UNITED DOMINION REALTY TRUST INC (Form: 10-Q, Received: 08/09/2005 12:53:31)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended June 30, 2005

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission file number 1-10524

United Dominion Realty Trust, Inc.

(Exact name of registrant as specified in its charter)


Maryland		54-0857512
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

1745 Shea Center Drive, Suite 200, Highlands Ranch, Colorado 80129

(Address of principal executive offices) (zip code)

(720) 283-6120

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No

The number of shares of the issuer’s common stock, $0.01 par value, outstanding as of August 2, 2005 was 137,172,473.

UNITED DOMINION REALTY TRUST, INC.

FORM 10-Q

INDEX


		Page

PART I — FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)		3
	Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004		3
	Consolidated Statements of Operations for the three and six months ended June 30, 2005 and 2004		4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2004		5
	Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2005		6
	Notes to Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 4.	Controls and Procedures		28
PART II — OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 4.	Submission of Matters to a Vote of Security Holders		29
Item 6.	Exhibits		30
Signatures			31
First Amendment to Amended/Restated Agreement of LP
Participation in the Series C Out-Performance Program
Computation of Ratio of Earnings to Fixed Charges
Rule 13a-14(a) Certification of Chief Executive Officer
Rule 13a-14(a) Certification of Chief Financial Officer
Section 1350 Certification of Chief Executive Officer
Section 1350 Certification of Chief Financial Officer

PART I — FINANCIAL INFORMATION


Item 1.	*Financial Statements*

UNITED DOMINION REALTY TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share data)

(Unaudited)


			June 30,			December 31,
			2005			2004

ASSETS
Real estate owned:
	Real estate held for investment		$	5,055,626		$	4,845,930
		Less: accumulated depreciation		(1,025,886	)		(932,149	)

				4,029,740			3,913,781
	Real estate under development			90,623			64,921
	Real estate held for disposition (net of accumulated depreciation of $46,032 and $75,738)			139,811			256,707

	Total real estate owned, net of accumulated depreciation			4,260,174			4,235,409
Cash and cash equivalents				6,167			7,904
Overnight investment				11,290			—
Restricted cash				4,424			6,086
Deferred financing costs, net				27,626			25,151
Investment in unconsolidated development joint venture				363			458
Funds held in escrow from 1031 exchanges pending the acquisition of real estate				—			17,039
Note receivable				5,000			5,000
Other assets				41,686			34,266
Other assets — real estate held for disposition				6,511			688

	Total assets		$	4,363,241		$	4,332,001


LIABILITIES AND STOCKHOLDERS’ EQUITY
Secured debt			$	1,062,873		$	1,186,140
Secured debt — real estate held for disposition				14,946			11,784
Unsecured debt				1,848,668			1,682,058
Real estate taxes payable				24,683			28,394
Accrued interest payable				28,231			18,773
Security deposits and prepaid rent				24,765			24,394
Distributions payable				45,850			44,624
Accounts payable, accrued expenses, and other liabilities				50,376			49,837
Other liabilities — real estate held for disposition				3,695			6,953

	Total liabilities			3,104,087			3,052,957
Minority interests				79,195			83,593
Stockholders’ equity:
Preferred stock, no par value; 50,000,000 shares authorized
	5,416,009 shares 8.60% Series B Cumulative Redeemable issued and outstanding (5,416,009 in 2004)			135,400			135,400
	2,803,812 shares 8.00% Series E Cumulative Convertible issued and outstanding (2,803,812 in 2004)			46,571			46,571
Common stock, $1 par value; 250,000,000 shares authorized;
	137,104,879 shares issued and outstanding (136,429,592 in 2004)			137,105			136,430
Additional paid-in capital				1,627,639			1,614,916
Distributions in excess of net income				(754,438	)		(731,808	)
Deferred compensation — unearned restricted stock awards				(12,318	)		(6,058	)

	Total stockholders’ equity			1,179,959			1,195,451

Total liabilities and stockholders’ equity			$	4,363,241		$	4,332,001

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


			Three Months Ended						Six Months Ended
			June 30,						June 30,

			2005			2004			2005			2004

REVENUES
	Rental income		$	169,427		$	140,651		$	334,489		$	277,480
	Non-property income:
		Sale of technology investment		—			—			12,306			—
		Other income		39			1,062			657			1,406

				39			1,062			12,963			1,406

		Total revenues		169,466			141,713			347,452			278,886

EXPENSES
	Rental expenses:
		Real estate taxes and insurance		19,533			16,849			39,454			33,462
		Personnel		17,413			14,231			34,098			28,390
		Utilities		9,405			8,014			19,301			16,843
		Repair and maintenance		10,543			9,289			20,852			17,436
		Administrative and marketing		5,822			4,895			11,586			9,646
		Property management		4,844			4,390			9,657			8,751
		Other operating expenses		290			291			580			561
	Real estate depreciation and amortization			51,372			39,151			101,530			76,574
	Interest			39,079			29,084			78,012			57,770
	General and administrative			4,909			4,627			11,908			9,381
	Loss on early debt retirement			18			—			6,785			5
	Other depreciation and amortization			677			810			1,337			1,703

		Total expenses		163,905			131,631			335,100			260,522

Income before minority interests and discontinued operations				5,561			10,082			12,352			18,364
Minority interests of outside partnerships				(54	)		(50	)		(112	)		(115	)
Minority interests of unitholders in operating partnerships				(107	)		(208	)		(277	)		(322	)

Income before discontinued operations, net of minority interests				5,400			9,824			11,963			17,927
Income from discontinued operations, net of minority interests				47,041			18,687			55,420			25,896

Net income				52,441			28,511			67,383			43,823
Distributions to preferred stockholders — Series B				(2,911	)		(2,911	)		(5,822	)		(5,822	)
Distributions to preferred stockholders — Series D (Convertible)				—			(1,045	)		—			(2,080	)
Distributions to preferred stockholders — Series E (Convertible)				(931	)		(1,138	)		(1,863	)		(2,276	)
Premium on preferred stock conversions				—			(1,562	)		—			(3,125	)

Net income available to common stockholders			$	48,599		$	21,855		$	59,698		$	30,520

Earnings per weighted average common share — basic and diluted:
	Income from continuing operations available to common stockholders, net of minority interests		$	0.01		$	0.02		$	0.03		$	0.04
	Income from discontinued operations, net of minority interests		$	0.35		$	0.15		$	0.41		$	0.20
	Net income available to common stockholders		$	0.36		$	0.17		$	0.44		$	0.24
Common distributions declared per share			$	0.3000		$	0.2925		$	0.6000		$	0.5850
Weighted average number of common shares outstanding — basic				136,150			127,150			136,108			127,057
Weighted average number of common shares outstanding — diluted				137,051			128,065			137,062			127,996

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except for share data)

(Unaudited)


				Six Months Ended
				June 30,

				2005			2004

Operating Activities
	Net income			$	67,383		$	43,823
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			104,774			87,944
		Net gains on sales of land and depreciable property			(53,804	)		(15,019	)
		Gain on the sale of technology investment			(12,306	)		—
		Minority interests			3,833			2,199
		Amortization of deferred financing costs and other			4,689			3,199
		Changes in operating assets and liabilities:
			Increase in operating assets		(3,006	)		(4,670	)
			Decrease in operating liabilities		(861	)		(10,715	)

Net cash provided by operating activities					110,702			106,761
Investing Activities
	Proceeds from sales of real estate investments, net				170,620			56,943
	Acquisition of real estate assets (net of liabilities assumed) and initial capital expenditures				(172,603	)		(143,019	)
	Development of real estate assets				(22,687	)		(10,759	)
	Capital expenditures and other major improvements — real estate assets, net of escrow reimbursement				(53,335	)		(31,146	)
	Capital expenditures — non-real estate assets				(1,055	)		(862	)
	Proceeds from the sale of technology investment				12,306			—
	Increase in funds due to overnight investment				(11,290	)		—
	Decrease in funds held in escrow from 1031 exchanges pending the acquisition of real estate				17,039			12,108

Net cash used in investing activities					(61,005	)		(116,735	)
Financing Activities
	Scheduled principal payments on secured debt				(6,702	)		(38,220	)
	Non-scheduled principal payments on secured debt				(125,221	)		(21,474	)
	Proceeds from the issuance of unsecured debt				161,802			246,973
	Payments on unsecured debt				(21,100	)		(46,585	)
	Net proceeds/(repayment) of revolving bank debt				37,900			(45,600	)
	Payment of financing costs				(6,112	)		(2,520	)
	Proceeds from the issuance of common stock				3,010			2,704
	Proceeds from the repayment of officer loans				—			459
	Proceeds from the issuance of performance shares				—			80
	Distributions paid to minority interests				(6,224	)		(6,031	)
	Distributions paid to preferred stockholders				(7,685	)		(10,160	)
	Distributions paid to common stockholders				(81,102	)		(73,723	)

Net cash (used in)/provided by financing activities					(51,434	)		5,903
Net decrease in cash and cash equivalents					(1,737	)		(4,071	)
Cash and cash equivalents, beginning of period					7,904			4,824

Cash and cash equivalents, end of period				$	6,167		$	753

Supplemental Information:
	Interest paid during the period			$	73,614		$	54,736
	Non-cash transactions:
		Conversion of operating partnership minority interests to common stock (84,380 shares in 2005 and 81,021 shares in 2004)			1,317			641
		Issuance of restricted stock awards			8,381			3,600
		Cancellation of a note receivable with the acquisition of a property			—			8,000
		Secured debt assumed with the acquisition of a property			—			41,324
		Receipt of a note receivable in connection with sales of real estate investments			—			75,586
		Deferred gain in connection with sales of real estate investments			—			11,413

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


															Deferred
		Preferred Stock				Common Stock						Distributions in			Compensation-
										Paid-in		Excess of Net			Unearned Restricted
		Shares		Amount		Shares		Amount		Capital		Income			Stock Awards			Total

Balance, December 31, 2004			8,219,821	$	181,971		136,429,592	$	136,430	$	1,614,916	$	(731,808	)	$	(6,058	)	$	1,195,451

Comprehensive Income
	Net income												67,383						67,383

	Comprehensive income												67,383						67,383

	Issuance of common shares to employees, officers, and director-stockholders						221,999		222		2,116								2,338
	Issuance of common shares through dividend reinvestment and stock purchase plan						30,296		30		642								672
	Issuance of restricted stock awards						338,612		339		8,042					(8,381	)		—
	Adjustment for conversion of minority interests of unitholders in operating partnerships						84,380		84		1,233								1,317
	Adjustment for conversion of minority interests in Series B LLC										690								690
	Common stock distributions declared ($0.6000 per share)												(82,328	)					(82,328	)
	Preferred stock distributions declared-Series B ($1.0750 per share)												(5,822	)					(5,822	)
	Preferred stock distributions declared-Series E ($0.6644 per share)												(1,863	)					(1,863	)
	Amortization of deferred compensation															2,121			2,121

Balance, June 30, 2005			8,219,821	$	181,971		137,104,879	$	137,105	$	1,627,639	$	(754,438	)	$	(12,318	)	$	1,179,959

See accompanying notes to consolidated financial statements.

