10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10‑Q

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

For the quarterly period ended March 31, 2019

OR

☐ 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 (UDR, Inc.)

333‑156002‑01 (United Dominion Realty, L.P.)

UDR, Inc.

United Dominion Realty, L.P.

(Exact name of registrant as specified in its charter)

Maryland (UDR, Inc.)	54‑0857512
Delaware (United Dominion Realty, L.P.)	54‑1776887
(State or other jurisdiction of	(I.R.S. Employer
incorporation of organization)	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.

UDR, Inc.	Yes ☒ No ☐
United Dominion Realty, L.P.	Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

UDR, Inc.	Yes ☒ No ☐
United Dominion Realty, L.P.	Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

☒
UDR, Inc.:
Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

☒
United Dominion Realty, L.P.:
Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

UDR, Inc.	☐
United Dominion Realty, L.P.	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).

UDR, Inc.	Yes ☐ No ☒
United Dominion Realty, L.P.	Yes ☐ No ☒

The number of shares of UDR, Inc.’s common stock, $0.01 par value, outstanding as of April 29, 2019 was 281,794,814.

UDR, INC.

UNITED DOMINION REALTY, L.P.

INDEX

	PAGE
PART I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
UDR, INC.:
Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018 (audited)	5
Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 (unaudited)	6
Consolidated Statements of Comprehensive Income/(Loss) for the three months ended March 31, 2019 and 2018 (unaudited)	7
Consolidated Statements of Changes in Equity for the three months ended March 31, 2019 and 2018 (unaudited)	8
Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)	9
Notes to Consolidated Financial Statements (unaudited)	10
UNITED DOMINION REALTY, L.P.:
Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018 (audited)	40
Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 (unaudited)	41
Consolidated Statements of Changes in Capital for the three months ended March 31, 2019 and 2018 (unaudited)	42
Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)	43
Notes to Consolidated Financial Statements (unaudited)	44
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	62
Item 3. Quantitative and Qualitative Disclosures About Market Risk	81
Item 4. Controls and Procedures	81
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	83
Item 1A. Risk Factors	83
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	97

Item 3. Defaults Upon Senior Securities	98
Item 4. Mine Safety Disclosures	98
Item 5. Other Information	98
Item 6. Exhibits	99
Signatures	101
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 31.4
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
Exhibit 32.4

EXPLANATORY NOTE

This Report combines the quarterly reports on Form 10‑Q for the quarter ended March 31, 2019 of UDR, Inc., a Maryland corporation, and United Dominion Realty, L.P., a Delaware limited partnership, of which UDR, Inc. is the parent company and sole general partner. Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” the “Company,” “UDR” or “UDR, Inc.” refer collectively to UDR, Inc., together with its consolidated subsidiaries and joint ventures, including United Dominion Realty, L.P. and UDR Lighthouse DownREIT L.P. (the “DownREIT Partnership”), also a Delaware limited partnership of which UDR is the sole general partner. Unless the context otherwise requires, the references in this Report to the “Operating Partnership” or the “OP” refer to United Dominion Realty, L.P., together with its consolidated subsidiaries. “Common stock” refers to the common stock of UDR and “stockholders” means the holders of shares of UDR’s common stock and preferred stock. The limited partnership interests of the Operating Partnership and the DownREIT Partnership are referred to as “OP Units” and “DownREIT Units,” respectively, and the holders of the OP Units and DownREIT Units are referred to as “unitholders.” This combined Form 10‑Q is being filed separately by UDR and the Operating Partnership.

There are a number of differences between the Company and the Operating Partnership, which are reflected in our disclosures in this Report. UDR is a real estate investment trust (“REIT”), whose most significant asset is its ownership interest in the Operating Partnership. UDR also conducts business through other subsidiaries, including its taxable REIT subsidiary (“TRS”). UDR acts as the sole general partner of the Operating Partnership, holds interests in subsidiaries and joint ventures, owns and operates properties, issues securities from time to time and guarantees debt of certain of our subsidiaries. The Operating Partnership conducts the operations of a substantial portion of the business and is structured as a partnership with no publicly traded equity securities. The Operating Partnership has guaranteed certain outstanding debt of UDR.

As of March 31, 2019, UDR owned 110,883 units (100%) of the general partnership interests of the Operating Partnership and 175,946,364 OP Units, representing approximately 95.6% of the total outstanding OP Units in the Operating Partnership. UDR conducts a substantial amount of its business and holds a substantial amount of its assets through the Operating Partnership, and, by virtue of its ownership of the OP Units and UDR’s role as the Operating Partnership’s sole general partner, UDR has the ability to control all of the day-to-day operations of the Operating Partnership. Separate financial statements and accompanying notes, as well as separate discussions under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are presented in this report for each of UDR and the Operating Partnership.

UDR, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	March 31,		December 31,
	2019		2018
	(unaudited)		(audited)
ASSETS
Real estate owned:
Real estate held for investment	$	10,680,555	$	10,196,159
Less: accumulated depreciation		(3,764,099)		(3,654,160)
Total real estate owned, net of accumulated depreciation		6,916,456		6,541,999
Cash and cash equivalents		1,043		185,216
Restricted cash		23,111		23,675
Notes receivable, net		36,974		42,259
Investment in and advances to unconsolidated joint ventures, net		749,100		780,869
Operating lease right-of-use assets		94,145		—
Other assets		134,896		137,710
Total assets	$	7,955,725	$	7,711,728
LIABILITIES AND EQUITY
Liabilities:
Secured debt, net	$	599,796	$	601,227
Unsecured debt, net		2,990,033		2,946,560
Operating lease liabilities		88,218		—
Real estate taxes payable		27,205		20,608
Accrued interest payable		29,397		38,747
Security deposits and prepaid rent		36,332		35,060
Distributions payable		105,548		97,666
Accounts payable, accrued expenses, and other liabilities		65,334		76,343
Total liabilities		3,941,863		3,816,211
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		1,051,498		972,740
Equity:
Preferred stock, no par value; 50,000,000 shares authorized:
8.00% Series E Cumulative Convertible; 2,780,994 shares issued and outstanding at March 31, 2019 and December 31, 2018		46,200		46,200
Series F; 15,797,155 and 15,802,393 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		1		1
Common stock, $0.01 par value; 350,000,000 shares authorized:
281,791,932 and 275,545,900 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		2,818		2,755
Additional paid-in capital		5,184,195		4,920,732
Distributions in excess of net income		(2,281,262)		(2,063,996)
Accumulated other comprehensive income/(loss), net		(2,970)		(67)
Total stockholders’ equity		2,948,982		2,905,625
Noncontrolling interests		13,382		17,152
Total equity		2,962,364		2,922,777
Total liabilities and equity	$	7,955,725	$	7,711,728

See accompanying notes to consolidated financial statements.

5

UDR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended
	March 31,
	2019		2018
REVENUES:
Rental income	$	267,922	$	250,483
Joint venture management and other fees		2,751		2,822
Total revenues		270,673		253,305
OPERATING EXPENSES:
Property operating and maintenance		41,939		40,587
Real estate taxes and insurance		36,300		33,282
Property management		7,703		6,888
Other operating expenses		5,646		2,009
Real estate depreciation and amortization		112,468		108,136
General and administrative		12,467		11,759
Casualty-related charges/(recoveries), net		—		940
Other depreciation and amortization		1,656		1,691
Total operating expenses		218,179		205,292
Gain/(loss) on sale of real estate owned		—		70,300
Operating income		52,494		118,313
Income/(loss) from unconsolidated entities		49		(1,677)
Interest expense		(33,542)		(29,943)
Interest income and other income/(expense), net		9,813		2,759
Income/(loss) before income taxes		28,814		89,452
Tax (provision)/benefit, net		(2,212)		(227)
Net income/(loss)		26,602		89,225
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.		24,503		81,756
Distributions to preferred stockholders — Series E (Convertible)		(1,011)		(955)
Net income/(loss) attributable to common stockholders	$	23,492	$	80,801
Income/(loss) per weighted average common share:
Basic	$	0.08	$	0.30
Diluted	$	0.08	$	0.30
Weighted average number of common shares outstanding:
Basic		277,002		267,546
Diluted		277,557		269,208

See accompanying notes to consolidated financial statements.

6

UDR, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands)

(Unaudited)

	Three Months Ended
	March 31,
	2019		2018
Net income/(loss)	$	26,602	$	89,225
Other comprehensive income/(loss), including portion attributable to noncontrolling interests:
Other comprehensive income/(loss) - derivative instruments:
Unrealized holding gain/(loss)		(2,210)		1,710
(Gain)/loss reclassified into earnings from other comprehensive income/(loss)		(945)		(172)
Other comprehensive income/(loss), including portion attributable to noncontrolling interests		(3,155)		1,538
Comprehensive income/(loss)		23,447		90,763
Comprehensive (income)/loss attributable to noncontrolling interests		(1,847)		(7,602)
Comprehensive income/(loss) attributable to UDR, Inc.	$	21,600	$	83,161

See accompanying notes to consolidated financial statements.

7

UDR, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except per share data)

(Unaudited)

							Distributions		Accumulated Other Comprehensive
	Preferred		Common		Paid-in		in Excess of		Income/(Loss),		Noncontrolling
	Stock		Stock		Capital		Net Income		net		Interests		Total
Balance at December 31, 2018	$	46,201	$	2,755	$	4,920,732	$	(2,063,996)	$	(67)	$	17,152	$	2,922,777
Net income/(loss) attributable to UDR, Inc.		—		—		—		24,503		—		—		24,503
Net income/(loss) attributable to noncontrolling interests		—		—		—		—		—		30		30
Contribution of noncontrolling interests in consolidated real estate		—		—		—		—		—		125		125
Long Term Incentive Plan Unit grants/(vestings), net		—		—		—		—		—		(3,925)		(3,925)
Other comprehensive income/(loss)		—		—		—		—		(2,903)		—		(2,903)
Issuance/(forfeiture) of common and restricted shares, net		—		—		(1,499)		—		—		—		(1,499)
Issuance of common shares through public offering, net		—		44		192,135		—		—		—		192,179
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		—		19		72,827		—		—		—		72,846
Common stock distributions declared ($0.3425 per share)		—		—		—		(96,561)		—		—		(96,561)
Preferred stock distributions declared-Series E ($0.3708 per share)		—		—		—		(1,011)		—		—		(1,011)
Adjustment to reflect redemption value of redeemable noncontrolling interests		—		—		—		(144,197)		—		—		(144,197)
Balance at March 31, 2019	$	46,201	$	2,818	$	5,184,195	$	(2,281,262)	$	(2,970)	$	13,382	$	2,962,364

							Distributions		Accumulated Other Comprehensive
	Preferred		Common		Paid-in		in Excess of		Income/(Loss),		Noncontrolling
	Stock		Stock		Capital		Net Income		net		Interests		Total
Balance at December 31, 2017	$	46,201	$	2,678	$	4,651,205	$	(1,871,603)	$	(2,681)	$	9,564	$	2,835,364
Net income/(loss) attributable to UDR, Inc.		—		—		—		81,756		—		—		81,756
Net income/(loss) attributable to noncontrolling interests		—		—		—		—		—		70		70
Contribution of noncontrolling interests in consolidated real estate		—		—		—		—		—		108		108
Repurchase of common shares		—		(6)		(19,982)		—		—		—		(19,988)
Long Term Incentive Plan Unit grants/(vestings), net		—		—		—		—		—		(1,424)		(1,424)
Other comprehensive income/(loss)		—		—		—		—		1,405		—		1,405
Issuance/(forfeiture) of common and restricted shares, net		—		—		(4,148)		—		—		—		(4,148)
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		—		4		11,691		—		—		—		11,695
Common stock distributions declared ($0.3225 per share)		—		—		—		(86,322)		—		—		(86,322)
Preferred stock distributions declared-Series E ($0.3492 per share)		—		—		—		(955)		—		—		(955)
Adjustment to reflect redemption value of redeemable noncontrolling interests		—		—		—		68,217		—		—		68,217
Balance at March 31, 2018	$	46,201	$	2,676	$	4,638,766	$	(1,808,907)	$	(1,276)	$	8,318	$	2,885,778

See accompanying notes to consolidated financial statements.

8

UDR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except for share data)

(Unaudited)

	Three Months Ended March 31,
	2019		2018
Operating Activities
Net income/(loss)	$	26,602	$	89,225
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization		114,124		109,827
(Gain)/loss on sale of real estate owned		—		(70,300)
(Income)/loss from unconsolidated entities		(49)		1,677
Return on investment in unconsolidated joint ventures		1,977		678
Amortization of share-based compensation		5,937		3,504
Other		3,910		1,745
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets		2,295		3,560
Increase/(decrease) in operating liabilities		(17,463)		(7,660)
Net cash provided by/(used in) operating activities		137,333		132,256
Investing Activities
Acquisition of real estate assets		(403,245)		—
Proceeds from sales of real estate investments, net		—		89,433
Development of real estate assets		(6,237)		(63,718)
Capital expenditures and other major improvements — real estate assets		(31,264)		(14,765)
Capital expenditures — non-real estate assets		(3,346)		(433)
Investment in unconsolidated joint ventures		(21,389)		(19,736)
Distributions received from unconsolidated joint ventures		10,797		5,633
Purchase deposits on pending acquisitions		(10,350)		(1,000)
Repayment/(issuance) of notes receivable, net		5,285		(20,000)
Net cash provided by/(used in) investing activities		(459,749)		(24,586)
Financing Activities
Payments on secured debt		(962)		(1,172)
Payments on unsecured debt		—		(25,000)
Net proceeds/(repayment) of commercial paper		(11,115)		—
Net proceeds/(repayment) of revolving bank debt		54,294		35,940
Proceeds from the issuance of common shares through public offering, net		192,179		—
Repurchase of common shares		—		(19,988)
Distributions paid to redeemable noncontrolling interests		(8,553)		(7,990)
Distributions paid to preferred stockholders		(959)		(915)
Distributions paid to common stockholders		(88,911)		(83,051)
Other		1,706		(6,471)
Net cash provided by/(used in) financing activities		137,679		(108,647)
Net increase/(decrease) in cash, cash equivalents, and restricted cash		(184,737)		(977)
Cash, cash equivalents, and restricted cash, beginning of year		208,891		21,830
Cash, cash equivalents, and restricted cash, end of period	$	24,154	$	20,853
Supplemental Information:
Interest paid during the period, net of amounts capitalized	$	44,271	$	35,155
Cash paid/(refunds received) for income taxes		241		(22)
Non-cash transactions:
Transfer of investment in and advances to unconsolidated joint ventures to real estate owned	$	40,433	$	—
Recognition of operating lease right-of-use assets		94,349		—
Recognition of operating lease liabilities		88,336		—
Vesting of LTIP Units		14,335		4,397
Development costs and capital expenditures incurred but not yet paid		10,745		39,749
Conversion of Operating Partnership and DownREIT Partnership noncontrolling interests to common stock (1,838,133 shares in 2019 and 303,498 shares in 2018)		72,846		11,695
Dividends declared but not yet paid		105,548		95,122
The following reconciles cash, cash equivalents, and restricted cash to amounts as shown above:
Cash, cash equivalents, and restricted cash, beginning of year:
Cash and cash equivalents	$	185,216	$	2,038
Restricted cash		23,675		19,792
Total cash, cash equivalents, and restricted cash as shown above	$	208,891	$	21,830
Cash, cash equivalents, and restricted cash, end of period:
Cash and cash equivalents	$	1,043	$	1,083
Restricted cash		23,111		19,770
Total cash, cash equivalents, and restricted cash as shown above	$	24,154	$	20,853

See accompanying notes to consolidated financial statements.

9

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

1. BASIS OF PRESENTATION

Basis of Presentation

UDR, Inc., collectively with our consolidated subsidiaries (“UDR,” the “Company,” “we,” “our,” or “us”), is a self-administered real estate investment trust, or REIT, that owns, operates, acquires, renovates, develops, redevelops, and manages apartment communities. The accompanying consolidated financial statements include the accounts of UDR and its subsidiaries, including United Dominion Realty, L.P. (the “Operating Partnership” or the “OP”) and UDR Lighthouse DownREIT L.P. (the “DownREIT Partnership”). As of March 31, 2019, there were 184,053,122 units in the Operating Partnership (“OP Units”) outstanding, of which 176,057,247 OP Units, or 95.7%, were owned by UDR and 7,995,875 OP Units, or 4.3%, were owned by outside limited partners. As of March 31, 2019, there were 32,367,380 units in the DownREIT Partnership (“DownREIT Units”) outstanding, of which 17,233,074, or 53.2%, were owned by UDR (including 13,470,651 DownREIT Units, or 41.6%, that were held by the Operating Partnership) and 15,134,306, or 46.8%, were owned by outside limited partners. The consolidated financial statements of UDR include the noncontrolling interests of the unitholders in the Operating Partnership and DownREIT Partnership.

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 note 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. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of our financial position as of March 31, 2019, and results of operations for the three months ended March 31, 2019 and 2018, have been included. 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 accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 appearing in UDR’s Annual Report on Form 10‑K, filed with the Securities and Exchange Commission on February 19, 2019.

The accompanying interim unaudited consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP 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 interim unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company evaluated subsequent events through the date its financial statements were issued. No significant recognized or non-recognized subsequent events were noted other than those noted in Note 3, Real Estate Owned, Note 5, Joint Ventures and Partnerships and Note 13, Commitments and Contingencies.

2. SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Company on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Company is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

10

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Company on January 1, 2019.

The Company elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Company also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Company recognized right-of-use assets of $94.3 million and lease liabilities of $88.3 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizing the lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.7 million and $140.7 million, respectively, during the remainder of 2019. The Company will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Company also elected.

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the consolidation guidance. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Company generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Company will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Company sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Company will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Company will record a full gain or loss in the period the property is contributed.

To the extent that the Company acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Company will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Company will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Company will not recognize a gain or loss on consolidation of a property.

Notes Receivable

The following table summarizes our Notes receivable, net as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due December 2019 (a)	12.00	%	$	20,000	$	20,000
Note due February 2020 (b)	10.00	%		14,974		14,659
Note due October 2020 (c)	8.00	%		2,000		2,000
Note due August 2022 (d)	10.00	%		—		5,600
Total notes receivable, net			$	36,974	$	42,259

(a) In March 2018, the Company entered into a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million, of which $20.0 million has been funded. Interest payments are due when the loan matures. In March 2019, the note’s maturity was extended to December 27, 2019, and the note is secured by a parcel of land.

(b) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $16.4 million, of which $15.0 million has been funded, including $0.3 million during the three months ended March 31, 2019. Interest payments are due monthly. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $5.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the eighth anniversary of the date of the note (February 2020).

(c) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $2.0 million, of which $2.0 million has been funded. Interest payments are due when the loan matures. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $10.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the fifth anniversary of the date of the note (October 2020).

(d) In January 2019, the $5.6 million secured note was repaid in full along with the contractually accrued interest of $0.2 million and an additional $8.5 million of promoted interest in conjunction with the unaffiliated third party being acquired.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

The Company recognized $1.1 million and $0.6 million of interest income and $8.5 million and zero of promoted interest from notes receivable during the three months ended March 31, 2019 and 2018, respectively, none of which was related party interest. Interest income and promoted interest are included in Interest income and other income/(expense), net on the Consolidated Statements of Operations.

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to stockholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Company’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges, (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) into earnings, and the allocation of other comprehensive income/(loss) to noncontrolling interests. The (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 11, Derivatives and Hedging Activity, for further discussion. The allocation of other comprehensive income/(loss) to redeemable noncontrolling interests during the three months ended March 31, 2019 and 2018, was $(0.3) million and $0.1 million, respectively.

Income Taxes

Due to the structure of the Company as a REIT and the nature of the operations for the operating properties, no provision for federal income taxes has been provided for at UDR. Historically, the Company has generally incurred only state and local excise and franchise taxes. UDR has elected for certain consolidated subsidiaries to be treated as taxable REIT subsidiaries (“TRS”).

Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. The Company’s deferred tax assets are generally the result of differing depreciable lives on capitalized assets and timing of expense recognition for certain accrued liabilities. As of March 31, 2019 and December 31, 2018, UDR’s net deferred tax asset/(liability) was less than $(0.1) million and less than $(0.1) million, respectively.

GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. GAAP also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

The Company recognizes its tax positions and evaluates them using a two-step process. First, UDR determines whether a tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

UDR had no material unrecognized tax benefit, accrued interest or penalties at March 31, 2019. UDR and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2015 through 2018 remain open to examination by tax jurisdictions to which we are subject. When applicable, UDR recognizes interest and/or penalties related to uncertain tax positions in Tax (provision)/benefit, net on the Consolidated Statements of Operations. 

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MARCH 31, 2019

3. REAL ESTATE OWNED

Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and held for disposition properties. As of March 31, 2019, the Company owned and consolidated 131 communities in 11 states plus the District of Columbia totaling 41,041 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	1,954,363	$	1,849,799
Depreciable property — held and used:
Land improvements		214,483		213,224
Building, improvements, and furniture, fixtures and equipment		8,475,755		8,133,136
Real estate intangible assets		35,954		—
Real estate owned		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Real estate owned, net	$	6,916,456	$	6,541,999

Acquisitions

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 386 apartment home operating community in Anaheim, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. In connection with the acquisition, the Company repaid approximately $59.8 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $115.7 million and recorded approximately $2.4 million of in-place lease intangibles.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 155 apartment home operating community located in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. In connection with the acquisition, the Company repaid approximately $26.0 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $58.1 million and recorded approximately $2.4 million of real estate intangibles and approximately $0.6 million of in-place lease intangibles.

In January 2019, the Company acquired a to-be-developed parcel of land located in Washington D.C. for approximately $27.1 million.

In February 2019, the Company acquired a to-be-developed parcel of land located in Denver, Colorado for approximately $13.7 million.

In February 2019, the Company acquired a 188 apartment home operating community located in Brooklyn, New York for approximately $132.1 million. The Company increased its real estate assets owned by approximately $97.5 million and recorded approximately $33.6 million of real estate intangibles and approximately $1.0 million of in-place lease intangibles.

In February 2019, the Company acquired a 381 apartment home operating community located in St. Petersburg, Florida for approximately $98.3 million.  The Company increased its real estate assets owned by approximately $96.0 million and recorded approximately $2.3 million of in-place lease intangibles.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

In April 2019, the Company acquired a 498 apartment home operating community located in Towson, Maryland for approximately $86.4 million.

Dispositions

The Company did not have any dispositions during the three months ended March 31, 2019.

Other Activity

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Company capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, for the three months ended March 31, 2019 and 2018,  were $3.3 million and $3.4 million, respectively.  Total interest capitalized was $1.1 million and $4.6 million for the three months ended March 31, 2019 and 2018, respectively. As each home in a capital project is completed and becomes available for lease-up, the Company ceases capitalization on the related portion of the costs and depreciation commences over the estimated useful life.

In connection with the acquisition of certain properties, the Company agreed to pay certain of the tax liabilities of certain contributors if the Company sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Company may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax-deferred Section 1031 exchange. 

Further, the Company has agreed to maintain certain debt that may be guaranteed by certain contributors for specified periods of time following the acquisition. The Company, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.

4. VARIABLE INTEREST ENTITIES

The Company has determined that the Operating Partnership and DownREIT Partnership are VIEs as the limited partners lack substantive kick-out rights and substantive participating rights. The Company has concluded that it is the primary beneficiary of, and therefore consolidates, the Operating Partnership and DownREIT Partnership based on its role as the sole general partner of the Operating Partnership and DownREIT Partnership. The Company’s role as community manager and its equity interests give us the power to direct the activities that most significantly impact the economic performance and the obligation to absorb potentially significant losses or the right to receive potentially significant benefits of the Operating Partnership and DownREIT Partnership.

See the consolidated financial statements of the Operating Partnership presented within this Report and Note 4, Unconsolidated Entities, to the Operating Partnership’s consolidated financial statements for the results of operations of the DownREIT Partnership.

5. JOINT VENTURES AND PARTNERSHIPS

UDR has entered into joint ventures and partnerships with unrelated third parties to acquire real estate assets that are either consolidated and included in Real estate owned on the Consolidated Balance Sheets or are accounted for under the equity method of accounting, and are included in Investment in and advances to unconsolidated joint ventures, net, on the Consolidated Balance Sheets. The Company consolidates the entities that we control as well as any variable interest entity where we are the primary beneficiary. Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

UDR’s joint ventures and partnerships are funded with a combination of debt and equity. Our losses are limited to our investment and except as noted below, the Company does not guarantee any debt, capital payout or other obligations associated with our joint ventures and partnerships.

The Company recognizes earnings or losses from our investments in unconsolidated joint ventures and partnerships consisting of our proportionate share of the net earnings or losses of the joint ventures and partnerships. In addition, we may earn fees for providing management services to the unconsolidated joint ventures and partnerships.

