1,238
)
(3,612
)
(1,589
)
786,364
239,068
140,346
(46,693
)
(11,959
)
(7,463
)
$
706,929
$
221,348
$
128,605
2008-vs.-2007
41
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2008-vs.-2007
42
Table of Contents
43
Table of Contents
Payments Due by Period
2009
2010-2011
2012-2013
Thereafter
Total
$
396,188
$
1,010,330
$
657,123
$
1,210,406
$
3,274,047
120,110
216,121
177,692
191,890
705,813
4,829
184,249
189,078
29,000
29,000
1,264
1,978
793
4,035
4,520
9,040
9,040
293,702
316,302
$
555,911
$
1,421,718
$
844,648
$
1,695,998
$
4,518,275
44
Table of Contents
(a)
Any unfunded costs at
December 31, 2008 are shown in the year of estimated
completion. The Company has project debt on many of our
development projects.
(b)
For purposes of our ground lease
contracts, the Company uses the minimum lease payment, if stated
in the agreement. For ground lease agreements where there is a
reset provision based on the communities appraised value or
consumer price index but does not included a specified minimum
lease payment, the Company uses the current rent over the
remainder of the lease term.
general economic factors;
unfavorable changes in apartment market and economic conditions
that could adversely affect occupancy levels and rental rates;
the failure of acquisitions to achieve anticipated results;
possible difficulty in selling apartment communities;
the timing and closing of planned dispositions under agreement;
competitive factors that may limit our ability to lease
apartment homes or increase or maintain rents;
insufficient cash flow that could affect our debt financing and
create refinancing risk;
failure to generate sufficient revenue, which could impair our
debt service payments and distributions to stockholders;
development and construction risks that may impact our
profitability;
potential damage from natural disasters, including hurricanes
and other weather-related events, which could result in
substantial costs to us;
risks from extraordinary losses for which we may not have
insurance or adequate reserves;
uninsured losses due to insurance deductibles, self-insurance
retention, uninsured claims or casualties, or losses in excess
of applicable coverage;
delays in completing developments and
lease-ups
on
schedule;
our failure to succeed in new markets;
changing interest rates, which could increase interest costs and
affect the market price of our securities;
potential liability for environmental contamination, which could
result in substantial costs to us;
the imposition of federal taxes if we fail to qualify as a REIT
under the Internal Revenue Code in any taxable year;
our internal control over financial reporting may not be
considered effective which could result in a loss of investor
confidence in our financial reports, and in turn have an adverse
effect on our stock price; and
changes in real estate laws, tax laws and other laws affecting
our business.
Item 7A.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
45
Table of Contents
Item 8.
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
Item 9.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Item 9A.
CONTROLS
AND PROCEDURES
Item 9B.
OTHER
INFORMATION
46
Table of Contents
Item 10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 11.
EXECUTIVE
COMPENSATION
Item 12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Item 13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Item 14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
47
Table of Contents
Item 15.
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
48
Table of Contents
UDR, INC.
By:
Chief Executive Officer and President
Chief Executive Officer, President, and Director
Director
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Director
Chairman of the Board
Director
Vice Chairman of the Board
Director
Director
Director
Director
Director
49
Table of Contents
UDR, INC.
Page
51
52
53
54
55
57
59
93
50
Table of Contents
The Board of
Directors and Stockholders of
UDR, Inc.
51
Table of Contents
UDR, Inc.
52
Table of Contents
53
Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
REVENUES
|
||||||||||||
Rental income
|
$ | 563,408 | $ | 501,618 | $ | 467,511 | ||||||
Non-property income:
|
||||||||||||
Other income
|
27,190 | 4,320 | 3,585 | |||||||||
Total Revenues
|
590,598 | 505,938 | 471,096 | |||||||||
EXPENSES
|
||||||||||||
Rental expenses:
|
||||||||||||
Real estate taxes and insurance
|
68,428 | 59,036 | 55,603 | |||||||||
Personnel
|
48,672 | 43,038 | 41,616 | |||||||||
Utilities
|
29,301 | 26,147 | 24,717 | |||||||||
Repair and maintenance
|
30,333 | 27,342 | 26,059 | |||||||||
Administrative and marketing
|
14,640 | 13,009 | 13,039 | |||||||||
Property management
|
15,494 | 13,792 | 12,856 | |||||||||
Other operating expenses
|
4,563 | 1,442 | 1,238 | |||||||||
Hurricane related expenses
|
1,310 | | | |||||||||
Real estate depreciation and amortization
|
251,984 | 191,478 | 165,499 | |||||||||
Interest
|
||||||||||||
Expense incurred
|
158,702 | 161,761 | 179,075 | |||||||||
Gain on debt extinguishment
|
(29,639 | ) | | | ||||||||
Prepayment penalty on debt restructure
|
4,201 | | | |||||||||
General and administrative
|
47,179 | 39,566 | 31,198 | |||||||||
Severance costs and other restructuring charges
|
653 | 4,333 | | |||||||||
Other depreciation and amortization
|
4,866 | 3,077 | 2,513 | |||||||||
Total Expenses
|
650,687 | 584,021 | 553,413 | |||||||||
Operating loss
|
(60,089 | ) | (78,083 | ) | (82,317 | ) | ||||||
Loss from unconsolidated entities
|
(3,612 | ) | (1,589 | ) | | |||||||
Tax benefit for the TRS
|
9,713 | 17,110 | 8,268 | |||||||||
Minority interests of outside partnerships
|
(202 | ) | (152 | ) | (103 | ) | ||||||
Minority interests of unitholders in operating partnerships
|
3,983 | (1,902 | ) | 5,394 | ||||||||
Net gain on the sale of depreciable property to a joint venture
|
| 113,799 | | |||||||||
(Loss)/ income before discontinued operations, net of minority
interests
|
(50,207 | ) | 49,183 | (68,758 | ) | |||||||
Income from discontinued operations, net of minority interests
|
757,136 | 172,165 | 197,363 | |||||||||
Net income
|
706,929 | 221,348 | 128,605 | |||||||||
Distributions to preferred stockholders Series B
|
| (4,819 | ) | (11,644 | ) | |||||||
Distributions to preferred stockholders
Series E (Convertible)
|
(3,724 | ) | (3,724 | ) | (3,726 | ) | ||||||
Distributions to preferred stockholders Series G
|
(8,414 | ) | (5,367 | ) | | |||||||
Discount/(premium) on preferred stock repurchases, net
|
3,056 | (2,261 | ) | | ||||||||
Net income available to common stockholders
|
$ | 697,847 | $ | 205,177 | $ | 113,235 | ||||||
Earnings per weighted average common share basic and
diluted:
|
||||||||||||
(Loss)/income from continuing operations available to common
stockholders, net of minority interests
|
$ | (0.42 | ) | $ | 0.23 | $ | (0.58 | ) | ||||
Income from discontinued operations, net of minority interests
|
$ | 5.37 | $ | 1.18 | $ | 1.36 | ||||||
Net income available to common stockholders
|
$ | 4.95 | $ | 1.41 | $ | 0.78 | ||||||
Common distributions declared per share
|
$ | 2.11 | $ | 1.22 | $ | 1.15 | ||||||
Weighted average number of common shares outstanding
basic
|
140,982 | 145,092 | 144,785 | |||||||||
Weighted average number of common shares outstanding
diluted
|
140,982 | 145,092 | 144,785 |
54
Twelve Months Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Operating Activities
|
||||||||||||
Net income
|
$ | 706,929 | $ | 221,348 | $ | 128,605 | ||||||
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||||||
Depreciation and amortization
|
256,850 | 261,038 | 246,934 | |||||||||
Net gains on the sale of depreciable property
|
(786,181 | ) | (125,269 | ) | (140,346 | ) | ||||||
Net gains on the sale of land
|
(183 | ) | | | ||||||||
Net gains on the sale of depreciable property to a joint venture
|
| (113,799 | ) | | ||||||||
Gains on debt extinguishment
|
(29,639 | ) | | | ||||||||
Gains on the sale of technology investment
|
| | (796 | ) | ||||||||
Minority interests
|
46,693 | 11,958 | 7,463 | |||||||||
Write off of bad debt
|
2,411 | 4,042 | 3,806 | |||||||||
Loss from unconsolidated entities
|
3,612 | 1,589 | | |||||||||
Amortization of deferred financing costs and other
|
7,762 | 7,482 | 6,063 | |||||||||
Amortization of deferred compensation
|
7,024 | 6,356 | | |||||||||
(Refunds)/prepayments on income taxes
|
(6,846 | ) | 6,284 | (6,288 | ) | |||||||
Changes in operating assets and liabilities:
|
||||||||||||
Increase in operating assets
|
(27,146 | ) | (7,495 | ) | (6,519 | ) | ||||||
Decrease in operating liabilities
|
(1,532 | ) | (4,253 | ) | (1,041 | ) | ||||||
Net cash provided by operating activities
|
179,754 | 269,281 | 237,881 | |||||||||
Investing Activities
|
||||||||||||
Proceeds from sales of real estate investments, net
|
1,487,067 | 737,201 | 484,476 | |||||||||
Proceeds from note receivable
|
18,774 | 4,000 | 59,805 | |||||||||
Disbursements related to notes receivable
|
(13,569 | ) | (6,155 | ) | (5,500 | ) | ||||||
Acquisition of real estate assets (net of liabilities assumed)
and initial capital expenditures
|
(936,538 | ) | (435,997 | ) | (365,606 | ) | ||||||