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2005

(UNAUDITED)


1.	Consolidation and Basis of Presentation

United Dominion Realty Trust, Inc. is a self-administered real estate investment trust, or REIT, that owns, acquires, renovates, develops, and manages middle-market apartment communities nationwide. The accompanying consolidated financial statements include the accounts of United Dominion and its subsidiaries, including United Dominion Realty, L.P. (the “Operating Partnership”), and Heritage Communities L.P. (the “Heritage OP”) (collectively, “United Dominion”). As of June 30, 2005, there were 166,061,749 units in the Operating Partnership outstanding, of which 156,107,518 units or 94.0% were owned by United Dominion and 9,954,231 units or 6.0% were owned by limited partners (of which 1,791,329 are owned by the holders of the Series A OPPS, see Note 6). As of June 30, 2005, there were 5,542,200 units in the Heritage OP outstanding, of which 5,201,355 units or 93.9% were owned by United Dominion and 340,845 units or 6.1% were owned by limited partners. The consolidated financial statements of United Dominion include the minority interests of the unitholders in the Operating Partnership and the Heritage OP. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying interim unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. The accompanying consolidated financial statements should be read in conjunction with the audited financial statements and related notes appearing in United Dominion’s Annual Report on Form 10-K for the year ended December 31, 2004, filed with the Securities and Exchange Commission as updated by the Current Report on Form 8-K filed May 19, 2005.

In the opinion of management, the consolidated financial statements reflect all adjustments which are necessary for the fair presentation of financial position at June 30, 2005 and results of operations for the interim periods ended June 30, 2005 and 2004. Such adjustments are normal and recurring in nature. The interim results presented are not necessarily indicative of results that can be expected for a full year.

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. Certain previously reported amounts have been reclassified to conform to the current financial statement presentation.

In June 2005, the FASB ratified its consensus in EITF Issue 04-05, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” (Issue 04-05). The effective date for Issue 04-05 is June 29, 2005 for all new or modified partnerships and January 1, 2006 for our remaining partnerships for the applicable provisions. The adoption of the provisions of EITF 04-05 is not anticipated to have a material impact on our financial position or results of operations.

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


2.	Real Estate Held for Investment

At June 30, 2005, there are 252 communities with 73,784 apartment homes classified as real estate held for investment. The following table summarizes the components of real estate held for investment (dollars in thousands):


	June 30,			December 31,
	2005			2004

Land and land improvements	$	1,224,539		$	1,159,979
Buildings and improvements		3,596,316			3,463,830
Furniture, fixtures, and equipment		234,771			222,121

Real estate held for investment		5,055,626			4,845,930
Accumulated depreciation		(1,025,886	)		(932,149	)

Real estate held for investment, net	$	4,029,740		$	3,913,781


3.	Income from Discontinued Operations

FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (FAS 144) requires, among other things, that the primary assets and liabilities and the results of operations of United Dominion’s real properties which have been sold subsequent to January 1, 2002, or are held for disposition subsequent to January 1, 2002, be classified as discontinued operations and segregated in United Dominion’s Consolidated Statements of Operations and Balance Sheets. Properties classified as real estate held for disposition generally represent properties that are under contract for sale and are expected to close within the next twelve months.

For purposes of these financial statements, FAS 144 results in the presentation of the primary assets and liabilities and the net operating results of those properties sold or classified as held for disposition through June 30, 2005, as discontinued operations for all periods presented. The adoption of FAS 144 does not have an impact on net income available to common stockholders. FAS 144 only results in the reclassification of the operating results of all properties sold or classified as held for disposition through June 30, 2005, within the Consolidated Statements of Operations for the three and six months ended June 30, 2005 and 2004, and the reclassification of the assets and liabilities within the Consolidated Balance Sheets for 2005 and 2004.

For the six months ended June 30, 2005, United Dominion sold 11 communities with 2,623 apartment homes, 12 townhomes from a community of 36 townhomes, 26 condominiums from a community of 152 condominiums, and one parcel of land. We recognized gains for financial reporting purposes of $53.8 million on these sales. At June 30, 2005, United Dominion had 11 communities with a total of 3,505 apartment homes and a net book value of $134.7 million and two parcels of land with a net book value of $5.1 million included in real estate held for disposition. For the year ended December 31, 2004, United Dominion sold 19 communities with a total of 5,425 apartment homes, 24 townhomes from a community of 36 townhomes, and one parcel of land. The results of operations for these properties and the interest expense associated with the secured debt on these properties are classified on the Consolidated Statements of Operations in the line item titled “Income from discontinued operations, net of minority interests.”

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of income from discontinued operations for the periods presented, (dollars in thousands) :


	Three Months Ended						Six Months Ended
	June 30,						June 30,

	2005			2004			2005			2004

Rental income	$	6,768		$	19,040		$	16,780		$	40,831
Non-property income		—			—			8			—

		6,768			19,040			16,788			40,831
Rental expenses		3,250			8,558			7,909			18,097
Real estate depreciation		331			4,082			1,892			9,571
Interest		—			213			215			427
Loss on early debt retirement		—			—			1,697			—
Other expenses		4			43			15			97

		3,585			12,896			11,728			28,192
Income before net gain on sale of depreciable property and minority interests		3,183			6,144			5,060			12,639
Net gain on sale of depreciable property		46,781			13,814			53,804			15,019

Income before minority interests		49,964			19,958			58,864			27,658
Minority interests on income from discontinued operations		(2,923	)		(1,271	)		(3,444	)		(1,762	)

Income from discontinued operations, net of minority interests	$	47,041		$	18,687		$	55,420		$	25,896

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


4.	Secured Debt

Secured debt on continuing and discontinued operations, which encumbers $1.8 billion or 33.3% of United Dominion’s real estate owned based upon book value ($3.5 billion or 66.7% of United Dominion’s real estate owned is unencumbered) consists of the following as of June 30, 2005 ( dollars in thousands ):


					Weighted			Weighted		Number of
	Principal Outstanding				Average			Average		Communities
					Interest Rate			Years to Maturity		Encumbered
	June 30,		December 31,
	2005		2004		2005			2005		2005

Fixed Rate Debt
Mortgage notes payable	$	334,146	$	428,223		5.35	%		6.0		13
Tax-exempt secured notes payable		26,595		39,160		5.85	%		19.6		3
Fannie Mae credit facilities		288,875		288,875		6.40	%		5.7		9

Total fixed rate secured debt		649,616		756,258		5.84	%		6.4		25
Variable Rate Debt
Mortgage notes payable		52,964		45,758		4.30	%		6.3		4
Tax-exempt secured note payable		7,770		7,770		2.45	%		23.0		1
Fannie Mae credit facilities		367,469		367,469		3.68	%		7.2		47
Freddie Mac credit facility		—		20,669		n/a			n/a		n/a

Total variable rate secured debt		428,203		441,666		3.73	%		7.4		52

Total secured debt	$	1,077,819	$	1,197,924		5.00	%		6.8		77

During the three months ended June 30, 2005 we elected to convert a $75 million variable rate debt placement to a fixed rate of 4.86%. The rate, currently at 3.77%, will float until December 1, 2005 and then convert to a 7-year fixed rate of 4.86%. Had the fixed rate been in effect at June 30, 2005, the weighted average interest rate for the fixed rate, variable rate and total secured debt would have been 5.74%, 3.72%, and 5.08%, respectively.

Approximate principal payments due during each of the next five calendar years and thereafter, as of June 30, 2005, are as follows (dollars in thousands):


					Total
	Fixed Rate		Variable Rate		Secured
Year	Maturities		Maturities		Maturities

2005	$	2,904	$	769	$	3,673
2006		33,943		5,201		39,144
2007		81,189		1,573		82,762
2008		8,740		8,006		16,746
2009		4,172		—		4,172
Thereafter		518,668		412,654		931,322

	$	649,616	$	428,203	$	1,077,819

During the three months ended March 31, 2005, we prepaid approximately $110 million of secured debt. In conjunction with these prepayments, we incurred prepayment penalties of $8.5 million that are reflected on the Consolidated Statements of Operations as “Loss on early debt retirement.” These penalties were funded by the proceeds from the sale of our technology investment of $12.3 million.

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


5.	Unsecured Debt

A summary of unsecured debt as of June 30, 2005 and December 31, 2004 is as follows ( dollars in thousands ):


			2005		2004

Commercial Banks
	Borrowings outstanding under an unsecured credit facility due May 2008(a)		$	316,000	$	278,100
Senior Unsecured Notes — Other
	7.73% Medium-Term Notes due April 2005			—		21,100
	7.02% Medium-Term Notes due November 2005			49,760		49,760
	Verano Construction Loan due February 2006			24,820		24,820
	7.95% Medium-Term Notes due July 2006			85,374		85,374
	7.07% Medium-Term Notes due November 2006			25,000		25,000
	7.25% Notes due January 2007			92,255		92,255
	4.30% Medium-Term Notes due July 2007			75,000		75,000
	4.50% Medium-Term Notes due March 2008			200,000		200,000
	ABAG Tax-Exempt Bonds due August 2008			46,700		46,700
	8.50% Monthly Income Notes due November 2008			29,081		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
	5.00% Medium-Term Notes due January 2012			100,000		100,000
	5.13% Medium-Term Notes due January 2014			200,000		200,000
	5.25% Medium-Term Notes due January 2015			250,000		100,000
	8.50% Debentures due September 2024			54,118		54,118
	Other(b)			560		750

				1,532,668		1,403,958

		Total Unsecured Debt	$	1,848,668	$	1,682,058


(a)		During the second quarter of 2005, United Dominion amended and restated its $500 million unsecured revolving credit facility and extended the term an additional two years. The credit facility matures on May 31, 2008, and at United Dominion’s option, can be extended for an additional year. United Dominion has the right to increase the credit facility to $750 million if the initial lenders increase their commitments or we receive commitments from additional lenders. Based on United Dominion’s current credit ratings, the credit facility carries an interest rate equal to LIBOR plus a spread of 57.5 basis points, which represents a 12.5 basis point reduction to the previous unsecured revolver, and the facility fee was reduced from 20 basis points to 15 basis points. Under a competitive bid feature and for so long as United Dominion maintains an Investment Grade Rating, United Dominion has the right to bid out 100% of the commitment amount.

(b)		Represents deferred gains from the termination of interest rate risk management agreements.


6.	Earnings Per Share

Basic earnings per common share is computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per common share is computed based upon the weighted average number of common shares outstanding plus the effect of dilutive stock options and other

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

potentially dilutive common stock equivalents. The dilutive effect of stock options and other potentially dilutive common stock equivalents is determined using the treasury stock method based on United Dominion’s average stock price.

The following table sets forth the computation of basic and diluted earnings per share for the periods presented, (dollars in thousands, except per share data):


		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2005			2004			2005			2004

Numerator for basic and diluted earnings per share —
	Net income available to common stockholders	$	48,599		$	21,855		$	59,698		$	30,520

Denominator:
Denominator for basic earnings per share —
	Weighted average common shares outstanding		136,971			127,764			136,942			127,642
	Non-vested restricted stock awards		(821	)		(614	)		(834	)		(585	)

			136,150			127,150			136,108			127,057

Effect of dilutive securities:
Employee stock options and non-vested restricted stock awards			901			915			954			939

Denominator for diluted earnings per share			137,051			128,065			137,062			127,996

Basic and diluted earnings per share		$	0.36		$	0.17		$	0.44		$	0.24

The effect of the conversion of the operating partnership units, Series A Out-Performance Partnership Shares, and convertible preferred stock is not dilutive and is therefore not included in the above calculations. If the operating partnership units were converted to common stock, the additional shares of common stock outstanding for the three and six months ended June 30, 2005 would be 8,507,349 and 8,512,674 weighted average common shares, and 8,680,217 and 8,683,229 weighted average common shares for the three and six months ended June 30, 2004. If the Series A Out-Performance Partnership Shares were converted to common stock, the additional shares of common stock outstanding for the three and six months ended June 30, 2005 and 2004 would be 1,791,329 weighted average common shares. If the convertible preferred stock were converted to common stock, the additional shares of common stock outstanding for the three and six months ended June 30, 2005 would be 2,803,812 weighted average common shares, and 6,502,140 weighted average common shares for the three and six months ended June 30, 2004, respectively.