The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of March 31, 2019 and December 31, 2018 (dollars in thousands):

				Number of
		Number of		Apartment
		Properties		Homes	Investment at				UDR’s Ownership Interest
	Location of	March 31,		March 31,	March 31,		December 31,		March 31,		December 31,
Joint Venture	Properties	2019		2019	2019		2018		2019		2018
Operating and development:
UDR/MetLife I	Los Angeles, CA	1	operating community	150	$	30,817	$	30,839	50.0	%	50.0	%
UDR/MetLife II	Various	18	operating communities	4,059		303,893		296,807	50.0	%	50.0	%
Other UDR/MetLife	Various	5	operating communities	1,437		111,377		115,668	50.6	%	50.6	%
Joint Ventures
UDR/MetLife Vitruvian Park®	Addison, TX	4	operating communities;	1,879		73,199		71,730	50.0	%	50.0	%
		1	development community (a);
		4	land parcels
UDR/KFH	Washington, D.C.	3	operating communities	660		4,357		5,507	30.0	%	30.0	%
West Coast Development Joint Ventures (d)	Los Angeles, CA	1	operating community	293		35,994		36,143	47.0	%	47.0	%
Investment in and advances to unconsolidated joint ventures, net, before participating loan investment, preferred equity investments and other investments					$	559,637	$	556,694

											Income/(loss) from investments
							Investment at				Three Months Ended
				Years To	UDR		March 31,		December 31,		March 31,
Developer Capital Program (b)	Location	Rate		Maturity	Commitment (c)		2019		2018		2019		2018
Preferred equity investments:
West Coast Development Joint Ventures (d)	Various	6.5	%	N/A	$	—	$	17,298	$	65,417	$	(161)	$	796
1532 Harrison (e)	San Francisco, CA	11.0	%	3.3		24,645		28,163		24,986		748		341
1200 Broadway (f)	Nashville, TN	8.0	%	3.5		55,558		60,185		58,982		1,169		408
Junction (g)	Santa Monica, CA	12.0	%	3.3		8,800		9,486		9,211		275		—
1300 Fairmount (h)	Philadelphia, PA	Variable		4.4		51,393		13,887		8,318		275		—
Essex (i)	Orlando, FL	12.5	%	4.4		12,886		11,824		9,940		332		—
Other investments:
The Portals (j)	Washington, D.C.	11.0	%	2.2		38,559		44,340		43,167		1,173		679
Other investment ventures	N/A	N/A		N/A	$	18,000		4,280		4,154	$	125	$	(90)
Total Developer Capital Program								189,463		224,175
Total investment in and advances to unconsolidated joint ventures, net							$	749,100	$	780,869

(a) The number of apartment homes for the communities under development presented in the table above is based on the projected number of total homes upon completion of development. As of March 31, 2019, no apartment homes had been completed in the development community held by UDR/MetLife Vitruvian Park® .

(b) The Developer Capital Program is the program through which the Company makes investments, including preferred equity investments, mezzanine loans or other structured investments that may receive a fixed or variable yield on the investment and may include provisions pursuant to which the Company participates in the increase in value of the property upon monetization of the applicable property and/or holds fixed price purchase options.

(c) Represents UDR’s maximum funding commitment only and therefore excludes other activity such as income from investments.

(d) In 2015, the Company entered into a joint venture agreement with an unaffiliated joint venture partner and paid $136.3 million for a 48% ownership interest in a portfolio of five communities that were under construction. The communities are located in three of the Company’s core, coastal markets: Seattle, Washington, Los Angeles, California and Orange County, California. UDR earns a 6.5% preferred return on its investment through each individual community’s date of stabilization, defined as when a community reaches 80% occupancy for 90 consecutive days, while the joint venture partner is allocated all operating income and expense during the pre-

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MARCH 31, 2019

stabilization period. Upon stabilization, income and expense are shared based on each partner’s ownership percentage and the Company no longer receives a 6.5% preferred return on its investment in the stabilized community. The Company serves as property manager and earns a management fee during the lease-up phase and subsequent operation of each of the communities. The unaffiliated joint venture partner is the general partner of the joint venture and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

At inception of the agreement, the Company had a fixed-price option to acquire the remaining interest in each community commencing one year after completion. The unaffiliated joint venture partner is providing certain guaranties.

During 2017, the Company exercised its fixed-price option to purchase the joint venture partner’s ownership interest in one of the five communities, and the joint venture sold two of the four remaining communities. 

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in one of the two remaining communities, a 386 apartment home operating community in Orange County, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company and its joint venture partner plan to continue operating the one remaining community. 

In 2017, the Company entered into two additional joint venture agreements with the unaffiliated joint venture partner and paid $15.5 million for a 49% ownership interest in a 155 apartment home community in Seattle, Washington and $16.1 million for a 49% ownership interest in a 276 apartment home community in Hillsboro, Oregon (together with the 2015 joint venture described above, the “West Coast Development Joint Ventures”). UDR earns a 6.5% preferred return on its investments through the communities’ date of stabilization, as defined above, while our joint venture partner is allocated all operating income and expense during the pre-stabilization period. Upon stabilization of the communities, income and expense will be shared based on each partner’s ownership percentage and the Company will no longer receive a 6.5% preferred return on its investment. The Company will serve as property manager and will earn a management fee during the lease-up phase and subsequent operation of the stabilized communities. The unaffiliated joint venture partner is the general partner and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

The Company has a fixed-price option to acquire the remaining interest in the communities beginning one year after completion. The unaffiliated joint venture partner is providing certain guaranties and there are construction loans on the communities.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in the 155 apartment home operating community in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company’s recorded equity investment in the West Coast Development Joint Ventures at March 31, 2019 and December 31, 2018, of $53.3 million and $101.6 million, respectively, is inclusive of outside basis costs and our accrued but unpaid preferred return.

(e) In June 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 136 apartment home community in San Francisco, California. The Company’s preferred equity investment of up to $24.6 million earns a preferred return of 11.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(f) In September 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 313 apartment home community in Nashville, Tennessee. The Company’s preferred equity investment of up to $55.6 million earns a preferred return of 8.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the

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MARCH 31, 2019

managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(g) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 66 apartment home community in Santa Monica, CA. The Company’s preferred equity investment of $8.8 million earns a preferred return of 12.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(h) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 471 apartment home community in Philadelphia, PA. The Company’s preferred equity investment of up to $51.4 million earns a preferred return between 8.5% and 12.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(i) In September 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 330 apartment home community in Orlando, FL. The Company’s preferred equity investment of up to $12.9 million earns a preferred return of 12.5% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(j) In May 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner. The joint venture has made a mezzanine loan to a third party developer of a 373 apartment home community in Washington, D.C. The unaffiliated joint venture partner is the managing member of the joint venture. The mezzanine loan is for up to $71.0 million at an interest rate of 13.5% per annum and carries a term of four years with one 12-month extension option. The Company’s commitment to the joint venture is approximately $38.6 million and earns a weighted average return of approximately 11.0% per annum. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

In April 2019, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 173 apartment home community in Oakland, California. The Company’s preferred equity investment of up to $27.3 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

As of March 31, 2019 and December 31, 2018, the Company had deferred fees of $10.8 million and $11.0 million, respectively, which will be recognized through earnings over the weighted average life of the related properties, upon the disposition of the properties to a third party, or upon completion of certain development obligations.

The Company recognized management fees of $2.8 million and $2.7 million for the three months ended March 31, 2019 and 2018, respectively, for management of the communities held by the joint ventures and partnerships. The management fees are included in Joint venture management and other fees on the Consolidated Statements of Operations.

The Company may, in the future, make additional capital contributions to certain of our joint ventures and partnerships should additional capital contributions be necessary to fund acquisitions or operations.

We evaluate our investments in unconsolidated joint ventures and partnerships when events or changes in circumstances indicate that there may be an other-than-temporary decline in value. We consider various factors to determine if a decrease in the value of the investment is other-than-temporary. The Company did not recognize any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures or partnerships during the three months ended March 31, 2019 and 2018.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

Combined summary balance sheets relating to the unconsolidated joint ventures and partnerships (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	3,193,477	$	3,311,034
Cash and cash equivalents		44,714		49,867
Other assets		127,789		124,428
Total assets	$	3,365,980	$	3,485,329
Third party debt, net	$	2,032,098	$	2,125,350
Accounts payable and accrued liabilities		59,096		71,272
Total liabilities		2,091,194		2,196,622
Total equity	$	1,274,786	$	1,288,707

Combined summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Total revenues	$	81,532	$	67,957
Property operating expenses		30,312		26,937
Real estate depreciation and amortization		29,580		26,848
Operating income/(loss)		21,640		14,172
Interest expense		(21,924)		(19,406)
Other income/(loss)		1,625		(5)
Net income/(loss)	$	1,341	$	(5,239)

6. LEASES

Lessee - Ground and Office Leases

UDR owns six communities that are subject to ground leases, under which UDR is the lessee, expiring between 2043 and 2103, inclusive of extension options we are reasonably certain will be exercised. In addition, UDR is a lessee to an operating lease related to office space rented by the Company with an expiration date in 2021. All of these leases existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, these leases will continue to be classified as operating leases through the lease term expiration. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the remaining lease term. We currently do not hold any finance leases.

As of March 31, 2019, the Operating lease right-of-use assets was $94.1 million and the Operating lease liabilities was $88.2 million on our Consolidated Balance Sheets related to our ground and office space leases. The value of the Operating lease right-of-use assets exceeds the value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in earnings in the period in which the obligation for those payments is incurred.

As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases utilizing the Company’s incremental borrowing rate at a portfolio level, adjusted for the remaining lease term, and the form of underlying collateral.  

The weighted average remaining lease term for these leases was 70.9 years at March 31, 2019 and the weighted average discount rate was 5.2% at March 31, 2019.

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

Future minimum lease payments and total operating lease liabilities from our ground leases and office space as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases		Office Space		Total
2019	$	3,676	$	57	$	3,733
2020		4,901		76		4,977
2021		4,901		32		4,933
2022		4,901		-		4,901
2023		4,901		-		4,901
Thereafter		313,919		-		313,919
Total future minimum lease payments (undiscounted)		337,199		165		337,364
Difference between future undiscounted cash flows and discounted cash flows		(249,138)		(8)		(249,146)
Total operating lease liabilities (discounted)	$	88,061	$	157	$	88,218

For purposes of recognizing our ground lease contracts, the Company uses the minimum lease payments, if stated in the agreement. For ground lease agreements where there is a rent reset provision based on fair market value or changes in the consumer price index but that does not include a specified minimum lease payment, the Company uses the current rent over the remainder of the lease term. We are currently in a dispute with the lessor of one of our ground lease contracts as it relates to a rent reset provision that requires both parties to agree to a new rent based on the current fair market value of the land or, absent agreement, have it determined by an appraisal process. The current annual lease payment under the ground lease contract to which the dispute relates, exclusive of variable payments, is $0.5 million, which is reflected in the table above. Depending on the outcome of the dispute, the future annual lease payments under such ground lease contract are likely to be between $1.2 million and $4.0 million.

The components of operating lease expenses from our ground leases and office space were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total ground lease expense (b)		2,279
Contractual office space expense (b)		19
Total operating lease expense	$	2,298

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses and office space expense is recorded in General and administrative on the Consolidated Statements of Operations.

Lessor - Apartment Home,  Retail and Commercial Space and Ground Leases

UDR’s communities and retail and commercial space are leased to tenants under operating leases. Nearly all of our apartment home leases have initial terms of 12 months or less. Our retail and commercial space leases expire between 2019 and 2107. (See Note 14, Reportable Segments for further discussion around our major revenue streams and disaggregation of our revenue.)

We also have one parcel of land subject to a ground lease, under which UDR is the lessor, expiring in 2065. The lease includes a purchase option for the lessee to acquire the land during specific periods of the lease term. The purchase option was not deemed to be a bargain purchase option. This lease existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, this lease will continue to be classified as an operating lease through the lease term expiration and the land parcel subject to the ground lease will continue to be recognized in Real estate held for investment on our Consolidated Balance Sheets. Rental income for lease payments related to this lease is recognized on a straight-line basis over the remaining lease term.

20

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

Future minimum lease payments from our retail and commercial leases and our ground lease as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases		Ground Lease		Total
2019	$	14,826	$	1,995	$	16,821
2020		19,825		2,660		22,485
2021		18,768		2,660		21,428
2022		17,071		2,660		19,731
2023		15,712		2,660		18,372
Thereafter		85,712		110,168		195,880
Total future minimum lease payments (a)	$	171,914	$	122,803	$	294,717

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage rents. The Company recorded variable percentage rents of less than $0.2 million during the three months ended March 31, 2019.

21

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

7. SECURED AND UNSECURED DEBT, NET

The following is a summary of our secured and unsecured debt at March 31, 2019 and December 31, 2018 (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
					Weighted		Weighted
					Average		Average	Number of
	March 31,		December 31,		Interest		Years to	Communities
	2019		2018		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	416,468	$	417,989	3.82	%	5.6	7
Fannie Mae credit facilities (b)		90,000		90,000	3.95	%	1.3	1
Deferred financing costs		(1,275)		(1,343)
Total fixed rate secured debt, net		505,193		506,646	3.85	%	4.8	8
Variable Rate Debt
Tax-exempt secured notes payable (c)		94,700		94,700	2.31	%	3.9	2
Deferred financing costs		(97)		(119)
Total variable rate secured debt, net		94,603		94,581	2.31	%	3.9	2
Total Secured Debt, net		599,796		601,227	3.60	%	4.7	10
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2023 (d) (j)		—		—	—	%	3.8
Borrowings outstanding under unsecured commercial paper program due April 2019 (e) (j)		90,000		101,115	2.78	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2021(f)		54,310		16	3.32	%	1.8
Term Loan due September 2023 (d) (j)		35,000		35,000	3.39	%	4.5
Fixed Rate Debt
3.70% Medium-Term Notes due October 2020 (net of discounts of $12 and $14, respectively) (j)		299,988		299,986	3.70	%	1.5
4.63% Medium-Term Notes due January 2022 (net of discounts of $997 and $1,087, respectively) (j)		399,003		398,913	4.63	%	2.8
1.93% Term Loan due September 2023 (d) (j)		315,000		315,000	1.93	%	4.5
3.75% Medium-Term Notes due July 2024 (net of discounts of $548 and $574, respectively) (g) (j)		299,452		299,426	3.75	%	5.3
8.50% Debentures due September 2024		15,644		15,644	8.50	%	5.5
4.00% Medium-Term Notes due October 2025 (net of discounts of $447 and $465, respectively) (h) (j)		299,553		299,535	4.00	%	6.5
2.95% Medium-Term Notes due September 2026 (j)		300,000		300,000	2.95	%	7.4
3.50% Medium-Term Notes due July 2027 (net of discounts of $582 and $600, respectively) (j)		299,418		299,400	3.50	%	8.3
3.50% Medium-Term Notes due January 2028 (net of discounts of $1,043 and $1,072, respectively) (j)		298,957		298,928	3.50	%	8.8
4.40% Medium-Term Notes due January 2029 (net of discounts of $6 and $6, respectively) (i) (j)		299,994		299,994	4.40	%	9.8
Other		15		16
Deferred financing costs		(16,301)		(16,413)
Total Unsecured Debt, net		2,990,033		2,946,560	3.65	%	5.7
Total Debt, net	$	3,589,829	$	3,547,787	3.73	%	5.5

For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument.

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of March 31, 2019, secured debt encumbered $1.3 billion or 12.2% of UDR’s total real estate owned based upon gross book value ($9.4 billion or 87.8% of UDR’s real estate owned based on gross book value is unencumbered).

22

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

(a) At March 31, 2019, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2020 through September 2028 and carry interest rates ranging from 3.15% to 4.35%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the Company records the debt at its estimated fair value and amortizes any difference between the fair value and par value to interest expense over the life of the underlying debt instrument.

During the three months ended March 31, 2019 and 2018, the Company had $0.6 million and $0.7 million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $4.4 million and $5.0 million at March 31, 2019 and December 31, 2018, respectively.

(b) UDR had one secured credit facility  with Fannie Mae with a commitment of $90.0 million at March 31, 2019.  The Fannie Mae credit facility matures in July 2020  and bears interest at a fixed rate of 3.95%.

Further information related to this credit facility is as follows (dollars in thousands):

	March 31,			December 31,
	2019			2018
Borrowings outstanding	$	90,000		$	90,000
Weighted average borrowings during the period ended		90,000			253,813
Maximum daily borrowings during the period ended		90,000			314,869
Weighted average interest rate during the period ended		4.0	%		4.7	%
Weighted average interest rate at the end of the period		4.0	%		4.0	%

(c) The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature in August 2019 and March 2032. Interest on these notes is payable in monthly installments. The variable rate mortgage notes have interest rates ranging from 2.25% to 2.47% as of March 31, 2019.

(d) The Company has a $1.1 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”). The credit agreement for these facilities (the “Credit Agreement”) allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023. 

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from 75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to 165 basis points.

The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Credit Agreement also includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable.

23

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total revolving credit facility	$	1,100,000		$	1,100,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		—			—
Maximum daily borrowings during the period ended		—			—
Weighted average interest rate during the period ended		—	%		—	%
Interest rate at end of the period		—	%		—	%

(1) Excludes $3.3 million and $3.3 million of letters of credit at March 31, 2019 and December 31, 2018, respectively.

(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total unsecured commercial paper program	$	500,000		$	500,000
Borrowings outstanding at end of period		90,000			101,115
Weighted average daily borrowings during the period ended		149,365			344,235
Maximum daily borrowings during the period ended		330,000			440,000
Weighted average interest rate during the period ended		2.8	%		2.4	%
Interest rate at end of the period		2.8	%		2.9	%

(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 15, 2021. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		54,310			16
Weighted average daily borrowings during the period ended		22,967			26,101
Maximum daily borrowings during the period ended		66,170			64,633
Weighted average interest rate during the period ended		3.3	%		2.9	%
Interest rate at end of the period		3.3	%		3.3	%

(g) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.69%.

(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.53%.

24

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $150.0 million of this debt. The all in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.27%.

(j) The Operating Partnership is a guarantor of this debt.

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten calendar years subsequent to March 31, 2019 are as follows (dollars in thousands):

	Total Fixed		Total Variable		Total		Total		Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt		Debt
2019	$	2,860	$	67,700	$	70,560	$	90,000	$	160,560
2020		198,076		—		198,076		300,000		498,076
2021		1,117		—		1,117		54,310		55,427
2022		1,157		—		1,157		400,000		401,157
2023		41,245		—		41,245		350,000		391,245
2024		—		—		—		315,644		315,644
2025		127,600		—		127,600		300,000		427,600
2026		50,000		—		50,000		300,000		350,000
2027		—		—		—		300,000		300,000
2028		80,000		—		80,000		300,000		380,000
Thereafter		—		27,000		27,000		300,000		327,000
Subtotal		502,055		94,700		596,755		3,009,954		3,606,709
Non-cash (a)		3,138		(97)		3,041		(19,921)		(16,880)
Total	$	505,193	$	94,603	$	599,796	$	2,990,033	$	3,589,829

(a) Includes the unamortized balance of fair market value adjustments, premiums/discounts and deferred financing costs. For the three months ended March 31, 2019 and 2018, the Company amortized $1.0 million and $1.0 million, respectively, of deferred financing costs into Interest expense.    

We were in compliance with the covenants of our debt instruments at March 31, 2019.

25

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

8. INCOME/(LOSS) PER SHARE

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

	March 31,
	2019		2018
Numerator for income/(loss) per share:
Net income/(loss)	$	26,602	$	89,225
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.		24,503		81,756
Distributions to preferred stockholders — Series E (Convertible)		(1,011)		(955)
Income/(loss) attributable to common stockholders - basic and diluted	$	23,492	$	80,801
Denominator for income/(loss) per share:
Weighted average common shares outstanding		277,297		267,963
Non-vested restricted stock awards		(295)		(417)
Denominator for basic income/(loss) per share		277,002		267,546
Incremental shares issuable from assumed conversion of stock options, unvested LTIP Units and unvested restricted stock		555		1,662
Denominator for diluted income/(loss) per share		277,557		269,208
Income/(loss) per weighted average common share:
Basic	$	0.08	$	0.30
Diluted	$	0.08	$	0.30

Basic income/(loss) per common share is computed based upon the weighted average number of common shares outstanding. Diluted income/(loss) per common share is computed based upon the weighted average number of common shares outstanding plus the common shares issuable from the assumed conversion of the OP Units and DownREIT Units, convertible preferred stock, stock options, unvested long-term incentive plan units (“LTIP Units”), unvested restricted stock and continuous equity program forward sales agreements. Only those instruments having a dilutive impact on our basic income/(loss) per share are included in diluted income/(loss) per share during the periods. For the three months ended March 31, 2019 and 2018, the effect of the conversion of the OP Units, DownREIT Units, LTIP Units and the Company’s Series E preferred stock was not dilutive and therefore not included in the above calculation. 

In July 2017, the Company entered into an ATM sales agreement under which the Company may offer and sell up to 20 million shares of its common stock, from time to time, to or through its sales agents and may enter into separate forward sales agreements to or through its forward purchasers. Upon entering into the ATM sales agreement, the Company simultaneously terminated the sales agreement for its prior at-the-market equity offering program, which was entered into in April 2017, which replaced the prior at-the-market equity offering program entered into in April 2012. During the three months ended March 31, 2019,  the Company sold 4.4 million shares of common stock through its ATM program for aggregate gross proceeds of approximately $195.0 million at a weighted average price per share of $44.80. Aggregate net proceeds from such sales, after deducting related expenses, including commissions paid to the sales agents of approximately $2.8 million, were approximately $192.2 million, which were primarily used to fund the Company’s recent acquisitions. As of March 31, 2019, we had 15.6 million shares of common stock available for future issuance under the ATM program.

For the three months ended March 31, 2019 and 2018, the Company did not enter into any forward purchase agreements under its continuous equity program.

26

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

The following table sets forth the additional shares of common stock outstanding by equity instrument if converted to common stock for each of the three months ended March 31, 2019 and 2018 (in thousands):

	March 31,
	2019	2018
OP/DownREIT Units	24,280	24,506
Convertible preferred stock	3,011	3,011
Stock options, unvested LTIP Units and unvested restricted stock	555	1,662

9. NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interests in the Operating Partnership and DownREIT Partnership

Interests in the Operating Partnership and the DownREIT Partnership held by limited partners are represented by OP Units and DownREIT Units, respectively. The income is allocated to holders of OP Units/DownREIT Units based upon net income attributable to common stockholders and the weighted average number of OP Units/DownREIT Units outstanding to total common shares plus OP Units/DownREIT Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to noncontrolling interests in accordance with the terms of the partnership agreements of the Operating Partnership and the DownREIT Partnership.

Limited partners of the Operating Partnership and the DownREIT Partnership have the right to require such partnership to redeem all or a portion of the OP Units/DownREIT Units held by the limited partner at a redemption price equal to and in the form of the Cash Amount (as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as applicable), provided that such OP Units/DownREIT Units have been outstanding for at least one year, subject to certain exceptions. UDR, as the general partner of the Operating Partnership and the DownREIT Partnership may, in its sole discretion, purchase the OP Units/DownREIT Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (generally one share of common stock of the Company for each OP Unit/DownREIT Unit), as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as applicable. Accordingly, the Company records the OP Units/DownREIT Units outside of permanent equity and reports the OP Units/DownREIT Units at their redemption value using the Company’s stock price at each balance sheet date.

The following table sets forth redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership for the following period (dollars in thousands):

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, December 31, 2018	$	972,740
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		144,197
Conversion of OP Units/DownREIT Units to Common Stock		(72,846)
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		2,057
Distributions to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(8,733)
Vesting of Long-Term Incentive Plan Units		14,335
Allocation of other comprehensive income/(loss)		(252)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, March 31, 2019	$	1,051,498

Noncontrolling Interests

Noncontrolling interests represent interests of unrelated partners and unvested LTIP Units in certain consolidated affiliates, and are presented as part of equity on the Consolidated Balance Sheets since these interests are not redeemable. Net (income)/loss attributable to noncontrolling interests was less than $(0.1) million and $(0.1) million during the three months ended March 31, 2019 and 2018, respectively.

27

UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

The Company grants LTIP Units to certain employees and non-employee directors. The LTIP Units represent an ownership interest in the Operating Partnership and have vesting terms of between one and three years, specific to the individual grants.

Noncontrolling interests related to long-term incentive plan units represent the unvested LTIP Units of these employees and non-employee directors in the Operating Partnership. The net income/(loss) allocated to the unvested LTIP Units is included in Net (income)/loss attributable to noncontrolling interests on the Consolidated Statements of Operations.

10. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

· Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

· Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

28

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MARCH 31, 2019

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018, are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	36,974	$	40,329	$	—	$	—	$	40,329
Derivatives - Interest rate contracts (b)		3,315		3,315		—		3,315		—
Total assets	$	40,289	$	43,644	$	—	$	3,315	$	40,329
Derivatives - Interest rate contracts (b)	$	2,285	$	2,285	$	—	$	2,285	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		416,468		423,329		—		—		423,329
Fannie Mae credit facilities		90,000		90,540		—		—		90,540
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		54,310		54,310		—		—		54,310
Commercial paper program		90,000		90,000		—		—		90,000
Unsecured notes		2,862,024		2,897,215		—		—		2,897,215
Total liabilities	$	3,609,787	$	3,652,379	$	—	$	2,285	$	3,650,094
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	1,051,498	$	1,051,498	$	—	$	1,051,498	$	—

29

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

					Fair Value at December 31, 2018, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	42,259	$	45,026	$	—	$	—	$	45,026
Derivatives - Interest rate contracts (b)		4,757		4,757		—		4,757		—
Total assets	$	47,016	$	49,783	$	—	$	4,757	$	45,026
Derivatives - Interest rate contracts (b)	$	356	$	356	$	—	$	356	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		417,989		416,314		—		—		416,314
Fannie Mae credit facilities		90,000		90,213		—		—		90,213
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		16		16		—		—		16
Commercial paper program		101,115		101,115		—		—		101,115
Unsecured notes		2,861,842		2,829,390		—		—		2,829,390
Total liabilities	$	3,566,018	$	3,532,104	$	—	$	356	$	3,531,748
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	972,740	$	972,740	$	—	$	972,740	$	—

(a) See Note 2, Significant Accounting Policies.