Development of real estate assets
|
(160,074 | ) | (101,460 | ) | (101,849 | ) | ||||||
Capital expenditures and other major improvements
real estate assets, net of escrow reimbursement
|
(123,234 | ) | (194,427 | ) | (215,721 | ) | ||||||
Capital expenditures non-real estate assets
|
(23,249 | ) | (4,547 | ) | (3,465 | ) | ||||||
Investment in unconsolidated joint venture
|
(2,396 | ) | (24,954 | ) | | |||||||
Contributions to unconsolidated joint ventures
|
| | (6,823 | ) | ||||||||
Proceeds from the sale of technology investment
|
| | 796 | |||||||||
Purchase deposits on pending real estate acquisitions
|
(694 | ) | (7,544 | ) | (4,354 | ) | ||||||
Change in funds held in escrow from IRC Section 1031
exchanges
|
56,217 | (56,217 | ) | | ||||||||
Net cash provided by/(used in) investing activities
|
302,304 | (90,100 | ) | (158,241 | ) |
55
Twelve Months Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Financing Activities
|
||||||||||||
Payments on secured debt
|
(216,354 | ) | (186,831 | ) | (70,339 | ) | ||||||
Proceeds from the issuance of unsecured debt
|
240,000 | 150,000 | 375,000 | |||||||||
Proceeds from the issuance of secured debt
|
445,162 | 91,804 | 78,860 | |||||||||
Payments on unsecured debt
|
(452,156 | ) | (167,255 | ) | (138,849 | ) | ||||||
Net (repayment)/proceeds of revolving bank debt
|
(309,500 | ) | 222,300 | (123,600 | ) | |||||||
Purchase of capped call equity instrument
|
| | (12,588 | ) | ||||||||
Payment of financing costs
|
(6,702 | ) | (6,772 | ) | (10,284 | ) | ||||||
Proceeds from the exercise of stock options
|
2,588 | 2,524 | 5,303 | |||||||||
Proceeds from the issuance of common shares through public
offering
|
184,327 | | | |||||||||
Proceeds from the (redemption)/issuance of Series G
preferred stock, net
|
(20,347 | ) | 135,000 | | ||||||||
Payment of preferred stock issuance costs
|
| (4,252 | ) | | ||||||||
(Repayment)/proceeds from the investment of performance based
programs, net
|
(944 | ) | 50 | 400 | ||||||||
Purchase of minority interests owned by Series A LLC
|
| | (2,059 | ) | ||||||||
Distributions paid to minority interests
|
(18,666 | ) | (12,099 | ) | (12,729 | ) | ||||||
Distributions paid to preferred stockholders
|
(12,429 | ) | (13,312 | ) | (15,370 | ) | ||||||
Distributions paid to common stockholders
|
(166,983 | ) | (175,923 | ) | (166,785 | ) | ||||||
Repurchase of common stock
|
(140,533 | ) | (77,939 | ) | | |||||||
Redemption of Series B preferred stock
|
| (135,400 | ) | | ||||||||
Net cash used in financing activities
|
(472,537 | ) | (178,105 | ) | (93,040 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents
|
9,521 | 1,076 | (13,400 | ) | ||||||||
Cash and cash equivalents, beginning of year
|
3,219 | 2,143 | 15,543 | |||||||||
Cash and cash equivalents, end of year
|
$ | 12,740 | $ | 3,219 | $ | 2,143 | ||||||
Supplemental Information:
|
||||||||||||
Interest paid during the period
|
$ | 176,087 | $ | 197,722 | $ | 174,871 | ||||||
Non-cash transactions:
|
||||||||||||
Conversion of operating partnership minority interests to common
stock (1,596,402 shares in 2008, 1,012,788 shares in
2007 and 412,491 shares in 2006)
|
12,176 | 8,794 | 7,988 | |||||||||
Issuance of restricted stock awards
|
6 | 1 | 3 | |||||||||
Issuance of note receivable upon the disposition of real estate
|
200,000 | | | |||||||||
Secured debt assumed with the acquisition of properties, net of
fair value adjustment
|
95,728 | 72,680 | 24,512 | |||||||||
Real estate assets contributed
|
| 10,350 | | |||||||||
Non-cash transactions associated with consolidated joint venture:
|
||||||||||||
Real estate assets acquired
|
| | 62,059 | |||||||||
Secured debt assumed
|
| | 33,627 | |||||||||
Operating liabilities assumed
|
| | 3,840 |
56
Accumulated
|
||||||||||||||||||||||||||||||||
Distributions in
|
Other
|
|||||||||||||||||||||||||||||||
Preferred Stock | Common Stock |
Paid-in
|
Excess of
|
Comprehensive
|
||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Net Income | Loss | Total | |||||||||||||||||||||||||
Balance, December 31, 2005
|
8,219,821 | $ | 181,971 | 145,088,173 | $ | 1,451 | $ | 1,813,046 | $ | (888,744 | ) | $ | | $ | 1,107,724 | |||||||||||||||||
Comprehensive Income
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 128,605 | | 128,605 | ||||||||||||||||||||||||
Comprehensive income
|
128,605 | | 128,605 | |||||||||||||||||||||||||||||
Issuance of common and restricted shares and other
|
| | 688,643 | 7 | 9,357 | | | 9,364 | ||||||||||||||||||||||||
Adjustment for conversion of minority interests of unitholders
in operating partnerships
|
| | 412,491 | 4 | 7,984 | | | 7,988 | ||||||||||||||||||||||||
Adjustment for conversion of minority interests owned by
Series A LLC
|
| | | | (2,059 | ) | | | (2,059 | ) | ||||||||||||||||||||||
Purchase of capped call equity instrument
|
| | | | (12,588 | ) | | | (12,588 | ) | ||||||||||||||||||||||
Common stock distributions declared ($1.145 per share)
|
| | | | | (168,408 | ) | | (168,408 | ) | ||||||||||||||||||||||
Preferred stock distributions declared-Series B ($2.15 per
share)
|
| | | | | (11,644 | ) | | (11,644 | ) | ||||||||||||||||||||||
Preferred stock distributions declared-Series E ($1.33 per
share)
|
| | | | | (3,726 | ) | | (3,726 | ) | ||||||||||||||||||||||
Balance, December 31,2006
|
8,219,821 | 181,971 | 146,189,307 | 1,462 | 1,815,740 | (943,917 | ) | | 1,055,256 | |||||||||||||||||||||||
Comprehensive Income
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 221,348 | | 221,348 | ||||||||||||||||||||||||
Other comprehensive income
|
||||||||||||||||||||||||||||||||
Unrealized loss on derivative financial instruments
|
| | | | | | (814 | ) | (814 | ) | ||||||||||||||||||||||
Comprehensive income
|
221,348 | (814 | ) | 220,534 | ||||||||||||||||||||||||||||
Issuance of common and restricted shares
|
| | 506,257 | 5 | 8,944 | | | 8,949 | ||||||||||||||||||||||||
Purchase of common shares
|
| | (3,371,914 | ) | (34 | ) | (77,905 | ) | | | (77,939 | ) | ||||||||||||||||||||
Redemption of 8.60% Series B Cumulative Redeemable shares
|
(5,416,009 | ) | (135,400 | ) | | | 2,261 | (2,261 | ) | | (135,400 | ) | ||||||||||||||||||||
Issuance of 6.75% Series G Cumulative Redeemable shares
|
5,400,000 | 135,000 | | | (4,252 | ) | | | 130,748 | |||||||||||||||||||||||
Adjustment for conversion of minority interests of unitholders
in operating partnerships
|
| | 1,012,788 | 10 | 8,684 | | | 8,694 | ||||||||||||||||||||||||
Common stock distributions declared ($1.22 per share)
|
| | | | | (177,540 | ) | | (177,540 | ) |
57
Accumulated
|
||||||||||||||||||||||||||||||||
Distributions in
|
Other
|
|||||||||||||||||||||||||||||||
Preferred Stock | Common Stock |
Paid-in
|
Excess of
|
Comprehensive
|
||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Net Income | Loss | Total | |||||||||||||||||||||||||
Preferred stock distributions declared-Series B ($1.07 per
share)
|
| | | | | (4,819 | ) | | (4,819 | ) | ||||||||||||||||||||||
Preferred stock distributions declared-Series E ($1.33 per
share)
|
| | | | | (3,724 | ) | | (3,724 | ) | ||||||||||||||||||||||
Preferred stock distributions declared-Series G ($1.13 per
share)
|
| | | | | (5,367 | ) | | (5,367 | ) | ||||||||||||||||||||||
Balance, December 31,2007
|
8,203,812 | 181,571 | 144,336,438 | 1,443 | 1,753,472 | (916,280 | ) | (814 | ) | 1,019,392 | ||||||||||||||||||||||
Comprehensive Income
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 706,929 | | 706,929 | ||||||||||||||||||||||||
Other comprehensive income Unrealized loss on derivative
financial instruments
|
| | | | | | (11,901 | ) | (11,901 | ) | ||||||||||||||||||||||
Comprehensive income
|
706,929 | (11,901 | ) | 695,028 | ||||||||||||||||||||||||||||
Issuance of common and restricted shares
|
| | 682,650 | 7 | 9,191 | | | 9,198 | ||||||||||||||||||||||||
Issuance of common shares
|
| | 8,661,201 | 87 | 183,085 | | | 183,172 | ||||||||||||||||||||||||
Purchase of common shares
|
| | (6,495,576 | ) | (65 | ) | (140,468 | ) | | | (140,533 | ) | ||||||||||||||||||||
Redemption of 969,300 shares of 6.75% Series G
Cumulative Redeemable shares
|
(969,300 | ) | (24,232 | ) | | | 829 | 3,056 | | (20,347 | ) | |||||||||||||||||||||
Adjustment for conversion of minority interests of unitholders
in operating partnerships
|
| | 1,596,402 | 16 | 12,160 | | | 12,176 | ||||||||||||||||||||||||
Common stock distributions declared ($2.105 per share)
|
| | | | | (175,271 | ) | | (175,271 | ) | ||||||||||||||||||||||
Preferred stock distributions declared-Series E ($1.3288
per share)
|
| | | | | (3,724 | ) | | (3,724 | ) | ||||||||||||||||||||||
Preferred stock distributions declared-Series G ($1.6875
per share)
|
| | | | | (8,414 | ) | | (8,414 | ) | ||||||||||||||||||||||
Balance, December 31, 2008
|
7,234,512 | $ | 157,339 | 148,781,115 | $ | 1,488 | $ | 1,818,269 | $ | (393,704 | ) | $ | (12,715 | ) | $ | 1,570,677 | ||||||||||||||||
58
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
59
60
61
62
63
Years Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Numerator for earnings per share basic and diluted:
|
||||||||||||
Net earnings attributable to common stockholders
|