7.	Comprehensive Income

Total comprehensive income for the three and six months ended June 30, 2005 and 2004, was $52.4 million and $67.4 million for 2005 and $29.5 million and $45.7 million for 2004, respectively. The difference between net income and total comprehensive income is primarily due to the fair value accounting for interest rate swaps in 2004.


8.	Commitments and Contingencies

Commitments

United Dominion is committed to completing its real estate under development, which has an estimated cost to complete of $76.3 million at June 30, 2005.

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contingencies


	*Series B Out-Performance Program*

In May 2003, the stockholders of United Dominion approved the Series B Out-Performance Program (the “Series B Program”) pursuant to which certain executive officers of United Dominion (the “Series B Participants”) were given the opportunity to invest indirectly in United Dominion by purchasing interests in a limited liability company (the “Series B LLC”), the only asset of which is a special class of partnership units of United Dominion Realty, L.P. (“Series B Out-Performance Partnership Shares” or “Series B OPPSs”). The purchase price for the Series B OPPSs was determined by United Dominion’s board of directors to be $1 million, assuming 100% participation, and was based upon the advice of an independent valuation expert. The Series B Program measured the cumulative total return on our common stock over the 24-month period from June 1, 2003 to May 31, 2005.

The Series B Program was designed to provide participants with the possibility of substantial returns on their investment if the total cumulative return on United Dominion’s common stock, as measured by the cumulative amount of dividends paid plus share price appreciation during the measurement period (a) exceeded the cumulative total return of the Morgan Stanley REIT Index peer group index over the same period; and (b) was at least the equivalent of a 22% total return, or 11% annualized.

At the conclusion of the measurement period on May 31, 2005, United Dominion’s total cumulative return did not satisfy these criteria, and therefore, the Series B LLC as holder of the Series B OPPSs did not receive (for the indirect benefit of the Series B Participants as holders of interests in the Series B LLC) distributions and allocations of income and loss from the Operating Partnership (accounted for on a consistent basis with all other OP Units) equal to the distributions and allocations that would be received on the number of OP Units. As a result, the investment made by the holders of the Series B OPPSs was forfeited.


	*Series C Out-Performance Program*

In May 2005, the stockholders of United Dominion approved the Series C Out-Performance Program (the “Series C Program”) pursuant to which certain executive officers and other key employees of United Dominion (the “Series C Participants”) were given the opportunity to invest indirectly in United Dominion by purchasing interests in UDR Out-Performance III, LLC, a Delaware limited liability company (the “Series C LLC”), the only asset of which is a special class of partnership units of United Dominion Realty, L.P. (“Series C Out-Performance Partnership Shares” or “Series C OPPSs”). The purchase price for the Series C OPPSs was determined by the Compensation Committee of United Dominion’s board of directors to be $750,000, assuming 100% participation, and was based upon the advice of an independent valuation expert. The Series C Program will measure the cumulative total return on our common stock over the 36-month period from June 1, 2005 to May 30, 2008.

The Series C Program is designed to provide participants with the possibility of substantial returns on their investment if the total cumulative return on United Dominion’s common stock, as measured by the cumulative amount of dividends paid plus share price appreciation during the measurement period is at least the equivalent of a 36% total return, or 12% annualized (“Minimum Return”).

At the conclusion of the measurement period, if United Dominion’s total cumulative return satisfies these criteria, the Series C LLC as holder of the Series C OPPSs will receive (for the indirect benefit of the Series C Participants as holders of interests in the Series C LLC) distributions and allocations of

UNITED DOMINION REALTY TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

income and loss from the Operating Partnership equal to the distributions and allocations that would be received on the number of OP Units obtained by:


	i. determining the amount by which the cumulative total return of United Dominion’s common stock over the measurement period exceeds the Minimum Return (such excess being the “Excess Return”);

	ii. multiplying 2% of the Excess Return by United Dominion’s market capitalization (defined as the average number of shares outstanding over the 36-month period, including common stock, OP Units and common stock equivalents) multiplied by the daily closing price of United Dominion’s common stock, up to a maximum of 1% of market capitalization; and

	iii. dividing the number obtained in (ii) by the market value of one share of United Dominion’s common stock on the valuation date, determined by the volume-weighted average price per day of common stock for the 20 trading days immediately preceding the valuation date.

If, on the valuation date, the cumulative total return of United Dominion’s common stock does not meet the Minimum Return, then the Series C Participants will forfeit their entire initial investment.

Litigation and Legal Matters

United Dominion is subject to various legal proceedings and claims arising in the ordinary course of business. United Dominion cannot determine the ultimate liability with respect to such legal proceedings and claims at this time. United Dominion believes that such liability, to the extent not provided for through insurance or otherwise, will not have a material adverse effect on our financial condition, results of operations or cash flow.


9.	Subsequent Event

On July 27, 2005, we filed with the State Department of Assessments and Taxation of the State of Maryland Articles of Amendment amending our Amended and Restated Articles of Incorporation. These Articles of Amendment increased the number of shares of common stock which we are authorized to issue from 250,000,000 shares to 550,000,000 shares and changed the par value of our common stock from $1.00 per share to $0.01 per share. On July 28, 2005, we filed Articles Supplementary with the State Department of Assessments and Taxation relating to the reclassification of 300,000,000 shares of our common stock into a series designated as Excess Stock, having a par value of $0.01 per share. The reclassification decreases the number of shares classified as common stock from 550,000,000 shares immediately prior to the reclassification to 250,000,000 shares immediately after the reclassification.


Item 2.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

Forward-Looking Statements

This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, without limitation, statements concerning property acquisitions and dispositions, development activity and capital expenditures, capital raising activities, rent growth, occupancy, and rental expense growth. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of United Dominion to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Such factors include, among other things, unanticipated adverse business developments affecting us or our properties, adverse changes in the real estate markets and general and local economies and business conditions. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this Report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

Business Overview

We are a real estate investment trust, or REIT, that owns, acquires, renovates, develops, and manages middle-market apartment communities nationwide. We were formed in 1972 as a Virginia corporation. In June 2003, we changed our state of incorporation from Virginia to Maryland. Our subsidiaries include two operating partnerships, Heritage Communities L.P., a Delaware limited partnership, and United Dominion Realty, L.P., a Delaware limited partnership. Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” “the company,” or “United Dominion” refer collectively to United Dominion Realty Trust, Inc. and its subsidiaries.

At June 30, 2005, our portfolio included 263 communities with 77,289 apartment homes nationwide. The following table summarizes our market information by major geographic markets (includes real estate held for disposition, real estate under development, and land, but excludes commercial properties):


											Three Months Ended					Six Months Ended
		As of June 30, 2005									June 30, 2005					June 30, 2005

		Number of		Number of		Percentage of					Average			Average		Average			Average
		Apartment		Apartment		Carrying			Carrying Value		Physical			Collections per		Physical			Collections per
		Communities		Homes		Value			(in thousands)		Occupancy			Occupied Home(a)		Occupancy			Occupied Home(a)

Southern California			26		7,017		19.7	%	$	1,049,780		94.2	%	$	1,202		93.4	%	$	1,138
Tampa, FL			12		4,314		4.7	%		249,645		94.6	%		792		94.9	%		784
Houston, TX			16		5,447		4.7	%		248,216		93.5	%		620		93.0	%		619
Northern California			7		2,024		4.1	%		220,639		94.3	%		1,142		94.1	%		1,134
Orlando, FL			14		4,140		4.1	%		219,842		95.4	%		752		95.6	%		746
Metropolitan DC			7		2,219		4.0	%		214,808		92.7	%		1,136		93.7	%		1,131
Raleigh, NC			11		3,663		4.0	%		214,514		93.6	%		644		93.8	%		643
Dallas, TX			11		3,590		3.8	%		199,965		95.2	%		648		95.5	%		652
Baltimore, MD			10		2,118		3.1	%		164,904		95.9	%		951		96.0	%		945
Columbus, OH			6		2,530		3.0	%		157,276		91.4	%		678		92.4	%		672
Nashville, TN			9		2,580		2.9	%		153,771		95.0	%		691		95.1	%		690
Richmond, VA			9		2,636		2.7	%		145,104		92.5	%		798		92.2	%		807
Monterey Peninsula, CA			7		1,568		2.6	%		139,050		93.1	%		921		91.5	%		911
Charlotte, NC			9		2,358		2.6	%		137,906		94.4	%		597		94.2	%		601
Phoenix, AZ			7		1,935		2.6	%		135,536		91.0	%		789		92.4	%		779
Arlington, TX			8		2,656		2.4	%		128,179		94.0	%		620		94.5	%		620
Greensboro, NC			8		2,123		2.0	%		108,634		94.4	%		575		94.8	%		580
Seattle, WA			6		1,575		1.9	%		100,378		94.1	%		771		93.6	%		761
Jacksonville, FL			4		1,557		1.9	%		99,538		95.9	%		549		95.9	%		540
Denver, CO			3		1,484		1.9	%		99,512		90.9	%		632		91.5	%		636
Wilmington, NC			6		1,868		1.8	%		94,699		96.7	%		685		96.4	%		679
Portland, OR			6		1,490		1.7	%		92,059		89.3	%		687		91.4	%		698
Austin, TX			5		1,425		1.6	%		82,405		95.1	%		646		95.3	%		641
Atlanta, GA			6		1,426		1.4	%		76,443		92.4	%		621		92.4	%		619
Columbia, SC			6		1,584		1.2	%		66,230		95.9	%		607		94.8	%		605
Norfolk, VA			6		1,438		1.2	%		63,847		95.4	%		819		95.3	%		809
Other Southwestern			10		3,676		3.7	%		197,658		95.0	%		646		94.7	%		644
Other Florida			6		1,737		2.2	%		118,769		95.7	%		823		96.1	%		818
Other North Carolina			8		1,893		1.5	%		79,320		93.3	%		622		93.8	%		623
Other Mid-Atlantic			6		1,156		1.1	%		57,643		95.9	%		838		95.2	%		833
Other Virginia			3		820		0.9	%		48,025		94.0	%		965		93.1	%		958
Other Southeastern			2		798		0.8	%		41,111		94.8	%		510		95.0	%		509
Other Midwestern			3		444		0.4	%		23,697		93.3	%		695		93.6	%		697
Real Estate Under Development			—		—		1.3	%		68,921		—			—		—			—
Land			—		—		0.5	%		25,722		—			—		—			—

	Total		263		77,289		100.0	%	$	5,323,746		94.1	%	$	769		94.1	%	$	761


(a)	Average Collections per Occupied Home represents net rental income plus fee income, excluding utility reimbursements, divided by occupancy and multiplied by the number of mature apartment homes.

Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations either through operating cash flows, the sale or maturity of existing assets, or by the acquisition of additional funds through capital management. Both the coordination of asset and liability maturities and effective capital management are important to the maintenance of liquidity. Our primary source of liquidity is our cash flow from operations as determined by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment homes. We routinely use our unsecured bank credit facility to temporarily fund certain investing and financing activities prior to arranging for longer-term financing. During the past several years, proceeds from the sale of real estate have been used for both investing and financing activities.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations and borrowings under credit arrangements. We expect to meet certain long-term liquidity requirements such as scheduled debt maturities, the repayment of financing on development activities, and potential property acquisitions, through long-term secured and unsecured borrowings, the disposition of properties, and the issuance of additional debt or equity securities. We believe that our net cash provided by operations will continue to be adequate to meet both operating requirements and the payment of dividends by the company in accordance with REIT requirements in both the short- and long-term. Likewise, the budgeted expenditures for improvements and renovations of certain properties are expected to be funded from property operations.