(b) See Note 11,  Derivatives and Hedging Activity.

(c) See Note 7,  Secured and Unsecured Debt, Net.

(d) See Note 9,  Noncontrolling Interests.

There were no transfers into or out of any of the levels of the fair value hierarchy during the three months ended March 31, 2019.

Financial Instruments Carried at Fair Value

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However,

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MARCH 31, 2019

as of March 31, 2019 and December 31, 2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership have a redemption feature and are marked to their redemption value. The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership are classified as Level 2.

Financial Instruments Not Carried at Fair Value

At March 31, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes notes receivable and debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Our cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair value. Our estimates of fair value represent our best estimate based upon Level 3 inputs such as industry trends and reference to market rates and transactions.

We consider various factors to determine if a decrease in the value of our Investment in and advances to unconsolidated joint ventures, net is other-than-temporary. These factors include, but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships with the other joint venture partners and its lenders. Based on the significance of the unobservable inputs, we classify these fair value measurements within Level 3 of the valuation hierarchy. The Company did not incur any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures during the three months ended March 31, 2019 and 2018.

After determining an other-than-temporary decrease in the value of an equity method investment has occurred, we estimate the fair value of our investment by estimating the proceeds we would receive upon a hypothetical liquidation of the investment at the date of measurement. Inputs reflect management’s best estimate of what market participants would use in pricing the investment giving consideration to the terms of the joint venture agreement and the estimated discounted future cash flows to be generated from the underlying joint venture assets. The inputs and assumptions utilized to estimate the future cash flows of the underlying assets are based upon the Company’s evaluation of the economy, market trends, operating results, and other factors, including judgments regarding costs to complete any construction activities, lease up and occupancy rates, rental rates, inflation rates, capitalization rates utilized to estimate the projected cash flows at the disposition, and discount rates.

11. DERIVATIVES AND HEDGING ACTIVITY

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

instruments. Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2019 and 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

Amounts reported in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets related to derivatives that will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Through March 31, 2020, the Company estimates that an additional $3.2 million will be reclassified as a decrease to Interest expense.

As of March 31, 2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate swaps (a)	4	$	315,000
Interest rate caps	1	$	65,197

(a) In addition to the interest rate swaps summarized above, the Company entered into two additional interest rate swaps with a notional value totaling $75.0 million that will become effective in December 2019.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in no gain or loss and a loss of less than $0.1 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	Asset Derivatives				Liability Derivatives
	(included in Other assets)				(included in Other liabilities)
	Fair Value at:				Fair Value at:
	March 31,		December 31,		March 31,		December 31,
	2019		2018		2019		2018
Derivatives designated as hedging instruments:
Interest rate products	$	3,315	$	4,757	$	2,285	$	356

Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 (dollars in thousands):

									Gain/(Loss) Recognized in
					Gain/(Loss) Reclassified				Interest expense
	Unrealized holding gain/(loss)				from Accumulated OCI into				(Amount Excluded from
	Recognized in OCI				Interest expense				Effectiveness Testing)
Derivatives in Cash Flow Hedging Relationships	2019		2018		2019		2018		2019		2018
Three Months Ended March 31,
Interest rate products	$	(2,210)	$	1,710	$	945	$	172	$	—	$	—

	Three Months Ended
	March 31,
	2019		2018
Total amount of Interest expense presented on the Consolidated Statements of Operations	$	33,542	$	29,943

The Company did not recognize any gain/(loss) in Interest income and other income/(expense), net related to derivatives not designated during each of the three months ended March 31, 2019 and 2018.

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.

The Company has certain agreements with some of its derivative counterparties that contain a provision where, in the event of default by the Company or the counterparty, the right of setoff may be exercised. Any amount payable to one party by the other party may be reduced by its setoff against any amounts payable by the other party. Events that give rise to default by either party may include, but are not limited to, the failure to pay or deliver payment under the derivative agreement, the failure to comply with or perform under the derivative agreement, bankruptcy, a merger without assumption of the derivative agreement, or in a merger, a surviving entity’s creditworthiness is materially weaker than the original party to the derivative agreement.

As of March 31, 2019, the fair value of derivatives was in a net asset position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, of $1.4 million. 

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MARCH 31, 2019

Tabular Disclosure of Offsetting Derivatives

The Company has elected not to offset derivative positions on the consolidated financial statements. The tables below present the effect on its financial position had the Company made the election to offset its derivative positions as of March 31, 2019 and December 31, 2018 (dollars in thousands):

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Assets		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Assets	Assets		Sheets		(a)		Instruments		Received		Net Amount
March 31, 2019	$	3,315	$	—	$	3,315	$	—	$	—	$	3,315
December 31, 2018	$	4,757	$	—	$	4,757	$	—	$	—	$	4,757

(a) Amounts reconcile to the aggregate fair value of derivative assets in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Liabilities		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Liabilities	Liabilities		Sheets		(a)		Instruments		Posted		Net Amount
March 31, 2019	$	2,285	$	—	$	2,285	$	—	$	—	$	2,285
December 31, 2018	$	356	$	—	$	356	$	—	$	—	$	356

(a) Amounts reconcile to the aggregate fair value of derivative liabilities in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.

12. STOCK BASED COMPENSATION

The Company recognized stock based compensation expense, inclusive of awards granted to our non-employee directors, net of capitalization, of $4.2 million and $3.5 million during the three months ended March 31, 2019 and 2018, respectively.

13. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Commitments

The following summarizes the Company’s real estate commitments at March 31, 2019 (dollars in thousands):

	Number	UDR's			UDR's Remaining
	Properties	Investment (a)			Commitment
Wholly-owned — redevelopment	2	$	245		$	35,255
Joint ventures:
Unconsolidated joint ventures - development	1		5,471			26,530	(b)
Preferred equity investments	2		25,711	(c)		39,618	(d)
Other investments	-		4,280			13,500	(e)
Total		$	35,707		$	114,903

(a) Represents UDR’s investment as of March 31, 2019.

(b) Represents UDR’s proportionate share of expected remaining costs to complete the development.

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MARCH 31, 2019

(c) Represents UDR’s investment in 1300 Fairmount and Essex for the properties under development as of March 31, 2019.

(d) Represents UDR’s remaining commitment for 1300 Fairmount and Essex.

(e) Represents UDR’s remaining commitment for other investment ventures.

Purchase Commitments

During the three months ended March 31, 2019, the Company entered into a contract to purchase a  313 apartment home operating community located in King of Prussia, Pennsylvania for approximately $108.5 million. The Company made a $5.4 million deposit on the purchase which, as of March 31, 2019, is generally non-refundable other than due to a failure of closing conditions pursuant to the terms of the agreement. The acquisition is expected to close in the second quarter of 2019, subject to customary closing conditions.

Contingencies

Litigation and Legal Matters

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. The Company cannot determine the ultimate liability with respect to such legal proceedings and claims at this time. The Company 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 flows.

14. REPORTABLE SEGMENTS

GAAP guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker to decide how to allocate resources and for purposes of assessing such segments’ performance. UDR’s Chief Operating Decision Maker is comprised of several members of its executive management team who use several generally accepted industry financial measures to assess the performance of the business for our reportable operating segments.

UDR owns and operates multifamily apartment communities that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures for UDR’s apartment communities are rental income and net operating income (“NOI”). Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI is defined as rental income less direct property rental expenses. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense, which is calculated as 2.875% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations, and land rent. UDR’s Chief Operating Decision Maker utilizes NOI as the key measure of segment profit or loss.

UDR’s two reportable segments are Same-Store Communities and Non-Mature Communities/Other:

· Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2018 and held as of March 31, 2019. A comparison of operating results from the prior year is meaningful as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior period, there is no plan to conduct substantial redevelopment activities, and the community is not held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

· Non-Mature Communities/Other represent those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.

Management evaluates the performance of each of our apartment communities on a Same-Store Community and Non-Mature Community/Other basis, as well as individually and geographically. This is consistent with the aggregation criteria under GAAP as each of our apartment communities generally has similar economic characteristics, facilities,

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UDR, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

services, and tenants. Therefore, the Company’s reportable segments have been aggregated by geography in a manner identical to that which is provided to the Chief Operating Decision Maker.

Revenue is measured based on consideration specified in contracts with customers. The Company recognizes revenue when it satisfies a performance obligation by providing the services specified in a contract to the customer. All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of UDR’s total revenues during the three months ended March 31, 2019 and 2018.

The following is a description of the principal streams from which the Company generates its revenue:

Lease Revenue

Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the noncancellable lease term, inclusive of any periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a straight-line basis over the lease term.

Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance reimbursements from retail leases. These services represent non-lease components in a contract as the Company transfers a service to the lessee other than the right to use the underlying asset. The Company has elected the practical expedient under the leasing standard to not separate lease and non-lease components from its resident and retail lease contracts as the timing and pattern of revenue recognition for the non-lease component and related lease component are the same and the combined single lease component would be classified as an operating lease. 

Other Revenue

Other revenue is generated by services provided by the Company to its retail and residential tenants and other unrelated third parties. These fees are generally recognized as earned.

Joint venture management and other fees

The Joint venture management and other fees revenue consists of management fees charged to our equity method joint ventures per the terms of contractual agreements and other fees. Joint venture fee revenue is recognized monthly as the management services are provided and the fees are earned or upon a transaction whereby the Company earns a fee. Joint venture management and other fees are not allocable to a specific reportable segment or segments.

The following table details rental income and NOI for UDR’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	100,565	$	96,665
Mid-Atlantic Region		54,300		52,694
Southeast Region		29,532		28,339
Northeast Region		30,192		29,585
Southwest Region		14,152		13,821
Non-Mature Communities/Other		30,162		21,393
Total segment and consolidated rental income	$	258,903	$	242,497
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	3,154	$	2,738

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

	March 31, (a)
	2019		2018
Mid-Atlantic Region		2,003		1,736
Southeast Region		1,788		1,697
Northeast Region		630		581
Southwest Region		733		569
Non-Mature Communities/Other		711		665
Total segment and consolidated rental income	$	9,019	$	7,986
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	103,719	$	99,403
Mid-Atlantic Region		56,303		54,430
Southeast Region		31,320		30,036
Northeast Region		30,822		30,166
Southwest Region		14,885		14,390
Non-Mature Communities/Other		30,873		22,058
Total segment and consolidated rental income	$	267,922	$	250,483
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	78,439	$	74,979
Mid-Atlantic Region		39,179		37,506
Southeast Region		22,010		21,047
Northeast Region		20,977		20,951
Southwest Region		8,992		8,477
Non-Mature Communities/Other		20,086		13,654
Total segment and consolidated NOI		189,683		176,614
Reconciling items:
Joint venture management and other fees		2,751		2,822
Property management		(7,703)		(6,888)
Other operating expenses		(5,646)		(2,009)
Real estate depreciation and amortization		(112,468)		(108,136)
General and administrative		(12,467)		(11,759)
Casualty-related (charges)/recoveries, net		—		(940)
Other depreciation and amortization		(1,656)		(1,691)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		49		(1,677)
Interest expense		(33,542)		(29,943)
Interest income and other income/(expense), net		9,813		2,759
Tax (provision)/benefit, net		(2,212)		(227)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.	$	24,503	$	81,756

(a) Same-Store Community population consisted of 37,959 apartment homes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

MARCH 31, 2019

The following table details the assets of UDR’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets:
Same-Store Communities:
West Region	$	3,773,413	$	3,763,366
Mid-Atlantic Region		2,323,591		2,317,369
Southeast Region		786,575		779,310
Northeast Region		1,494,009		1,491,994
Southwest Region		448,299		447,305
Non-Mature Communities/Other		1,854,668		1,396,815
Total segment assets		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Total segment assets — net book value		6,916,456		6,541,999
Reconciling items:
Cash and cash equivalents		1,043		185,216
Restricted cash		23,111		23,675
Notes receivable, net		36,974		42,259
Investment in and advances to unconsolidated joint ventures, net		749,100		780,869
Operating lease right-of-use assets		94,145		—
Other assets		134,896		137,710
Total consolidated assets	$	7,955,725	$	7,711,728

Markets included in the above geographic segments are as follows:

i. West Region — Orange County, San Francisco, Seattle, Los Angeles, Monterey Peninsula, Other Southern California and Portland

ii. Mid-Atlantic Region — Metropolitan D.C., Richmond and Baltimore

iii. Southeast Region — Orlando, Tampa, Nashville and Other Florida

iv. Northeast Region — New York and Boston

v. Southwest Region — Dallas, Austin and Denver

38

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39

UNITED DOMINION REALTY, L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for unit data)

	March 31,		December 31,
	2019		2018
	(unaudited)		(audited)
ASSETS
Real estate owned:
Real estate held for investment	$	3,827,875	$	3,811,985
Less: accumulated depreciation		(1,692,702)		(1,658,161)
Total real estate owned, net of accumulated depreciation		2,135,173		2,153,824
Cash and cash equivalents		59		125
Restricted cash		14,010		13,563
Investment in unconsolidated entities		95,673		103,026
Operating lease right-of-use assets		93,987		—
Other assets		24,425		34,052
Total assets	$	2,363,327	$	2,304,590
LIABILITIES AND CAPITAL
Liabilities:
Secured debt, net	$	26,931	$	26,929
Notes payable due to the General Partner		690,974		700,115
Operating lease liabilities		88,061		—
Real estate taxes payable		8,593		2,699
Accrued interest payable		33		32
Security deposits and prepaid rent		14,978		15,250
Distributions payable		63,451		59,461
Accounts payable, accrued expenses, and other liabilities		13,520		14,215
Total liabilities		906,541		818,701
Commitments and contingencies (Note 11)
Capital:
Partners’ capital:
General partner:
110,883 OP Units outstanding at March 31, 2019 and December 31, 2018		926		950
Limited partners:
183,942,239 and 183,525,660 OP Units outstanding at March 31, 2019 and December 31, 2018, respectively		1,441,653		1,471,120
Total partners’ capital		1,442,579		1,472,070
Noncontrolling interests		14,207		13,819
Total capital		1,456,786		1,485,889
Total liabilities and capital	$	2,363,327	$	2,304,590

See accompanying notes to the consolidated financial statements.

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UNITED DOMINION REALTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per unit data)

(Unaudited)

	Three Months Ended
	March 31,
	2019		2018
REVENUES:
Rental income	$	108,334	$	106,592
OPERATING EXPENSES:
Property operating and maintenance		16,531		16,618
Real estate taxes and insurance		12,664		11,685
Property management		2,979		2,931
Other operating expenses		2,400		1,554
Real estate depreciation and amortization		34,654		37,565
General and administrative		4,661		4,309
Casualty-related charges/(recoveries), net		—		342
Total operating expenses		73,889		75,004
Gain/(loss) on sale of real estate owned		—		70,300
Operating income		34,445		101,888
Income/(loss) from unconsolidated entities		(2,740)		(5,017)
Interest expense		(190)		(1,973)
Interest expense on notes payable due to the General Partner		(7,181)		(3,053)
Net income/(loss)		24,334		91,845
Net (income)/loss attributable to noncontrolling interests		(388)		(418)
Net income/(loss) attributable to OP unitholders	$	23,946	$	91,427
Net income/(loss) per weighted average OP Unit - basic and diluted	$	0.13	$	0.50
Weighted average OP Units outstanding - basic and diluted		183,949		183,523

See accompanying notes to the consolidated financial statements.

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UNITED DOMINION REALTY, L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(In thousands)

(Unaudited)

			Limited
	Class A		Partners		UDR, Inc.				Total
	Limited		and LTIP		Limited		General		Partners’		Noncontrolling
	Partner		Units		Partner		Partner		Capital		Interests		Total
Balance at December 31, 2018	$	69,401	$	302,545	$	1,099,174	$	950	$	1,472,070	$	13,819	$	1,485,889
Net income/(loss)		228		812		22,892		14		23,946		388		24,334
Distributions		(599)		(2,570)		(60,262)		(38)		(63,469)		—		(63,469)
OP Unit redemptions for common shares of UDR		—		(71,673)		71,673		—		—		—		—
Adjustment to reflect limited partners’ capital at redemption value		10,601		44,716		(55,317)		—		—		—		—
Long-Term Incentive Plan Unit grants		—		10,032		—		—		10,032		—		10,032
Balance at March 31, 2019	$	79,631	$	283,862	$	1,078,160	$	926	$	1,442,579	$	14,207	$	1,456,786

			Limited								Advances
	Class A		Partners		UDR, Inc.				Total		(to)/from
	Limited		and LTIP		Limited		General		Partners’		General		Noncontrolling
	Partner		Units		Partner		Partner		Capital		Partner		Interests		Total
Balance at December 31, 2017	$	67,474	$	283,568	$	1,112,298	$	955	$	1,464,295	$	397,899	$	12,936	$	1,875,130
Net income/(loss)		887		4,014		86,471		55		91,427		—		418		91,845
Distributions		(582)		(2,684)		(56,157)		(36)		(59,459)		—		—		(59,459)
OP Unit redemptions for common shares of UDR		—		(320)		320		—		—		—		—		—
Adjustment to reflect limited partners’ capital at redemption value		(5,384)		(19,590)		24,974		—		—		—		—		—
Long-Term Incentive Plan Unit grants		—		7,109		—		—		7,109		—		—		7,109
Net change in advances (to)/from the General Partner		—		—		—		—		—		(107,097)		—		(107,097)
Balance at March 31, 2018	$	62,395	$	272,097	$	1,167,906	$	974	$	1,503,372	$	290,802	$	13,354	$	1,807,528

See accompanying notes to the consolidated financial statements.

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UNITED DOMINION REALTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2019		2018
Operating Activities
Net income/(loss)	$	24,334	$	91,845
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization		34,654		37,565
(Gain)/loss on sale of real estate owned		—		(70,300)
(Income)/loss from unconsolidated entities		2,740		5,017
Other		1,364		1,091
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets		2,529		2,091
Increase/(decrease) in operating liabilities		3,006		3,540
Net cash provided by/(used in) operating activities		68,627		70,849
Investing Activities
Proceeds from sales of real estate investments, net		—		89,433
Capital expenditures and other major improvements — real estate assets		(14,271)		(7,402)
Distributions received from unconsolidated entities		4,613		4,344
Net cash provided by/(used in) investing activities		(9,658)		86,375
Financing Activities
Advances (to)/from the General Partner, net		—		(154,101)
Issuance/(repayment) of notes payable to the General Partner		(55,599)		—
Distributions paid to partnership unitholders		(2,989)		(2,910)
Net cash provided by/(used in) financing activities		(58,588)		(157,011)
Net increase/(decrease) in cash, cash equivalents, and restricted cash		381		213
Cash, cash equivalents, and restricted cash, beginning of year		13,688		12,872
Cash, cash equivalents, and restricted cash, end of period	$	14,069	$	13,085
Supplemental Information:
Interest paid during the period, net of amounts capitalized	$	5,031	$	3,368
Non-cash transactions:
Development costs and capital expenditures incurred but not yet paid		3,676		1,903
Recognition of operating lease right-of-use assets		94,174		—
Recognition of operating lease liabilities		88,161		—
LTIP Unit grants		10,032		7,109
Distributions declared but not yet paid		63,451		59,461
The following reconciles cash, cash equivalents, and restricted cash to the total of the same amounts as shown above:
Cash, cash equivalents, and restricted cash, beginning of year
Cash and cash equivalents	$	125	$	293
Restricted cash		13,563		12,579
Total cash, cash equivalents, and restricted cash as shown above	$	13,688	$	12,872
Cash, cash equivalents, and restricted cash, end of period
Cash and cash equivalents	$	59	$	74
Restricted cash		14,010		13,011
Total cash, cash equivalents, and restricted cash as shown above	$	14,069	$	13,085

See accompanying notes to the consolidated financial statements.

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UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

1. CONSOLIDATION AND BASIS OF PRESENTATION

Basis of Presentation

United Dominion Realty, L.P. (“UDR, L.P.,” the “Operating Partnership,” “we” or “our”) is a Delaware limited partnership, that owns, acquires, renovates, redevelops, manages, and disposes of multifamily apartment communities generally located in high barrier to entry markets located in the United States. The high barrier to entry markets are characterized by limited land for new construction, difficult and lengthy entitlement process, expensive single-family home prices and significant employment growth potential. UDR, L.P. is a subsidiary of UDR, Inc. (“UDR” or the “General Partner”), a self-administered real estate investment trust, or REIT, through which UDR conducts a significant portion of its business. During the three months ended March 31, 2019 and 2018, rental revenues of the Operating Partnership represented 40% and 43%, respectively,  of the General Partner’s consolidated rental revenues. As of March 31, 2019, the Operating Partnership’s apartment portfolio consisted of 52 communities located in 15 markets consisting of 16,434 apartment homes.

Interests in UDR, L.P. are represented by operating partnership units (“OP Units”). The Operating Partnership’s net income is allocated to the partners, which is initially based on their respective distributions made during the year and secondly, their percentage interests. Distributions are made in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. (the “Operating Partnership Agreement”), on a per unit basis that is generally equal to the dividend per share on UDR’s common stock, which is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “UDR.”

As of March 31, 2019, there were 184,053,122 OP Units outstanding, of which 176,057,247, or 95.7%, were owned by UDR and affiliated entities and 7,995,875, or 4.3%, were owned by non-affiliated limited partners. There were 183,636,543 OP Units outstanding as of December 31, 2018, of which 174,248,699, or 94.9%, were owned by UDR and affiliated entities and 9,387,844, or 5.1%, were owned by non-affiliated limited partners. See Note 10, Capital Structure.

The accompanying interim unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note 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. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of our financial position as of March 31, 2019, and results of operations for the three months ended March 31, 2019 and 2018, have been included. 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 accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 included in the Annual Report on Form 10‑K filed by UDR and the Operating Partnership with the SEC on February 19, 2019.

The accompanying interim unaudited consolidated statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP 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 interim unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All intercompany accounts and transactions have been eliminated in consolidation.

The Operating Partnership evaluated subsequent events through the date its financial statements were issued. No significant recognized or non-recognized subsequent events were noted.

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UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

MARCH 31, 2019

2. SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Operating Partnership on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Operating Partnership is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Operating Partnership on January 1, 2019.

The Operating Partnership elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Operating Partnership also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Operating Partnership recognized right-of-use assets of $94.2 million and lease liabilities of $88.2 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizingthe lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.5 million and $140.5 million, respectively, during the remainder of 2019. The Operating Partnership will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be

45

UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

MARCH 31, 2019

classified as an operating lease. The Operating Partnership elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Operating Partnership also elected.

Principles of Consolidation

The Operating Partnership accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the amended consolidation guidance. The Operating Partnership first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Operating Partnership consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Operating Partnership consolidates an entity when it controls the entity through ownership of a majority voting interest.

Income/(Loss) Per Operating Partnership Unit

Basic income/(loss) per OP Unit is computed by dividing net income/(loss) attributable to the general and limited partner unitholders by the weighted average number of general and limited partner units outstanding during the year. Diluted income/(loss) per OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units or resulted in the issuance of OP Units and then shared in the income/(loss) of the Operating Partnership.

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Operating Partnership generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Operating Partnership will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Operating Partnership sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Operating Partnership will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Operating Partnership will record a full gain or loss in the period the property is contributed.

To the extent that the Operating Partnership acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Operating Partnership will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Operating Partnership will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Operating Partnership will not recognize a gain or loss on consolidation of a property.

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to unitholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Operating Partnership’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges and (gain)/loss reclassified from other comprehensive income/(loss) into earnings. The (gain)/loss reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 9, Derivatives and Hedging Activity, for further discussion.

46

UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

MARCH 31, 2019

Income Taxes

The taxable income or loss of the Operating Partnership is reported on the tax returns of the partners. Accordingly, no provision has been made in the accompanying financial statements for federal or state income taxes on income that is passed through to the partners. However, any state or local revenue, excise or franchise taxes that result from the operating activities of the Operating Partnership are recorded at the entity level. The Operating Partnership’s tax returns are subject to examination by federal and state taxing authorities. Net income for financial reporting purposes differs from the net income for income tax reporting purposes primarily due to temporary differences, principally real estate depreciation and the tax deferral of certain gains on property sales. The differences in depreciation result from differences in the book and tax basis of certain real estate assets and the differences in the methods of depreciation and lives of the real estate assets.

The Operating Partnership evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Operating Partnership’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Management of the Operating Partnership is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The Operating Partnership has no examinations in progress and none are expected at this time.

Management of the Operating Partnership has reviewed all open tax years (2015 through 2018) of tax jurisdictions and concluded there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns.

3. REAL ESTATE OWNED

Real estate assets owned by the Operating Partnership consist of income producing operating properties, properties under development, land held for future development, and sold or held for disposition properties. At March 31, 2019, the Operating Partnership owned and consolidated 52 communities in nine states plus the District of Columbia totaling 16,434 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	711,256	$	711,256
Depreciable property — held and used:
Land improvements		92,624		92,000
Buildings, improvements, and furniture, fixtures and equipment		3,023,995		3,008,729
Real estate owned		3,827,875		3,811,985
Accumulated depreciation		(1,692,702)		(1,658,161)
Real estate owned, net	$	2,135,173	$	2,153,824

Acquisitions

The Operating Partnership did not have any acquisitions of real estate during the three months ended March 31, 2019.

47

UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

MARCH 31, 2019

Dispositions

The Operating Partnership did not have any dispositions of real estate during the three months ended March 31, 2019.