$ | 697,847 | $ | 205,177 | $ | 113,235 | ||||||
Denominator for earnings per share basic and diluted:
|
||||||||||||
Weighted average common shares outstanding
|
142,222 | 146,036 | 145,652 | |||||||||
Non-vested restricted stock awards
|
(1,240 | ) | (944 | ) | (867 | ) | ||||||
Denominator for basic and diluted earnings per share
|
140,982 | 145,092 | 144,785 | |||||||||
Earnings per share basic and diluted
|
$ | 4.95 | $ | 1.41 | $ | 0.78 | ||||||
64
65
2. | REAL ESTATE OWNED |
66
December 31, | ||||||||
2008 | 2007 | |||||||
Land
|
$ | 1,567,737 | $ | 1,143,516 | ||||
Depreciable property held and used
|
||||||||
Building and improvements
|
3,859,245 | 2,871,763 | ||||||
Furniture, fixtures and equipment
|
217,948 | 171,081 | ||||||
Under development
|
||||||||
Land
|
52,294 | 227,357 | ||||||
Construction in progress
|
134,529 | 117,374 | ||||||
Held for Sale
|
||||||||
Land
|
| 235,344 | ||||||
Building and improvements
|
| 1,057,979 | ||||||
Furniture, fixtures and equipment
|
| 132,067 | ||||||
Investment in real estate
|
5,831,753 | 5,956,481 | ||||||
Accumulated depreciation
|
(1,078,689 | ) | (1,371,759 | ) | ||||
Investment in real estate, net
|
$ | 4,753,064 | $ | 4,584,722 | ||||
Purchase
|
||||||||||||||||
Property Name
|
Market
|
Acquisition Date | Units | Price(a) | ||||||||||||
The Place at Millenia
|
Orlando, FL | January 2008 | 371 | $ | 50,132 | |||||||||||
Dulaney Crescent
|
Baltimore, MD | March 2008 | 264 | 57,690 | ||||||||||||
Delancey at Shirlington Village
|
Metro D.C. | March 2008 | 241 | 85,000 | ||||||||||||
Edgewater
|
San Francisco, CA | March 2008 | 193 | 115,000 | ||||||||||||
Circle Towers
|
Metro D.C. | March 2008 | 606 | 138,378 | (b) | |||||||||||
Legacy Village
|
Dallas, TX | March 2008 | 1,043 | 118,500 | ||||||||||||
Pine Brook Village II
|
Orange County, CA | May 2008 | 296 | 87,320 | ||||||||||||
Hearthstone at Merrill Creek
|
Seattle, WA | May 2008 | 220 | 38,000 | ||||||||||||
Island Square
|
Seattle, WA | July 2008 | 235 | 112,202 | ||||||||||||
Almaden Lake Village
|
San Francisco, CA | July 2008 | 250 | 47,270 | ||||||||||||
Residences at the Domain
|
Austin, TX | August 2008 | 390 | 59,500 | ||||||||||||
Waterford
|
Phoenix, AZ | August 2008 | 200 | 23,666 | ||||||||||||
Vintage Lofts
|
Tampa, FL | August 2008 | 249 | 43,672 | (c) | |||||||||||
4,558 | $ | 976,330 | ||||||||||||||
(a) | The purchase price is the contractual amount paid by UDR to the seller and does not include any costs that the Company incurred as a result of the acquisition of the property. | |
(b) | The purchase price does not include the $5.9 million allocated to the commercial space acquired in the transaction. |
67
(c) | This community was acquired by the Company while under development and is projected to be completed in the first quarter of 2009. |
3. | DISCONTINUED OPERATIONS |
68
December 31,
|
||||||||||||
2008 | 2007 | 2006 | ||||||||||
Rental income
|
$ | 39,597 | $ | 237,188 | $ | 269,403 | ||||||
Non-property income
|
183 | 1 | 5 | |||||||||
39,780 | 237,189 | 269,408 | ||||||||||
Rental expenses
|
14,644 | 91,123 | 111,198 | |||||||||
Property management fee
|
1,089 | 6,523 | 7,409 | |||||||||
Real estate depreciation
|
| 65,972 | 78,390 | |||||||||
Interest
|
2,612 | 16,259 | 2,108 | |||||||||
Other expenses
|
6 | 511 | 532 | |||||||||
18,351 | 180,388 | 199,637 | ||||||||||
Income before net gain on the sale of depreciable property and
minority interests
|
21,429 | 56,801 | 69,771 | |||||||||
Net gain on the sale of depreciable property, excluding RE3
|
787,058 | 117,468 | 120,013 | |||||||||
RE3 (loss)/gain on sale of real estate, net of tax
|
(877 | ) | 7,801 | 20,333 | ||||||||
Income before minority interests
|
807,610 | 182,070 | 210,117 | |||||||||
Minority interests on income from discontinued operations
|
(50,474 | ) | (9,905 | ) | (12,754 | ) | ||||||
Income from discontinued operations, net of minority interests
|
$ | 757,136 | $ | 172,165 | $ | 197,363 | ||||||
4. | JOINT VENTURES |
69
70
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
For the year ended:
|
||||||||||||
Revenues
|
$ | 43,486 | $ | 9,495 | $ | | ||||||
Real estate depreciation and amortization
|
22,509 | 4,671 | | |||||||||
Net loss
|
(18,167 | ) | (3,532 | ) | |
December 31, | ||||||||
2008 | 2007 | |||||||
Real estate
|
$ | 542,160 | $ | 480,374 | ||||
Total assets
|
534,735 | 494,015 | ||||||
Amount due to UDR
|
3,898 | 9,813 | ||||||
Third party debt
|
373,269 | 314,673 | ||||||
Total liabilities
|
397,115 | 338,851 | ||||||
Equity
|
137,620 | 155,164 |
5. | SECURED DEBT |
71
2008 | ||||||||||||||||||||
Principal Outstanding |
Weighted
|
Weighted
|
Number of
|
|||||||||||||||||
December 31 |
Average
|
Average
|
Communities
|
|||||||||||||||||
2008
|
2007 | Interest Rate | Years to Maturity | Encumbered | ||||||||||||||||
Fixed Rate Debt
|
||||||||||||||||||||
Mortgage notes payable
|
$ | 476,810 | $ | 324,059 | 5.03 | % | 2.9 | 18 | ||||||||||||
Tax-exempt secured notes payable
|
13,325 | 18,230 | 5.30 | % | 22.2 | 1 | ||||||||||||||
Fannie Mae credit facilities
|
666,642 | 583,071 | 5.52 | % | 7.0 | 26 | ||||||||||||||
Total fixed rate secured debt
|
1,156,777 | 925,360 | 5.32 | % | 5.5 | 45 | ||||||||||||||
Variable Rate Debt
|
||||||||||||||||||||
Mortgage notes payable
|
114,181 | 124,023 | 3.34 | % | 3.5 | 7 | ||||||||||||||
Tax-exempt secured note payable
|
27,000 | 7,770 | 1.95 | % | 21.2 | 1 | ||||||||||||||
Fannie Mae credit facilities
|
164,513 | 80,783 | 3.08 | % | 5.2 | 8 | ||||||||||||||
Total variable rate secured debt
|
305,694 | 212,576 | 3.08 | % | 6.0 | 16 | ||||||||||||||
Total secured debt
|
$ | 1,462,471 | $ | 1,137,936 | 4.85 | % | 5.6 | 61 | ||||||||||||
December 31,
|
December 31,
|
|||||||
2008 | 2007 | |||||||
Borrowings outstanding at end of year
|
$ | 831,155 | $ | 663,854 | ||||
Weighted average daily borrowings during the year ended
|
702,620 | 686,556 | ||||||
Maximum daily borrowings during the year ended
|
831,370 | 741,185 | ||||||
Weighted average interest rate during the year ended
|
5.5 | % | 5.9 | % | ||||
Weighted average interest rate at the end of the year
|
5.0 | % | 5.8 | % |
72
Fixed | Variable | |||||||||||||||||||||||||||
Mortgage
|
Tax-Exempt
|
Credit
|
Mortgage
|
Tax-Exempt
|
Credit
|
|||||||||||||||||||||||
Notes | Notes | Facilities | Notes | Notes | Facilities | Total | ||||||||||||||||||||||
2009
|
$ | 138,235 | $ | | $ | 2,507 | $ | 5,318 | $ | | $ | | $ | 146,060 | ||||||||||||||
2010
|
91,157 | | 2,654 | 18,146 | | | 111,957 | |||||||||||||||||||||
2011
|
58,925 | | 52,808 | 35,802 | | 39,513 | 187,048 | |||||||||||||||||||||
2012
|
56,795 | | 177,944 | | | 60,000 | 294,739 | |||||||||||||||||||||
2013
|
61,386 | | 38,631 | 37,415 | | | 137,432 | |||||||||||||||||||||
Thereafter
|
70,312 | 13,325 | 392,098 | 17,500 | 27,000 | 65,000 | 585,235 | |||||||||||||||||||||
$ | 476,810 | $ | 13,325 | $ | 666,642 | $ | 114,181 | $ | 27,000 | $ | 164,513 | $ | 1,462,471 | |||||||||||||||
73
6. | UNSECURED DEBT |
December 31, | ||||||||
2008 | 2007 | |||||||
Commercial Banks
|
||||||||
Borrowings outstanding under an unsecured credit facility due
July 2012(a)
|
$ | | $ | 309,500 | ||||
Borrowings outstanding under an unsecured term loan due February
2010(b)
|
240,000 | | ||||||
240,000 | 309,500 | |||||||
Senior Unsecured Notes
|
||||||||
4.50% Medium-Term Notes due March 2008
|
| 200,000 | ||||||
8.50% Monthly Income Notes due November 2008
|
| 29,081 | ||||||
4.25% Medium-Term Notes due January 2009
|
50,000 | 50,000 | ||||||
6.50% Notes due June 2009
|
200,000 | 200,000 | ||||||
3.90% Medium-Term Notes due March 2010
|
50,000 | 50,000 | ||||||
3.625% Convertible Senior Notes due September 2011(c),(d)
|
171,335 | 250,000 | ||||||
5.00% Medium-Term Notes due January 2012
|
100,000 | 100,000 | ||||||
6.05% Medium-Term Notes due June 2013
|
125,000 | 125,000 | ||||||
5.13% Medium-Term Notes due January 2014(d)
|
184,000 | 200,000 | ||||||
5.50% Medium-Term Notes due April 2014(d)
|
128,500 | 150,000 | ||||||
5.25% Medium-Term Notes due January 2015(d)
|
175,175 | 250,000 | ||||||
5.25% Medium-Term Notes due January 2016(d)
|
83,260 | 100,000 | ||||||
8.50% Debentures due September 2024
|
54,118 | 54,118 | ||||||
4.00% Convertible Senior Notes due December 2035(e)
|
250,000 | 250,000 | ||||||
Other
|
149 | 158 | ||||||
1,571,537 | 2,008,357 | |||||||
Unsecured Notes
|
||||||||
ABAG Tax-Exempt Bonds due August 2008
|
| 46,700 | ||||||
Unsecured Notes Premiums &
Discounts
|
||||||||
Premium on $50 million Medium-Term Notes due March 2010
|
190 | 344 | ||||||
Premium on $250 million Medium-Term Notes due January
2015(d)
|
212 | 343 | ||||||
Discount on $150 million Medium-Term Notes due April 2014(d)
|
(363 | ) | (504 | ) | ||||
39 | 183 | |||||||
$ | 1,811,576 | $ | 2,364,740 | |||||
(a) | Our unsecured credit facility provides us with an aggregate borrowing capacity of $600 million, which at our election we can increase to $750 million under certain circumstances. Our unsecured credit facility held by a syndicate of financial institutions carries an interest rate equal to LIBOR plus a spread of 47.5 basis points and matures on July 26, 2012. In addition, the unsecured credit facility contains a provision that allows us to bid up to 50% of the commitment and we can bid out the entire unsecured credit facility once per quarter so long as we maintain an investment grade rating. | |