We have a shelf registration statement filed with the Securities and Exchange Commission which provides for the issuance of up to an aggregate of $1.5 billion in common shares, preferred shares, and debt securities to facilitate future financing activities in the public capital markets. During the first six months of 2005, we completed various financing activities under our $1.5 billion shelf registration statement. These activities are summarized in the section titled “Financing Activities” below. As of June 30, 2005, approximately $1.0 billion of equity and debt securities remained available for use under the shelf registration statement. Access to capital markets is dependent on market conditions at the time of issuance.

In October 2004, we filed a prospectus supplement under the Securities Act of 1933 relating to the offering of up to 5 million shares of our common stock that we may issue and sell through an agent from time to time in “at the market offerings,” as defined in Rule 415 of the Securities Act of 1933. Any sales of these shares will be made under our $1.5 billion shelf registration statement pursuant to a sales agreement that we entered into with the agent in July 2003. The sales price of the common stock that may be sold under the sales agreement will be no lower than the minimum price designated by us prior to the sale. During the fourth quarter of 2004, we sold a total of 472,000 shares of common stock pursuant to the sales agreement at a weighted average sales price of $20.36, for net proceeds to us of approximately $9.4 million. We did not sell any shares of common stock under the sales agreement during the six months ended June 30, 2005.

Future Capital Needs

Future development expenditures are expected to be funded primarily through joint ventures, with proceeds from the sale of property, with construction loans and, to a lesser extent, with cash flows provided by operating activities. Acquisition activity in strategic markets is expected to be largely financed through the issuance of equity and debt securities, the issuance of operating partnership units, the assumption or placement of secured and/or unsecured debt, and by the reinvestment of proceeds from the sale of properties.

During the remainder of 2005, we have approximately $3.7 million of secured debt and $49.8 million of unsecured debt maturing and we anticipate repaying that debt with proceeds from borrowings under our secured or unsecured credit facilities, or the issuance of new unsecured debt securities or equity.

Critical Accounting Policies and Estimates

Our critical accounting policies are those having the most impact on the reporting of our financial condition and results and those requiring significant judgments and estimates. These policies include those related to (1) capital expenditures, (2) impairment of long-lived assets, and (3) real estate investment properties. Our critical accounting policies are described in more detail in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2004. There have been no significant changes in our critical accounting policies from those reported in our 2004 Annual Report on Form 10-K. With respect to these critical accounting policies, management believes that the application of judgments and assessments is consistently applied and produces financial information that fairly depicts the results of operations for all periods presented.

Statements of Cash Flow

The following discussion explains the changes in net cash provided by operating and financing activities and net cash used in investing activities that are presented in our Consolidated Statements of Cash Flows.


	*Operating Activities*

For the six months ended June 30, 2005, our cash flow provided by operating activities was $110.7 million compared to $106.8 million for the same period in 2004. The increase in cash flow from operating activities resulted primarily from an increase in property operating income due to the overall increase in our apartment community portfolio (see discussion under “Apartment Community Operations”).


	*Investing Activities*

For the six months ended June 30, 2005, net cash used in investing activities was $61.0 million compared to $116.7 million for the same period in 2004. Changes in the level of investing activities from period to period reflects our strategy as it relates to our acquisition, capital expenditure, development, and disposition programs, as well as the impact of the capital market environment on these activities, all of which are discussed in further detail below.


	Acquisitions

During the six months ended June 30, 2005, we acquired two apartment communities with 1,115 apartment homes and one parcel of land. Our long-term strategic plan is to achieve greater operating efficiencies by investing in fewer, more concentrated markets. As a result, we have been expanding our interests in the fast growing Southern California, Florida, and Metropolitan DC markets over the past two years. During 2005, we plan to continue to channel new investments into those markets we believe will provide the best investment returns. Markets will be targeted based upon defined criteria including past performance, expected job growth, current and anticipated housing supply and demand, and the ability to attract and support household formation.


	Capital Expenditures

In conformity with accounting principles generally accepted in the United States, we capitalize those expenditures related to acquiring new assets, materially enhancing the value of an existing asset, or substantially extending the useful life of an existing asset. Expenditures necessary to maintain an existing property in ordinary operating condition are expensed as incurred.

During the first six months of 2005, we spent $53.3 million or $690 per home on capital expenditures for all of our communities, excluding development and commercial properties. These capital improvements included turnover related expenditures for floor coverings and appliances, other recurring capital

expenditures such as HVAC equipment, roofs, siding, parking lots, and other non-revenue enhancing capital expenditures, which aggregated $18.4 million or $238 per home. In addition, revenue enhancing capital expenditures, kitchen and bath upgrades, and other extensive interior upgrades totaled $30.1 million or $390 per home and major renovations totaled $4.8 million or $62 per home for the six months ended June 30, 2005.

The following table outlines capital expenditures and repair and maintenance costs for all of our communities, excluding real estate under development and commercial properties for the periods presented:


		Six Months Ended June 30,							Six Months Ended June 30,
		(dollars in thousands)							(per home)

		2005		2004		% Change			2005		2004		% Change

Turnover capital expenditures		$	9,171	$	8,173		12.2	%	$	119	$	107		11.2	%
Other recurring capital expenditures			9,200		7,698		19.5	%		119		101		17.8	%

	Total recurring capital expenditures		18,371		15,871		15.8	%		238		208		14.4	%
Revenue enhancing improvements			30,142		15,050		100.3	%		390		198		97.0	%
Major renovations			4,822		233		1969.5	%		62		3		1966.7	%

	Total capital improvements	$	53,335	$	31,154		71.2	%	$	690	$	409		68.7	%

Repair and maintenance		$	22,055	$	20,389		8.2	%	$	285	$	268		6.3	%

	Total expenditures	$	75,390	$	51,543		46.3	%	$	975	$	677		44.0	%

Total capital improvements increased $22.2 million or $281 per home for the six months ended June 30, 2005 compared to the same period in 2004. We will continue to selectively add revenue enhancing improvements which we believe will provide a return on investment substantially in excess of our cost of capital. Recurring capital expenditures during 2005 are currently expected to be approximately $510 per home.


	Real Estate Under Development

Development activity is focused in core markets in which we have strong operations in place. For the six months ended June 30, 2005, we invested approximately $22.7 million on development projects, an increase of $11.9 million from $10.8 million for the same period in 2004.

The following projects were under development as of June 30, 2005:


		Number of		Completed		Cost to		Budgeted		Estimated		Expected
		Apartment		Apartment		Date		Cost		Cost Per		Completion
		Homes		Homes		(In thousands)		(In thousands)		Home		Date

Verano at Town Square
	Rancho Cucamonga, CA		414		—	$	40,775	$	66,300	$	160,100		4Q05
Mandalay on the Lake
	Irving, TX		369		—		17,959		30,900		83,700		1Q06
2000 Post Phase III
	San Francisco, CA		24		—		2,976		9,000		375,000		2Q06
Ridgeview
	Plano, TX		225		—		4,260		18,000		80,000		3Q06
Lincoln Towne Square — Phase II
	Plano, TX		303		—		2,951		21,000		69,300		3Q07

			1,335		—	$	68,921	$	145,200	$	108,800

In addition, we own five parcels of land that we continue to hold for future development that had a carrying value at June 30, 2005 of $21.7 million. Two of the five parcels represent additional phases to existing communities as we plan to add apartment homes adjacent to currently owned communities that are in improving markets.


	Disposition of Investments

For the six months ended June 30, 2005, we sold 11 communities with 2,623 apartment homes, 12 townhomes from a community of 36 townhomes, and 26 condominiums from a community of 152 condominiums for a gross consideration of $181.0 million. In addition, we sold one parcel of land for $0.9 million. We recognized gains for financial reporting purposes of $53.8 million on these sales. Proceeds from the sales were used primarily to reduce debt and acquire additional communities.

During 2005, we plan to continue to pursue our strategy of selling properties where long-term growth prospects are limited and redeploying capital into properties that would enhance future growth rates and economies of scale. We intend to use the proceeds from 2005 dispositions to reduce debt, acquire communities, and fund development activity.


	*Financing Activities*

Net cash used in financing activities during the six months ended June 30, 2005, was $51.4 million compared to net cash provided by financing activities of $5.9 million for the same period in 2004. As part of the plan to improve our balance sheet, we utilized proceeds from dispositions, equity and debt offerings, and refinancings to extend maturities, pay down existing debt, and purchase new properties.

The following is a summary of our financing activities for the six months ended June 30, 2005:


	•	Repaid $131.9 million of secured debt and $21.1 million of unsecured debt, and incurred $8.5 million in prepayment penalties.

	•	Sold $50 million aggregate principal amount of 5.25% senior unsecured notes due January 2015 in February 2005 under our medium-term note program. These notes represent a re-opening of the 5.25% senior unsecured notes due January 2015 that were issued in November 2004, and these notes constitute a single series of notes. The February 2005 issuance of these notes brought the aggregate principal amount of the 5.25% senior unsecured notes to $150 million. The net proceeds of approximately $50 million were used for debt repayment and to fund the acquisition of apartment communities.

	•	Sold our shares in Rent.com, a leading Internet listing web site in the apartment and rental housing industry, in February 2005. As a result, United Dominion received cash proceeds and recorded a one-time gain of $12.3 million on the sale. As part of the transaction, an additional $0.8 million was placed in escrow and will be recorded as revenue when received.

	•	Sold $50 million aggregate principal amount of 5.25% senior unsecured notes due January 2015 in March 2005 under our medium-term note program. These notes represent a re-opening of the 5.25% senior unsecured notes due January 2015 that were issued in November 2004, and these notes constitute a single series of notes. The March 2005 issuance of these notes brought the aggregate principal amount of the 5.25% senior unsecured notes to $200 million. The net proceeds of approximately $50 million were used for debt repayment and to fund the acquisition of apartment communities.

	•	Sold $50 million aggregate principal amount of 5.25% senior unsecured notes due January 2015 in May 2005 under our medium-term note program. These notes represent a re-opening of the 5.25% senior unsecured notes due January 2015 that were issued in November 2004, and these notes constitute a single series of notes. The May 2005 issuance of these notes brought the aggregate principal amount of the 5.25% senior unsecured notes to $250 million. The net proceeds of approximately $50 million were used for debt repayment and to fund the acquisition of apartment communities.

	•	Amended and restated our $500 million unsecured revolving credit facility and extended the term an additional two years. The credit facility matures on May 31, 2008, and, at United Dominion’s option, can be extended for an additional year. United Dominion has the right to increase the credit facility to $750 million if the initial lenders increase their commitments or we receive commitments

from additional lenders. Based on United Dominion’s current credit ratings, the credit facility carries an interest rate equal to LIBOR plus a spread of 57.5 basis points, which represents a 12.5 basis point reduction to the previous unsecured revolver, and the facility fee was reduced from 20 basis points to 15 basis points. Under a competitive bid feature and for so long as United Dominion maintains an Investment Grade Rating, United Dominion has the right to bid out 100% of the commitment amount.

• Elected to convert a $75 million variable rate debt facility to a fixed rate of 4.86% in May 2005. The rate, currently at 3.77%, will float until December 1, 2005, and then convert to a 7-year fixed rate of 4.86%.

Credit Facilities

We have four secured revolving credit facilities with Fannie Mae with an aggregate commitment of $860 million. As of June 30, 2005, $656.3 million was outstanding under the Fannie Mae credit facilities leaving $203.7 million of unused capacity. The Fannie Mae credit facilities are for an initial term of ten years, bear interest at floating and fixed rates, and can be extended for an additional five years at our discretion. We have $288.9 million of the funded balance fixed at a weighted average interest rate of 6.4%. The remaining balance on these facilities is currently at a weighted average variable rate of 3.7%.