Other Activity

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Operating Partnership capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, were less than $0.1 million for both the three months ended March 31, 2019 and 2018. During each of the three months ended March 31, 2019 and 2018,  total interest capitalized was less than $0.1 million. As each home in a capital project is completed and becomes available for lease-up, the Operating Partnership ceases capitalization on the related portion of the costs and depreciation commences over the estimated useful life.

In connection with the acquisition of certain properties, the Operating Partnership agreed to pay certain of the tax liabilities of certain contributors if the Operating Partnership sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Operating Partnership may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax deferred Section 1031 exchange. 

Further, the Operating Partnership has agreed to maintain certain debt that may be guaranteed by certain contributors for specified periods of time following the acquisition. The Operating Partnership, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.

4. UNCONSOLIDATED ENTITIES

The DownREIT Partnership is accounted for by the Operating Partnership under the equity method of accounting and is included in Investment in unconsolidated entities on the Consolidated Balance Sheets. The Operating Partnership recognizes earnings or losses from its investments in unconsolidated entities consisting of our proportionate share of the net earnings or losses of the partnership in accordance with the Partnership Agreement.

The DownREIT Partnership is a VIE as the limited partners lack substantive kick-out rights and substantive participating rights. The Operating Partnership is not the primary beneficiary of the DownREIT Partnership as it lacks the power to direct the activities that most significantly impact its economic performance and will continue to account for its interest as an equity method investment. See Note 2, Significant Accounting Policies.

As of March 31, 2019, the DownREIT Partnership owned 12 communities with 5,657 apartment homes. The Operating Partnership’s investment in the DownREIT Partnership was $95.7 million and $103.0 million as of March 31, 2019 and December 31, 2018, respectively.

48

UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

MARCH 31, 2019

Combined summary balance sheets relating to all of the DownREIT Partnership (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	1,151,740	$	1,167,720
Cash and cash equivalents		21		39
Note receivable from the General Partner		218,520		221,022
Other assets		4,855		5,561
Total assets	$	1,375,136	$	1,394,342
Secured debt, net	$	430,890	$	431,735
Other liabilities		23,006		26,597
Total liabilities		453,896		458,332
Total capital	$	921,240	$	936,010

Combined summary financial information relating to all of the DownREIT Partnership (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Rental income	$	31,606	$	34,012
Property operating expenses		(13,096)		(14,487)
Real estate depreciation and amortization		(20,294)		(21,495)
Operating income/(loss)		(1,784)		(1,970)
Interest expense		(3,888)		(3,574)
Interest income on note receivable from the General Partner		1,988		1,196
Net income/(loss)	$	(3,684)	$	(4,348)

5. LEASES

Lessee - Ground Leases

The Operating Partnership owns six communities that are subject to ground leases, under which the Operating Partnership is the lessee, expiring between 2043 and 2103, inclusive of extension options we are reasonably certain will be exercised. All of these leases existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, these leases will continue to be classified as operating leases through the lease term expiration. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the remaining lease term. We currently do not hold any finance leases.

As of March 31, 2019, the Operating lease right-of-use assets was $94.0 million and the Operating lease liabilities was $88.1 million on our Consolidated Balance Sheets related to our ground leases. The value of the Operating lease right-of-use assets exceeds the value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in earnings in the period in which the obligation for those payments is incurred.

As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases utilizing the Operating Partnership’s incremental borrowing rate at a portfolio level, adjusted for the remaining lease term, and the form of underlying collateral.  

The weighted average remaining lease term for these leases was 71.1 years at March 31, 2019 and the weighted average discount rate was 5.2% at March 31, 2019. 

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Future minimum lease payments and total operating lease liabilities from our ground leases as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases
2019	$	3,676
2020		4,901
2021		4,901
2022		4,901
2023		4,901
Thereafter		313,919
Total future minimum lease payments (undiscounted)		337,199
Difference between future undiscounted cash flows and discounted cash flows		(249,138)
Total operating lease liabilities (discounted)	$	88,061

For purposes of recognizing our ground lease contracts, the Operating Partnership uses the minimum lease payments, if stated in the agreement. For ground lease agreements where there is a rent reset provision based on fair market value or changes in the consumer price index but that does not include a specified minimum lease payment, the Company uses the current rent over the remainder of the lease term. We are currently in a dispute with the lessor of one of our ground lease contracts as it relates to a rent reset provision that requires both parties to agree to a new rent based on the current fair market value of the land or, absent agreement, have it determined by an appraisal process. The current annual lease payment under the ground lease contract to which the dispute relates, exclusive of variable payments, is $0.5 million, which is reflected in the table above. Depending on the outcome of the dispute, the future annual lease payments under such ground lease contract are likely to be between $1.2 million and $4.0 million.

The components of operating lease expenses from our ground leases were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total operating lease expense	$	2,279

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses on the Consolidated Statements of Operations.

Lessor - Apartment Home and Retail and Commercial Leases

The Operating Partnership’s communities and retail and commercial space are leased to tenants under operating leases. Nearly all of our apartment home leases have initial terms of 12 months or less. Our retail and commercial space leases expire between 2019 and 2030. (See Note 12, Reportable Segments for further discussion around our major revenue streams and disaggregation of our revenue.)

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Future minimum lease payments from our retail and commercial leases as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases
2019	$	5,357
2020		7,600
2021		7,270
2022		6,684
2023		6,375
Thereafter		19,578
Total future minimum lease payments (a)	$	52,864

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage rents. The Operating Partnership recorded variable percentage rents of less than $0.1 million during the three months ended March 31, 2019.

6. DEBT, NET

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. For purposes of classification in the following table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Operating Partnership having effectively established the fixed interest rate for the underlying debt instrument. Secured debt consists of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
							Weighted
					Weighted		Average
	March 31,		December 31,		Average		Years to	Communities
	2019		2018		Interest Rate		Maturity	Encumbered
Secured Debt
Tax-exempt secured note payable	$	27,000	$	27,000	2.47	%	13.0	1
Deferred financing costs		(69)		(71)
Total Secured Debt, Net	$	26,931	$	26,929	2.50	%	13.0	1

The Operating Partnership may from time to time acquire properties subject to fixed rate debt instruments. In those situations, management will record the secured debt at its estimated fair value and amortize any difference between the fair value and par to interest expense over the life of the underlying debt instrument. The Operating Partnership did not have any unamortized fair value adjustments associated with the fixed rate debt instruments on the Operating Partnership’s properties.

Variable Rate Debt

Tax-exempt secured note payable. The variable rate mortgage note payable that secures tax-exempt housing bond issues matures March 2032. Interest on this note is payable in monthly installments. The mortgage note payable has an interest rate of 2.47% as of March 31, 2019.

Guarantor on Unsecured Debt

The Operating Partnership is a guarantor on the General Partner’s unsecured revolving credit facility with an aggregate borrowing capacity of $1.1 billion, an unsecured commercial paper program with an aggregate borrowing capacity of $500 million, $300 million of medium-term notes due October 2020, $400 million of medium-term notes due

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January 2022, a  $350 million term loan due September 2023, $300 million of medium-term notes due July 2024, $300 million of medium-term notes due October 2025, $300 million of medium-term notes due September 2026, $300 million of medium-term notes due July 2027, $300 million of medium-term notes due January 2028, and $300 million of medium-term notes due January 2029. As of March 31, 2019 and December 31, 2018, the General Partner did not have an outstanding balance under the unsecured revolving credit facility and had $90.0 million and $101.1 million, respectively, outstanding under its unsecured commercial paper program.

7. RELATED PARTY TRANSACTIONS

Allocation of General and Administrative Expenses

The General Partner shares various general and administrative costs, employees and other overhead costs with the Operating Partnership including legal assistance, acquisitions analysis, marketing, human resources, IT, accounting, rent, supplies and advertising, and allocates these costs to the Operating Partnership first on the basis of direct usage when identifiable, with the remainder allocated based on the reasonably anticipated benefits to the parties. The general and administrative expenses allocated to the Operating Partnership by UDR were $3.6 million and $3.5 million during the three months ended March 31, 2019 and 2018, respectively, and are included in General and administrative on the Consolidated Statements of Operations. In the opinion of management, this method of allocation reflects the level of services received by the Operating Partnership from the General Partner.

During the three months ended March 31, 2019 and 2018, the Operating Partnership reimbursed the General Partner $4.0 million and $3.7 million, respectively, for shared services related to corporate level property management costs incurred by the General Partner. These shared cost reimbursements are initially recorded within the line item General and administrative on the Consolidated Statements of Operations, and a portion related to management costs is reclassified to Property management on the Consolidated Statements of Operations. (See further discussion below.)

Shared Services

The Operating Partnership self-manages its own properties and is party to an Inter-Company Employee and Cost Sharing Agreement with the General Partner. This agreement provides for reimbursements to the General Partner for the Operating Partnership’s allocable share of costs incurred by the General Partner for (a) shared services of corporate level property management employees and related support functions and costs, and (b) general and administrative costs. As discussed above, the reimbursement for shared services is classified in Property management on the Consolidated Statements of Operations.

Notes Payable to the General Partner

The following table summarizes the Operating Partnership’s Notes payable due to the General Partner as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due August 2021	5.34	%	$	5,500	$	5,500
Note due December 2023	5.18	%		83,196		83,196
Note due April 2026	4.12	%		184,638		184,638
Note due November 2028	4.69	%		133,205		133,205
Note due December 2028 (a)	3.73	%		284,435		293,576
Total notes payable due to the General Partner			$	690,974	$	700,115

(a) In December 2018, the Operating Partnership converted the remaining outstanding portion of the Advances (to)/from the General Partner capital balance in connection with entering into an unsecured revolving note payable with the General Partner.  There is no limit on the total commitments under this note. Interest is incurred on the unpaid principal balance at a variable interest rate equivalent to the General Partner’s weighted average interest rate on borrowings, or 3.73% as of March 31, 2019. The note matures on December 1, 2028.  To the extent there is an

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MARCH 31, 2019

outstanding principal balance on the revolving note payable, the General Partner, at its discretion, can demand payment at any time prior to the stated maturity date of the note,

Certain limited partners of the Operating Partnership have provided guarantees or reimbursement agreements related to these notes payable. The guarantees were provided by the limited partners in conjunction with their contribution of properties to the Operating Partnership. The Operating Partnership recognized interest expense on the notes payable of $7.2 million and $3.1 million during the three months ended March 31, 2019 and 2018, respectively.

8. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

· Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

· Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The estimated fair values of the Operating Partnership’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018 are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Secured debt instruments - variable rate: (a)
Tax-exempt secured notes payable	$	27,000	$	27,000	$	—	$	—	$	27,000
Total liabilities	$	27,000	$	27,000	$	—	$	—	$	27,000

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MARCH 31, 2019

					Fair Value at December 31, 2018, Using
					Quoted
	Total				Prices in
	Carrying				Active
	Amount in				Markets
	Statement of				for Identical		Significant
	Financial		Fair Value		Assets		Other		Significant
	Position at		Estimate at		or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Secured debt instruments - variable rate: (a)
Tax-exempt secured notes payable	$	27,000	$	27,000	$	—	$	—	$	27,000
Total liabilities	$	27,000	$	27,000	$	—	$	—	$	27,000

(a) See Note 6,  Debt, Net.

There were no transfers into or out of each of the levels of the fair value hierarchy during the three months ended March 31, 2019.

Financial Instruments Carried at Fair Value

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

The General Partner, on behalf of the Operating Partnership, incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Operating Partnership has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the General Partner, on behalf of the Operating Partnership, has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2019 and December 31, 2018, the Operating Partnership has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Operating Partnership has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Operating Partnership made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Financial Instruments Not Carried at Fair Value

As of March 31, 2019, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.

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The Operating Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Cash flow estimates are based upon historical results adjusted to reflect management’s best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair value. The General Partner’s estimates of fair value represent management’s estimates based upon Level 3 inputs such as industry trends and reference to market rates and transactions. The Operating Partnership did not incur any other-than-temporary impairments in the value of its investments in unconsolidated entities during the three months ended March 31, 2019 and 2018.

9. DERIVATIVES AND HEDGING ACTIVITY

Risk Management Objective of Using Derivatives

The Operating Partnership is exposed to certain risks arising from both its business operations and economic conditions. The General Partner principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The General Partner manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the General Partner enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The General Partner’s and the Operating Partnership’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the General Partner’s known or expected cash payments principally related to the General Partner’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The General Partner’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the General Partner primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the General Partner making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an upfront premium.

A portion of the General Partner’s interest rate derivatives are owed by the Operating Partnership based on the General Partner’s underlying debt instruments owed by the Operating Partnership. (See Note 6, Debt, Net.)

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. As of and during the three months ended March 31, 2019 and 2018, no derivatives designated as cash flow hedges were held by the Operating Partnership.

Amounts reported in Accumulated other comprehensive income/(loss), net related to derivatives will be reclassified to interest expense as interest payments are made on the General Partner’s variable-rate debt that is owed by the Operating Partnership. As of March 31, 2019, no derivatives designated as cash flow hedges were held by the Operating Partnership and, as a result, no amounts are anticipated to be reclassified as an increase to interest expense through March 31, 2020.

Derivatives not designated as hedges are not speculative and are used to manage the Operating Partnership’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in no gain or loss for both the three months ended March 31, 2019 and 2018.

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MARCH 31, 2019

As of March 31, 2019, we had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets

As of March 31, 2019 and December 31, 2018, the fair value of the Operating Partnership’s derivative financial instruments was zero.  

Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations

During the three months ended March 31, 2019 and 2018, the Operating Partnership’s derivative instruments did not impact the Consolidated Statement of Operations.

Credit-risk-related Contingent Features

The General Partner has agreements with its derivative counterparties that contain a provision where the General Partner could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the General Partner’s default on the indebtedness.

The General Partner has certain agreements with some of its derivative counterparties that contain a provision where, in the event of default by the General Partner or the counterparty, the right of setoff may be exercised. Any amount payable to one party by the other party may be reduced by its setoff against any amounts payable by the other party. Events that give rise to default by either party may include, but are not limited to, the failure to pay or deliver payment under the derivative agreement, the failure to comply with or perform under the derivative agreement, bankruptcy, a merger without assumption of the derivative agreement, or in a merger, a surviving entity’s creditworthiness is materially weaker than the original party to the derivative agreement.

10. CAPITAL STRUCTURE

General Partnership Units

The General Partner has complete discretion to manage and control the operations and business of the Operating Partnership, which includes but is not limited to the acquisition and disposition of real property, construction of buildings and making capital improvements, and the borrowing of funds from outside lenders or UDR and its subsidiaries to finance such activities. The General Partner can generally authorize, issue, sell, redeem or purchase any OP Unit or securities of the Operating Partnership without the approval of the limited partners. The General Partner can also approve, with regard to the issuances of OP Units, the class or one or more series of classes, with designations, preferences, participating, optional or other special rights, powers and duties including rights, powers and duties senior to limited partnership interests without approval of any limited partners except holders of Class A Limited Partnership Units. There were 110,883 General Partnership units outstanding at March 31, 2019 and December 31, 2018, all of which were held by UDR.

Limited Partnership Units

As of March 31, 2019 and December 31, 2018, there were 183,942,239 and 183,525,660, respectively, of limited partnership units outstanding, of which 1,873,332 were Class A Limited Partnership Units for both periods. UDR owned 175,946,364, or 95.7%, and 174,137,816, or 94.9%, of OP Units outstanding at March 31, 2019 and December 31, 2018, respectively, of which 121,661 were Class A Limited Partnership Units for both periods. The remaining 7,995,875, or 4.3%, and 9,387,844, or 5.1%, of OP Units outstanding were held by non-affiliated partners at March 31, 2019 and December 31, 2018, respectively, of which 1,751,671 were Class A Limited Partnership Units for both periods.

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MARCH 31, 2019

Subject to the terms of the Operating Partnership Agreement, the limited partners have the right to require the Operating Partnership to redeem all or a portion of the OP Units held by the limited partner at a redemption price equal to and in the form of the Cash Amount (as defined in the Operating Partnership Agreement), provided that such OP Units have been outstanding for at least one year. UDR, as general partner of the Operating Partnership, may, in its sole discretion, purchase the OP Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (generally one share of common stock of UDR for each OP Unit), as defined in the Operating Partnership Agreement.

The non-affiliated limited partners’ capital is adjusted to redemption value at the end of each reporting period with the corresponding offset against UDR’s limited partner capital account based on the redemption rights noted above. The aggregate value upon redemption of the then-outstanding OP Units held by limited partners was $363.5 million and $371.9 million as of March 31, 2019 and December 31, 2018, respectively, based on the value of UDR’s common stock at each period end. A limited partner has no right to receive any distributions from the Operating Partnership on or after the date of redemption of its OP Units.

Class A Limited Partnership Units

Class A Limited Partnership Units have a cumulative, annual, non-compounded preferred return, which is equal to 8% based on a value of $16.61 per Class A Limited Partnership Unit.

Holders of the Class A Limited Partnership Units exclusively possess certain voting rights. The Operating Partnership may not do the following without approval of the holders of the Class A Limited Partnership Units: (i) increase the authorized or issued amount of Class A Limited Partnership Units, (ii) reclassify any other partnership interest into Class A Limited Partnership Units, (iii) create, authorize or issue any obligations or security convertible into or the right to purchase Class A Limited Partnership Units, (iv) enter into a merger or acquisition, or (v) amend or modify the Operating Partnership Agreement in a manner that adversely affects the relative rights, preferences or privileges of the Class A Limited Partnership Units.

The following table shows OP Units outstanding and OP Unit activity as of and for the three months ended March 31, 2019:

			UDR, Inc.
	Class A			Class A
	Limited	Limited	Limited	Limited	General
	Partners	Partners	Partner	Partner	Partner	Total
Ending balance at December 31, 2018	1,751,671	7,636,173	174,016,155	121,661	110,883	183,636,543
Vesting of LTIP Units	—	416,579	—	—	—	416,579
OP redemptions for UDR stock	—	(1,808,548)	1,808,548	—	—	—
Ending balance at March 31, 2019	1,751,671	6,244,204	175,824,703	121,661	110,883	184,053,122

LTIP Units

UDR grants long-term incentive plan units (“LTIP Units”) to certain employees and non-employee directors. The LTIP Units represent an ownership interest in the Operating Partnership and have voting and distribution rights consistent with OP Units. The LTIP Units are subject to the terms of UDR’s long-term incentive plan.

Two classes of LTIP Units are granted, Class 1 LTIP Units and Class 2 LTIP Units. Class 1 LTIP Units are granted to certain employees and non-employee directors and vest over a period of up to four years. Class 2 LTIP Units are granted to certain employees and vest over a period from one to three years subject to certain performance and market conditions being achieved. Vested LTIP Units may be converted into OP Units provided that such LTIP Units have been outstanding for at least two years from the date of grant.

Allocation of Profits and Losses

Profit of the Operating Partnership is allocated in the following order: (i) to the General Partner and the Limited Partners in proportion to and up to the amount of cash distributions made during the year, and (ii) to the General Partner and Limited Partners in accordance with their percentage interests. Losses and depreciation and amortization expenses,

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non-recourse liabilities are allocated to the General Partner and Limited Partners in accordance with their percentage interests. Losses allocated to the Limited Partners are capped to the extent that such an allocation would not cause a deficit in the Limited Partners’ capital account. Such losses are, therefore, allocated to the General Partner. If any Partner’s capital balance were to fall into a deficit, any income and gains are allocated to each Partner sufficient to eliminate its negative capital balance.

11. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Commitments

The following summarizes the Operating Partnership’s real estate commitments at March 31, 2019 (dollars in thousands):

	Number			Operating Partnership's
	Properties	Investment		Remaining Commitment
Real estate communities - redevelopment	1	$	108	$	24,892

Contingencies

Litigation and Legal Matters

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

12. REPORTABLE SEGMENTS

GAAP guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker to decide how to allocate resources and for purposes of assessing such segments’ performance. The Operating Partnership has the same Chief Operating Decision Maker as that of its parent, the General Partner. The Chief Operating Decision Maker consists of several members of UDR’s executive management team who use several generally accepted industry financial measures to assess the performance of the business for our reportable operating segments.

The Operating Partnership owns and operates multifamily apartment communities throughout the United States that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures of the Operating Partnership’s apartment communities are rental income and net operating income (“NOI”), and are included in the Chief Operating Decision Maker’s assessment of the Operating Partnership’s performance on a consolidated basis. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI is defined as total revenues less direct property operating expenses. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI are property management costs, which are the Operating Partnership’s allocable share of costs incurred by the General Partner for shared services of corporate level property management employees and related support functions and costs. The Chief Operating Decision Maker of the General Partner utilizes NOI as the key measure of segment profit or loss.

The Operating Partnership’s two reportable segments are Same-Store Communities and Non-Mature Communities/Other:

· Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2018 and held as of March 31, 2019. A comparison of operating results from the prior year is meaningful as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior period, there is no plan to conduct substantial redevelopment activities, and the community is

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not held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

· Non-Mature Communities/Other represent those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.

Management of the General Partner evaluates the performance of each of the Operating Partnership’s apartment communities on a Same-Store Community and Non-Mature Community/Other basis, as well as individually and geographically. This is consistent with the aggregation criteria under GAAP as each of our apartment communities generally has similar economic characteristics, facilities, services, and tenants. Therefore, the Operating Partnership’s reportable segments have been aggregated by geography in a manner identical to that which is provided to the Chief Operating Decision Maker.

All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of the Operating Partnership’s total revenues during the three months ended March 31, 2019 and 2018.

The following is a description of the principal streams from which the Operating Partnership generates its revenue:

Lease Revenue

Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the noncancellable lease term, inclusive of any periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a straight-line basis over the lease term.

Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance reimbursements from retail leases. These services represent non-lease components in a contract as the Operating Partnership transfers a service to the lessee other than the right to use the underlying asset. The Operating Partnership has elected the practical expedient under the leasing standard to not separate lease and non-lease components from its resident and retail lease contracts as the timing and pattern of revenue recognition for the non-lease component and related lease component are the same and the combined single lease component would be classified as an operating lease. 

Other Revenue

Other revenue is generated by services provided by the Operating Partnership to its retail and residential tenants and other unrelated third parties. These fees are generally recognized as earned.

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UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

MARCH 31, 2019

The following table details rental income and NOI for the Operating Partnership’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to OP unitholders on the Consolidated Statements of Operations (dollars in thousands):

	Three Months Ended
	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	60,782	$	58,340
Mid-Atlantic Region		14,810		14,532
Southeast Region		12,462		11,979
Northeast Region		7,972		7,848
Non-Mature Communities/Other		8,650		10,470
Total segment and consolidated rental income	$	104,676	$	103,169
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	1,994	$	1,824
Mid-Atlantic Region		535		495
Southeast Region		776		750
Northeast Region		166		166
Non-Mature Communities/Other		187		188
Total segment and consolidated rental income	$	3,658	$	3,423
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	62,776	$	60,164
Mid-Atlantic Region		15,345		15,027
Southeast Region		13,238		12,729
Northeast Region		8,138		8,014
Non-Mature Communities/Other		8,837		10,658
Total segment and consolidated rental income	$	108,334	$	106,592
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	47,798	$	45,829
Mid-Atlantic Region		10,524		10,393
Southeast Region		9,257		8,792
Northeast Region		6,205		6,216
Non-Mature Communities/Other		5,355		7,059
Total segment and consolidated NOI		79,139		78,289
Reconciling items:
Property management		(2,979)		(2,931)
Other operating expenses		(2,400)		(1,554)
Real estate depreciation and amortization		(34,654)		(37,565)
General and administrative		(4,661)		(4,309)
Casualty-related (charges)/recoveries, net		—		(342)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		(2,740)		(5,017)
Interest expense		(7,371)		(5,026)
Net (income)/loss attributable to noncontrolling interests		(388)		(418)
Net income/(loss) attributable to OP unitholders	$	23,946	$	91,427

(a) Same-Store Community population consisted of 15,723 apartment homes.

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UNITED DOMINION REALTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

MARCH 31, 2019

The following table details the assets of the Operating Partnership’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets
Same-Store Communities
West Region	$	1,988,360	$	1,981,007
Mid-Atlantic Region		664,103		663,083
Southeast Region		343,520		340,722
Northeast Region		406,759		406,149
Non-Mature Communities/Other		425,133		421,024
Total segment assets		3,827,875		3,811,985
Accumulated depreciation		(1,692,702)		(1,658,161)
Total segment assets - net book value		2,135,173		2,153,824
Reconciling items:
Cash and cash equivalents		59		125
Restricted cash		14,010		13,563
Investment in unconsolidated entities		95,673		103,026
Operating lease right-of-use assets		93,987		—
Other assets		24,425		34,052
Total consolidated assets	$	2,363,327	$	2,304,590

Markets included in the above geographic segments are as follows:

i. West Region — Orange County, San Francisco, Seattle, Los Angeles, Monterey Peninsula, Other Southern California and Portland

ii. Mid-Atlantic Region — Metropolitan, D.C. and Baltimore

iii. Southeast Region —  Tampa, Nashville and Other Florida

iv. Northeast Region — New York and Boston

v. Southwest Region — Denver

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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,” “likely,” “will,” “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 our actual results, performance or achievements 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, unfavorable changes in the apartment market, changing economic conditions, the impact of inflation/deflation on rental rates and property operating expenses, expectations concerning the availability of capital and the stability of the capital markets, the impact of competition and competitive pricing, acquisitions, developments and redevelopments not achieving anticipated results, delays in completing developments and redevelopments, delays in completing lease-ups on schedule or at expected rent and occupancy levels, expectations on job growth, home affordability and demand/supply ratio for multifamily housing, expectations concerning development and redevelopment activities, expectations on occupancy levels and rental rates, expectations concerning joint ventures and partnerships with third parties, expectations that automation will help grow net operating income, and expectations on annualized net operating income.