(b) | During the year ended December 31, 2008, UDR borrowed $240 million in the form of a two-year unsecured term loan from a consortium of banks. UDR entered into one interest rate swap agreement |
74
associated with the borrowings under the term loan with an aggregate notional value of $200 million in which the Company pays a fixed rate of interest and receives a variable rate of interest on the notional amount. The interest rate swap effectively changes UDRs interest rate exposure on $200 million of these borrowings from a variable rate to a weighted average fixed rate of approximately 3.61%. The remaining $40 million has a variable interest rate, which was 2.77% at December 31, 2008. | ||
(c) | At any time on or after July 15, 2011, prior to the close of business on the second business day prior to September 15, 2011, and also following the occurrence of certain events, the notes will be convertible at the option of the holder. Upon conversion of the notes, UDR will deliver cash and common stock, if any, based on a daily conversion value calculated on a proportionate basis for each trading day of the relevant 30 trading day observation period. The initial conversion rate for each $1,000 principal amount of notes is 26.6326 shares of our common stock, subject to adjustment under certain circumstances. The Companys Special Dividend met the criteria to adjust the conversion rate and will result in an adjusted conversion rate of 29.0207 shares of our common stock for each $1,000 of principal. In connection with the issuance of the 3.625% convertible senior notes, UDR entered into a capped call transaction with respect to its common stock. The convertible note and capped call transaction, both of which expire September 2011, must be net share settled. The maximum number of shares to be issued under the convertible notes is 6.7 million shares, subject to certain adjustment provisions. The capped call transaction combines a purchased call option with a strike price of $37.548 with a written call option with a strike price of $43.806. These transactions have no effect on the terms of the 3.625% convertible senior notes by effectively increasing the initial conversion price to $43.806 per share, representing a 40% conversion premium. The net cost of $12.6 million of the capped call transaction was included in stockholders equity. | |
(d) | During the year ended December 31, 2008, the Company repurchased several different traunches of our own unsecured debt in the marketplace. As a result of these transactions, we retired debt with a notional value of $207.7 million for $176.2 million of cash. The gain of $29.6 million is presented as a separate component of interest expense on our Consolidated Statement of Operations. Consistent with our accounting policy, the Company expensed $1.9 million of unamortized financing costs as a result of these debt retirements. | |
(e) | The debt holders at their discretion have the ability to convert the notes on January 15, 2011, December 15, 2015, December 15, 2020, December 15, 2025 and December 15, 2030 into cash, and in certain circumstances, shares of UDRs common stock at an initial conversion price of approximately 35.2988 shares per $1,000 principal, subject to adjustment in certain circumstances. The Companys Special Dividend met the criteria to adjust the conversion rate and will result in an adjusted conversion rate of 38.7123 shares of our common stock for each $1,000 of principal. The Company has at our discretion after providing adequate notification, the ability to redeem the instrument subsequent to January 15, 2011 for cash, and in certain instances shares of UDRs common stock. |
December 31, | ||||||||
2008 | 2007 | |||||||
Total revolving credit facility
|
$ | 600,000 | $ | 600,000 | ||||
Borrowings outstanding at end of year
|
| 309,500 | ||||||
Weighted average daily borrowings during the year ended
|
84,566 | 222,216 | ||||||
Maximum daily borrowings during the year ended
|
587,400 | 408,400 | ||||||
Weighted average interest rate during the year ended
|
4.1 | % | 5.6 | % | ||||
Weighted average interest rate at the end of the year
|
N/A | 5.4 | % |
75
Credit
|
Unsecured
|
|||||||||||
Facility | Debt | Total | ||||||||||
2009
|
$ | | $ | 250,128 | $ | 250,128 | ||||||
2010
|
| 290,014 | 290,014 | |||||||||
2011
|
| 421,311 | 421,311 | |||||||||
2012
|
| 99,976 | 99,976 | |||||||||
2013
|
| 124,976 | 124,976 | |||||||||
Thereafter
|
| 625,171 | 625,171 | |||||||||
$ | | $ | 1,811,576 | $ | 1,811,576 | |||||||
7. | STOCKHOLDERS EQUITY |
| Issued 8,661,201 shares of common stock (8,000,000 shares of common stock on an unadjusted basis) in connection with an equity offering where we received gross proceeds of $194.0 million; | |
| Issued 238,544 shares of common stock (220,333 shares of common stock on an unadjusted basis) in connection with stock options exercised; | |
| Issued 444,106 shares of common stock (410,203 shares of common stock on an unadjusted basis) through the Companys 1999 Long-Term Incentive Plan (the LTIP), net of forfeitures; | |
| Converted 1,596,402 OP Units into Company common stock (1,474,531 shares of common stock on an unadjusted basis); and | |
| Repurchased 6,495,576 shares of common stock (5,999,700 shares of common stock on an unadjusted basis) through the Companys stock repurchase program. |
76
77
8. | EMPLOYEE BENEFIT PLANS |
78
Option Outstanding | Option Exercisable | |||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Number of
|
Exercise
|
Number of
|
Exercise
|
|||||||||||||
Options | Price | Options | Price | |||||||||||||
Balance, January 1, 2006
|
1,642,223 | $ | 11.84 | |||||||||||||
Exercised
|
(315,333 | ) | 13.52 | |||||||||||||
Forfeited
|
(27,500 | ) | 11.47 | |||||||||||||
Balance, December 31, 2006
|
1,299,390 | $ | 11.44 | 1,299,390 | $ | 11.44 | ||||||||||
Exercised
|
(213,731 | ) | 12.25 | |||||||||||||
Forfeited
|
(7,000 | ) | 12.76 | |||||||||||||
Balance, December 31, 2007
|
1,078,659 | $ | 11.25 | 1,078,659 | $ | 11.25 | ||||||||||
Granted
|
465,841 | 26.55 | ||||||||||||||
Exercised
|
(220,333 | ) | 10.67 | |||||||||||||
Forfeited
|
| | ||||||||||||||
Balance, December 31, 2008
|
1,324,167 | $ | 16.73 | 1,124,167 | $ | 15.01 | ||||||||||
79
9. | INCOME TAXES |
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
GAAP net income
|
$ | 706,929 | $ | 221,348 | $ | 128,605 | ||||||
Book to tax differences
|
||||||||||||
Elimination of TRS income
|
44,436 | 13,284 | (6,955 | ) | ||||||||
Minority interest
|
37,979 | (4,018 | ) | (4,219 | ) | |||||||
Depreciation and amortization expense
|
52,662 | 18,539 | 66,754 | |||||||||
Disposition of properties
|
(449,598 | ) | (52,192 | ) | 47,168 | |||||||
Revenue recognition timing differences
|
(1,897 | ) | (2,439 | ) | (1,249 | ) | ||||||
Compensation related differences
|
(1,666 | ) | (1,804 | ) | (3,264 | ) | ||||||
Other expense timing differences
|
(19,197 | ) | 548 | 1,793 | ||||||||
Net operating loss
|
(3,925 | ) | (3,925 | ) | (47,522 | ) | ||||||
REIT taxable income before dividends
|
$ | 365,723 | $ | 189,341 | $ | 181,111 | ||||||
Dividend paid deduction
|
$ | 365,723 | $ | 189,341 | $ | 181,111 | ||||||
Adjusted for the Special Dividend December 31, | Unadjusted for the Special Dividend December 31, | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
Ordinary income
|
$ | 0.18 | $ | 0.19 | $ | 0.44 | $ | 0.20 | $ | 0.20 | $ | 0.48 | ||||||||||||
Long-term capital gain
|
1.67 | 0.79 | 0.42 | 1.82 | 0.84 | 0.46 | ||||||||||||||||||
Unrecaptured section 1250 gain
|
0.54 | 0.24 | 0.28 | 0.59 | 0.26 | 0.30 | ||||||||||||||||||
$ | 2.39 | $ | 1.22 | $ | 1.14 | $ | 2.61 | $ | 1.30 | $ | 1.24 | |||||||||||||
80
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Income tax (benefit)/expense
|
||||||||||||
Current
|
||||||||||||
Federal
|
$ | 2,421 | $ | (6,749 | ) | $ | 4,596 | |||||
State
|
(1,873 | ) | (832 | ) | 937 | |||||||
Total current
|
548 | (7,581 | ) | 5,533 | ||||||||
Deferred
|
||||||||||||
Federal
|
(10,504 | ) | (908 | ) | (561 | ) | ||||||
State
|
83 | (111 | ) | (119 | ) | |||||||
Total deferred
|
(10,421 | ) | (1,019 | ) | (680 | ) | ||||||
Total income tax (benefit)/expense
|
$ | (9,873 | ) | $ | (8,600 | ) | $ | 4,853 | ||||
December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||
Deferred tax assets:
|
||||||||||||||||||||
Federal and state tax attributes
|
$ | 21,123 | $ | 380 | $ | | ||||||||||||||
Book/tax depreciation
|
3,851 | 593 | 550 | |||||||||||||||||
Construction capitalization differences
|
468 | 605 | | |||||||||||||||||
Debt and interest deductions
|
12,262 | | | |||||||||||||||||
Other
|
270 | 124 | 254 | |||||||||||||||||
Total deferred tax assets
|
37,974 | 1,702 | 804 | |||||||||||||||||
Valuation allowance
|
(15,304 | ) | | | ||||||||||||||||
Net deferred income tax assets
|
22,670 | 1,702 | 804 | |||||||||||||||||
Deferred tax liabilities
|
||||||||||||||||||||