We have a $500 million unsecured revolving credit facility that matures in May 2008, and, at United Dominion’s option, can be extended an additional year. United Dominion has the right to increase the credit facility to $750 million if the initial lenders increase their commitments or we receive commitments from additional lenders. Based on our current credit ratings, the credit facility bears interest at a rate equal to LIBOR plus 57.5 basis points. As of June 30, 2005, $316 million was outstanding under the credit facility leaving $184 million of unused capacity.

The Fannie Mae credit facility and the bank revolving credit facility are subject to customary financial covenants and limitations.

Information concerning short-term bank borrowings under our credit facility is summarized in the table that follows (dollars in thousands) :


	Three Months Ended			Twelve Months Ended
	June 30, 2005			December 31, 2004

Total revolving credit facility	$	500,000		$	500,000
Borrowings outstanding at end of period		316,000			278,100
Weighted average daily borrowings during the period		301,670			127,665
Maximum daily borrowings during the period		413,500			356,500
Weighted average interest rate during the period		3.3	%		2.0	%
Weighted average interest rate at end of period		3.5	%		2.7	%

Funds from Operations

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, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We compute FFO for all periods presented in accordance with the recommendations set forth by the National Association of Real Estate Investment Trust’s (“NAREIT”) April 1, 2002 White Paper. 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 as a measure of our operating performance. FFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles, or GAAP, and is not necessarily indicative of cash available to fund cash needs.

Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered the

presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance and defines FFO as net income (computed in accordance with accounting principles generally accepted in the United States), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The use of FFO, combined with the required presentations, has been fundamentally beneficial, improving the understanding of operating results of REITs among the investing public and making comparisons of REIT operating results more meaningful. We generally consider FFO to be a useful measure for reviewing our comparative operating and financial performance (although FFO should be reviewed in conjunction with net income which remains the primary measure of performance) because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies. We believe that FFO is the best measure of economic profitability for real estate investment trusts.

The following table outlines our FFO calculation and reconciliation to generally accepted accounting principles for the three and six months ended June 30, (dollars and shares in thousands) :


		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2005			2004			2005			2004

Net income		$	52,441		$	28,511		$	67,383		$	43,823
Adjustments:
	Distributions to preferred stockholders		(3,842	)		(5,094	)		(7,685	)		(10,178	)
	Real estate depreciation and amortization		51,372			39,151			101,530			76,574
	Minority interests of unitholders in operating partnership		107			208			277			322
	Real estate depreciation related to unconsolidated entities		74			80			136			137
Discontinued Operations:
	Real estate depreciation		331			4,082			1,892			9,571
	Minority interests of unitholders in operating partnership		2,923			1,271			3,444			1,762
	Net gains on sales of depreciable property		(46,781	)		(13,814	)		(53,804	)		(15,019	)

Funds from operations — basic		$	56,625		$	54,395		$	113,173		$	106,992

	Distributions to preferred stockholders — Series D and E (Convertible)		931			2,183			1,863			4,356

Funds from operations — diluted		$	57,556		$	56,578		$	115,036		$	111,348

	Gains on the disposition of real estate developed for sale		1,865			—			2,324			—

FFO with gains on the disposition of real estate developed for sale — diluted		$	59,421		$	56,578		$	117,360		$	111,348

Weighted average number of common shares and OP Units outstanding — basic			144,657			135,830			144,621			135,740
Weighted average number of common shares, OP Units, and common stock equivalents outstanding — diluted			150,153			145,038			150,170			144,972

In the computation of diluted FFO, OP units, out-performance partnership shares, and the shares of Series D Cumulative Convertible Redeemable Preferred Stock and Series E Cumulative Convertible Preferred Stock are dilutive; therefore, they are included in the diluted share count. For the three and six

months ended June 30, 2004, distributions to preferred stockholders exclude $1.6 million and $3.1 million related to premiums on preferred stock conversions.

Gains from the disposition of real estate investments developed for sale is defined as net sales proceeds less a tax provision (such development by REITs must be conducted in a taxable REIT subsidiary) and the gross investment basis of the asset before accumulated depreciation. We consider FFO with gains/losses on real estate developed for sale 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.

The following is a reconciliation of GAAP gains from the disposition of real estate developed for sale to gross gains from the disposition of real estate developed for sale for the three and six months ended June 30, (dollars in thousands) :

Three Months

Six Months

Ended June 30,

2005

2004

2005

2004

GAAP gains on the disposition of real estate developed for sale

1,885

—

2,351

—

Less: accumulated depreciation

(20

)

—

(27

)

—

Gains on the disposition of real estate developed for sale

1,865

—

2,324

—

The following table is our reconciliation of FFO share information to weighted average common shares outstanding, basic and diluted, reflected on the Consolidated Statements of Operations for the three and six months ended June 30, (shares in thousands) :


		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2005			2004			2005			2004

Weighted average number of common shares and OP units outstanding — basic			144,657			135,830			144,621			135,740
Weighted average number of OP units outstanding			(8,507	)		(8,680	)		(8,513	)		(8,683	)

	Weighted average number of common shares outstanding — basic per the Consolidated Statements of Operations		136,150			127,150			136,108			127,057

Weighted average number of common shares, OP units, and common stock equivalents outstanding — diluted			150,153			145,038			150,170			144,972
Weighted average number of OP units outstanding			(8,507	)		(8,680	)		(8,513	)		(8,683	)
Weighted average number of Series A OPPSs outstanding			(1,791	)		(1,791	)		(1,791	)		(1,791	)
Weighted average number of Series D preferred shares outstanding			—			(3,077	)		—			(3,077	)
Weighted average number of Series E preferred shares outstanding			(2,804	)		(3,425	)		(2,804	)		(3,425	)

	Weighted average number of common shares outstanding — diluted per the Consolidated Statements of Operations		137,051			128,065			137,062			127,996

FFO also does not represent cash generated from operating activities in accordance with generally accepted accounting principles, and therefore should not be considered an alternative to net cash flows from operating activities, as determined by generally accepted accounting principles, as a measure of liquidity. Additionally, it is not necessarily indicative of cash availability to fund cash needs.

The following is a presentation of cash flow metrics based on generally accepted accounting principles for the three and six months ended June 30, (dollars in thousands ):


	Three Months Ended						Six Months Ended
	June 30,						June 30,

	2005			2004			2005			2004

Net cash provided by operating activities	$	60,332		$	68,506		$	110,702		$	106,761
Net cash provided by/(used in) investing activities		10,223			(41,898	)		(61,005	)		(116,735	)
Net cash (used in)/provided by financing activities		(66,049	)		(27,828	)		(51,434	)		5,903

Results of Operations

The following discussion includes the results of both continuing and discontinued operations for the periods presented.


	*Net Income Available to Common Stockholders*

Net income available to common stockholders was $48.6 million ($0.36 per diluted share) for the three months ended June 30, 2005, compared to $21.9 million ($0.17 per diluted share) for the same period in the prior year. The increase for the three months ended June 30, 2005 when compared to the same period in 2004, resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report:


	•	$33.0 million more in gains recognized from the sale of depreciable property,

	•	an $11.6 million increase in apartment community operating results,

	•	a $1.6 million decrease in premiums paid on preferred stock conversions, and

	•	$1.3 million less in preferred stock distributions.

These increases in income were partially offset by a $9.8 million increase in interest expense, an $8.5 million increase in real estate depreciation and amortization expense, a $1.6 million increase in minority interest expense, and a $1.0 million decrease in non-property income during the second quarter of 2005 when compared to the same period in 2004.

Net income available to common stockholders was $59.7 million ($0.44 per diluted share) for the six months ended June 30, 2005, compared to $30.5 million ($0.24 per diluted share) for the same period in the prior year. The increase for the six months ended June 30, 2005 when compared to the same period in 2004 resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report:


	•	$38.8 million more in gains recognized from the sale of depreciable property,

	•	a $22.3 million increase in apartment community operating results,

	•	an $11.6 million increase in non-property income,

	•	a $3.1 million decrease in premiums paid on preferred stock conversions, and

	•	$2.5 million less in preferred stock distributions.

These increases in income were partially offset by a $20.0 million increase in interest expense, a $17.3 million increase in real estate depreciation and amortization expense, an $8.5 million increase in losses on early debt retirement, and a $2.5 million increase in general and administrative expense during the first six months of 2005 when compared to the same period in 2004.


	Apartment Community Operations

Our net income is primarily generated from the operation of our apartment communities. The following table summarizes the operating performance of our total apartment portfolio for each of the periods presented, (dollars in thousands ):


	Three Months Ended June 30,								Six Months Ended June 30,

	2005			2004			% Change		2005			2004			% Change

Property rental income	$	175,257		$	159,578			9.8%	$	349,665		$	318,083			9.9%
Property operating expense*		(65,951	)		(61,830	)		6.7%		(133,178	)		(123,861	)		7.5%

Property operating income	$	109,306		$	97,748			11.8%	$	216,487		$	194,222			11.5%

Weighted average number of homes		77,163			75,106			2.7%		77,584			75,710			2.5%
Physical occupancy**		94.1	%		93.5	%		0.6%		94.1	%		93.2	%		0.9%


	*	Excludes depreciation, amortization, and property management expenses.


**	Based upon weighted average stabilized homes.

The following table is our reconciliation of property operating income to net income as reflected on the Consolidated Statements of Operations for the periods presented, (dollars in thousands) :


		Three Months Ended						Six Months Ended
		June 30,						June 30,

		2005			2004			2005			2004

Property operating income		$	109,306		$	97,748		$	216,487		$	194,222
Commercial operating income			923			107			1,582			215
Non-property income			39			1,062			12,971			1,406
Real estate depreciation and amortization			(52,384	)		(44,086	)		(104,774	)		(87,945	)
Interest			(39,079	)		(29,297	)		(78,227	)		(58,197	)
Loss on early debt retirement			(18	)		—			(8,482	)		(5	)
General and administrative and property management			(9,753	)		(9,017	)		(21,565	)		(18,132	)
Other operating expenses			(290	)		(291	)		(580	)		(561	)
Net gain on sale of depreciable property			46,781			13,814			53,804			15,019
Minority interests			(3,084	)		(1,529	)		(3,833	)		(2,199	)

	Net income per the Consolidated Statement of Operations	$	52,441		$	28,511		$	67,383		$	43,823


	*Same Communities*

Our same communities (those communities acquired, developed, and stabilized prior to March 31, 2004 and held on June 30, 2005, which consisted of 62,327 apartment homes) provided 75% of our property operating income for the six months ended June 30, 2005.

For the second quarter of 2005, same community property operating income increased 4.4% or $3.6 million compared to the same period in 2004. The increase in property operating income was primarily attributable to a 3.4% or $4.5 million increase in revenues from rental and other income that was offset by a 1.9% or $1.0 million increase in operating expenses. The increase in revenues from rental and other income was primarily driven by a 1.7% or $2.3 million increase in rental rates, a 28.4% or $1.1 million decrease in concession expense, a 9.6% or $0.8 million decrease in vacancy loss, a 4.7% or $0.4 million increase in utility reimbursement income and fee income, and a 21.6% or $0.2 million decrease in bad debt. Physical occupancy increased 0.5% to 94.4%.

The increase in property operating expenses was primarily driven by a 6.8% or $0.9 million increase in personnel costs, a 5.5% or $0.4 million increase in utilities expense, a 73.3% or $0.2 million increase in incentive compensation, and a 3.4% or $0.2 million increase in administrative and marketing costs, all of which were offset by a 14.6% or $0.4 million decrease in insurance costs and a 1.6% or $0.2 million decrease in real estate taxes.

As a result of the percentage changes in property rental income and property operating expenses, the operating margin (property operating income divided by property rental income) increased 0.6% to 62.5%.