The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:

· general economic conditions;

· 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;

· competitive factors that may limit our ability to lease apartment homes or increase or maintain rents;

· insufficient cash flow that could affect our debt financing and create refinancing risk;

· failure to generate sufficient revenue, which could impair our debt service payments and distributions to stockholders;

· development and construction risks that may impact our profitability;

· potential damage from natural disasters, including hurricanes and other weather-related events, which could result in substantial costs to us;

· risks from extraordinary losses for which we may not have insurance or adequate reserves;

· risks from cybersecurity breaches of our information technology systems and the information technology systems of our third party vendors and other third parties;

· uninsured losses due to insurance deductibles, self-insurance retention, uninsured claims or casualties, or losses in excess of applicable coverage;

· delays in completing developments and lease-ups on schedule;

· our failure to succeed in new markets;

· risks that third parties who have an interest in or are otherwise involved in projects in which we have an interest, including mezzanine borrowers, joint venture partners or other investors, do not perform as expected;

· changing interest rates, which could increase interest costs and affect the market price of our securities;

· potential liability for environmental contamination, which could result in substantial costs to us;

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· the imposition of federal taxes if we fail to qualify as a REIT under the Code in any taxable year;

· our internal control over financial reporting may not be considered effective which could result in a loss of investor confidence in our financial reports, and in turn have an adverse effect on our stock price; and

· changes in real estate laws, tax laws and other laws affecting our business.

A discussion of these and other factors affecting our business and prospects is set forth in Part II, Item 1A. Risk Factors. We encourage investors to review these risk factors.

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.

Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Report, and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.

The following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere herein and is based primarily on the consolidated financial statements for the three months ended March 31, 2019 and 2018, of each of UDR, Inc. and United Domination Realty, L.P.

UDR, Inc.:

Business Overview

We are a self-administered real estate investment trust, or REIT, that owns, operates, acquires, renovates, develops, redevelops, disposes of, and manages multifamily apartment communities. 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 the Operating Partnership and the DownREIT Partnership. Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” “the Company,” or “UDR” refer collectively to UDR, Inc., its subsidiaries and its consolidated joint ventures.

At March 31, 2019, our consolidated real estate portfolio included 131 communities in 11 states plus the District of Columbia totaling 41,041 apartment homes, and our total real estate portfolio, inclusive of our unconsolidated communities, included an additional 32 communities with 8,112 apartment homes. The Same-Store Community apartment home population for the three months ended March 31, 2019, was 37,959.

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The following table summarizes our market information by major geographic markets as of and for the three months ended March 31, 2019:

		March 31, 2019					Three Months Ended March 31, 2019
			Percentage		Total				Monthly
	Number of	Number of	of Total		Carrying		Average		Income per
	Apartment	Apartment	Carrying		Value (in		Physical		Occupied
Same-Store Communities	Communities	Homes	Value		thousands)		Occupancy		Home (a)
West Region
Orange County, CA	10	4,434	10.6	%	$	1,127,647	96.0	%	$	2,335
San Francisco, CA	11	2,751	8.1	%		867,635	97.0	%		3,655
Seattle, WA	15	2,837	9.3	%		988,074	96.2	%		2,470
Los Angeles, CA	4	1,225	4.3	%		454,958	96.9	%		2,874
Monterey Peninsula, CA	7	1,565	1.7	%		178,263	95.9	%		1,853
Other Southern California	2	654	1.0	%		107,601	96.8	%		1,933
Portland, OR	2	476	0.5	%		49,235	96.6	%		1,570
Mid-Atlantic Region
Metropolitan D.C.	21	7,799	18.9	%		2,021,574	97.7	%		2,069
Richmond, VA	4	1,358	1.4	%		149,506	97.5	%		1,363
Baltimore, MD	3	720	1.4	%		152,511	97.2	%		1,707
Southeast Region
Orlando, FL	9	2,500	2.1	%		227,813	96.5	%		1,394
Tampa, FL	7	2,287	2.4	%		259,490	97.0	%		1,445
Nashville, TN	8	2,260	2.0	%		213,622	97.0	%		1,309
Other Florida	1	636	0.8	%		85,650	95.7	%		1,646
Northeast Region
New York, NY	3	1,452	9.7	%		1,032,244	98.2	%		4,483
Boston, MA	4	1,388	4.3	%		461,765	96.0	%		2,913
Southwest Region
Dallas, TX	7	2,345	2.7	%		283,849	96.1	%		1,376
Austin, TX	4	1,272	1.5	%		164,450	97.4	%		1,502
Total/Average Same-Store Communities	122	37,959	82.7	%		8,825,887	96.8	%	$	2,149
Non-Mature, Commercial Properties & Other	9	3,082	17.3	%		1,854,668
Total Real Estate Owned	131	41,041	100.0	%		10,680,555
Total Accumulated Depreciation						(3,764,099)
Total Real Estate Owned, Net of Accumulated Depreciation					$	6,916,456

(a) Monthly Income per Occupied Home represents total monthly revenues divided by the average physical number of occupied apartment homes in our Same-Store portfolio.

We report in two segments: Same-Store Communities and Non-Mature Communities/Other.

Our Same-Store Communities segment represents those communities acquired, developed, and stabilized prior to January 1, 2018 and held as of March 31, 2019. These communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior period, there is no plan to conduct substantial redevelopment activities, and the communities are not classified as held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

Our Non-Mature Communities/Other segment represents those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.

Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations either through operating cash flows, sales of properties, borrowings under our credit agreements, and/or the issuance of debt and/or equity securities. 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 and borrowings under our credit agreements. We routinely use our unsecured revolving credit facility to temporarily fund certain investing and financing activities prior to arranging for longer-term financing or the

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issuance of equity or debt securities. During the past several years, proceeds from the sale of real estate have been used for both investing and financing activities as we continue to execute on maintaining a diversified portfolio.

We expect to meet our short-term liquidity requirements generally through net cash provided by property operations and borrowings under our credit agreements and our unsecured commercial paper program. 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 net cash provided by property operations, secured and unsecured borrowings, the issuance of debt or equity securities, and/or the disposition of properties. We believe that our net cash provided by property operations and borrowings under our credit agreements and our unsecured commercial paper program will continue to be adequate to meet both operating requirements and the payment of dividends by the Company in accordance with REIT requirements. Likewise, the budgeted expenditures for improvements and renovations of certain properties are expected to be funded from property operations, borrowings under credit agreements, the issuance of debt or equity securities, and/or dispositions of properties.

We have a shelf registration statement filed with the Securities and Exchange Commission, or “SEC,” which provides for the issuance of common stock, preferred stock, depositary shares, debt securities, guarantees of debt securities, warrants, subscription rights, purchase contracts and units to facilitate future financing activities in the public capital markets. Access to capital markets is dependent on market conditions at the time of issuance.

In July 2017, the Company entered into an ATM sales agreement under which the Company may offer and sell up to 20 million shares of its common stock, from time to time, to or through its sales agents and may enter into separate forward sales agreements to or through its forward purchasers. Upon entering into the ATM sales agreement, the Company simultaneously terminated the sales agreement for its prior at-the-market equity offering program, which was entered into in April 2017, which replaced the prior at-the-market equity offering program entered into in April 2012. During the three months ended March 31, 2019,  the Company sold 4.4 million shares of common stock through its ATM program for aggregate gross proceeds of approximately $195.0 million at a weighted average price per share of $44.80. Aggregate net proceeds from such sales, after deducting related expenses, including commissions paid to the sales agents of approximately $2.8 million, were approximately $192.2 million, which were primarily used to fund the Company’s recent acquisitions. As of March 31, 2019, we had 15.6 million shares of common stock available for future issuance under the ATM program.

Future Capital Needs

Future development and redevelopment expenditures may be funded through unsecured or secured credit facilities, unsecured commercial paper, proceeds from the issuance of equity or debt securities, sales of properties, joint ventures, and, to a lesser extent, from cash flows provided by property operations. Acquisition activity in strategic markets may be funded through joint ventures, by the reinvestment of proceeds from the sale of properties, through the issuance of equity or debt securities, the issuance of operating partnership units and the assumption or placement of secured and/or unsecured debt.

During the remainder of 2019, we have approximately $70.6 million of secured debt maturing, inclusive of principal amortization, and $90.0 million of unsecured debt maturing, comprised solely of unsecured commercial paper. We anticipate repaying the remaining debt with cash flow from our operations, proceeds from debt or equity offerings, proceeds from dispositions of properties, or from borrowings under our credit agreements and our unsecured commercial paper program.

Critical Accounting Policies and Estimates and New Accounting Pronouncements

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, (3) real estate investment properties, and (4) revenue recognition.

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 UDR’s Annual Report on Form 10‑K, filed with the SEC on February 19, 2019. There have been no significant changes in our critical accounting policies from those reported in our Form 10‑K filed with the SEC on February 19, 2019. With respect to these critical accounting policies, we believe 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.

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Statements of Cash Flows

The following discussion explains the changes in Net cash provided by/(used in) operating activities,  Net cash provided by/(used in) investing activities, and Net cash provided by/(used in) financing activities that are presented in our Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018.

Operating Activities

For the three months ended March 31, 2019, our Net cash provided by/(used in) operating activities was $137.3 million, compared to $132.3 million for the comparable period in 2018. The increase in cash flow from operating activities was primarily due to improved net operating income, primarily driven by revenue growth at communities, partially offset by changes in operating assets and liabilities.

Investing Activities

For the three months ended March 31, 2019,  Net cash provided by/(used in) investing activities was $(459.7) million, compared to $(24.6) million for the comparable period in 2018. The increase in cash used in investing activities was primarily due to the acquisitions made during the current period and a decrease in proceeds from the sales of real estate investments, partially offset by a decrease in spend for development of real estate assets.

Acquisitions

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 386 apartment home operating community in Anaheim, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. In connection with the acquisition, the Company repaid approximately $59.8 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $115.7 million and recorded approximately $2.4 million of in-place lease intangibles.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 155 apartment home operating community located in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. In connection with the acquisition, the Company repaid approximately $26.0 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $58.1 million and recorded approximately $2.4 million of real estate intangibles and approximately $0.6 million of in-place lease intangibles.

In January 2019, the Company acquired a to-be-developed parcel of land located in Washington D.C. for approximately $27.1 million.

In February 2019, the Company acquired a to-be-developed parcel of land located in Denver, Colorado for approximately $13.7 million.

In February 2019, the Company acquired a 188 apartment home operating community located in Brooklyn, New York for approximately $132.1 million. The Company increased its real estate assets owned by approximately $97.5 million and recorded approximately $33.6 million of real estate intangibles and approximately $1.0 million of in-place lease intangibles.

In February 2019, the Company acquired a 381 apartment home operating community located in St. Petersburg, Florida for approximately $98.3 million.  The Company increased its real estate assets owned by approximately $96.0 million and recorded approximately $2.3 million of in-place lease intangibles.

Dispositions

During the three months ended March 31, 2019, the Company did not have any dispositions.

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Capital Expenditures

We capitalize those expenditures that materially enhance the value of an existing asset or substantially extend the useful life of an existing asset. Expenditures necessary to maintain an existing property in ordinary operating condition are expensed as incurred.

For the three months ended March 31, 2019, total capital expenditures of $34.4 million, or $865 per stabilized home, which in aggregate include recurring capital expenditures and major renovations, were spent across our portfolio, excluding development, as compared to $15.3 million, or $388 per stabilized home, for the comparable period in 2018.

The increase in total capital expenditures was primarily due to:

· an increase of $12.5 million in spend for our operations platform, which include smart home installations in certain of our properties;

· an increase of 240.7%, or $5.9 million, in major renovations, which include major structural changes and/or architectural revisions to existing buildings; and

· an increase of 12.3%, or $0.6 million, in asset preservation expenditures, such as building interiors, building exteriors, and landscaping and grounds.

The following table outlines capital expenditures and repair and maintenance costs for all of our communities, excluding real estate under development, for the three months ended March 31, 2019 and 2018  (dollars in thousands):

							Per Home
	Three Months Ended March 31,						Three Months Ended March 31,
	2019		2018		% Change		2019		2018		% Change
Turnover capital expenditures	$	2,046	$	2,062	(0.8)	%	$	51	$	52	(1.9)	%
Asset preservation expenditures		5,172		4,607	12.3	%		131		117	12.0	%
Total recurring capital expenditures		7,218		6,669	8.2	%		182		169	7.7	%
Revenue-enhancing improvements		6,333		6,221	1.8	%		159		157	1.3	%
Major renovations (a)		8,348		2,450	240.7	%		210		62	238.7	%
Operations platform		12,500		—	—			314		—	—
Total capital expenditures	$	34,399	$	15,340	124.2	%	$	865	$	388	123.1	%
Repair and maintenance expense	$	8,780	$	8,088	8.6	%	$	221	$	205	7.8	%
Average home count (b)		39,750		39,522	0.6	%

(a) Major renovations include major structural changes and/or architectural revisions to existing buildings.

(b) Average number of homes is calculated based on the number of homes outstanding at the end of each month.

The above table includes amounts capitalized during the year. Actual capital spending is impacted by the net change in capital expenditure accruals.

We intend to continue to selectively add revenue enhancing improvements, which we believe will provide a return on investment in excess of our cost of capital. Our objective in redeveloping a community is twofold: we aim to meaningfully grow rental rates while also achieving cap rate compression through asset quality improvement.

Consolidated Real Estate Under Development and Redevelopment

At March 31, 2019, the Company was not developing any communities.

At March 31, 2019, the Company was redeveloping two communities, located in Boston, Massachusetts and New York, New York, which are expected to be completed in the fourth quarter of 2020 and the first quarter of 2021, respectively. The redevelopments include the renovation of building exteriors, corridors, and common area amenities as well as individual apartment homes.

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During the three months ended March 31, 2019, we incurred $8.3 million in major renovations, which include major structural changes and/or architectural revisions to existing buildings, an increase of $5.9 million compared to the three months ended March 31, 2018.

Unconsolidated Joint Ventures and Partnerships

The Company recognizes income or losses from our investments in unconsolidated joint ventures and partnerships consisting of our proportionate share of the net income or losses of the joint ventures and partnerships. In addition, we may earn fees for providing management services to the communities held by the unconsolidated joint ventures and partnerships.

The Company’s Investment in and advances to unconsolidated joint ventures and partnerships, net, are accounted for under the equity method of accounting. For the three months ended March 31, 2019:

· we made investments totaling $21.4 million in our unconsolidated joint ventures, including contributions of  $9.3 million to three unconsolidated investments under our Developer Capital Program, which earn preferred returns ranging from 8.0% to 12.5%;

· our proportionate share of the net income/(loss) of the joint ventures and partnerships was less than $0.1 million; and

· we received distributions of $12.8 million, of which $2.0 million were operating cash flows and $10.8 million were investing cash flows.

We evaluate our investments in unconsolidated joint ventures and partnerships when events or changes in circumstances indicate that there may be an other-than-temporary decline in value. We consider various factors to determine if a decrease in the value of the investment is other-than-temporary. The Company did not recognize any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures or partnerships during the three months ended March 31, 2019 and 2018.

Financing Activities

For the three months ended March 31, 2019, our Net cash provided by/(used in) financing activities was $137.7 million, compared to $(108.6) million for the comparable period of 2018.

The following significant financing activities occurred during the three months ended March 31, 2019:

· net repayment of $11.1 million from our unsecured commercial paper program;

· net proceeds of $54.3 million from the Company’s unsecured revolving credit facilities;

· net proceeds of $192.2 million from sales under our ATM program; and

· payment of $88.9 million of distributions to our common stockholders.

Credit Facilities and Commercial Paper Program

UDR had one secured credit facility with Fannie Mae with a commitment of $90.0 million at March 31, 2019. The Fannie Mae credit facility matures in July 2020 and bears interest at a fixed rate of 3.95%. 

The Company has a $1.1 billion unsecured revolving credit facility and a $350.0 million unsecured term loan. The Credit Agreement for these facilities allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023. 

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges

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from 75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to 165 basis points.

As of March 31, 2019,  we had no outstanding borrowings under the Revolving Credit Facility, leaving $1.1 billion of unused capacity (excluding $3.3 million of letters of credit at March 31, 2019), and $350.0 million of outstanding borrowings under the Term Loan.

We have a working capital credit facility, which provides for a $75 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 15, 2021. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.

As of March 31, 2019, we had $54.3 million of outstanding borrowings under the Working Capital Credit Facility, leaving $20.7 million of unused capacity.

The Fannie Mae credit facility, the bank revolving credit facilities and the term loan are subject to customary financial covenants and limitations, all of which we were in compliance with at March 31, 2019.

We have an unsecured commercial paper program. Under the terms of the program, we may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of our other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership. As of March 31, 2019, we had issued $90.0 million of commercial paper, for one month terms, at a weighted average annualized rate of 2.78%, leaving $410.0 million of unused capacity.

Interest Rate Risk

We are exposed to interest rate risk associated with variable rate notes payable and maturing debt that has to be refinanced. We do not hold financial instruments for trading or other speculative purposes, but rather issue these financial instruments to finance our portfolio of real estate assets. Interest rate sensitivity is the relationship between changes in market interest rates and the fair value of market rate sensitive assets and liabilities. Our earnings are affected as changes in short-term interest rates impact our cost of variable rate debt and maturing fixed rate debt. We had $274.0 million in variable rate debt that is not subject to interest rate swap contracts as of March 31, 2019. If market interest rates for variable rate debt increased by 100 basis points, our interest expense for the three months ended March 31, 2019 would increase by $0.9 million based on the average balance outstanding during the period.

These amounts are determined by considering the impact of hypothetical interest rates on our borrowing cost. This analysis does not consider the effects of the adjusted level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no change in our financial structure.

The Company also utilizes derivative financial instruments to manage interest rate risk and generally designates these financial instruments as cash flow hedges. See Note 11, Derivatives and Hedging Activities, in the Notes to the UDR Consolidated Financial Statements included in this Report for additional discussion of derivate instruments.

A presentation of cash flow metrics based on GAAP is as follows (dollars in thousands):

	Three Months Ended March 31,
	2019		2018
Net cash provided by/(used in) operating activities	$	137,333	$	132,256
Net cash provided by/(used in) investing activities		(459,749)		(24,586)
Net cash provided by/(used in) financing activities		137,679		(108,647)

Results of Operations

The following discussion explains the changes in results of operations that are presented in our Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018.

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Net Income/(Loss) Attributable to Common Stockholders

Net income/(loss) attributable to common stockholders was $23.5 million ($0.08 per diluted share) for the three months ended March 31, 2019, as compared to $80.8 million ($0.30 per diluted share) for the comparable period in the prior year. The decrease resulted primarily from the following items, all of which are discussed in further detail elsewhere within this Report:

· no gains recognized on the sale real estate during the three months ended March 31, 2019, as compared to a gain of $70.3 million on the sale of an operating community in Orange County, California during the three months ended March 31, 2018.

This was partially offset by:

· an increase in interest income and other income/(expense), net of $7.1 million, primarily attributable to an $8.5 million promoted interest on the prepayment of a note to a multifamily technology company; and

· an increase in total property NOI of $13.1 million primarily due to higher revenue per occupied home and NOI from communities acquired in 2019 and recently developed communities, partially offset by a decrease from sold communities.

Apartment Community Operations

Our net income results are primarily from NOI generated from the operation of our apartment communities. The Company defines NOI, which is a non-GAAP financial measure, as rental income less direct property rental expenses. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense which is calculated as 2.875% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations and land rent.

Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization.

Although the Company considers NOI a useful measure of operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities as determined in accordance with GAAP. NOI excludes several income and expense categories as detailed in the reconciliation of NOI to Net income/(loss) attributable to UDR, Inc. below.

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The following table summarizes the operating performance of our total property NOI for each of the periods presented (dollars in thousands):

	Three Months Ended
	March 31,  (a)
	2019		2018		%Change
Same-Store Communities:
Same-Store rental income	$	237,049	$	228,425	3.8	%
Same-Store operating expense (b)		(67,452)		(65,465)	3.0	%
Same-Store NOI		169,597		162,960	4.1	%
Non-Mature Communities/Other NOI:
Stabilized, non-mature communities NOI (c)		1,336		1,282	4.2	%
Acquired communities NOI		3,327		—	—	%
Redevelopment communities NOI		5,232		5,609	(6.7)	%
Development communities NOI		8,130		463	1,655.9	%
Non-residential/other NOI		2,061		3,337	(38.2)	%
Sold and held for disposition communities NOI		—		2,963	(100.0)	%
Total Non-Mature Communities/Other NOI		20,086		13,654	47.1	%
Total property NOI	$	189,683	$	176,614	7.4	%

(a) Same-Store consists of 37,959 apartment homes.

(b) Excludes depreciation, amortization, and property management expenses.

(c) Represents non-mature communities that have achieved 90% occupancy for three consecutive months but do not meet the criteria to be included in Same-Store Communities.

The following table is our reconciliation of Net income/(loss) attributable to UDR, Inc. to total property NOI for the periods presented (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Net income/(loss) attributable to UDR, Inc.	$	24,503	$	81,756
Joint venture management and other fees		(2,751)		(2,822)
Property management		7,703		6,888
Other operating expenses		5,646		2,009
Real estate depreciation and amortization		112,468		108,136
General and administrative		12,467		11,759
Casualty-related charges/(recoveries), net		—		940
Other depreciation and amortization		1,656		1,691
(Gain)/loss on sale of real estate owned		—		(70,300)
(Income)/loss from unconsolidated entities		(49)		1,677
Interest expense		33,542		29,943
Interest income and other (income)/expense, net		(9,813)		(2,759)
Tax provision/(benefit), net		2,212		227
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		2,057		7,390
Net income/(loss) attributable to noncontrolling interests		42		79
Total property NOI	$	189,683	$	176,614

Same-Store Communities

Our Same-Store Community properties (those acquired, developed, and stabilized prior to January 1, 2018 and held on  March 31, 2019)  consisted of 37,959 apartment homes and provided 89.4% of our total NOI for the three months ended March 31, 2019, respectively.

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Three Months Ended March 31, 2019 vs. Three Months Ended March 31, 2018

NOI for our Same-Store Community properties increased 4.1%, or $6.6 million, for the three months ended March 31, 2019 compared to the same period in 2018. The increase in property NOI was attributable to a 3.8%, or $8.6 million, increase in property rental income, which was partially offset by a 3.0%, or $2.0 million, increase in operating expenses. The increase in property income was primarily driven by a 2.6%, or $5.6 million, increase in rental rates and a 12.7%, or $2.8 million, increase in reimbursement and ancillary and fee income. Physical occupancy decreased 0.1% to 96.8% and total monthly income per occupied home increased 3.8% to $2,149.

The increase in operating expenses was primarily driven by a 14.1%, or $1.1 million, increase in repair and maintenance expense and a 3.4%, or $0.9 million, increase in real estate taxes, which was primarily due to higher assessed valuations.

The operating margin (property net operating income divided by property rental income) was 71.5% and 71.3% for the three months ended March 31, 2019 and 2018, respectively.

Non-Mature Communities/Other

UDR’s Non-Mature Communities/Other represent those communities that do not meet the criteria to be included in Same-Store Communities, which include communities recently developed or acquired, redevelopment properties, sold or held for disposition properties, and non-apartment components of mixed use properties.

Three Months Ended March 31, 2019 vs. Three Months Ended March 31, 2018

The remaining 10.6%, or $20.1 million, of our total NOI during the three months ended March 31, 2019 was generated from our Non-Mature Communities/Other.  NOI from Non-Mature Communities/Other increased by 47.1%, or $6.4 million, for the three months ended March 31, 2019 as compared to the same period in 2018. The increase was primarily attributable to a $7.7 million increase in development communities and a $3.3 million increase in NOI from acquired communities, partially offset by a $3.0 million decrease in NOI from sold and held for disposition communities.

Gain/(Loss) on Sale of Real Estate Owned

During the three months ended March 31, 2019, the Company did not recognize any gains on the sale of real estate. During the three months ended March 31, 2018, the Company recognized a gain of $70.3 million on the sale of an operating community in Orange County, California.

Interest income and other income/(expense), net

For the three months ended March 31, 2019 and 2018, we recognized interest income and other income/(expense), net of $9.8 million and $2.8 million, respectively. The increase in 2019 as compared to 2018 was primarily attributable to an $8.5 million promoted interest on the prepayment of a note to a multifamily technology company.

Noncontrolling Interest

For the three months ended March 31, 2019 and 2018, we recognized net income attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership of $2.1 million and $7.4 million, respectively. The decrease in 2019 as compared to 2018 was primarily attributable to the noncontrolling interest’s share of the gain on sale associated with the disposition in 2018.

Inflation

We believe that the direct effects of inflation on our operations have been immaterial. While the impact of inflation primarily impacts our results of operations as a result of wage pressures and increases in utilities and material costs, the majority of our apartment leases have initial terms of 12 months or less, which generally enables us to compensate for any inflationary effects by increasing rental rates on our apartment homes. Although an extreme escalation in costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this has had a material impact on our results for the three months ended March 31, 2019.

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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.