Investment in partnerships
|
(177 | ) | (35 | ) | | |||||||||||||||
Other
|
(1,149 | ) | (281 | ) | (437 | ) | ||||||||||||||
Total deferred tax liabilities
|
(1,326 | ) | (316 | ) | (437 | ) | ||||||||||||||
Net deferred tax asset
|
$ | 21,344 | $ | 1,386 | $ | 367 | ||||||||||||||
81
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Income tax (benefit)/expense
|
||||||||||||
U.S. federal income tax (benefit)/expense
|
$ | (19,019 | ) | $ | (7,659 | ) | $ | 4,134 | ||||
State income tax (net of federal benefit)
|
(1,991 | ) | (943 | ) | 818 | |||||||
Valuation allowance
|
11,136 | | | |||||||||
Other items
|
1 | 2 | (99 | ) | ||||||||
Total income tax (benefit)/expense
|
$ | (9,873 | ) | $ | (8,600 | ) | $ | 4,853 | ||||
Classification of income tax (benefit)/expense
|
||||||||||||
Continuing operations
|
$ | (9,713 | ) | $ | (17,110 | ) | $ | (8,268 | ) | |||
Discontinued operations
|
(160 | ) | 8,510 | 13,121 |
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Balance at beginning of year
|
$ | 415 | $ | 538 | $ | | ||||||
Reductions for tax positions of prior years
|
(415 | ) | (123 | ) | | |||||||
Balance at end of year
|
$ | | $ | 415 | $ | | ||||||
82
10. | FINANCIAL INSTRUMENTS |
December 31, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
Amounts | Fair Value | Amounts | Fair Value | |||||||||||||
Debt instruments
|
||||||||||||||||
Secured debt
|
$ | 1,462,471 | $ | 1,419,411 | $ | 1,137,936 | $ | 1,159,503 | ||||||||
Unsecured debt
|
1,811,576 | 1,183,098 | 2,364,740 | 2,288,542 | ||||||||||||
Derivative contracts
|
||||||||||||||||
Interest rate swaps
|
$ | (11,011 | ) | $ | (11,011 | ) | $ | | $ | | ||||||
Interest rate caps
|
62 | 62 | | |
83
Carrying
|
||||||||||||||||
Earliest
|
Latest
|
and
|
||||||||||||||
Notional
|
Maturity
|
Maturity
|
Estimated
|
|||||||||||||
Amount | Date | Date | Fair Value | |||||||||||||
Cash flow hedges
|
||||||||||||||||
Interest rate swaps
|
$ | 498,808 | October 2009 | December 2011 | $ | (11,011 | ) | |||||||||
Interest rate caps
|
197,666 | April 2010 | December 2012 | 62 | ||||||||||||
Total cash flow hedges
|
$ | 696,474 | $ | (10,949 | ) | |||||||||||
84
| Level 1 Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. | |
| Level 2 Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data. | |
| Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
11. | COMMITMENTS AND CONTINGENCIES |
December 31, 2008 | ||||||||||||||||
Number of
|
Costs Incurred
|
Expected Costs
|
Ownership
|
|||||||||||||
Properties | to Date | to Complete | Stake | |||||||||||||
Wholly owned under development
|
7 | $ | 186,823 | $ | 189,077 | 100 | % | |||||||||
Joint ventures
|
||||||||||||||||
Unconsolidated joint ventures(a)
|
1 | 43,128 | 5,872 | 49 | % | |||||||||||
$ | 229,951 | $ | 194,949 | |||||||||||||
(a) | Costs incurred to date and expected costs to complete are based on our 49% equity interest of the joint venture. |
85
Ground
|
Office
|
|||||||
Leases(a) | Space | |||||||
2009
|
$ | 4,520 | $ | 1,264 | ||||
2010
|
4,520 | 1,142 | ||||||
2011
|
4,520 | 836 | ||||||
2012
|
4,520 | 541 | ||||||
2013
|
4,520 | 252 | ||||||
Thereafter
|
293,702 | | ||||||
$ | 316,302 | $ | 4,035 | |||||
(a) | For purposes of our ground lease contracts, the Company uses the minimum lease payment, if stated in the agreement. For ground lease agreements where there is a reset provision based on the communities appraised value or consumer price index but does not included a specified minimum lease payment, the Company uses the current rent over the remainder of the lease term. |
86
87
88
12. | REPORTABLE SEGMENTS |
| Same communities represent those communities acquired, developed, and stabilized prior to January 1, 2007, and held as of December 31, 2008. A comparison of operating results from the prior year is meaningful as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior year, there is no plan to conduct substantial redevelopment activities, and the community is not held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months. | |
| Non-mature/other communities represent those communities that were acquired or developed in 2006, 2007 or 2008, sold properties, redevelopment properties, properties classified as real estate held for disposition, condominium conversion properties, joint venture properties, properties managed by third parties, and the non-apartment components of mixed use properties. |
89
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Reportable apartment home segment rental income
|
||||||||||||
Same Communities
|
||||||||||||
Western Region
|
$ | 207,778 | $ | 196,796 | $ | 182,168 | ||||||
Mid-Atlantic Region
|
101,594 | 98,208 | 93,499 | |||||||||
Southeastern Region
|
102,093 | 102,317 | 98,446 | |||||||||
Southwestern Region
|
18,282 | 17,594 | 13,767 | |||||||||
Non-Mature communities/Other
|
173,258 | 323,891 | 349,034 | |||||||||
Total segment and consolidated rental income
|
$ | 603,005 | $ | 738,806 | $ | 736,914 | ||||||
Reportable apartment home segment NOI
|
||||||||||||
Same Communities
|
||||||||||||
Western Region
|
$ | 146,973 | $ | 137,114 | $ | 124,323 | ||||||
Mid-Atlantic Region
|
70,064 | 68,569 | 63,988 | |||||||||
Southeastern Region
|
64,310 | 65,433 | 61,492 | |||||||||
Southwestern Region
|
11,993 | 11,469 | 9,039 | |||||||||
Non-Mature communities/Other
|
103,647 | 196,526 | 205,840 | |||||||||
Total segment and consolidated NOI
|
396,987 | 479,111 | 464,682 | |||||||||
Reconciling items:
|
||||||||||||
Non-property income
|
36,903 | 21,431 | 11,858 | |||||||||
Property management
|
(16,583 | ) | (20,315 | ) | (20,265 | ) | ||||||
Other operating expenses
|
(4,569 | ) | (1,442 | ) | (1,238 | ) | ||||||
Hurricane related expenses
|
(1,310 | ) | | | ||||||||
Depreciation and amortization
|
(251,984 | ) | (257,450 | ) | (243,889 | ) | ||||||
Interest
|
(135,876 | ) | (178,020 | ) | (181,183 | ) | ||||||
General and administrative
|
(47,179 | ) | (39,566 | ) | (31,198 | ) | ||||||
Severance costs and other restructuring charges
|
(653 | ) | (4,333 | ) | | |||||||
Other depreciation and amortization
|
(4,866 | ) | (3,588 | ) | (3,045 | ) | ||||||
Loss from unconsolidated entities
|
(3,612 | ) | (1,589 | ) | | |||||||
Minority interests
|
(46,693 | ) | (11,959 | ) | (7,463 | ) | ||||||
Net gain on the sale of depreciable property
|
786,364 | 239,068 | 140,346 | |||||||||
Consolidated net income
|
$ | 706,929 | $ | 221,348 | $ | 128,605 | ||||||
90
December 31, | ||||||||
2008 | 2007 | |||||||
Reportable apartment home segment assets
|
||||||||
Same Communities
|
||||||||
Western Region
|
$ | 1,853,430 | $ | 1,820,519 | ||||
Mid-Atlantic Region
|
650,403 | 619,307 | ||||||
Southeastern Region
|
732,593 | 713,039 | ||||||
Southwestern Region
|
151,529 | 148,358 | ||||||
Non-Mature communities/Other
|
2,443,798 | 2,655,258 | ||||||
Total segment assets
|
5,831,753 | 5,956,481 | ||||||
Accumulated depreciation
|
(1,078,689 | ) | (1,371,759 | ) | ||||
Total segment assets net book value
|
4,753,064 | 4,584,722 | ||||||
Reconciling items:
|
||||||||
Cash and cash equivalents
|
12,740 | 3,219 | ||||||
Restricted cash
|
7,726 | 4,847 | ||||||
Deferred financing costs, net
|
29,658 | 34,136 | ||||||
Notes receivable
|
207,450 | 12,655 | ||||||
Investment in unconsolidated joint ventures
|
47,048 | 48,264 | ||||||
Escrow 1031 exchange funds
|
| 56,217 | ||||||
Other assets
|
85,842 | 53,730 | ||||||
Other assets real estate held for disposition
|
767 | 3,331 | ||||||
Total consolidated assets
|
$ | 5,144,295 | $ | 4,801,121 | ||||
13. | RESTRUCTURING CHARGES |
91
14. | UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY FINANCIAL DATA |
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2008
|
||||||||||||||||
Rental income(a)
|
$ | 126,586 | $ | 139,955 | $ | 147,414 | $ | 149,453 | ||||||||
Loss before discontinued operations, net of minority interests
|
(13,326 | ) | (11,790 | ) | (14,959 | ) | (10,132 | ) | ||||||||
Income/(loss) from discontinued operations, net of minority
interests
|
738,585 | 12,655 | 6,586 | (690 | ) | |||||||||||
Net income/(loss) available to common stockholders
|
722,050 | (2,344 | ) | (8,237 | ) | (13,622 | ) | |||||||||
Earnings/(loss) per share(b)
|
||||||||||||||||
Basic and diluted
|
$ | 5.07 | $ | (0.02 | ) | $ | (0.06 | ) | $ | (0.09 | ) | |||||
2007
|
||||||||||||||||
Rental income(a)
|
$ | 122,629 | $ | 124,745 | $ | 129,116 | $ | 125,128 | ||||||||
(Loss)/income before discontinued operations, net of minority
interests
|
(12,836 | ) | (12,210 | ) | (12,440 | ) | 86,669 | |||||||||
Income from discontinued operations, net of minority interests
|
44,668 | 18,906 | 91,270 | 17,321 | ||||||||||||
Net income available to common stockholders
|
27,990 | 811 | 75,569 | 100,806 | ||||||||||||
Earnings per share(b)
|
||||||||||||||||
Basic and diluted
|
$ | 0.19 | $ | 0.01 | $ | 0.51 | $ | 0.70 |
(a) | Represents rental income from continuing operations | |
(b) | Quarterly earnings per common share amounts may not total to the annual amounts due to rounding and to the change in the number of common shares outstanding due to the Special Dividend. |
92
93
94
95
96
(a) | Date of construction or date of last major renovation. | |