For the six months ended June 30, 2005, same community property operating income increased 4.0% or $6.2 million compared to the same period in 2004. The increase in property operating income was primarily attributable to a 3.1% or $7.7 million increase in revenues from rental and other income that was offset by a 1.6% or $1.5 million increase in operating expenses. The increase in revenues from rental and other income was primarily driven by a 1.4% or $3.6 million increase in rental rates, a 10.7% or $1.8 million decrease in vacancy loss, a 17.5% or $1.3 million decrease in concession expense, a 27.7% or $0.3 million decrease in bad debt, and a 5.4% or $1.0 million increase in utility reimbursement income and fee income. Physical occupancy increased 0.8% to 94.4%.

The increase in property operating expenses was primarily driven by a 4.3% or $1.1 million increase in personnel costs, a 4.5% or $0.4 million increase in administrative and marketing costs, a 1.4% or $0.2 million increase in utilities expenses, all of which were offset by a 1.3% or $0.2 million decrease in repair and maintenance costs.

As a result of the percentage changes in property rental income and property operating expenses, the operating margin increased 0.6% to 62.1%.


	*Non-Mature Communities*

The remaining 25% of our property operating income during the first six months of 2005 was generated from communities that we classify as “non-mature communities” (primarily those communities acquired or developed in 2004 and 2005, sold properties, and those properties classified as real estate held for disposition). The 35 communities with 11,008 apartment homes that we acquired in the fourth quarter of 2003, and in 2004 and 2005 provided $39.1 million of property operating income. The 11 communities with 2,623 apartment homes and 38 condominiums sold during the first six months of 2005 provided $2.4 million of property operating income. In addition, our development communities, which included 178 apartment homes constructed since January 1, 2003, provided $0.6 million of property operating income during 2005, the 11 communities with 3,505 apartment homes classified as real estate held for disposition provided $6.4 million of property operating income, and other non-mature communities provided $6.3 million of property operating income for the six months ended June 30, 2005.

Real Estate Depreciation and Amortization

For the three and six months ended June 30, 2005, real estate depreciation and amortization on both continuing and discontinued operations increased 19.6% or $8.5 million and 20.1% or $17.3 million, respectively, compared to the same period in 2004, primarily due to the overall increase in the weighted average number of apartment homes and the significant increase in per home acquisition cost compared to the existing portfolio, and other capital expenditures.

Interest Expense

For the three months ended June 30, 2005, interest expense on both continuing and discontinued operations increased 33.4% or $9.8 million from the same period in 2004 primarily due to the issuance of debt. For the three months ended June 30, 2005, the weighted average amount of debt outstanding increased 28.6% or $0.6 billion compared to the same period in 2004 and the weighted average interest rate increased from 4.9% to 5.2% during 2005. The weighted average amount of debt outstanding during 2005 is higher than 2004 as acquisition costs in 2004 and in 2005 have been funded, in most part, by the

issuance of debt. The increase in the weighted average interest rate during 2005 reflects short-term bank borrowings that had higher interest rates when compared to the prior year.

For the six months ended June 30, 2005, interest expense on both continuing and discontinued operations increased 34.4% or $20.0 million from the same period in 2004 primarily due to the issuance of debt. For the six months ended June 30, 2005, the weighted average amount of debt outstanding increased 21.2% or $0.5 billion compared to the same period in 2004 and the weighted average interest rate increased from 5.0% to 5.2% during 2005. The weighted average amount of debt outstanding during 2005 is higher than 2004 as acquisition costs in 2004 and in 2005 have been funded, in most part, by the issuance of debt. The increase in the weighted average interest rate during 2005 reflects short-term bank borrowings that had higher interest rates when compared to the prior year.

General and Administrative

For the three months ended June 30, 2005, general and administrative expenses increased $0.3 million or 6.1% compared to the same period in 2004 primarily as a result of an increase in personnel costs. For the six months ended June 30, 2005, general and administrative expenses increased $2.5 million or 26.9% over the comparable period in 2004 primarily as a result of an increase in personnel and incentive compensation costs.

Gains on Sales of Land and Depreciable Property

For the three and six months ended June 30, 2005, we recognized gains for financial reporting purposes of $46.8 million and $53.8 million compared to $13.8 million and $15.0 million for the comparable period in 2004. Changes in the level of gains recognized from period to period reflect the changing level of our divestiture activity from period to period, as well as the extent of gains related to specific properties sold.

Inflation

We believe that the direct effects of inflation on our operations have been immaterial. Substantially all of our leases are for a term of one year or less which generally minimizes our risk from the adverse effects of inflation.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material.

Factors Affecting Our Business and Prospects

There are many factors that affect our business and the results of our operations, some of which are beyond our control. These factors include:


	•	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,

	•	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,

	•	the imposition of federal taxes if we fail to qualify as a REIT in any taxable year, and

	•	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.

For a discussion of these and other factors affecting our business and prospects, see “Item 1. — Business — Factors Affecting Our Business and Prospects” in our Annual Report on Form 10-K for the year ended December 31, 2004.


Item 3.	*Quantitative and Qualitative Disclosures About Market Risk*

United Dominion is exposed to interest rate changes associated with our unsecured credit facility and other variable rate debt as well as refinancing risk on our fixed rate debt. United Dominion’s involvement with derivative financial instruments is limited and we do not expect to use them for trading or other speculative purposes. In prior periods, United Dominion had used derivative instruments solely to manage its exposure to interest rates.

See our Annual Report on Form 10-K for the year ended December 31, 2004 “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for a more complete discussion of our interest rate sensitive assets and liabilities. As of June 30, 2005, our market risk has not changed materially from the amounts reported on our Annual Report on Form 10-K for the year ended December 31, 2004.


Item 4.	*Controls and Procedures*

As of June 30, 2005, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Our disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports. In addition, our Chief Executive Officer and our Chief Financial Officer concluded that during the quarter ended June 30, 2005, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our internal control over financial reporting is designed with the objective of providing reasonable assurance regarding the reliability of our financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective under circumstances where our disclosure controls and procedures should reasonably be expected to operate effectively.

PART II — OTHER INFORMATION


Item 2.	*Unregistered Sales of Equity Securities and Use of Proceeds*

On June 3, 1999, our Board of Directors authorized the repurchase in open market transactions, in block transactions, or otherwise, of up to 5.5 million shares of our common stock. On December 5, 2000, our Board of Directors authorized the purchase of up to an additional 5.5 million shares of our common stock in open market transactions, in block purchases or otherwise. As of June 30, 2005, we have repurchased a total of 8,749,763 shares of our common stock under this program. As disclosed in the table below, we did not purchase any shares of our common stock during the quarter ended June 30, 2005.

Total Number

Maximum

of Shares

Number of

Purchased as

Shares that

Part of Publicly

May Yet Be

Total Number

Average

Announced

Purchased

of Shares

Price Per

Plans or

Under the Plans

Period

Purchased

Share

Programs

or Programs

April 1, 2005 through April 30, 2005

N/A

2,250,237

May 1, 2005 through May 31, 2005

N/A

2,250,237

June 1, 2005 through June 30, 2005

N/A

2,250,237

Total

N/A

2,250,237


Item 4.	*Submission of Matters to a Vote of Security Holders*

On May 3, 2005, United Dominion held its Annual Meeting of Stockholders. At the meeting, our stockholders voted on the election of directors, a proposal to ratify the selection of Ernst & Young LLP to serve as our independent auditors for the year ending December 31, 2005, a proposal to approve the Series C Out-Performance Program and an amendment to the Series A Out-Performance Program, and a proposal to authorize the creation and issuance of a new series of preferred stock.

The following persons were elected directors of United Dominion, to serve as such for the term indicated and until the respective successors are duly elected and qualified or until their earlier resignation or removal, by the indicated vote:


Name	Votes For		Votes Withheld

Eric J. Foss		121,960,020		1,774,051
Robert P. Freeman		122,531,080		1,202,990
Jon A. Grove		118,412,433		5,321,638
James D. Klingbeil		118,385,259		5,348,811
Robert C. Larson		122,274,261		1,459,810
Thomas R. Oliver		119,251,324		4,482,747
Lynne B. Sagalyn		122,291,923		1,442,148
Mark J. Sandler		122,121,563		1,612,507
Robert W. Scharar		122,530,405		1,203,666
Thomas W. Toomey		122,531,937		1,202,134

The stockholders approved the proposal to ratify the appointment of Ernst & Young LLP to serve as independent auditors for the year ending December 31, 2005, by the indicated vote:


Votes For		Votes Against		Votes Abstained

	121,669,004		1,868,659		196,407

The stockholders approved the proposal to approve the New Out-Performance Program, including the Series C Out-Performance Program, and an amendment to the Series A Out-Performance Program to

allow the participants to transfer interests to United Dominion or in exchange for interests in subsequent out-performance programs, by the indicated vote:


Votes For		Votes Against		Votes Abstained		Broker Non-Votes

	53,993,465		43,281,265		1,016,461		25,442,880

The stockholders approved the proposal to authorize the creation and the issuance of a new Series F Preferred Stock to give voting rights to the holders of OP Units, by the indicated vote:


Votes For		Votes Against		Votes Abstained		Broker Non-Votes

	52,374,192		44,913,467		1,003,532		25,442,880


Item 6.	*Exhibits*

The exhibits filed or furnished with this Report are set forth in the Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


	United Dominion Realty Trust, Inc.

	(registrant)

	/s/ Christopher D. Genry

	Christopher D. Genry
	Executive Vice President and Chief Financial Officer

Date: August 9, 2005


	/s/ Scott A. Shanaberger

	Scott A. Shanaberger
	Senior Vice President and Chief Accounting Officer

Date: August 9, 2005

EXHIBIT INDEX


Exhibit
Number			Description

	2	.01	Articles of Merger between the Company and United Dominion Realty Trust, Inc., a Virginia corporation, filed with the State Department of Assessments and Taxation of the State of Maryland (incorporated by reference to Exhibit 2.01 to the Company’s Current Report on Form 8-K dated and filed with the Commission on June 11, 2003, Commission File No. 1-10524).
	2	.02	Certificate of Correction to Articles of Merger between the Company and United Dominion Realty Trust, Inc., a Virginia corporation, filed with the State Department of Assessments and Taxation of the State of Maryland on March 21, 2005 (incorporated by reference to Exhibit 2.02 to the Company’s Current Report on Form 8-K dated March 17, 2005 and filed with the Commission on March 22, 2005, Commission File No. 1-10524).
	2	.03	Certificate of Correction to Articles of Merger between the Company and United Dominion Realty Trust, Inc., a Virginia corporation, filed with the State Department of Assessments and Taxation of the State of Maryland on July 27, 2005 (incorporated by reference to Exhibit 2.03 to the Company’s Current Report on Form 8-K dated July 27, 2005 and filed with the Commission on August 1, 2005, Commission File No. 1-10524).
	3	.01	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit A to Exhibit 2.01 to the Company’s Current Report on Form 8-K dated and filed with the Commission on June 11, 2003, Commission File No. 1-10524).
	3	.02	Articles Supplementary filed with the State Department of Assessments and Taxation of the State of Maryland on March 21, 2005 (incorporated by reference to Exhibit 3.02 to the Company’s Current Report on Form 8-K dated March 17, 2005 and filed with the Commission on March 22, 2005, Commission File No. 1-10524).
	3	.03	Articles of Amendment to the Amended and Restated Articles of Incorporation filed with the State Department of Assessments and Taxation of the State of Maryland on March 21, 2005 (incorporated by reference to Exhibit 3.03 to the Company’s Current Report on Form 8-K dated March 17, 2005 and filed with the Commission on March 22, 2005, Commission File No. 1-10524).
	3	.04	Certificate of Correction to Articles of Merger between the Company and United Dominion Realty Trust, Inc., a Virginia corporation, filed with the State Department of Assessments and Taxation of the State of Maryland on March 21, 2005 (see Exhibit 2.02).
	3	.05	Articles Supplementary filed with the State Department of Assessments and Taxation of the State of Maryland on May 4, 2005 (incorporated by reference to Exhibit 3.05 to the Company’s Current Report on Form 8-K dated May 3, 2005 and filed with the Commission on May 9, 2005, Commission File No. 1-10524).
	3	.06	Certificate of Correction to Articles of Merger between the Company and United Dominion Realty Trust, Inc., a Virginia corporation, filed with the State Department of Assessments and Taxation of the State of Maryland on July 27, 2005 (incorporated by reference to Exhibit 2.03 to the Company’s Current Report on Form 8-K dated July 27, 2005 and filed with the Commission on August 1, 2005, Commission File No. 1-10524).
	3	.07	Articles of Amendment filed with the State Department of Assessments and Taxation of the State of Maryland on July 27, 2005 (incorporated by reference to Exhibit 3.07 to the Company’s Current Report on Form 8-K dated July 27, 2005 and filed with the Commission on August 1, 2005, Commission File No. 1-10524).
	3	.08	Articles Supplementary filed with the State Department of Assessments and Taxation of the State of Maryland on July 28, 2005 (incorporated by reference to Exhibit 3.08 to the Company’s Current Report on Form 8-K dated July 27, 2005 and filed with the Commission on August 1, 2005, Commission File No. 1-10524).
	3	.09	Articles of Restatement filed with the State Department of Assessments and Taxation of the State of Maryland on July 29, 2005 (incorporated by reference to Exhibit 3.09 to the Company’s Current Report on Form 8-K dated July 27, 2005 and filed with the Commission on August 1, 2005, Commission File No. 1-10524).
	4	.01	Medium-Term Note due January 2015, issued May 3, 2005 (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, Commission File No. 1-10524)