Funds from Operations, Funds from Operations as Adjusted, and Adjusted Funds from Operations

Funds from Operations

Funds from operations (“FFO”) attributable to common stockholders and unitholders is defined as Net income/(loss) attributable to common stockholders (computed in accordance with GAAP), excluding impairment write-downs of depreciable real estate related to the main business of the Company or of investments in non-consolidated investees that are directly attributable to decreases in the fair value of depreciable real estate held by the investee, gains and losses from sales of depreciable real estate related to the main business of the Company and income taxes directly associated with those gains and losses, plus real estate depreciation and amortization, and after adjustments for noncontrolling interests, and the Company’s share of unconsolidated partnerships and joint ventures. This definition conforms with the National Association of Real Estate Investment Trust's (“Nareit”) definition issued in April 2002 and restated in November 2018. 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 a REIT’s operating performance. In the computation of diluted FFO, if OP Units, DownREIT Units, unvested restricted stock, unvested LTIP Units, stock options, and the shares of Series E Cumulative Convertible Preferred Stock are dilutive, they are included in the diluted share count.

Management considers FFO a useful metric for investors as the Company uses FFO in evaluating property acquisitions and its operating performance, and believes that FFO should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company’s activities in accordance with GAAP. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs.

Funds from Operations as Adjusted

FFO as Adjusted (“FFOA”) attributable to common stockholders and unitholders is defined as FFO excluding the impact of non-comparable items including, but not limited to, acquisition-related costs, prepayment costs/benefits associated with early debt retirement, impairment write-downs or gains and losses on sales of real estate or other assets incidental to the main business of the Company and income taxes directly associated with those gains and losses, casualty-related expenses and recoveries, severance costs and legal and other costs.

Management believes that FFOA is useful supplemental information regarding our operating performance as it provides a consistent comparison of our operating performance across time periods and allows investors to more easily compare our operating results with other REITs. FFOA is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance. We believe that Net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to FFOA. However, other REITs may use different methodologies for calculating FFOA or similar FFO measures and, accordingly, our FFOA may not always be comparable to FFOA or similar FFO measures calculated by other REITs. FFOA should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity.

Adjusted Funds from Operations

Adjusted FFO (“AFFO”) attributable to common stockholders and unitholders is defined as FFOA less recurring capital expenditures on consolidated communities that are necessary to help preserve the value of and maintain functionality at our communities. Therefore, management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company’s operational performance than FFO or FFOA.

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AFFO is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance. We believe that Net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to AFFO. Management believes that AFFO is a widely recognized measure of the operations of REITs, and presenting AFFO will enable investors to assess our performance in comparison to other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not always be comparable to AFFO calculated by other REITs. AFFO should not be considered as an alternative to net income/(loss) (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.

The following table outlines our reconciliation of Net income/(loss) attributable to common stockholders to FFO, FFOA, and AFFO for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Net income/(loss) attributable to common stockholders	$	23,492	$	80,801
Real estate depreciation and amortization		112,468		108,136
Noncontrolling interests		2,099		7,469
Real estate depreciation and amortization on unconsolidated joint ventures		15,674		14,340
Cumulative effect of change in accounting principle		—		(2,100)
Net gain on the sale of depreciable real estate owned		—		(70,300)
FFO attributable to common stockholders and unitholders, basic	$	153,733	$	138,346
Distribution to preferred stockholders — Series E (Convertible)		1,011		955
FFO attributable to common stockholders and unitholders, diluted	$	154,744	$	139,301
Income/(loss) per weighted average common share - diluted	$	0.08	$	0.30
FFO per weighted average common share and unit, basic	$	0.51	$	0.47
FFO per weighted average common share and unit, diluted	$	0.51	$	0.47
Weighted average number of common shares and OP/DownREIT Units outstanding — basic		301,282		292,052
Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding — diluted		304,848		296,725
Impact of adjustments to FFO:
Promoted interest on settlement of note receivable, net of tax	$	(6,482)	$	—
Legal and other costs		3,431		—
Casualty-related charges/(recoveries), net		15		1,009
Casualty-related charges/(recoveries) on unconsolidated joint ventures, net		146		—
	$	(2,890)	$	1,009
FFOA attributable to common stockholders and unitholders, diluted	$	151,854	$	140,310
FFOA per weighted average common share and unit, diluted	$	0.50	$	0.47
Recurring capital expenditures		(7,218)		(6,669)
AFFO attributable to common stockholders and unitholders, diluted	$	144,636	$	133,641
AFFO per weighted average common share and unit, diluted	$	0.47	$	0.45

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The following table is our reconciliation of FFO share information to weighted average common shares outstanding, basic and diluted, reflected on the UDR Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 (shares in thousands):

	Three Months Ended
	March 31,
	2019	2018
Weighted average number of common shares and OP/DownREIT Units outstanding — basic	301,282	292,052
Weighted average number of OP/DownREIT Units outstanding	(24,280)	(24,506)
Weighted average number of common shares outstanding — basic per the Consolidated Statements of Operations	277,002	267,546
Weighted average number of common shares, OP/DownREIT Units, and common stock equivalents outstanding — diluted	304,848	296,725
Weighted average number of OP/DownREIT Units outstanding	(24,280)	(24,506)
Weighted average number of Series E preferred shares outstanding	(3,011)	(3,011)
Weighted average number of common shares outstanding — diluted per the Consolidated Statements of Operations	277,557	269,208

United Dominion Realty, L.P.:

Business Overview

United Dominion Realty, L.P. (the “Operating Partnership” or “UDR, L.P.”) is a Delaware limited partnership formed in February 2004 and organized pursuant to the provisions of the Delaware Revised Uniform Limited Partnership Act. The Operating Partnership is the successor-in-interest to United Dominion Realty, L.P., a limited partnership formed under the laws of Virginia, which commenced operations on November 4, 1995. Our sole general partner is UDR, Inc., a Maryland corporation (“UDR” or the “General Partner”), which conducts a substantial amount of its business and holds a substantial amount of its assets through the Operating Partnership. At March 31, 2019, the Operating Partnership’s real estate portfolio included 52 communities located in nine states and the District of Columbia with a total of 16,434 apartment homes.

As of March 31, 2019, UDR owned 110,883 units of our general partnership interests and 175,946,364 units of our limited partnership interests (the “OP Units”), or approximately 95.6% of our outstanding OP Units. By virtue of its ownership of our OP Units and being our sole general partner, UDR has the ability to control all of the day-to-day operations of the Operating Partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this section of this Report to the Operating Partnership or “we,” “us” or “our” refer to UDR, L.P. together with its consolidated subsidiaries, and all references in this section to “UDR” or the “General Partner” refer solely to UDR, Inc.

UDR is a self-administered real estate investment trust, or REIT, that owns, acquires, renovates, develops, and manages apartment communities. The General Partner was formed in 1972 as a Virginia corporation and changed its state of incorporation from Virginia to Maryland in June 2003. At March 31, 2019, the General Partner’s consolidated real estate portfolio included 131 communities located in 11 states and the District of Columbia with a total of 41,041 apartment homes. In addition, the General Partner had an ownership interest in 32 communities with 8,112 completed apartment homes through unconsolidated operating communities.

The Operating Partnership’s same-store community apartment home population for the three months ended March 31, 2019 was 15,723.

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The following table summarizes our market information by major geographic markets as of and for the three months ended March 31, 2019:

		March 31, 2019					Three Months Ended March 31, 2019
			Percentage		Total				Monthly
	Number of	Number of	of Total		Carrying		Average		Income per
	Apartment	Apartment	Carrying		Value (in		Physical		Occupied
Same-Store Communities	Communities	Homes	Value		thousands)		Occupancy		Home (a)
West Region
Orange County, CA	5	3,119	19.4	%	$	740,659	96.1	%	$	2,275
San Francisco, CA	9	2,185	15.8	%		604,214	96.8	%		3,303
Seattle, WA	5	932	5.9	%		226,520	96.2	%		2,086
Los Angeles, CA	2	344	3.0	%		115,121	96.8	%		2,773
Monterey Peninsula, CA	7	1,565	4.7	%		178,263	95.9	%		1,852
Other Southern California	1	414	2.0	%		74,348	96.8	%		2,049
Portland, OR	2	476	1.3	%		49,235	96.6	%		1,569
Mid-Atlantic Region
Metropolitan D.C.	6	2,068	14.6	%		558,963	97.3	%		2,142
Baltimore, MD	2	540	2.7	%		105,140	96.7	%		1,540
Southeast Region
Tampa, FL	2	942	2.8	%		107,967	97.6	%		1,525
Nashville, TN	6	1,612	3.9	%		149,903	96.9	%		1,286
Other Florida	1	636	2.2	%		85,650	95.7	%		1,646
Northeast Region
New York, NY	1	503	8.7	%		333,391	97.9	%		3,928
Boston, MA	1	387	1.9	%		73,368	95.5	%		2,108
Total/Average Same-Store Communities	50	15,723	88.9	%		3,402,742	96.6	%	$	2,183
Non-Mature, Commercial Properties & Other	2	711	11.1	%		425,133
Total Real Estate Owned	52	16,434	100.0	%		3,827,875
Total Accumulated Depreciation						(1,692,702)
Total Real Estate Owned, Net of Accumulated Depreciation					$	2,135,173

(a) Monthly Income per Occupied Home represents total monthly revenues divided by the average physical number of occupied apartment homes in our Same-Store portfolio.

We report in two segments: Same-Store Communities and Non-Mature Communities/Other.

Our Same-Store Communities segment represents those communities acquired, developed, and stabilized prior to January 1, 2018 held as of March 31, 2019. These communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior period, there is no plan to conduct substantial redevelopment activities, and the communities are not held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

Our Non-Mature Communities/Other segment represents those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.

Liquidity and Capital Resources

Liquidity is the ability to meet present and future financial obligations either through operating cash flows, the sale of properties, and the issuance of debt. Both the coordination of asset and liability maturities and effective capital management are important to the maintenance of liquidity. The Operating Partnership’s primary source of liquidity is cash flow from operations as determined by rental rates, occupancy levels, and operating expenses related to our portfolio of apartment homes and borrowings owed by us under the General Partner’s credit agreements. The General Partner will routinely use its unsecured credit facility to temporarily fund certain investing and financing activities prior to arranging for longer-term financing or the issuance of equity or debt securities. During the past several years, proceeds from the sale of real estate have been used for both investing and financing activities as we continue to execute on maintaining a diversified portfolio.

We expect to meet our short-term liquidity requirements generally through net cash provided by property operations and borrowings owed by us under the General Partner’s credit agreements. We expect to meet certain long-term liquidity

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requirements such as scheduled debt maturities and potential property acquisitions through net cash provided by property operations, borrowings and the disposition of properties. We believe that our net cash provided by property operations and borrowings will continue to be adequate to meet both operating requirements and the payment of distributions. Likewise, the budgeted expenditures for improvements and renovations of certain properties are expected to be funded from property operations, borrowings owed by us under the General Partner’s credit agreements, and the disposition of properties.

Future Capital Needs

Future capital expenditures are expected to be funded with proceeds from the issuance of secured debt or unsecured debt, sales of properties, borrowings owed by us under our General Partner’s credit agreements, and to a lesser extent, from cash flows provided by operating activities.

As of March 31, 2019, the Operating Partnership does not have any debt maturing during the remainder of 2019.

Critical Accounting Policies and Estimates and New Accounting Pronouncements

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, (3) real estate investment properties, and (4) revenue recognition.

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 the Operating Partnership’s Annual Report on Form 10‑K, filed with the SEC on February 19, 2019. There have been no significant changes in our critical accounting policies from those reported. With respect to these critical accounting policies, we believe 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 Flows

The following discussion explains the changes in Net cash provided by/(used in) operating activities,  Net cash provided by/(used in) investing activities, and Net cash provided by/(used in) financing activities that are presented in our Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018.

Operating Activities

For the three months ended March 31, 2019, Net cash provided by/(used in) operating activities was $68.6 million compared to $70.8 million for the comparable period in 2018. The decrease in cash flow from operating activities was primarily due to changes in operating assets and liabilities, partially offset by improved net operating income, primarily driven by revenue growth at communities.

Investing Activities

For the three months ended March 31, 2019,  Net cash provided by/(used in) investing activities was  $(9.7) million compared to $86.4 million for the comparable period in 2018.  The decrease in cash provided by investing activities was primarily due to proceeds received from the sale of an operating community in Orange County, California in 2018 and an increase in capital expenditures during the three months ended March 31, 2019, as compared to the same period in 2018.

Acquisitions and Dispositions

The Operating Partnership did not have any acquisitions or dispositions of real estate during the three months ended March 31, 2019.

Financing Activities

For the three months ended March 31, 2019 and 2018, our Net cash provided by/(used in) financing activities was $(58.6) million compared to $(157.0) million for the comparable period of 2018. The decrease in cash used in financing activities was primarily due to a decrease in advances to the General Partner, partially offset by the repayment of notes payable to the General Partner.

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Credit Facilities

The Operating Partnership is a guarantor on the General Partner’s unsecured revolving credit facility with an aggregate borrowing capacity of $1.1 billion, an unsecured commercial paper program with an aggregate borrowing capacity of $500 million, $300 million of medium-term notes due October 2020, $400 million of medium-term notes due January 2022, a $350 million term loan due September 2023, $300 million of medium-term notes due July 2024, $300 million of medium-term notes due October 2025, $300 million of medium-term notes due September 2026, $300 million of medium-term notes due July 2027, $300 million of medium-term notes due January 2028 and $300 million of medium-term notes due January 2029. As of March 31, 2019 and December 31, 2018, the General Partner did not have an outstanding balance under the unsecured revolving credit facility and had $90.0 million and $101.1 million, respectively, outstanding under its unsecured commercial paper program.

The credit facilities are subject to customary financial covenants and limitations.

Interest Rate Risk

We are exposed to interest rate risk associated with variable rate notes payable and maturing debt that has to be refinanced. We do not hold financial instruments for trading or other speculative purposes, but rather issue these financial instruments to finance our portfolio of real estate assets. Interest rate sensitivity is the relationship between changes in market interest rates and the fair value of market rate sensitive assets and liabilities. Our earnings are affected as changes in short-term interest rates impact our cost of variable rate debt and maturing fixed rate debt. We had $27.0 million in variable rate debt that is not subject to interest rate swap contracts as of March 31, 2019. If market interest rates for variable rate debt increased by 100 basis points, our interest expense for the three months ended March 31, 2019 would increase by $0.1 million based on the average balance outstanding during the period.

These amounts are determined by considering the impact of hypothetical interest rates on our borrowing cost. These analyses do not consider the effects of the adjusted level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no change in our financial structure.

The General Partner also utilizes derivative financial instruments owed by the Operating Partnership to manage interest rate risk and generally designates these financial instruments as cash flow hedges. See Note 9, Derivatives and Hedging Activities, in the Notes to the Operating Partnership’s Consolidated Financial Statements for additional discussion of derivative instruments.

A presentation of cash flow metrics based on GAAP is as follows (dollars in thousands):

	Three Months Ended March 31,
	2019		2018
Net cash provided by/(used in) operating activities	$	68,627	$	70,849
Net cash provided by/(used in) investing activities		(9,658)		86,375
Net cash provided by/(used in) financing activities		(58,588)		(157,011)

Results of Operations

The following discussion explains the changes in results of operations that are presented in our Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018.

Net Income/(Loss) Attributable to OP Unitholders

Net income attributable to OP unitholders was $23.9 million ($0.13 per diluted OP Unit) for the three months ended March 31, 2019, as compared to net income of $91.4 million ($0.50 per diluted OP Unit) for the comparable period in the

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prior year. The decrease in net income attributable to OP unitholders resulted primarily from the following item, which is discussed in further detail elsewhere within this Report:

· no gains on the sale of real estate during three months ended March 31, 2019, as compared to gains of $70.3 million on the sale of an operating community in Orange County, California during the three months ended March 31, 2018.

Apartment Community Operations

Our net income results primarily from NOI generated from the operation of our apartment communities. The Operating Partnership defines NOI, which is a non-GAAP financial measure, as rental income less direct property rental expenses. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI are property management costs, which are the Operating Partnership’s allocable share of costs incurred by the General Partner for shared services of corporate level property management employees and related support functions and costs.

Management considers NOI a useful metric for investors as it is a more meaningful representation of a community’s continuing operating performance than net income as it is prior to corporate-level expense allocations, general and administrative costs, capital structure and depreciation and amortization.

Although we consider NOI a useful measure of operating performance, NOI should not be considered an alternative to net income or net cash flow from operating activities as determined in accordance with GAAP. NOI excludes several income and expense categories as detailed in the reconciliation of NOI to Net income/(loss) attributable to OP unitholders below.

The following table summarizes the operating performance of our total property NOI for the three months ended March 31, 2019 and 2018 (dollars in thousands):

	Three Months Ended
	March 31,  (a)				%
	2019		2018		Change
Same-Store Communities:
Same-Store rental income	$	99,497	$	95,934	3.7	%
Same-Store operating expense (b)		(25,713)		(24,704)	4.1	%
Same-Store NOI		73,784		71,230	3.6	%
Non-Mature Communities/Other NOI:
Stabilized, non-mature communities NOI (c)		1,337		1,283	4.2	%
Redeveloped communities NOI		3,547		3,900	(9.1)	%
Non-residential/other NOI		471		1,213	(61.2)	%
Sold and held for disposition communities NOI		—		663	(100.0)	%
Total Non-Mature Communities/Other NOI		5,355		7,059	(24.1)	%
Total property NOI	$	79,139	$	78,289	1.1	%

(a) Same-Storeconsists of 15,723 apartment homes.

(b) Excludes depreciation, amortization, and property management expenses.

(c) Represents non-mature communities that have achieved 90% occupancy for three consecutive months but do not meet the criteria to be included in Same-Store Communities.

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The following table is our reconciliation of Net income/(loss) attributable to OP unitholders to total property NOIfor the three months ended March 31, 2019 and 2018 (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Net income/(loss) attributable to OP unitholders	$	23,946	$	91,427
Property management		2,979		2,931
Other operating expenses		2,400		1,554
Real estate depreciation and amortization		34,654		37,565
General and administrative		4,661		4,309
Casualty-related charges/(recoveries), net		—		342
(Gain)/loss on sale of real estate owned		—		(70,300)
(Income)/loss from unconsolidated entities		2,740		5,017
Interest expense		7,371		5,026
Net income/(loss) attributable to noncontrolling interests		388		418
Total property NOI	$	79,139	$	78,289

Same-Store Communities

Our Same-Store Community properties (those acquired, developed, and stabilized prior to January 1, 2018 and held as of March 31, 2019  consisted of 15,723 apartment homes and provided 93.2% of our total NOI for the three months ended March 31, 2019.

Three Months Ended March 31, 2019 vs. Three Months Ended March 31, 2018

NOI for our Same-Store Community properties increased 3.6%, or $2.6 million, for the three months ended March 31, 2019 compared to the same period in 2018. The increase in property NOI was primarily attributable to a 3.7%, or $3.6 million, increase in property rental income, which was partially offset by a 4.1%, or $1.0 million, increase in operating expenses. The increase in property income was primarily driven by a 2.7%, or $2.4 million, increase in rental rates and a 10.8%, or $1.1 million, increase in reimbursement and ancillary and fee income. Physical occupancy decreased 0.1% to 96.6% and total income per occupied home increased 3.8% to $2,183 for the three months ended March 31, 2019 compared to the same period in 2018.

The increase in operating expenses was primarily driven by a 17.8%, or $0.6 million, increase in repair and maintenance expense and a 5.9%, or $0.5 million, increase in real estate taxes, which was primarily due to higher assessed valuations.

The operating margin (property net operating income divided by property rental income)  was 74.2% for both the three months ended March 31, 2019 and 2018.

Non-Mature Communities/Other

The Operating Partnership’s Non-Mature Communities/Other represent those communities that do not meet the criteria to be included in Same-Store Communities, which include communities recently developed or acquired, redevelopment properties, sold or held for disposition properties and the non-apartment components of mixed use properties.

Three Months Ended March 31, 2019 vs. Three Months Ended March 31, 2018

The remaining 6.8%, or $5.4 million, of our total NOI during the three months ended March 31, 2019 was generated from our Non-Mature Communities/Other. NOI from Non-Mature Communities/Other decreased 24.1%, or $1.7 million, for the three months ended March 31, 2019, compared to the same period in 2018. The decrease was primarily attributable to a $0.7 million decrease in NOI from non-residential/other and a decrease of $0.7 million in NOI from sold communities.

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Gain/(Loss) on Sale of Real Estate Owned

During the three months ended March 31, 2019, the Operating Partnership did not recognize any gains on the sale of real estate. During the three months ended March 31, 2018, the Operating Partnership recognized a gain of $70.3 million on the sale of an operating community in Orange County, California.

Inflation

We believe that the direct effects of inflation on our operations have been immaterial. While the impact of inflation primarily impacts our results of operations as a result of wage pressures and increases in utilities and material costs, the majority of our apartment leases have initial terms of 12 months or less, which generally enables us to compensate for any inflationary effects by increasing rental rates on our apartment homes. Although an extreme escalation in costs could have a negative impact on our residents and their ability to absorb rent increases, we do not believe this has had a material impact on our results for the three months ended March 31, 2019.

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.

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company and the Operating Partnership are 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. The Company’s and the Operating Partnership’s involvement with derivative financial instruments is limited and we do not expect to use them for trading or other speculative purposes. The Company and the Operating Partnership use derivative instruments solely to manage their exposure to interest rates.

See our Annual Report on Form 10‑K for the year ended December 31, 2018 under the heading “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for a more complete discussion of our interest rate sensitive assets and liabilities. As of March 31, 2019, our market risk has not changed materially from the amounts reported in our Annual Report on Form 10‑K for the year ended December 31, 2018.

Item 4.CONTROLS AND PROCEDURES

The disclosure controls and procedures of the Company and the Operating Partnership 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. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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. As a result, our disclosure controls and procedures are designed to provide reasonable assurance that such disclosure controls and procedures will meet their objectives.

As of March 31, 2019, we carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, of the effectiveness of the design and operation of the disclosure controls and procedures of the Company and the Operating Partnership. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer of the Company concluded that the disclosure controls and procedures of the Company and the Operating Partnership are effective at the reasonable assurance level described above.

There have not been any changes in either the Company’s or the Operating Partnership’s internal control over financial reporting (as such term is defined in Rules 13a‑15(f) and 15d‑15(f) under the Securities Exchange Act of 1934)

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during the fiscal quarter to which this report relates that materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of either the Company or the Operating Partnership.

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PART II — OTHER INFORMATION

Item 1.LEGAL PROCEEDINGS

The Company is a party to various claims and routine litigation arising in the ordinary course of business. We do not believe that the results of any such claims and litigation, individually or in the aggregate, will have a material adverse effect on our business, financial position or results of operations.

Item 1A.RISK FACTORS

There are many factors that affect the business and the results of operations of the Company and the Operating Partnership, some of which are beyond the control of the Company and the Operating Partnership. The following is a description of important factors that may cause the actual results of operations of the Company and the Operating Partnership in future periods to differ materially from those currently expected or discussed in forward-looking statements set forth in this Report relating to our financial results, operations and business prospects. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Report, and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.

Risks Related to Our Real Estate Investments and Our Operations

Unfavorable Apartment Market and Economic Conditions Could Adversely Affect Occupancy Levels, Rental Revenues and the Value of Our Real Estate Assets. Unfavorable market conditions in the areas in which we operate or unfavorable economic conditions generally may significantly affect our occupancy levels, our rental rates and collections, the value of our properties and our ability to acquire or dispose of apartment communities on economically favorable terms. Our ability to lease our properties at favorable rates is adversely affected by the increase in supply in the multifamily and other rental markets and is dependent upon the overall level in the economy, which is adversely affected by, among other things, job losses and unemployment levels, recession, personal debt levels, housing markets, stock market volatility and uncertainty about the future. Some of our major expenses generally do not decline when related rents decline. We would expect that declines in our occupancy levels, rental revenues and/or the values of our apartment communities would cause us to have less cash available to pay our indebtedness and to distribute to UDR’s stockholders, which could adversely affect our financial condition or the market value of our securities. Factors that may affect our occupancy levels, our rental revenues, and/or the value of our properties include the following, among others:

· downturns in the global, national, regional and local economic conditions, particularly increases in unemployment;

· declines in mortgage interest rates, making alternative housing more affordable;

· government or builder incentives with respect to home ownership, making alternative housing options more attractive;

· local real estate market conditions, including oversupply of, or reduced demand for, apartment homes;

· declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants;

· changes in market rental rates;

· our ability to renew leases or re-lease space on favorable terms;

· the timing and costs associated with property improvements, repairs or renovations;

· declines in household formation; and

· rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs.

The Geographic Concentration of Our Communities in Certain Markets Could Have an Adverse Effect on Our Operations if a Particular Market is Adversely Impacted by Economic or Other Conditions. For the three months ended March

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31, 2019, approximately 51.8% of our total NOI was generated from communities located in the Washington, D.C. metropolitan area (16.3%), Orange County, CA (13.8%), the San Francisco Bay Area, CA (11.9%) and New York, NY (9.8%). For the year ended December 31, 2018, approximately 52.3% of our total NOI was generated from communities located in the Washington, D.C. metropolitan area (17.0%), Orange County, CA (12.8%), the San Francisco Bay Area, CA (12.2%) and New York, NY (10.3%). As a result, if any one or more of these markets is adversely impacted by regional or local economic conditions or local real estate market conditions or regulations, such conditions may have a greater adverse impact on our results of operations than if our portfolio was more geographically diverse.