(b) | Includes unallocated accruals and capital expenditures. |
2008 | 2007 | 2006 | ||||||||||
Balance at beginning of the year
|
$ | 5,956,481,074 | $ | 5,820,122,155 | $ | 5,512,424,090 | ||||||
Real estate acquired
|
1,014,231,819 | 509,976,871 | 392,058,366 | |||||||||
Capital expenditures and development
|
297,564,557 | 234,724,992 | 379,629,467 | |||||||||
Real estate sold
|
(1,436,525,132 | ) | (608,342,944 | ) | (463,989,768 | ) | ||||||
Balance at end of year
|
$ | 5,831,752,318 | $ | 5,956,481,074 | $ | 5,820,122,155 | ||||||
Balance at beginning of the year
|
$ | 1,371,759,339 | $ | 1,253,726,781 | $ | 1,123,829,081 | ||||||
Depreciation expense for the year
|
245,898,189 | 256,931,873 | 243,348,343 | |||||||||
Accumulated depreciation on sales
|
(538,968,481 | ) | (138,899,315 | ) | (113,450,643 | ) | ||||||
Balance at end of year
|
$ | 1,078,689,047 | $ | 1,371,759,339 | $ | 1,253,726,781 | ||||||
97
Exhibit
|
Description
|
Location
|
||||
2 | .01 | Agreement and Plan of Merger dated as of December 19, 1997, between the Company, ASR Investment Corporation and ASR Acquisition Sub, Inc. | Exhibit 2(a) to the Companys Form S-4 Registration Statement (Registration No. 333-45305) filed with the Commission on January 30, 1998. | |||
2 | .02 | Agreement of Plan of Merger dated as of September 10, 1998, between the Company and American Apartment Communities II, Inc. including as exhibits thereto the proposed terms of the Series D Preferred Stock and the proposed form of Investment Agreement between the Company, United Dominion Realty, L.P., American Apartment Communities II, Inc., American Apartment Communities Operating Partnership, L.P., Schnitzer Investment Corp., AAC Management LLC and LF Strategic Realty Investors, L.P. | Exhibit 2(c) to the Companys Form S-3 Registration Statement (Registration No. 333-64281) filed with the Commission on September 25, 1998. | |||
2 | .03 | Partnership Interest Purchase and Exchange Agreement dated as of September 10, 1998, between the Company, United Dominion Realty, L.P., American Apartment Communities Operating Partnership, L.P., AAC Management LLC, Schnitzer Investment Corp., Fox Point Ltd. and James D. Klingbeil including as an exhibit thereto the proposed form of the Third Amended and Restated Limited Partnership Agreement of United Dominion Realty, L.P. | Exhibit 2(d) to the Companys Form S-3 Registration Statement (Registration No. 333-64281) filed with the Commission on September 25, 1998. | |||
2 | .04 | Agreement of Purchase and Sale dated as of August 13, 2004, by and between United Dominion Realty, L.P., a Delaware limited partnership, as Buyer, and Essex The Crest, L.P., a California limited partnership, Essex El Encanto Apartments, L.P., a California limited partnership, Essex Hunt Club Apartments, L.P., a California limited partnership, and the other signatories named as Sellers therein. | Exhibit 2.1 to the Companys Current Report on Form 8-K dated September 28, 2004 and filed with the Commission on September 29, 2004. | |||
2 | .05 | First Amendment to Agreement of Purchase and Sale dated as of September 29, 2004, by and between United Dominion Realty, L.P., a Delaware limited partnership, as Buyer, and Essex The Crest, L.P., a California limited partnership, Essex El Encanto Apartments, L.P., a California limited partnership, Essex Hunt Club Apartments, L.P., a California limited partnership, and the other signatories named as Sellers therein. | Exhibit 2.2 to the Companys Current Report on Form 8-K dated September 29, 2004 and filed with the Commission on October 5, 2004. |
2
.06
Second Amendment to Agreement of Purchase and Sale dated as of
October 26, 2004, by and between United Dominion Realty, L.P., a
Delaware limited partnership, as Buyer, and Essex The Crest,
L.P., a California limited partnership, Essex El Encanto
Apartments, L.P., a California limited partnership, Essex Hunt
Club Apartments, L.P., a California limited partnership, and the
other signatories named as Sellers therein.
Exhibit 2.3 to the Companys Current Report on Form 8-K/A
dated September 29, 2004 and filed with the Commission on
November 1, 2004.
2
.07
Agreement of Purchase and Sale dated January 23, 2008, by and
between the Company, DRA Fund VI LLC and the other signatories
thereto.
Exhibit 2.1 to the Companys Current Report on Form 8-K
dated January 23, 2008 and filed with the Commission on January
29, 2008.
2
.08
First Amendment to Agreement of Purchase and Sale by and between
the Company, DRA Fund VI LLC and the other signatories thereto.
Exhibit 2.2 to the Companys Current Report on Form 8-K/A
dated March 3, 2008 and filed with the Commission on May 2, 2008.
3
.01
Articles of Restatement.
Exhibit 3.09 to the Companys Current Report on Form 8-K
dated July 27, 2005 and filed with the Commission on
August 1, 2005.
3
.02
Articles of Amendment to the Articles of Restatement dated and
filed with the State Department of Assessments and Taxation of
the State of Maryland on March 14, 2007.
Exhibit 3.2 to the Companys Current Report on Form 8-K
dated March 14, 2007 and filed with the Commission on
March 15, 2007.
3
.03
Articles Supplementary relating to the Companys 6.75%
Series G Cumulative Redeemable Preferred Stock, dated and filed
with the State Department of Assessments and Taxation of the
State of Maryland on May 30, 2007.
Exhibit 3.4 to the Companys Form 8-A Registration
Statement dated and filed with the Commission on May 30, 2007.
3
.04
Amended and Restated Bylaws (as amended through May 30, 2008).
Exhibit 3.1 to the Companys Current Report on Form 8-K
dated May 30, 2008 and filed with the Commission on June 2, 2008.
4
.01
Form of Common Stock Certificate.
Exhibit 4.1 to the Companys Current Report on Form 8-K
dated March 14, 2007 and filed with the Commission on
March 15, 2007.
4
.02
Senior Indenture dated as of November 1, 1995.
Exhibit 4(ii)(h)(1) to the Companys Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996.
4
.03
Supplemental Indenture dated as of June 11, 2003.
Exhibit 4.03 to the Companys Current Report on Form 8-K
dated June 17, 2004 and filed with the Commission on June 18,
2004.
4
.04
Subordinated Indenture dated as of August 1, 1994.
Exhibit 4(i)(m) to the Companys Form S-3 Registration
Statement (Registration No. 33-64725) filed with the
Commission on November 15, 1995.
4
.05
Indenture dated December 19, 2005 between the Company and
SunTrust Bank, as Trustee, relating to the Companys
4.00% Convertible Senior Notes due 2035, including the form
of note.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated December 13, 2005 and filed with the Commission on
December 19, 2005.
4
.06
Indenture dated October 12, 2006 between the Company and U.S.
Bank National Association, as Trustee, relating to the
Companys 3.625% Convertible Senior Notes due 2011,
including the form of note.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated October 5, 2006 and filed with the Commission on October
12, 2006.
4
.07
Form of Senior Debt Security.
Exhibit 4(i)(n) to the Companys Form S-3 Registration
Statement (Registration No. 33-64725) filed with the
Commission on November 15, 1995.
4
.08
Form of Subordinated Debt Security.
Exhibit 4(i)(o) to the Companys Form S-3 Registration
Statement (Registration No. 33-55159) filed with the
Commission on August 19, 1994.
4
.09
Form of Fixed Rate Medium-Term Note, Series A.
Exhibit 4.01 to the Companys Current Report on Form 8-K
dated March 20, 2007 and filed with the Commission on March 22,
2007.
4
.10
Form of Floating Rate Medium-Term Note, Series A.
Exhibit 4.02 to the Companys Current Report on Form 8-K
dated March 20, 2007 and filed with the Commission on
March 22, 2007.
4
.11
6.50% Notes due 2009.
Exhibit 4 to the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002.
4
.12
5.13% Medium-Term Note due January 2014.
Exhibit 4.2 to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003, and Exhibits 4.1 and
4.2 to the Companys Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004.
4
.13
3.90% Medium-Term Note due March 2010.
Exhibit 4.3 to the Companys Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004.
4
.14
5.00% Medium-Term Notes due January 2012.
Exhibit 4.19 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2004.
4
.15
5.25% Medium-Term Note due January 2015, issued November 1, 2004.
Exhibit 4.21 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2004.
4
.16
5.25% Medium-Term Note due January 2015, issued February 14,
2005.
Exhibit 4.22 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2004.
4
.17
5.25% Medium-Term Note due January 2015, issued March 8, 2005.
Exhibit 4.23 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2004.
4
.18
5.25% Medium-Term Note due January 2015, issued May 3, 2005.
Exhibit 4.3 to the Companys Quarterly Report on Form 10-Q
for the quarter ended March 31, 2005.
4
.19
5.25% Medium-Term Note due January 2016, issued September 7,
2005.
Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005.
4
.20
6.05% Medium-Term Note due June 2013, issued June 7, 2006.
Exhibit 4.3 to the Companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 2006.