Exhibit
Number			Description

	10	.01	Description of the Company’s New Out-Performance Program (incorporated by reference to Exhibit 10.01 to the Company’s Current Report on Form 8-K dated May 3, 2005 and filed with the Commission on May 9, 2005, Commission File No. 1-10524).
	10	.02	Description of the Series C Out-Performance Program (incorporated by reference to Exhibit 10.02 to the Company’s Current Report on Form 8-K dated May 3, 2005 and filed with the Commission on May 9, 2005, Commission File No. 1-10524).
	10	.03	Description of the Amendment to the Series A Out-Performance Program (incorporated by reference to Exhibit 10.03 to the Company’s Current Report on Form 8-K dated May 3, 2005 and filed with the Commission on May 9, 2005, Commission File No. 1-10524).
	10	.04	Description of the Series A Out-Performance Program (incorporated by reference to Exhibit 10(xviii) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, Commission File No. 1-10524).
	10	.05	Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of February 23, 2004 (incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003).
	10	.06	First Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of June 24, 2005.
	10	.07	Participation in the Series C Out-Performance Program.
	10	.08	Amended and Restated Credit Agreement dated as of May 25, 2005, by and among United Dominion Realty Trust, Inc., as Borrower, 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, 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 a signatory thereto and their assignees, as Lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated May 25, 2005 and filed with the Commission on May 27, 2005, Commission File No. 1-10524).
	12		Computation of Ratio of Earnings to Fixed Charges.
	31	.1	Rule 13a-14(a) Certification of the Chief Executive Officer.
	31	.2	Rule 13a-14(a) Certification of the Chief Financial Officer.
	32	.1	Section 1350 Certification of the Chief Executive Officer.
	32	.2	Section 1350 Certification of the Chief Financial Officer.

EXHIBIT 10.06

FIRST AMENDMENT TO THE
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF UNITED DOMINION REALTY, L.P.

This First Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P., dated as of June 24, 2005 (this “Amendment”), is being executed by United Dominion Realty Trust, Inc., a Maryland corporation (the “Company”), as the general partner of United Dominion Realty, L.P., a Delaware limited partnership (the “Partnership”), pursuant to the authority conferred upon the Company by Section 11.01 of the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P., dated as of February 23, 2004, as amended and/or supplemented from time to time (the “Agreement”). Capitalized terms used, but not otherwise defined herein, shall have the respective meanings ascribed thereto in the Agreement.

WHEREAS, pursuant to Section 4.02(a) of the Agreement, the Company is authorized to determine the designations, preferences and relative, participating, optional or other special rights, powers and duties of Partnership Units.

NOW, THEREFORE, in consideration of the foregoing, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

(1) The Agreement is hereby amended by the addition of a new exhibit, titled “Exhibit E,” in the form attached hereto, which shall be attached and made a part of the Agreement.

(2) Except as specifically amended hereby, the terms, covenants, provisions and conditions of the Agreement shall remain unmodified and continue in full force and effect and, except as amended hereby, all of the terms, covenants, provisions and conditions of the Agreement are hereby ratified and confirmed in all respects.

IN WITNESS WHEREOF, this Amendment has been executed as of the date first written above.


	UNITED DOMINION REALTY TRUST, INC.
	By:	/s/ Mary Ellen Norwood
		Mary Ellen Norwood
		Vice President - Legal Administration

EXHIBIT E

PARTNERSHIP UNIT DESIGNATION
OF THE
CLASS III OUT-PERFORMANCE PARTNERSHIP SHARES
OF UNITED DOMINION REALTY, L.P.

1. NUMBER OF UNITS AND DESIGNATION.

A class of Partnership Units is hereby designated as “Class III Out-Performance Partnership Shares,” and the number of Partnership Units initially constituting such class shall be seven hundred fifty thousand (750,000).

2. DEFINITIONS.

For purposes of this Partnership Unit Designation, the following terms shall have the meanings indicated in this Section 2. Capitalized terms used and not otherwise defined herein shall have the meanings assigned thereto in the Agreement.

“Change of Control” shall mean the occurrence of any of the following events:

(i) an acquisition of any voting securities of the Company (the “Voting Securities”) by any “person” (as the term “person” is used for purposes of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) immediately after which such person has “beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership,” “Beneficial Owner” or “Beneficially Owned,” as the specific context requires) of 30% or more of the combined voting power of the Company’s then-outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities that are acquired in a Non-Control Acquisition (as hereinafter defined) shall not constitute an acquisition that would cause a Change in Control. “Non-Control Acquisition” shall mean an acquisition by (A) an employee benefit plan (or a trust forming a part thereof) maintained by (1) the Company or (2) any corporation, partnership or other person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company or in which the Company serves as a general partner or manager (a “Subsidiary”), (B) the Company or any Subsidiary, or (C) any person in connection with a Non-Control Transaction (as hereinafter defined);

(ii) the individuals who constitute the Board of Directors of the Company as of June 24, 2005 (the “Incumbent Board”) cease for any reason to constitute at least two-thirds (2/3) of the members of the Board of Directors of the Company; provided, however, that if the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least two-thirds (2/3) of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board; provided, further, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or

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threatened “election contest” (as described in Rule 14a-11 promulgated under the Exchange Act) (an “Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors of the Company (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

(iii) approval by stockholders of the Company of: (A) a merger, consolidation, share exchange or reorganization involving the Company, unless (1) the stockholders of the Company immediately before such merger, consolidation, share exchange or reorganization, own, directly or indirectly immediately following such merger, consolidation, share exchange or reorganization, at least 60% of the combined voting power of the outstanding voting securities of the corporation that is the successor in such merger, consolidation, share exchange or reorganization (the “Surviving Company”) in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation, share exchange or reorganization, (2) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation, share exchange or reorganization constitute at least two-thirds (2/3) of the members of the board of directors of the Surviving Company, and (3) no persons (other than the Company or any Subsidiary of the Company, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Company or any Subsidiary of the Company), or any person who, immediately prior to such merger, consolidation, share exchange or reorganization had Beneficial Ownership of 30% or more of the then-outstanding Voting Securities has Beneficial Ownership of 30% or more of the combined voting power of the Surviving Company’s then-outstanding voting securities (a transaction described in clauses (1) through (3) is referred to herein as a “Non-Control Transaction”); (B) a complete liquidation or dissolution of the Company; or (C) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any person (other than a transfer to a Subsidiary of the Company).

Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any person (a “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company that, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by such Subject Person, provided that if a Change of Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, such Subject Person becomes the Beneficial Owner of any additional Voting Securities that increases the percentage of the then-outstanding Voting Securities Beneficially Owned by such Subject Person, then a Change of Control shall occur.

“Class III Out-Performance Partnership Share” shall mean a Partnership Unit with the designations, preferences and relative, participating, optional or other special rights, powers and duties as are set forth in this Exhibit E .

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“Class III Out-Performance Valuation Date” shall mean the earlier to occur of (i) May 30, 2008, or (ii) the date on which a Change of Control occurs.

“Conversion Factor” shall mean the quotient obtained by dividing (i) the product of 2% of the Excess Return and the UDR Market Capitalization (provided, however, that the product obtained by this clause (i) shall not exceed 1% of the UDR Market Capitalization) by (ii) the market value of one REIT Share on the Class III Out-Performance Valuation Date, computed as the weighted average price per day of the REIT Shares for the 20 trading days immediately preceding the Class III Out-Performance Valuation Date.

“Determination Date” shall mean (i) when used with respect to any dividend or other distribution, the date fixed for the determination of the holders of the securities entitled to receive such dividend or distribution, or, if a dividend or distribution is paid or made without fixing such a date, the date of such dividend or distribution, and (ii) when used with respect to any split, subdivision, reverse stock split, combination or reclassification of securities, the date upon which such split, subdivision, reverse stock split, combination or reclassification becomes effective.

“Excess Return” shall mean the amount, if any, by which the cumulative Total Return of REIT Shares over the Measurement Period exceeds the Minimum Return.

“Ex-Date” shall mean (i) when used with respect to any dividend or distribution, the first date on which the securities on which the dividend or distribution is payable trade regular way on the relevant exchange or in the relevant market without the right to receive such dividend or distribution, and (ii) when used with respect to any split, subdivision, reverse stock split, combination or reclassification of securities, the first date on which the securities trade regular way on such exchange or in such market to reflect such split, subdivision, reverse stock split, combination or reclassification becoming effective.

“Extraordinary Distribution” shall mean the distribution by the Company, by dividend or otherwise, to all holders of its REIT Shares of evidences of its indebtedness or assets (including securities) other than cash.

“Family Controlled Entity” means, as to any holder of Class III Out-Performance Shares, (a) any corporation more than 50% of the outstanding voting stock of which is owned by such holder and such holder’s Family Members, (b) any trust, whether or not revocable, of which such holder and such holder’s Family Members are the sole beneficiaries, (c) any partnership of which such holder and such holder’s Family Members hold partnership interests representing at least 25% of such partnership’s capital and profits and (d) any limited liability company of which such holder is the manager and in which such holder and such holder’s Family Members hold membership interests representing at least 25% of such limited liability company’s capital and profits.

“Family Members” means, as to a Person that is an individual, such Person’s spouse, ancestors, descendants (whether by blood or by adoption), brothers, sisters and

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inter vivos or testamentary trusts of which only such Person and his spouse, ancestors, descendants (whether by blood or by adoption), brothers and sisters are beneficiaries.

“Initial Holder” shall mean UDR Out-Performance III, LLC, a Delaware limited liability company.

“Measurement Period” shall mean the 36-month period beginning June 1, 2005 and ending on May 30, 2008.

“Minimum Return” shall mean the cumulative Total Return of the REIT Shares during the Measurement Period is at least the equivalent of a 36% Total Return or 12% annualized.

“Partnership” shall mean United Dominion Realty, L.P., a Delaware limited partnership.