We May Be Unable to Renew Leases or Relet Apartment Units as Leases Expire, or the Terms of Renewals or New Leases May Be Less Favorable Than Current Leases. When our residents decide to leave our apartments, whether because they decide not to renew their leases or they leave prior to their lease expiration date, we may not be able to relet their apartment units. Even if the residents do renew or we can relet the apartment units, the terms of renewal or reletting may be less favorable than current lease terms. Furthermore, because the majority of our apartment leases have initial terms of 12 months or less, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms. If we are unable to promptly renew the leases or relet the apartment units, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then our results of operations and financial condition may be adversely affected. If residents do not experience increases in their income, we may be unable to increase rent and/or delinquencies may increase.

We Face Certain Risks Related to Our Retail and Commercial Space. Certain of our properties include retail or commercial space that we lease to third parties. The long term nature of our retail and commercial leases (generally five to ten years with market based renewal options) and the characteristics of many of our tenants (generally small and/or local businesses) may subject us to certain risks. The longer term leases could result in below market lease rates over time. We may not be able to lease new space for rents that are consistent with our projections or for market rates. Also, when leases for our retail or commercial space expire, the space may not be relet or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the prior lease terms. Our properties compete with other properties with retail or commercial space. The presence of competitive alternatives may adversely affect our ability to lease space and the level of rents we can obtain. If our retail or commercial tenants experience financial distress or bankruptcy, they may fail to comply with their contractual obligations, seek concessions in order to continue operations or cease their operations, which could adversely impact our results of operations and financial condition.

Risk of Inflation/Deflation. Substantial inflationary or deflationary pressures could have a negative effect on rental rates and property operating expenses. The general risk of inflation is that interest on our debt and general and administrative expenses increase at a rate faster than increases in our rental rates, which could adversely affect our financial condition or results of operations.

We Are Subject to Certain Risks Associated with Selling Apartment Communities, Which Could Limit Our Operational and Financial Flexibility. We periodically dispose of apartment communities that no longer meet our strategic objectives, but adverse market conditions may make it difficult to sell apartment communities we own. We cannot predict whether we will be able to sell any property for the price or on the terms we set, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Furthermore, we may be required to expend funds to correct defects or to make improvements before a property can be sold. These conditions may limit our ability to dispose of properties and to change our portfolio in order to meet our strategic objectives, which could in turn adversely affect our financial condition, results of operations or our ability to fund other activities in which we may want to engage such as the purchase of properties, development or redevelopment or funding the Developer Capital Program. We are also subject to the following risks in connection with sales of our apartment communities, among others:

· a significant portion of the proceeds from property sales may be held by intermediaries in order for some sales to qualify as like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended, or the “Code,” so that any related capital gain can be deferred for federal income tax purposes. As a result, we may not have immediate access to all of the cash proceeds generated from our property sales; and

· federal tax laws limit our ability to profit on the sale of communities that we have owned for less than two years, and this limitation may prevent us from selling communities when market conditions are favorable.

Competition Could Limit Our Ability to Lease Apartment Homes or Increase or Maintain Rents. Our apartment communities compete with numerous housing alternatives in attracting residents, including other apartment communities, condominiums and single-family rental homes, as well as owner occupied single- and multi-family homes. Competitive

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housing in a particular area could adversely affect our ability to lease apartment homes and increase or maintain rents, which could materially adversely affect our results of operations and financial condition.

We May Not Realize the Anticipated Benefits of Past or Future Acquisitions, and the Failure to Integrate Acquired Communities and New Personnel Successfully Could Create Inefficiencies. We have selectively acquired in the past, and if presented with attractive opportunities we intend to selectively acquire in the future, apartment communities that meet our investment criteria. Our acquisition activities and their success are subject to the following risks, among others:

· we may be unable to obtain financing for acquisitions on favorable terms, including but not limited to interest rates, term and/or loan-to-value ratios, or at all, all of which could cause us to delay or even abandon potential acquisitions;

· even if we are able to finance the acquisition, cash flow from the acquisition may be insufficient to meet our required principal and interest payments on the debt used to finance the acquisition;

· even if we enter into an acquisition agreement for an apartment community, we may not complete the acquisition for a variety of reasons after incurring certain acquisition-related costs;

· we may incur significant costs and divert management attention in connection with the evaluation and negotiation of potential acquisitions, including potential acquisitions that we subsequently do not complete;

· when we acquire an apartment community, we may invest additional amounts in it with the intention of increasing profitability, and these additional investments may not produce the anticipated improvements in profitability;

· the expected occupancy rates and rental rates may differ from actual results; and

· we may be unable to quickly and efficiently integrate acquired apartment communities and new personnel into our existing operations, and the failure to successfully integrate such apartment communities or personnel will result in inefficiencies that could materially adversely affect our expected return on our investments and our overall profitability.

Competition Could Adversely Affect Our Ability to Acquire Properties. In the past, other real estate investors, including insurance companies, pension and investment funds, developer partnerships, investment companies and other public and private apartment REITs, have competed with us to acquire existing properties and to develop new properties, and such competition in the future may make it more difficult for us to acquire attractive investment opportunities on favorable terms, which could adversely affect our ability to grow or acquire properties profitably or with attractive returns.

Development and Construction Risks Could Impact Our Profitability. In the past we have selectively pursued the development and construction of apartment communities, and we intend to do so in the future as appropriate opportunities arise. Development activities have been, and in the future may be, conducted through wholly-owned affiliated companies or through joint ventures with unaffiliated parties. Our development and construction activities are subject to the following risks, among others:

· we may be unable to obtain construction financing for development activities on favorable terms, including but not limited to interest rates, term and/or loan to value ratios, or at all, which could cause us to delay or even abandon potential developments;

· we may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental or quasi-governmental permits and authorizations, which could result in increased development costs, could delay initial occupancy dates for all or a portion of a development community, and could require us to abandon our activities entirely with respect to a project for which we are unable to obtain permits or authorizations;

· cost may be higher or yields may be less than anticipated as a result of delays in completing projects, costs that exceed budget and/or higher than expected concessions for lease up and lower rents than expected;

· we may abandon development opportunities that we have already begun to explore, and we may fail to recover expenses already incurred in connection with exploring such development opportunities;

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· we may be unable to complete construction and lease-up of a community on schedule, or incur development or construction costs that exceed our original estimates, and we may be unable to charge rents that would compensate for any increase in such costs;

· occupancy rates, rents and concessions at a newly developed community may fluctuate depending on a number of factors, including market and economic conditions, preventing us from meeting our expected return on our investment and our overall profitability goals; and

· when we sell communities or properties that we developed or renovated to third parties, we may be subject to warranty or construction defect claims that are uninsured or exceed the limits of our insurance.

Bankruptcy or Defaults of Our Counterparties Could Adversely Affect Our Performance. We have relationships with and, from time to time, we execute transactions with or receive services from many counterparties, such as general contractors engaged in connection with our development activities. As a result, bankruptcies or defaults by these counterparties or their subcontractors could result in services not being provided, projects not being completed on time, or on budget, or at all, or volatility in the financial markets and economic weakness could affect the counterparties’ ability to complete transactions with us as intended, both of which could result in disruptions to our operations that may adversely affect our financial condition and results of operations.

Property Ownership Through Partnerships and Joint Ventures May Limit Our Ability to Act Exclusively in Our Interest. We have in the past and may in the future develop and/or acquire properties in partnerships and joint ventures, including those in which we own a preferred interest, with other persons or entities when we believe circumstances warrant the use of such structures. As of March 31, 2019, we had active joint ventures and partnerships, including our preferred equity investments, with a total equity investment of $749.1 million. We could become engaged in a dispute with one or more of our partners which could adversely impact us. Moreover, our partners may have business, economic or other objectives that are inconsistent with our objectives, including objectives that relate to the appropriate timing and terms of any sale or refinancing of a property. In some instances, our partners may have competing interests in our markets that could create conflicts of interest. Also, our partners might refuse to make capital contributions when due and we may be responsible to our partners for indemnifiable losses. In general, we and our partners may each have the right to trigger a buy-sell arrangement, which could cause us to sell our interest, or acquire our partners’ interest, at a time when we otherwise would not have initiated such a transaction and may result in the valuation of our interest in the partnership or joint venture (if we are the seller) or of the other partner’s interest in the partnership or joint venture (if we are the buyer) at levels which may not be representative of the valuation that would result from an arm’s length marketing process and could cause us to recognize unanticipated capital gains or losses or the loss of fee income.

We are also subject to other risks in connection with partnerships or joint ventures, including (i) a deadlock if we and our partner are unable to agree upon certain major and other decisions, (ii) the limitation of our ability to liquidate our position in the partnership or joint venture without the consent of the other partner, and (iii) the requirement to provide guarantees in favor of lenders with respect to the indebtedness of the joint venture.

We May Not be Permitted to Dispose of Certain Properties or Pay Down the Indebtedness Associated with Those Properties When We Might Otherwise Desire to do so Without Incurring Additional Costs. In connection with certain property acquisitions, we have agreed with the sellers that we will not dispose of the acquired properties or reduce the mortgage indebtedness on such properties for significant periods of time unless we pay certain of the resulting tax costs of the sellers or dispose of the property in a transaction in which a gain is not recognized for federal income tax purposes by such sellers, and we may enter into similar agreements in connection with future property acquisitions. These agreements could result in us retaining properties that we would otherwise sell or not paying down or refinancing indebtedness that we would otherwise pay down or refinance. However, subject to certain conditions, we retain the right to substitute other property or debt to meet these obligations to the sellers.

We Could Incur Significant Insurance Costs and Some Potential Losses May Not Be Adequately Covered by Insurance. We have a comprehensive insurance program covering our properties and operating activities with limits of liability, deductibles and self-insured retentions customary within the multifamily industry. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are, however, certain types of extraordinary losses which may not be adequately covered under our insurance program. In addition, we will sustain losses due to insurance deductibles, self-insured retention, uninsured claims or casualties, or losses in excess of applicable coverage.

If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In such an event, we might nevertheless

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remain obligated for any mortgage debt or other financial obligations related to the property. Material losses in excess of insurance proceeds may occur in the future. If one or more of our significant properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Such events could adversely affect our financial condition and results of operations.

As a result of our substantial real estate holdings, the cost of insuring our apartment communities is a component of expense. Insurance premiums and the terms and conditions of insurance policies are subject to significant fluctuations and changes, which are generally outside of our control. We insure our properties with insurance companies that we believe have a good rating at the time our policies are put into effect. The financial condition of one or more insurance companies that we hold policies with may be negatively impacted, which could result in their inability to pay on future insurance claims. Their inability to pay future claims may have a negative impact on our financial results. In addition, the failure or exit or partial exit from an insurance market of one or more insurance companies may affect our ability to obtain insurance or increase the costs to renew or replace our insurance policies or increase the cost of insuring properties.

Failure to Succeed in New Markets May Limit Our Growth. We have acquired in the past, and we may acquire in the future if appropriate opportunities arise, apartment communities that are outside of our existing markets. Entering into new markets may expose us to a variety of risks, and we may not be able to operate successfully in new markets. These risks include, among others:

· inability to accurately evaluate local apartment market conditions and local economies;

· inability to hire and retain key personnel;

· lack of familiarity with local governmental and permitting procedures; and

· inability to achieve budgeted financial results.

Potential Liability for Environmental Contamination Could Result in Substantial Costs. Under various federal, state and local environmental laws, as a current or former owner or operator of real estate, we could be required to investigate and remediate the effects of contamination of currently or formerly owned real estate by hazardous or toxic substances, often regardless of our knowledge of or responsibility for the contamination and solely by virtue of our current or former ownership or operation of the real estate. In addition, we could be held liable to a governmental authority or to third parties for property damage and for investigation and clean-up costs incurred in connection with the contamination. These costs could be substantial, and in many cases environmental laws create liens in favor of governmental authorities to secure their payment. The presence of such substances or a failure to properly remediate any resulting contamination could materially and adversely affect our ability to borrow against, sell or rent an affected property.

In addition, our properties are subject to various federal, state and local environmental, health and safety laws, including laws governing the management of wastes and underground and aboveground storage tanks. Noncompliance with these environmental, health and safety laws could subject us to liability. Changes in laws could increase the potential costs of compliance with environmental laws, health and safety laws or increase liability for noncompliance. This may result in significant unanticipated expenditures or may otherwise adversely affect our financial condition and results of operations.

As the owner or operator of real property, we may also incur liability based on various building conditions. For example, buildings and other structures on properties that we currently own or operate or those we acquire or operate in the future contain, may contain, or may have contained, asbestos-containing material, or ACM. Environmental, health and safety laws require that ACM be properly managed and maintained and may impose fines or penalties on owners, operators or employers for non-compliance with those requirements.

These requirements include special precautions, such as removal, abatement or air monitoring, if ACM would be disturbed during maintenance, renovation or demolition of a building, potentially resulting in substantial costs. In addition, we may be subject to liability for personal injury or property damage sustained as a result of exposure to ACM or releases of ACM into the environment.

We cannot assure you that costs or liabilities incurred as a result of environmental issues will not adversely affect our financial condition and results of operations.

Our Properties May Contain or Develop Harmful Mold or Suffer from Other Indoor Air Quality Issues, Which Could Lead to Liability for Adverse Health Effects or Property Damage or Cost for Remediation. When excessive moisture

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accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants or to increase ventilation, which could adversely affect our results of operations and cash flow. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants or others if property damage or personal injury occurs.

Compliance or Failure to Comply with the Americans with Disabilities Act of 1990 or Other Safety Regulations and Requirements Could Result in Substantial Costs. The Americans with Disabilities Act generally requires that public buildings, including our properties, be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. From time to time, claims may be asserted against us with respect to some of our properties under the Americans with Disabilities Act. If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affect our financial condition and results of operations.

Our properties are subject to various federal, state and local regulatory requirements, such as state and local fire and life safety requirements and federal, state and local accessibility requirements in addition to those imposed by the Americans with Disabilities Act. If we fail to comply with these requirements, we could incur fines or private damage awards. We do not know whether existing requirements will change or whether compliance with future requirements will require significant unanticipated expenditures that could adversely affect our financial condition or results of operations.

The Adoption of, or Changes to, Rent Control, Rent Stabilization, Eviction, Tenants’ Rights and Similar Laws and Regulations in Our Markets Could Have an Adverse Effect on Our Results of Operations and Property Values. Various state and local governments have enacted and may continue to enact rent control, rent stabilization and similar laws and regulations that could limit our ability to raise rents or charge certain fees. We have seen a recent increase in governments considering, or being urged to consider, such laws and regulations. State and local governments also may make changes to eviction and other tenants’ rights laws and regulations that could adversely impact our results of operations and the value of our properties. Laws and regulations regarding rent control, rent stabilization, eviction, tenants’ rights, and similar matters, as well as any lawsuits against us arising from such laws and regulations, may limit our ability to charge market rents, increase rents, evict delinquent tenants or recover increases in our operating expenses, which could have an adverse effect on our results of operations and the value of our properties.

Compliance with or Changes in Real Estate Tax and Other Laws and Regulations Could Adversely Affect Our Funds from Operations and Our Ability to Make Distributions to Stockholders. We are subject to federal, state and local laws, regulations, rules and ordinances at locations where we operate regarding a wide variety of matters that could affect, directly or indirectly, our operations. Generally, we do not directly pass through costs resulting from compliance with or changes in real estate tax laws to residential property tenants. We also do not generally pass through increases in income, service or other taxes to tenants under leases. These costs may adversely affect net operating income and the ability to make distributions to stockholders. Similarly, compliance with or changes in (i) laws increasing the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions or (ii) laws and regulations regulating housing, such as the Americans with Disabilities Act and the Fair Housing Amendments Act of 1988, may result in significant unanticipated expenditures or unanticipated reductions in revenue, which could adversely affect our financial condition and results of operations. In addition, changes in federal and state legislation and regulation on climate change may result in increased capital expenditures to improve the energy efficiency of our existing communities and also may require us to spend more on our new development communities without a corresponding increase in revenue.

Risk of Damage from Catastrophic Weather and Natural Events and Potential Climate Change. Our communities are located in areas that may experience catastrophic weather and other natural events from time to time, including mudslides, fires, hurricanes, tornadoes, floods, snow or ice storms, or other severe inclement weather. These adverse weather and natural events could cause damage or losses that may be greater than insured levels. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected community, as well as anticipated future revenue from that community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. Any such loss could adversely affect our financial condition and results of operations.

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To the extent that we experience any significant changes in the climate in areas where our communities are located, we may experience extreme weather conditions and prolonged changes in precipitation and temperature, all of which could result in physical damage to, and/or a decrease in demand for, our communities located in these areas. Should the impact of such climate change be material in nature, or occur for lengthy periods of time, our financial condition and results of operations could be adversely affected.

Risk of Earthquake Damage. Some of our communities are located in the general vicinity of earthquake faults. We cannot assure you that an earthquake would not cause damage or losses greater than insured levels. In the event of a loss in excess of insured limits, we could lose our capital invested in the affected community, as well as anticipated future revenue from that community. We may also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. Any such loss could adversely affect our financial condition and results of operations. Insurance coverage for earthquakes can be costly due to limited industry capacity. As a result, we may experience shortages in desired coverage levels if market conditions are such that insurance is not available or the cost of insurance makes it, in management’s view, economically impractical.

Risk of Accidental Death or Injury Due to Fire, Natural Disasters or Other Hazards. The accidental death or injury of persons living in our communities due to fire, natural disasters or other hazards could have an adverse effect on our business and results of operations. Our insurance coverage may not cover all losses associated with such events, and we may experience difficulty marketing communities where any such events have occurred, which could have an adverse effect on our financial condition and results of operations.

Actual or Threatened Terrorist Attacks May Have an Adverse Effect on Our Business and Operating Results and Could Decrease the Value of Our Assets. Actual or threatened terrorist attacks and other acts of violence or war could have an adverse effect on our business and operating results. Attacks that directly impact one or more of our apartment communities could significantly affect our ability to operate those communities and thereby impair our ability to achieve our expected results. Further, our insurance coverage may not cover all losses caused by a terrorist attack. In addition, the adverse effects that such violent acts and threats of future attacks could have on the U.S. economy could similarly have an adverse effect on our financial condition and results of operations.

Mezzanine Loan Assets Involve Greater Risks of Loss than Senior Loans Secured by Income-producing Properties. We have in the past and may in the future originate mezzanine loans, which take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. Mezzanine loans may involve a higher degree of risk than a senior mortgage secured by real property, because the security for the loan may lose all or substantially all of its value as a result of foreclosure by the senior lender and because it is in second position and there may not be adequate equity in the property. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some of or all our investment. In addition, mezzanine loans typically have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal.

Risk Related to Preferred Equity Investments. We have in the past and may in the future make preferred equity investments in corporations, limited partnerships, limited liability companies or other entities that have been formed for the purpose of acquiring, developing or managing real property. Generally, we will not have the ability to control the daily operations of the entity, and we will not have the ability to select or remove a majority of the members of the board of directors, managers, general partner or partners or similar governing body of the entity or otherwise control its operations. Although we would seek to maintain sufficient influence over the entity to achieve our objectives, our partners may have interests that differ from ours and may be in a position to take actions without our consent or that are inconsistent with our interests. Further, if our partners were to fail to invest additional capital in the entity when required, we may have to invest additional capital to protect our investment. Our partners may fail to develop or operate the real property or refinance property indebtedness or sell the real property in the manner intended and as a result the entity may not be able to redeem our investment or pay the return expected to us in a timely manner if at all. In addition, we may not be able to dispose of our investment in the entity in a timely manner or at the price at which we would want to divest. In the event that such an entity fails to meet expectations or becomes insolvent, we may lose our entire investment in the entity.

Risks Related to Ground leases. We have in the past and may in the future enter into, as either landlord or tenant, a long-term ground lease with respect to a property or a portion thereof. Such ground leases may contain a rent reset provision

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that requires both parties to agree to a new rent or is based upon factors, for example fair market rent, that are not objective and are not within our control. We may not be able to agree with the counterparty to a revised rental rate, or the revised rental rate may be set by external factors, which could result in a different rental rate than we forecasted. In the past we have had disagreements with respect to revised rental rates and the disagreements have gone to arbitration (for resolution as provided in the applicable lease agreement). In addition, the other party may not perform as expected under the ground lease or there may be a dispute with the other party to the ground lease. Any of these circumstances could have an adverse effect on our business, financial condition or operating results.

We May Experience a Decline in the Fair Value of Our Assets and Be Forced to Recognize Impairment Charges, Which Could Adversely Impact Our Financial Condition, Liquidity and Results of Operations and the Market Price of UDR’s Common Stock. A decline in the fair value of our assets may require us to recognize an impairment against such assets under generally accepted accounting principles as in effect in the United States (“GAAP”), if we were to determine that, with respect to any assets in unrealized loss positions, we do not have the ability and intent to hold such assets to maturity or for a period of time sufficient to allow for recovery to the amortized cost of such assets. If such a determination were to be made, we would recognize unrealized losses through earnings and write down the amortized cost of such assets to a new cost basis, based on the fair value of such assets on the date they are considered to be impaired. Such impairment charges reflect non-cash losses at the time of recognition; subsequent disposition or sale of such assets could further affect our future losses or gains, as they are based on the difference between the sale price received and adjusted amortized cost of such assets at the time of sale. If we are required to recognize asset impairment charges in the future, these charges could adversely affect our financial condition, liquidity, results of operations and the per share trading price of UDR’s common stock.

Any Material Weaknesses Identified in Our Internal Control Over Financial Reporting Could Have an Adverse Effect on UDR’s Stock Price. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal control over financial reporting. If we identify one or more material weaknesses in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, which in turn could have an adverse effect on the per share trading price of UDR’s common stock.

A Breach of Information Technology Systems On Which We Rely Could Materially and Adversely Impact Our Business, Financial Condition, Results of Operations and Reputation. We rely on information technology systems, including the Internet and networks and systems maintained and controlled by third party vendors and other third parties, to process, transmit and store information and to manage or support our business processes. Third party vendors collect and hold personally identifiable information and other confidential information of our tenants, prospective tenants and employees. We also maintain confidential financial and business information regarding us and persons and entities with which we do business on our information technology systems. While we take steps, and generally require third party vendors to take steps, to protect the security of the information maintained in our and third party vendors’ information technology systems, including associate training and testing and the use of commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing of the information, it is possible that our or our third party vendors’ security measures will not be able to prevent human error or the systems’ improper functioning, or the loss, misappropriation, disclosure or corruption of personally identifiable information or other confidential or sensitive information, including information about our tenants and employees. Cybersecurity breaches, including physical or electronic break-ins, computer viruses, phishing scams, attacks by hackers, breaches due to employee error or misconduct, and similar breaches, can create system disruptions, shutdowns or unauthorized access to information maintained on our information technology systems or the information technology systems of our third party vendors or other third parties or otherwise cause disruption or negative impacts to occur to our business and adversely affect our financial condition and results of operations. While we maintain cyber risk insurance to provide some coverage for certain risks arising out of cybersecurity breaches, there is no assurance that such insurance would cover all or a significant portion of the costs or consequences associated with a cybersecurity breach. As the techniques used to obtain unauthorized access to information technology systems become more varied and sophisticated and the occurrence of such breaches becomes more frequent, we and our third party vendors and other third parties may be unable to adequately anticipate these techniques or breaches and implement appropriate preventative measures. Any failure to prevent cybersecurity breaches and maintain the proper function, security and availability of our or our third party vendors’ and other third parties’ information technology systems could interrupt our operations, damage our reputation and brand, damage our competitive position, make it difficult for us to attract and retain tenants, subject us to liability claims or regulatory penalties and could adversely affect our business, financial condition and results of operations.

Our Business and Operations Would Suffer in the Event of Information Technology System Failures. Despite system redundancy and the existence of a disaster recovery plan for our information technology systems, our information technology systems and the information technology systems maintained by our third party vendors are vulnerable to damage arising from any number of sources beyond our or our third party vendors’ control, including energy blackouts, natural disasters, terrorism,

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war, and telecommunication failures. Any failure to maintain proper function and availability of our or third party vendors’ information technology systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could adversely affect our business, financial condition and results of operations.

Social Media Presents Risks. The use of social media could cause us to suffer brand damage or unintended information disclosure. Negative posts or communications about us on a social networking website could damage our reputation. Further, employees or others may disclose non-public information regarding us or our business or otherwise make negative comments regarding us on social networking or other websites, which could adversely affect our business and results of operations. As social media evolves we will be presented with new risks and challenges.

Our Success Depends on Our Senior Management. Our success depends upon the retention of our senior management, whose continued service is not guaranteed. We may not be able to find qualified replacements for the individuals who make up our senior management if their services should no longer be available to us. The loss of services of one or more members of our senior management team could have a material adverse effect on our business, financial condition and results of operations.

Changes in U.S. Accounting Standards May Materially and Adversely Affect Our Reported Results of Operations. Accounting for public companies in the United States is in accordance with GAAP, which is established by the Financial Accounting Standards Board (the “FASB”), an independent body whose standards are recognized by the SEC as authoritative for publicly held companies. Uncertainties posed by various initiatives of accounting standard-setting by the FASB and the SEC, which create and interpret applicable accounting standards for U.S. companies, may change the financial accounting and reporting standards or their interpretation and application of these standards that govern the preparation of our financial statements. These changes could have a material impact on our reported financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in potentially material restatements of prior period financial statements.