4
.21
5.50% Medium-Term Note, Series A due April 2014, issued March
27, 2007.
Exhibit 4.5 to the Companys Quarterly Report on Form 10-Q
for the quarter ended March 31, 2007.
4
.22
Form of Certificate for Shares of the Companys 6.75%
Series G Cumulative Redeemable Preferred Stock.
Exhibit 4.1 to the Companys Form 8-A Registration
Statement dated and filed with the Commission on May 30, 2007.
4
.23
Articles Supplementary relating to the Companys 6.75%
Series G Cumulative Redeemable Preferred Stock.
See Exhibit 3.03.
4
.24
Registration Rights Agreement dated October 12, 2006 between the
Company and the Initial Purchasers of the Companys
3.625% Convertible Senior Notes due 2011.
Exhibit 4.1 to the Companys Current Report on Form 8-K
dated October 5, 2006 and filed with the Commission on
October 12, 2006.
10
.01*
1985 Stock Option Plan, as amended.
Exhibit 10(iv) to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 1998.
10
.02*
1991 Stock Purchase and Loan Plan.
Exhibit 10(viii) to the Companys Quarterly Report on Form
10-Q for the quarter ended March 31, 1997.
10
.03*
1999 Long-Term Incentive Plan (as amended and restated through
May 30, 2008).
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated May 30, 2008 and filed with the Commission on June 2, 2008.
10
.04*
Form of Restricted Stock Awards.
Exhibit 99.6 to the Companys Current Report on Form 8-K
dated December 31, 2004 and filed with the Commission on January
11, 2005.
10
.05
Description of Shareholder Value Plan.
Exhibit 10(x) to the Companys Annual Report on Form 10-K
for the year ended December 31, 1999.
10
.06*
Description of Executive Deferral Plan.
Exhibit 10(xi) to the Companys Annual Report on Form 10-K
for the year ended December 31, 1999.
10
.07*
Description of Series A Out-Performance Program.
Exhibit 10(xvii) to the Companys Quarterly Report on Form
10-Q for the quarter ended September 30, 2001.
10
.08*
Description of Amendment to Series A Out-Performance Program.
Exhibit 10.03 to the Companys Current Report on Form 8-K
dated May 3, 2005 and filed with the Commission on May 9, 2005.
10
.09*
Description of Series B Out-Performance Program.
Exhibit 10.22 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2003.
10
.10*
Description of New Out-Performance Program.
Exhibit 10.01 to the Companys Current Report on Form 8-K
dated May 3, 2005 and filed with the Commission on May 9, 2005.
10
.11*
Description of Series C Out-Performance Program.
Exhibit 10.02 to the Companys Current Report on Form 8-K
dated May 3, 2005 and filed with the Commission on May 9, 2005.
10
.12*
Participation in the Series C
Out-Performance
Program.
Exhibit 10.07 to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2005.
10
.13*
Description of the Series D
Out-Performance
Program.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated May 2, 2006 and filed with the Commission on May 8, 2006.
10
.14*
Description of the Series E
Out-Performance
Program.
Companys Definitive Proxy Statement dated March 26, 2007
and filed with the Commission on March 23, 2007.
10
.15
Second Amended and Restated Agreement of Limited Partnership of
Heritage Communities L.P.
Exhibit 10.3 to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003.
10
.16
First Amendment of Second Amended and Restated Agreement of
Limited Partnership of Heritage Communities L.P.
Exhibit 10.4 to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003.
10
.17
Second Amendment to Second Amended and Restated Agreement of
Limited Partnership of Heritage Communities L.P.
Exhibit 10.5 to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003.
10
.18
Third Amendment to Second Amended and Restated Agreement of
Limited Partnership of Heritage Communities L.P.
Exhibit 10.2 to the Companys Current Report on Form 8-K
dated December 9, 2008 and filed with the Commission on December
10, 2008.
10
.19
Credit Agreement dated as of August 14, 2001, between the
Company and certain subsidiaries and ARCS Commercial Mortgage
Co., L.P., as Lender, as amended through October 5, 2006.
Exhibit 10.15 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2006.
10
.20
Credit Agreement dated as of December 12, 2001, between the
Company and certain subsidiaries and ARCS Commercial Mortgage
Co., L.P., as Lender, as amended through September 29, 2006.
Exhibit 10.16 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2006.
10
.21
Amended and Restated Credit Agreement dated May 25, 2005 between
the Company and Wachovia Capital Markets, LLC and
J.P. Morgan Securities Inc., as Joint Lead Arrangers and
Joint Bookrunners, Wachovia Bank, National Association, as
Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication
Agent, SunTrust Bank and Wells Fargo Bank, National Association,
as Documentation Agents, Citicorp North America, Inc., KeyBank,
N.A. and U.S. Bank National Association, as Managing Agents, and
LaSalle Bank National Association, Mizuho Corporate Bank, Ltd.,
New York Branch and UFJ Bank Limited, New York Branch as
Co-Agents, and each of the financial institutions initially
signatory thereto and their assignees.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated May 25, 2005 and filed with the Commission on May 27, 2005.
10
.22
Amended and Restated Agreement of Limited Partnership of United
Dominion Realty, L.P. dated as of February 23, 2004.
Exhibit 10.23 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2003.
10
.23
First Amendment to the Amended and Restated Agreement of Limited
Partnership of United Dominion Realty, L.P.
Exhibit 10.06 to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2005.
10
.24
Second Amendment to the Amended and Restated Agreement of
Limited Partnership of United Dominion Realty, L.P.
Exhibit 10.6 to the Companys Quarterly Report on Form 10-Q
for the quarter ended March 31, 2006.
10
.25*
Employment Agreement between the Company and Richard A.
Giannotti, as amended.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated and filed with the Commission on December 23, 2008.
10
.26
Fourth Amendment to the Amended and Restated Agreement of
Limited Partnership of United Dominion Realty, L.P.
Exhibit 10.25 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2007.
10
.27*
Agreement between the Company and Thomas W. Toomey dated
November 7, 2005, regarding corporate aircraft.
Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005.
10
.28
Indenture dated October 12, 2006 between the Company and U.S.
Bank National Association, as Trustee, including the form of
note.
See Exhibit 4.06.
10
.29*
Letter Agreement between the Company and Michael A. Ernst.
Exhibit 10.01 to the Companys Current Report on Form 8-K
dated May 31, 2006 and filed with the Commission on June 5, 2006.
10
.30*
Letter Agreement between the Company and Michael A. Ernst, dated
June 30, 2008.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated June 30, 2008 and filed with the Commission on July 3,
2008.
10
.31*
Form of Indemnification Agreement.
Exhibit 10.3 to the Companys Current Report on Form 8-K
dated May 2, 2006 and filed with the Commission on May 8, 2006.
10
.32*
Form of Notice of Performance Contingent Restricted Stock Award.
Exhibit 10.2 to the Companys Current Report on Form 8-K
dated May 2, 2006 and filed with the Commission on May 8, 2006.
10
.33*
Summary of 2007 Director Compensation.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated December 7, 2006 and filed with the Commission on December
12, 2006.
10
.34
Senior Indenture dated as of November 1, 1995, as supplemented
by Supplemental Indenture dated as of June 11, 2003.
See Exhibits 4.02 and 4.03.
10
.35
Indenture dated December 19, 2005 between the Company and
SunTrust Bank, as Trustee, including form of note.
See Exhibit 4.05.
10
.36*
Notice of Performance Contingent Restricted Stock Award,
including Restricted Stock Award Agreement for
2,350 Shares, for Mark M. Culwell, Jr.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated June 21, 2006 and filed with the Commission on June 23,
2006.
10
.37*
Restricted Stock Award Agreement for 7,418 Shares for Mark
M. Culwell, Jr.
Exhibit 10.2 to the Companys Current Report on Form 8-K
dated June 21, 2006 and filed with the Commission on June 23,
2006.
10
.38*
Restricted Stock Award Agreement for 37,092 Shares for Mark
M. Culwell, Jr.
Exhibit 10.3 to the Companys Current Report on Form 8-K
dated June 21, 2006 and filed with the Commission on June 23,
2006.
10
.39
Amended and Restated Master Credit Facility Agreement dated June
24, 2002 between the Company and Green Park Financial Limited
Partnership, as amended through February 14, 2007.
Exhibit 10.41 to the Companys Annual Report on Form 10-K
for the year ended December 31, 2006.
10
.40*
Letter Agreement between the Company and Martha R. Carlin.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated December 31, 2007 and filed with the Commission on January
3, 2008.
10
.41
Agreement of Purchase and Sale dated January 23, 2008, by and
between the Company, DRA Fund VI LLC and the other signatories
thereto, as amended.
See Exhibits 2.07 and 2.08.
10
.42
Limited Liability Company Agreement of UDR Texas Ventures LLC, a
Delaware limited liability company, dated as of November 5, 2007.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated November 5, 2007 and filed with the Commission on November
9, 2007.
10
.43
Second Amended and Restated Credit Agreement dated as of July
27, 2007.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated July 27, 2007 and filed with the Commission on
August 2, 2007.
10
.44*
Letter Agreement dated May 31, 2007 between the Company and
Lester C. Boeckel.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated May 31, 2007 and filed with the Commission on June 4, 2007.
10
.45*
Form of Restricted Stock Award Agreement for awards outside of
the 1999 Long-Term Incentive Plan.
Exhibit 99.3 to Companys Current Report on Form 8-K dated
March 19, 2007 and filed with the Commission on March 19, 2007.
10
.46*
Letter Agreement between the Company and Warren L. Troupe.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated February 22, 2008 and filed with the Commission on
February 27, 2008.
10
.47*
Indemnification Agreement between the Company and Warren L.
Troupe.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated February 22, 2008 and filed with the Commission on
February 27, 2008.
10
.48*
Amended 2008 Independent Director Compensation Program.
Exhibit 10.2 to the Companys Current Report on Form 8-K
dated May 30, 2008 and filed with the Commission on June 2, 2008.
10
.49*
Summary of 2009 Non-Employee Director Compensation
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated and filed with the Commission on January 7, 2009.
10
.50
Sixth Amendment to the Amended and Restated Agreement of Limited
Partnership of United Dominion Realty, L.P., dated as of
December 9, 2008.