“Total Return” shall mean, for any security and for any period, the cumulative total return for such security over such period, assuming that all cash dividends are reinvested in such security as of the payment date for such dividend based on the security price on the dividend payment date, computed by taking the market value of the accumulated shares at the end of the period (including fractional shares acquired with dividend proceeds) and dividing by the market value of a share at the beginning of the period.

“UDR Market Capitalization” shall mean the average number of REIT Shares outstanding over the Measurement Period (including, for this purpose, REIT Shares, Partnership Units and common stock equivalents, but not including Class III Out-Performance Partnership Shares) multiplied by the daily closing price of the REIT Shares.

“UDR Total Return” shall mean the Total Return of the REIT Shares for the Measurement Period.

3. FORFEITURE.

If, on the Class III Out-Performance Valuation Date, there is no Excess Return, then, from and after such date, each Class III Out-Performance Partnership Share shall, without any action on the part of the Partnership, the Company or the holder thereof, be automatically forfeited and be no longer outstanding.

4. DISTRIBUTIONS.

Subject to Section 5.06 of the Agreement, on and after the Class III Out-Performance Valuation Date, the holders of Class III Out-Performance Partnership Shares not forfeited under Section 3 shall be entitled to receive distributions at the same time and in the same amount that would be received on the number of Partnership Units held by Outside Partners (assuming such Partnership Units were originally issued on the

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Class III Out-Performance Valuation Date) that is obtained by multiplying the number of Class III Out-Performance Partnership Shares by the Conversion Factor.

5. ALLOCATIONS.

(a) From and after the Class III Out-Performance Valuation Date, Profits and Losses shall be allocated to each of the holders of Class III Out-Performance Partnership Shares not forfeited under Section 3 at the same time and in the same amount that would be allocated on the number of Partnership Units held by Outside Partners (assuming such Partnership Units were originally issued on the Class III Out-Performance Valuation Date) that is obtained by multiplying the number of Class III Out-Performance Partnership Shares by the Conversion Factor.

(b) In the event that the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Partnership pursuant to Article II of the Agreement, then, notwithstanding Section 5.06 of the Agreement, each holder of Class III Out-Performance Partnership Shares not forfeited under Section 3 shall be, to the extent possible, specially allocated items of Partnership income and gain in an amount sufficient to cause the Capital Account of such holder to be equal to that of an Outside Partner that holds Partnership Units equal to the number of Class III Out-Performance Partnership Shares held by such holder multiplied by the Conversion Factor. Amounts allocated pursuant to this Section 5(b) shall be excluded from “Profits” and “Losses” otherwise determined under the Agreement.

6. EXCHANGE.

If the Class III Out-Performance Partnership Shares have not been forfeited under Section 3 and the Class III Out-Performance Partnership Shares have been transferred by the Initial Holder in accordance with Section 8, the transferee and subsequent transferees of the Class III Out-Performance Partnership Shares may exchange from time to time some or all of the Class III Out-Performance Partnership Shares for a number Partnership Units equal to the Class III Out-Performance Partnership Shares multiplied by the Conversion Factor.

7. REDEMPTION UPON CHANGE OF CONTROL.

Upon the occurrence of a Change of Control, and subject to the applicable requirements of Federal securities laws and any securities exchange or quotation system rules or regulations, each holder of Class III Out-Performance Partnership Shares shall have the redemption rights of Limited Partners set forth in Section 8.05 of the Agreement with respect to a number of Partnership Units equal to the number of Class III Out-Performance Partnership Shares multiplied by the Conversion Factor and the thirty-six (36) month transfer limitation period applicable to the Class III Out-Performance Partnership Shares shall be deemed to have passed.

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8. RESTRICTIONS ON OWNERSHIP AND TRANSFER.

The restrictions on Transfer set forth in Article IX of the Agreement shall not apply to Transfers of Class III Out-Performance Partnership Shares. Prior to the Class III Out-Performance Valuation Date, the Class III Out-Performance Partnership Shares shall be owned and held solely by the Initial Holder. On or after the later of the Class III Out-Performance Valuation Date and the thirty-six (36) month period from the date the Class III Out-Performance Partnership Shares are issued the Class III Out-Performance Partnership Shares may be Transferred (i) by the Initial Holder to (a) any Person who is a member (a “Member”) of the Initial Holder immediately prior to such transfer, (b) a Family Member of a Member, (c) a Family Controlled Entity of a Member, (d) any Person with respect to whom the Member constitutes a Family Controlled Entity, (e) upon the death of a Member, by will or by the laws of descent and distribution to any Family Member or Family Controlled Entity, and (ii) by any other Person to (a) a Family Member of a such Person, (b) a Family Controlled Entity of such Person, (c) any other Person with respect to whom such Person constitutes a Family Controlled Entity, (d) upon the death of such Person, by will or by the laws of descent and distribution to any Family Member or Family Controlled Entity; provided, however, that, until May 30, 2008, the Class III Out-Performance Partnership Shares may not be Transferred by the Initial Holder without the approval of the managers of the Initial Holder.

9. ADJUSTMENTS.

(a) In the event of any Extraordinary Distribution occurring on or after May 3, 2005, for purposes of determining the Value of a REIT Share or the UDR Total Return, each price of a REIT Share determined as of a date on or after the Ex-Date for such Extraordinary Distribution shall be adjusted by multiplying such price by a fraction (i) the numerator of which shall be the price of a REIT Share on the date immediately prior to such Ex-Date, and (ii) the denominator of which shall be (A) the price of a REIT Share on the date immediately prior to such Ex-Date, minus (B) the fair market value on the date fixed for such determination of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share (as determined by the Company, whose determination shall be conclusive); provided further, that such amount shall be so adjusted for each such Extraordinary Distribution occurring on or after May 3, 2005.

(b) In the event that, on or after May 3, 2005, the Company (i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares in REIT Shares, (ii) splits or subdivides its outstanding REIT Shares, (iii) effects a reverse stock split or otherwise combines its outstanding REIT Shares into a smaller number of REIT Shares, or (iv) otherwise reclassifies its outstanding REIT Shares, then, for purposes of determining the Value of a REIT Share or the UDR Total Return, each price of a REIT Share determined as of a date on or after the Ex-Date for such transaction shall be adjusted by multiplying such price by a fraction (x) the numerator of which shall be the number of REIT Shares issued and outstanding on the Determination Date for such dividend, distribution, split, subdivision, reverse stock split, combination or reclassification (assuming for such purposes that such dividend, distribution, split, subdivision, reverse

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split or combination has occurred as of such time) and (y) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the Determination Date for such dividend, distribution, split, subdivision, reverse stock split, combination or reclassification.

(c) The Company shall have authority to appropriately adjust the UDR Market Capitalization, the UDR Total Return or the Value of a REIT Share if any other transaction or circumstance occurs or arises that without such adjustment would have an inequitable result.

10. GENERAL.

The ownership of Class III Out-Performance Partnership Shares may (but need not, in the sole and absolute discretion of the Company) be evidenced by one or more certificates. The Company shall amend Exhibit A to the Agreement from time to time to the extent necessary to reflect accurately the issuance of, and subsequent conversion, redemption, or any other event having an effect on the ownership of Class III Out-Performance Partnership Shares.

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EXHIBIT 10.07

Participation in the Series C
Out-Performance Program

Set forth below is information relating to the participation in the Series C Out-Performance Program by certain officers of United Dominion Realty Trust, Inc., including information relating to their membership interests in UDR Out-Performance III, LLC.

UDR OUT-PERFORMANCE III, LLC

MEMBERS, CAPITAL CONTRIBUTIONS AND MEMBERSHIP INTERESTS


			Capital
	Capital		Contributions ¹
	Contributions		(Other		Membership		Percentage
Members	(Cash)		Consideration)		Units		Interests

Thomas W. Toomey	$	100,000	$	125,000		225,000		30	%
W. Mark Wallis			$	75,000		75,000		10	%
Christopher D. Genry			$	45,000		45,000		6	%
Martha R. Carlin			$	45,000		45,000		6	%
Richard A. Giannotti			$	75,000		75,000		10	%
Michael J. Kelly	$	37,500				37,500		5	%
Mark E. Wood			$	37,500		37,500		5	%
Matthew T. Akin	$	37,500				37,500		5	%
Thomas A. Spangler			$	60,000		60,000		8	%
Moises V. Vela, Jr.	$	37,500				37,500		5	%
Patrick S. Gregory			$	37,500		37,500		5	%
Sara Jo Light	$	37,500				37,500		5	%


¹		Interests in UDR Out-Performance I, LLC, a Virginia limited liability company (valued at $18.7495 per limited liability company interest), common stock of United Dominion Realty Trust, Inc. or other consideration.

EXHIBIT 12

Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends

(Dollars in thousands)


			Three months ended						Six months ended
			June 30,						June 30,

			2005			2004			2005			2004

Income before discontinued operations, net of minority interests			$	5,400		$	9,824		$	11,963		$	17,927
Add:
	Portion of rents representative of the interest factor			164			157			329			312
	Minority interests			161			258			389			437
	Loss on early debt retirement			18			—			6,785			5
	Interest on indebtedness from continuing operations			39,079			29,084			78,012			57,770

		Earnings	$	44,822		$	39,323		$	97,478		$	76,451

Fixed charges and preferred stock dividend:
	Interest on indebtedness from continuing operations		$	39,079		$	29,084		$	78,012		$	57,770
	Capitalized interest			338			208			635			480
	Portion of rents representative of the interest factor			164			157			329			312

		Fixed charges		39,581			29,449			78,976			58,562

Add:
	Preferred stock dividend			3,842			5,094			7,685			10,178
	Accretion of preferred stock			—			1,562			—			3,125

		Preferred stock dividend		3,842			6,656			7,685			13,303

		Combined fixed charges and preferred stock dividend	$	43,423		$	36,105		$	86,661		$	71,865

Ratio of earnings to fixed charges				1.13	x		1.34	x		1.23	x		1.31	x
Ratio of earnings to combined fixed charges and preferred stock dividend				1.03	x		1.09	x		1.12	x		1.06	x

EXHIBIT 31.1

CERTIFICATION

I, Thomas W. Toomey, Chief Executive Officer and President of United Dominion Realty Trust, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Dominion Realty Trust, 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 registrant’s 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; and

(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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.



Date: August 9, 2005	/s/ Thomas W. Toomey
	Thomas W. Toomey
	Chief Executive Officer and President

EXHIBIT 31.2

CERTIFICATION

I, Christopher D. Genry, Executive Vice President and Chief Financial Officer of United Dominion Realty Trust, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Dominion Realty Trust, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: August 9, 2005	/s/ Christopher D. Genry
	Christopher D. Genry
	Executive Vice President and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION

In connection with the periodic report of United Dominion Realty Trust, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2005, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas W. Toomey, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.



Date: August 9, 2005	/s/ Thomas W. Toomey
	Thomas W. Toomey
	Chief Executive Officer and President

EXHIBIT 32.2

CERTIFICATION

In connection with the periodic report of United Dominion Realty Trust, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2005, as filed with the Securities and Exchange Commission (the “Report”), I, Christopher D. Genry, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.



Date: August 9, 2005	/s/ Christopher D. Genry
	Christopher D. Genry
	Executive Vice President and Chief Financial Officer

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		from additional lenders. Based on United Dominion’s current credit ratings, the credit facility carries an interest rate equal to LIBOR plus a spread of 57.5 basis points, which represents a 12.5 basis point reduction to the previous unsecured revolver, and the facility fee was reduced from 20 basis points to 15 basis points. Under a competitive bid feature and for so long as United Dominion maintains an Investment Grade Rating, United Dominion has the right to bid out 100% of the commitment amount.

	•	Elected to convert a $75 million variable rate debt facility to a fixed rate of 4.86% in May 2005. The rate, currently at 3.77%, will float until December 1, 2005, and then convert to a 7-year fixed rate of 4.86%.