Exhibit 10.1 to the Companys Current Report on Form 8-K
dated December 9, 2008 and filed with the Commission on December
10, 2008.
10
.51
Subordination Agreement dated April 16, 1998, between the
Company and United Dominion Realty, L.P.
Exhibit 10(vi)(a) to the Companys Quarterly Report on Form
10-Q for the quarter ended March 31, 1998.
10
.52
Servicing and Purchase Agreement dated as of June 24, 1999,
including as an exhibit thereto the Note and Participation
Agreement forms.
Exhibit 10(vii) to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 1999.
10
.53
Fifth Amendment to the Amended and Restated Agreement of Limited
Partnership of United Dominion Realty, L.P.
Filed herewith.
12
Computation of Ratio of Earnings to Fixed Charges.
Filed herewith.
21
Subsidiaries.
Filed herewith.
23
Consent of Independent Registered Public Accounting Firm.
Filed herewith.
31
.1
Rule 13a-14(a) Certification of the Chief Executive Officer.
Filed herewith.
31
.2
Rule 13a-14(a) Certification of the Chief Financial Officer.
Filed herewith.
32
.1
Section 1350 Certification of the Chief Executive Officer.
Filed herewith.
32
.2
Section 1350 Certification of the Chief Financial Officer.
Filed herewith.
UDR, INC.
|
||||
By: | /s/ W. Mark Wallis | |||
Name: | W. Mark Wallis | |||
Title: | Senior Executive Vice President | |||
Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(Loss)/income before discontinued operations, net of minority
interests
|
$ | (50,207 | ) | $ | 49,183 | $ | (68,758 | ) | $ | (50,084 | ) | $ | (43,055 | ) | ||||||
Add:
|
||||||||||||||||||||
Interest on indebtedness from continuing operations
|
162,903 | 161,761 | 179,075 | 159,433 | 118,504 | |||||||||||||||
Minority interests
|
(3,781 | ) | 2,054 | (5,291 | ) | |||||||||||||||
Portion of rents representative of the interest factor
|
1,883 | 871 | 679 | 667 | 651 | |||||||||||||||
Earnings
|
$ | 110,798 | $ | 213,869 | $ | 105,705 | $ | 110,016 | $ | 76,100 | ||||||||||
Fixed charges and preferred stock dividend:
|
||||||||||||||||||||
Interest on indebtedness from continuing operations
|
$ | 162,903 | $ | 161,761 | $ | 179,075 | $ | 159,433 | $ | 118,504 | ||||||||||
Capitalized interest
|
14,857 | 13,244 | 5,173 | 2,769 | 986 | |||||||||||||||
Portion of rents representative of the interest factor
|
1,883 | 871 | 679 | 667 | 651 | |||||||||||||||
Fixed charges
|
179,643 | 175,876 | 184,927 | 162,869 | 120,141 | |||||||||||||||
Add:
|
||||||||||||||||||||
Preferred stock dividend
|
12,138 | 13,910 | 15,370 | 15,370 | 19,531 | |||||||||||||||
(Discount)/premium on preferred stock
|
(3,056 | ) | 2,261 | | | 5,729 | ||||||||||||||
Preferred stock dividend and preferred stock
|
9,082 | 16,171 | 15,370 | 15,370 | 25,260 | |||||||||||||||
Combined fixed charges and preferred stock
|
$ | 188,725 | $ | 192,047 | $ | 200,297 | $ | 178,239 | $ | 145,401 | ||||||||||
Ratio of earnings to fixed charges
|
| 1.22 | | | | |||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock
|
| 1.11 | | | |
State of Incorporation | ||||
Subsidiary | or Organization | |||
AAC Funding II, Inc.
|
Delaware | |||
AAC Funding IV LLC
|
California | |||
AAC Funding IV, Inc.
|
Delaware | |||
AAC Funding Partnership II
|
Delaware | |||
AAC Funding Partnership III
|
Delaware | |||
AAC Seattle I, Inc.
|
Delaware | |||
AAC Vancouver I, L.P.
|
Washington | |||
AAC/FSC Crown Pointe Investors, LLC
|
Washington | |||
AAC/FSC Hilltop Investors, LLC
|
Washington | |||
AAC/FSC Seattle Properties, LLC
|
Delaware | |||
Andover House LLC
|
Delaware | |||
Andover Member 1 LLC
|
Delaware | |||
Andover Member 2 LLC
|
Delaware | |||
Arizona Properties, LLC
|
Virginia | |||
ASR Investments Corporation
|
Maryland | |||
ASR of Delaware LLC
|
Delaware | |||
Ashwood Commons, L.L.C.
|
Washington | |||
Ashwood Commons North LLC
|
Washington | |||
Bellevue JV LLC
|
Delaware | |||
Bellevue Plaza Development LLC
|
Delaware | |||
CMP-1, LLC
|
Delaware | |||
Circle Towers LLC
|
Delaware | |||
Coastal Monterey Properties LLC
|
Delaware | |||
Coit Road, L.P.
|
Delaware | |||
Consolidated-Hampton, LLC
|
Maryland | |||
Continental 146 Fund LLC
|
Wisconsin | |||
Coronado South Apartments, L.P.
|
Delaware | |||
DCO 1015 Grandview LP
|
Delaware | |||
DCO 2400 14
th
Street LLC
|
Delaware | |||
DCO 3033 Wilshire LLC
|
Delaware | |||
DCO Addison at Brookhaven LP
|
Delaware | |||
DCO Arbors at Lee Vista LLC
|
Delaware | |||
DCO Bennett Development LP
|
Delaware | |||
DCO Borgata LLC
|
Delaware | |||
DCO Brookhaven Center LP
|
Delaware | |||
DCO Brooks Apartments LP
|
Delaware | |||
DCO Caroline Development LLC
|
Delaware | |||
DCO Clipper Pointe LP
|
Delaware | |||
DCO Garden Oaks LP
|
Delaware | |||
DCO Gessner Development LP
|
Delaware | |||
DCO Glenwood Apartments GP LLC
|
Delaware | |||
DCO Glenwood Apartments LP
|
Delaware | |||
DCO Glenwood Urban LP
|
Delaware |
State of Incorporation
Subsidiary
or Organization
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Ohio
Ohio
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Ohio
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Delaware
Delaware
California
Florida
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Delaware
Delaware
Virginia
District of Columbia
District of Columbia
Delaware
Maryland
Virginia
Delaware
Delaware
Virginia
State of Incorporation
Subsidiary
or Organization
Delaware
Maryland
Delaware
Delaware
Delaware
Delaware
Virginia
Maryland
Delaware
Virginia
Delaware
Maryland
Delaware
Virginia
Delaware
Delaware
Delaware
Virginia
Delaware
Delaware
Delaware
North Carolina
Virginia
Virginia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Delaware
Delaware
Maryland
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Virginia
Virginia
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
State of Incorporation
Subsidiary
or Organization
Delaware
Delaware
California
California
Registration | ||
Statement Number | Description | |
|
||
033-58201
|
Form S-8, pertaining to the Employees Stock Purchase Plan. | |
|
||
333-11207
|
Form S-3, pertaining to the registration of 1,679,840 shares of the Companys Common Stock. | |
|
||
333-32829
|
Form S-8, pertaining to the Companys Stock Purchase and Loan Plan. | |
|
||
333-42691
|
Form S-8, pertaining to the Companys 1985 Stock Option Plan. | |
|
||
333-48557
|
Form S-3, pertaining to the registration of 104,920 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-53401
|
Form S-3, pertaining to the registration of 1,528,089 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-58600
|
Form S-8, pertaining to the Employees Stock Purchase Plan. | |
|
||
333-64281
|
Form S-3, pertaining to the registration of 849,498 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-72885
|
Form S-3, pertaining to the registration of 130,416 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-75897
|
Form S-8, pertaining to the Companys 1999 Long-Term Incentive Plan. | |
|
||
333-77107
|
Form S-3, pertaining to the registration of 1,023,732 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-77161
|
Form S-3, pertaining to the registration of 481,251 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-80279
|
Form S-8, pertaining to the Companys 1999 Open Market Purchase Program. | |
|
||
333-82929
|
Form S-3, pertaining to the registration of 95,119 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-86808
|
Form S-3, pertaining to the registration of 12,307,692 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. | |
|
||
333-106959
|
Form S-3, pertaining to the registration of 3,425,217 shares of Common Stock, including rights to purchase Series C Junior Participating Redeemable Preferred Stock. |
Registration
Statement Number
Description
Form S-3, pertaining to the registration of 1,617,815 shares of Common Stock, including
rights to purchase Series C Junior Participating Redeemable Preferred Stock.
Form S-3, pertaining to the registration of 11,000,000 shares of Common Stock, including
rights to purchase Series C Junior Participating Redeemable Preferred Stock, issuable
under the Companys Dividend Reinvestment and Stock Purchase Plan.
Form S-8, pertaining to the registration of 46,860 shares of Common Stock, including
rights to purchase Series C Junior Participating Redeemable Preferred Stock, in connection
with the Inducement Grant of Performance Contingent Restricted Stock and Restricted Stock.
Form S-3, pertaining to the registration of $250,000,000 Principal Amount of 3.625%
Convertible Senior Notes due 2011 and shares of Common Stock issuable upon conversion of
the Notes.
Form S-3, Shelf Registration Statement, pertaining to the registration of an indeterminate
amount of Common Stock, Preferred Stock, Debt Securities, Guarantees of Debt Securities,
Warrants, Subscription Rights, Purchase Contracts and Purchase Units.
February 20, 2009
1. | I have reviewed this annual report on Form 10-K of UDR, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and | ||
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): | |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 26, 2009 | /s/ Thomas W. Toomey | |||
Thomas W. Toomey | ||||
Chief Executive Officer and President |
1. | I have reviewed this annual report on Form 10-K of UDR, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and | ||
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and | ||
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): | |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 26, 2009 | /s/ David L. Messenger | |||
David L. Messenger | ||||
Senior Vice President and Chief Financial Officer |
Date: February 26, 2009 | /s/ Thomas W. Toomey | |||
Thomas W. Toomey | ||||
Chief Executive Officer and President |
Date: February 26, 2009 | /s/ David L. Messenger | |||
David L. Messenger | ||||
Senior Vice President and Chief Financial Officer | ||||