Risks Related to Our Indebtedness and Financings

Insufficient Cash Flow Could Affect Our Debt Financing and Create Refinancing Risk. We are subject to the risks normally associated with debt financing, including the risk that our operating income and cash flow will be insufficient to make required payments of principal and interest, or could restrict our borrowing capacity under our line of credit due to debt covenant restraints. Sufficient cash flow may not be available to make all required principal payments and still satisfy UDR’s distribution requirements to maintain its status as a REIT for federal income tax purposes. In addition, the amounts under our line of credit may not be available to us and we may not be able to access the commercial paper market if our operating performance falls outside the constraints of our debt covenants. We are also likely to need to refinance substantially all of our outstanding debt as it matures. We may not be able to refinance existing debt, or the terms of any refinancing may not be as favorable as the terms of the existing debt, which could create pressures to sell assets or to issue additional equity when we would otherwise not choose to do so. In addition, our failure to comply with our debt covenants could result in a requirement to repay our indebtedness prior to its maturity, which could have a material adverse effect on our financial condition and cash flow, and increase our financing costs and impact our ability to make distributions to UDR’s stockholders.

Failure to Generate Sufficient Income Could Impair Debt Service Payments and Distributions to Stockholders. If our apartment communities do not generate sufficient revenue to meet rental expenses, our ability to make required payments of interest and principal on our debt securities and to pay distributions to UDR’s stockholders or the Operating Partnership’s or the DownREIT Partnership’s unitholders will be adversely affected. The following factors, among others, may affect the income generated by our apartment communities:

· the national and local economies;

· local real estate market conditions, such as an oversupply of apartment homes;

· tenants’ perceptions of the safety, convenience, and attractiveness of our communities and the neighborhoods where they are located;

· our ability to provide adequate management, maintenance and insurance;

· rental expenses, including real estate taxes and utilities;

· competition from other apartment communities;

· changes in interest rates and the availability of financing;

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· changes in governmental regulations and the related costs of compliance; and

· changes in tax and housing laws, including the enactment of rent control laws or other laws regulating multifamily housing.

Expenses associated with our investment in an apartment community, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in income from that community. If a community is mortgaged to secure payment of debt and we are unable to make the mortgage payments, we could sustain a loss as a result of foreclosure on the community or the exercise of other remedies by the mortgage holder.

Changing Interest Rates Could Increase Interest Costs and Adversely Affect Our Cash Flow and the Market Price of Our Securities. We currently have, and expect to incur in the future, interest-bearing debt, including unsecured commercial paper, at rates that vary with market interest rates. As of March 31, 2019, UDR had approximately $274.0 million of variable rate indebtedness outstanding, which constitutes approximately 7.6% of total outstanding indebtedness as of such date. As of March 31, 2019, the Operating Partnership had approximately $27.0 million of variable rate indebtedness outstanding, which constitutes all outstanding indebtedness to third parties as of such date. An increase in interest rates would increase our interest expenses and increase the costs of refinancing existing indebtedness and of issuing new debt, including unsecured commercial paper. Accordingly, higher interest rates could adversely affect cash flow and our ability to service our debt and to make distributions to security holders. The effect of prolonged interest rate increases could negatively impact our ability to make acquisitions and develop properties.

The Phase-Out of LIBOR and Transition to SOFR as a Benchmark Interest Rate Could Have Adverse Effects. In 2018, the Alternative Reference Rate Committee identified the Secured Overnight Financing Rate (“SOFR”) as the alternative to LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, published by the Federal Reserve Bank of New York.  By the end of 2021, it is expected that no new contracts will reference LIBOR and will instead use SOFR. Due to the broad use of LIBOR as a reference rate, all financial market participants, including the Company, are impacted by the risks associated with this transition and therefore it could adversely affect our operations and cash flows.

Our Debt Level May Be Increased. Our ability to incur debt is limited by covenants in our bank and other credit agreements. We manage our debt to be in compliance with these debt covenants, but subject to compliance with these covenants, we may increase the amount of our debt at any time without a concurrent improvement in our ability to service the additional debt.

Financing May Not Be Available and Could Be Dilutive. Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit, construction loans and other forms of secured debt, commercial paper and other forms of unsecured debt, and equity financing, including common and preferred equity. We and other companies in the real estate industry have experienced limited availability of financing from time to time, including due to regulatory changes directly or indirectly affecting financing markets, for example the changes in terms on construction loans brought about by the Basel III capital requirements and the associated “High Volatility Commercial Real Estate” designation, which has adversely impacted the availability of loans, including construction loans, and the proceeds of and the interest rate thereon. Restricted lending practices could impact our ability to obtain financing or refinancing for our properties. If we issue additional equity securities to finance developments and acquisitions instead of incurring debt, the interests of UDR’s existing stockholders could be diluted.

Failure To Maintain Our Current Credit Ratings Could Adversely Affect Our Cost of Funds, Related Margins, Liquidity, and Access to Capital Markets. Moody’s and Standard & Poor’s routinely evaluate our debt and have given us ratings on our senior unsecured debt, commercial paper program and preferred stock. These ratings are based on a number of factors, which included their assessment of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flow and earnings. Due to changes in these factors and market conditions, we may not be able to maintain our current credit ratings, which could adversely affect our cost of funds and related margins, liquidity, and access to capital markets, including our ability to access the commercial paper market.

Disruptions in Financial Markets May Adversely Impact Availability and Cost of Credit and Have Other Adverse Effects on Us and the Market Price of UDR’s Stock. Our ability to make scheduled payments on, or to refinance, our debt obligations will depend on our operating and financial performance, which in turn is subject to prevailing economic conditions and to financial, business and other factors beyond our control. During the global financial crisis and the economic recession that followed it, the United States stock and credit markets experienced significant price volatility, dislocations and liquidity

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disruptions, which caused market prices of many stocks to fluctuate substantially and the spreads on debt financings to widen considerably. Those circumstances materially impacted liquidity in the financial markets at times, making terms for certain financings less attractive, and in some cases resulted in the unavailability of financing, such as the commercial paper market. Any future disruptions or uncertainty in the stock and credit markets may negatively impact our ability to refinance existing indebtedness and access additional financing for acquisitions, development of our properties and other purposes at reasonable terms or at all, which may negatively affect our business and the market price of UDR’s common stock. If we are not successful in refinancing our existing indebtedness when it becomes due, we may be forced to dispose of properties on disadvantageous terms, which might adversely affect our ability to service other debt and to meet our other obligations. A prolonged downturn in the financial markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plan accordingly. These events also may make it more difficult or costly for us to raise capital through the issuance of UDR’s common or preferred stock.

A Change in U.S. Government Policy or Support Regarding Fannie Mae or Freddie Mac Could Have a Material Adverse Impact on Our Business. While in recent years we have decreased our borrowing from Fannie Mae and Freddie Mac, Fannie Mae and Freddie Mac are a major source of financing to participants in the multifamily housing market including potential purchasers of our properties. Potential options for the future of agency mortgage financing in the U.S. have been suggested, including options that could involve a reduction in the amount of financing Fannie Mae and Freddie Mac are able to provide, limitations on the loans that the agencies may make, which may not include loans secured by properties like our properties, or the phase out of Fannie Mae and Freddie Mac. While we believe Fannie Mae and Freddie Mac will continue to provide liquidity to our sector, should they discontinue doing so, have their mandates changed or reduced or be disbanded or reorganized by the government, or if there is reduced government support for multifamily housing generally, it may adversely affect interest rates, capital availability, development of multifamily communities and the value of multifamily residential real estate and, as a result, may adversely affect our business and results of operations.

The Soundness of Financial Institutions Could Adversely Affect Us. We have relationships with many financial institutions, including lenders under our credit facilities, and, from time to time, we execute transactions with counterparties in the financial services industry. As a result, defaults by, or even rumors or questions about, financial institutions or the financial services industry generally, could result in losses or defaults by these institutions. In the event that the volatility of the financial markets adversely affects these financial institutions or counterparties, we or other parties to the transactions with us may be unable to complete transactions as intended, which could adversely affect our results of operations.

Interest Rate Hedging Contracts May Be Ineffective and May Result in Material Charges. From time to time when we anticipate issuing debt securities, we may seek to limit our exposure to fluctuations in interest rates during the period prior to the pricing of the securities by entering into interest rate hedging contracts. We may do this to increase the predictability of our financing costs. Also, from time to time we may rely on interest rate hedging contracts to limit our exposure under variable rate debt to unfavorable changes in market interest rates. If the terms of new debt securities are not within the parameters of, or market interest rates fall below that which we incur under a particular interest rate hedging contract, the contract is ineffective. Furthermore, the settlement of interest rate hedging contracts has involved and may in the future involve material charges. In addition, our use of interest rate hedging arrangements may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may fail to honor its obligations. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that our hedging activities will have the desired beneficial impact on our results of operations or financial condition. Termination of these hedging agreements typically involves costs, such as transaction fees or breakage costs.

Risks Related to Tax Laws

We Would Incur Adverse Tax Consequences if UDR Failed to Qualify as a REIT. UDR has elected to be taxed as a REIT under the Code. Our qualification as a REIT requires us to satisfy numerous requirements, some on an annual and quarterly basis, established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. We intend that our current organization and method of operation enable us to continue to qualify as a REIT, but we may not so qualify or we may not be able to remain so qualified in the future. In addition, U.S. federal income tax laws governing REITs and other corporations and the administrative interpretations of those laws may be amended at any time, potentially with retroactive effect. Future legislation, new regulations, administrative interpretations or court decisions could adversely affect our ability to qualify as a REIT or adversely affect UDR’s stockholders.

If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax (including, for periods prior to 2018, any applicable alternative minimum tax) on our taxable income at regular corporate rates, and would not be

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allowed to deduct dividends paid to UDR’s stockholders in computing our taxable income. Also, unless the Internal Revenue Service granted us relief under certain statutory provisions, we could not re-elect REIT status until the fifth calendar year after the year in which we first failed to qualify as a REIT. The additional tax liability from the failure to qualify as a REIT would reduce or eliminate the amount of cash available for investment or distribution to UDR’s stockholders. This would likely have a significant adverse effect on the value of our securities and our ability to raise additional capital. In addition, we would no longer be required to make distributions to UDR’s stockholders. Even if we continue to qualify as a REIT, we will continue to be subject to certain federal, state and local taxes on our income and property.

Certain of our subsidiaries have also elected to be taxed as REITs under the Code, and are therefore subject to the same risks in the event that any such subsidiary fails to qualify as a REIT in any taxable year.

Dividends Paid By REITs Generally Do Not Qualify for Reduced Tax Rates. In general, the maximum U.S. federal income tax rate for dividends paid to individual U.S. stockholders is 20%. Unlike dividends received from a corporation that is not a REIT, our regular dividends (i.e., dividends other than capital gain dividends) to individual stockholders generally are not eligible for the reduced rates. However, under the Tax Cuts and Jobs Act of 2017, our individual U.S. stockholders generally may deduct 20% of such regular dividends under Section 199A of the Code, reducing the effective tax rate applicable to such dividends (although such provision will expire after 2025 absent future legislation).

UDR May Conduct a Portion of Our Business Through Taxable REIT Subsidiaries, Which are Subject to Certain Tax Risks. We have established taxable REIT subsidiaries. Despite UDR’s qualification as a REIT, its taxable REIT subsidiaries must pay income tax on their taxable income. In addition, we must comply with various tests to continue to qualify as a REIT for federal income tax purposes, and our income from and investments in our taxable REIT subsidiaries generally do not constitute permissible income and investments for certain of these tests. While we will attempt to ensure that our dealings with our taxable REIT subsidiaries will not adversely affect our REIT qualification, we cannot provide assurance that we will successfully achieve that result. Furthermore, we may be subject to a 100% penalty tax, we may jeopardize our ability to retain future gains on real property sales, or our taxable REIT subsidiaries may be denied deductions, to the extent our dealings with our taxable REIT subsidiaries are not deemed to be arm’s length in nature or are otherwise not respected.

REIT Distribution Requirements Limit Our Available Cash. As a REIT, UDR is subject to annual distribution requirements, which limit the amount of cash we retain for other business purposes, including amounts to fund our growth. We generally must distribute annually at least 90% of our net REIT taxable income, excluding any net capital gain, in order for our distributed earnings not to be subject to corporate income tax. We intend to make distributions to UDR’s stockholders to comply with the requirements of the Code. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Code.

Certain Property Transfers May Generate Prohibited Transaction Income, Resulting in a Penalty Tax on Gain Attributable to the Transaction. From time to time, we may transfer or otherwise dispose of some of our properties. Under the Code, any gain resulting from transfers of properties that we hold as inventory or primarily for sale to customers in the ordinary course of business would be treated as income from a prohibited transaction and subject to a 100% penalty tax. Since we acquire properties for investment purposes, we do not believe that our occasional transfers or disposals of property are prohibited transactions. However, whether property is held for investment purposes is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. The Internal Revenue Service may contend that certain transfers or disposals of properties by us are prohibited transactions. If the Internal Revenue Service were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, then we would be required to pay a 100% penalty tax on any gain allocable to us from the prohibited transaction and we may jeopardize our ability to retain future gains on real property sales. In addition, income from a prohibited transaction might adversely affect UDR’s ability to satisfy the income tests for qualification as a REIT for federal income tax purposes.

Changes to the U.S. Federal Income Tax Laws, including the Enactment of Certain Tax Reform Measures, Could Have an Adverse Impact on Our Business and Financial Results. The recently passed Tax Cuts and Jobs Act of 2017 significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. The impact of the Act on us and our stockholders is uncertain, and may not become evident for some period of time. For example, the Act contained provisions that may reduce the relative competitive advantage of operating as a REIT, including the lowering of income tax rates on individuals and corporations, which eases the burden of double taxation on corporate dividends and potentially causes the single level of taxation on REIT distributions to become relatively less attractive. The Act also contains provisions allowing the expensing of capital expenditures, which could result in the bunching of taxable income and required distributions for REITs, and provisions extending the depreciable lives of certain real estate

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assets and further limiting the deductibility of interest expense, which could negatively impact the real estate market. In addition, although the Tax Cuts and Jobs Act of 2017 was recently passed, there can be no assurance that future changes to the U.S. federal income tax laws or regulatory changes will not be proposed or enacted that could impact our business and financial results. The REIT rules are regularly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department, which may result in revisions to regulations and interpretations in addition to statutory changes. If enacted, certain of such changes could have an adverse impact on our business and financial results.

We cannot predict whether, when or to what extent the Tax Cuts and Jobs Act of 2017 and any new U.S. federal tax laws, regulations, interpretations or rulings will impact the real estate investment industry or REITs. Prospective investors are urged to consult their tax advisors regarding the effect of the Tax Cuts and Jobs Act of 2017 and potential future changes to the federal tax laws on an investment in our shares.

We May Be Adversely Affected by Changes in State and Local Tax Laws and May Become Subject to Tax Audits from Time to Time. Because UDR is organized and qualifies as a REIT, it is generally not subject to federal income taxes, but it is subject to certain state and local taxes. From time to time, changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and local jurisdictions in which we own apartment communities may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional state and local taxes. These increased tax costs could adversely affect our financial condition and the amount of cash available for the payment of distributions to UDR’s stockholders. In the normal course of business, we or our affiliates (including entities through which we own real estate) may also become subject to federal, state or local tax audits. If we (or such entities) become subject to federal, state or local tax audits, the ultimate result of such audits could have an adverse effect on our financial condition and results of operations.

The Operating Partnership and the DownREIT Partnership Intend to Qualify as Partnerships, But Cannot Guarantee That They Will Qualify. The Operating Partnership and the DownREIT Partnership intend to qualify as partnerships for federal income tax purposes, and intend to take that position for all income tax reporting purposes. If classified as partnerships, the Operating Partnership and the DownREIT Partnership generally will not be taxable entities and will not incur federal income tax liability. However, the Operating Partnership and the DownREIT Partnership would be treated as corporations for federal income tax purposes if they were “publicly traded partnerships,” unless at least 90% of their income was qualifying income as defined in the Code. A “publicly traded partnership” is a partnership whose partnership interests are traded on an established securities market or are readily tradable on a secondary market (or the substantial equivalent thereof). Although neither the Operating Partnership’s nor the DownREIT Partnership’s partnership units are traded on an established securities market, because of the redemption rights of their limited partners, the Operating Partnership’s and DownREIT Partnership’s units held by limited partners could be viewed as readily tradable on a secondary market (or the substantial equivalent thereof), and the Operating Partnership and the DownREIT Partnership may not qualify for one of the “safe harbors” under the applicable tax regulations. Qualifying income for the 90% test generally includes passive income, such as real property rents, dividends and interest. The income requirements applicable to REITs and the definition of qualifying income for purposes of this 90% test are similar in most respects. The Operating Partnership and the DownREIT Partnership may not meet this qualifying income test. If either the Operating Partnership or the DownREIT Partnership were to be taxed as a corporation, it would incur substantial tax liabilities, and UDR would then fail to qualify as a REIT for tax purposes, unless it qualified for relief under certain statutory savings provisions, and our ability to raise additional capital would be impaired.

Qualifying as a REIT Involves Highly Technical and Complex Provisions of the Code. Our qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Moreover, new legislation, court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or impossible for us to qualify as a REIT. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. Our ability to satisfy the REIT income and asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination and for which we will not obtain independent appraisals, and upon our ability to successfully manage the composition of our income and assets on an ongoing basis. In addition, our ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

95

Risks Related to Our Organization and Ownership of UDR’s Stock

Changes in Market Conditions and Volatility of Stock Prices Could Adversely Affect the Market Price of UDR’s Common Stock. The stock markets, including the New York Stock Exchange (“NYSE”), on which we list UDR’s common stock, have experienced significant price and volume fluctuations. As a result, the market price of UDR’s common stock could be similarly volatile, and investors in UDR’s common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the price per share of UDR’s common stock, including:

· general market and economic conditions;

· actual or anticipated variations in UDR’s quarterly operating results or dividends or UDR’s payment of dividends in shares of UDR’s stock;

· changes in our funds from operations or earnings estimates;

· difficulties or inability to access capital or extend or refinance existing debt;

· decreasing (or uncertainty in) real estate valuations;

· changes in market valuations of similar companies;

· publication of research reports about us or the real estate industry;

· the general reputation of real estate investment trusts and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate companies);

· general stock and bond market conditions, including changes in interest rates on fixed income securities, that may lead prospective purchasers of UDR’s stock to demand a higher annual yield from future dividends;

· a change in analyst ratings;

· additions or departures of key management personnel;

· adverse market reaction to any additional debt we incur in the future;

· speculation in the press or investment community;

· terrorist activity which may adversely affect the markets in which UDR’s securities trade, possibly increasing market volatility and causing the further erosion of business and consumer confidence and spending;

· failure to qualify as a REIT;

· strategic decisions by us or by our competitors, such as acquisitions, divestments, spin-offs, joint ventures, strategic investments or changes in business strategy;

· failure to satisfy listing requirements of the NYSE;

· governmental regulatory action and changes in tax laws; and

· the issuance of additional shares of UDR’s common stock, or the perception that such sales might occur, including under UDR’s at-the-market equity distribution program.

Many of the factors listed above are beyond our control. These factors may cause the market price of shares of UDR’s common stock to decline, regardless of our financial condition, results of operations, business or our prospects.

We May Change the Dividend Policy for UDR’s Common Stock in the Future. The decision to declare and pay dividends on UDR’s common stock, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our board of directors and will depend on our earnings, funds from operations, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness, the annual distribution requirements under the REIT provisions of the Code, state law and such other factors as our board of directors considers relevant. Any change in our dividend policy could have an adverse effect on the market price of UDR’s common stock.

Maryland Law May Limit the Ability of a Third Party to Acquire Control of Us, Which May Not be in UDR’s Stockholders’ Best Interests. Maryland business statutes may limit the ability of a third party to acquire control of us. As a

96

Maryland corporation, we are subject to various Maryland laws which may have the effect of discouraging offers to acquire our Company and of increasing the difficulty of consummating any such offers, even if our acquisition would be in UDR’s stockholders’ best interests. The Maryland General Corporation Law restricts mergers and other business combination transactions between us and any person who acquires beneficial ownership of shares of UDR’s stock representing 10% or more of the voting power without our board of directors’ prior approval. Any such business combination transaction could not be completed until five years after the person acquired such voting power, and generally only with the approval of stockholders representing 80% of all votes entitled to be cast and 66 2/3 % of the votes entitled to be cast, excluding the interested stockholder, or upon payment of a fair price. Maryland law also provides generally that a person who acquires shares of our equity stock that represents 10% (and certain higher levels) of the voting power in electing directors will have no voting rights unless approved by a vote of two-thirds of the shares eligible to vote.

Limitations on Share Ownership and Limitations on the Ability of UDR’s Stockholders to Effect a Change in Control of Our Company Restricts the Transferability of UDR’s Stock and May Prevent Takeovers That are Beneficial to UDR’s Stockholders. One of the requirements for maintenance of our qualification as a REIT for U.S. federal income tax purposes is that no more than 50% in value of our outstanding capital stock may be owned by five or fewer individuals, including entities specified in the Code, during the last half of any taxable year. Our charter contains ownership and transfer restrictions relating to UDR’s stock primarily to assist us in complying with this and other REIT ownership requirements; however, the restrictions may have the effect of preventing a change of control, which does not threaten REIT status. These restrictions include a provision that generally limits ownership by any person of more than 9.9% of the value of our outstanding equity stock, unless our board of directors exempts the person from such ownership limitation, provided that any such exemption shall not allow the person to exceed 13% of the value of our outstanding equity stock. Absent such an exemption from our board of directors, the transfer of UDR’s stock to any person in excess of the applicable ownership limit, or any transfer of shares of such stock in violation of the ownership requirements of the Code for REITs, will be considered null and void, and the intended transferee of such stock will acquire no rights in such shares. These provisions of our charter may have the effect of delaying, deferring or preventing someone from taking control of us, even though a change of control might involve a premium price for UDR’s stockholders or might otherwise be in UDR’s stockholders’ best interests.

Item 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

From time to time the Company issues shares of the Company’s common stock in exchange for operating partnership units (“OP Units”) tendered to the Operating Partnership for redemption in accordance with the provisions of the Operating Partnership’s limited partnership agreement. The holders of OP Units have the right to require the Operating Partnership to redeem all or a portion of their OP Units in exchange for a cash payment based on the market value of our common stock at the time of redemption. However, the Operating Partnership’s obligation to pay the cash amount is subject to the prior right of the Company to acquire such OP Units in exchange for either the cash amount or the number of shares of the Company’s common stock equal to the number of OP Units being redeemed.

During the three months ended March 31, 2019, we issued 4,311 shares of our common stock upon redemption of OP Units in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

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Repurchase of Equity Securities

In February 2006, UDR’s Board of Directors authorized a 10 million share repurchase program. In January 2008, our Board of Directors authorized a new 15 million share repurchase program. Under the two share repurchase programs, UDR may repurchase shares of our common stock in open market purchases, block purchases, privately negotiated transactions or otherwise. The following table summarizes all of UDR’s repurchases of shares of common stock under these programs during the three months ended March 31, 2019:

				Total Number	Maximum
				of Shares	Number of
				Purchased as	Shares that
	Total			Part of	May Yet Be
	Number of	Average		Publicly	Purchased
	Shares	Price Paid		Announced Plans	Under the Plans
Period	Purchased	per Share		or Programs	or Programs (a)
Beginning Balance	10,560,863	$	22.66	10,560,863	14,439,137
January 1, 2019 through January 31, 2019	—		—	—	14,439,137
February 1, 2019 through February 28, 2019	—		—	—	14,439,137
March 1, 2019 through March 31, 2019	—		—	—	14,439,137
Balance as of March 31, 2019	10,560,863	$	22.66	10,560,863	14,439,137

(a) This number reflects the amount of shares that were available for purchase under our 10 million share repurchase program authorized in February 2006 and our 15 million share repurchase program authorized in January 2008.

During the three months ended March 31, 2019, certain of our employees surrendered shares of common stock owned by them to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted shares of common stock and the exercise of stock options issued under our 1999 Long-Term Incentive Plan (the “LTIP”). The following table summarizes all of these repurchases during the three months ended March 31, 2019:

				Total Number	Maximum
				of Shares	Number of
				Purchased as	Shares that
	Total			Part of	May Yet Be
	Number of	Average		Publicly	Purchased
	Shares	Price Paid		Announced Plans	Under the Plans
Period	Purchased	per Share (a)		or Programs	or Programs
January 1, 2019 through January 31, 2019	17,045	$	38.39	N/A	N/A
February 1, 2019 through February 28, 2019	47,611		44.45	N/A	N/A
March 1, 2019 through March 31, 2019	—		—	N/A	N/A
Total	64,656	$	42.85

(a) The price paid per share is based on the closing price of our common stock as of the date of the determination of the statutory minimum for federal and state tax obligations.

Item 3.DEFAULTS UPON SENIOR SECURITIES

None.

Item 4.MINE SAFETY DISCLOSURES

Not applicable.

Item 5.OTHER INFORMATION

None.

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Item 6.   EXHIBITS

Exhibit No.	Description
3.1	Articles of Restatement of UDR, Inc. (incorporated by reference to Exhibit 3.09 to UDR, Inc.’s Current Report on Form 8‑K dated July 27, 2005 and filed with the SEC on August 1, 2005).
3.2	Articles of Amendment to the Articles of Restatement of UDR, Inc. dated and filed with the State Department of Assessments and Taxation of the State of Maryland on March 14, 2007 (incorporated by reference to Exhibit 3.2 to UDR, Inc.’s Current Report on Form 8‑K dated March 14, 2007 and filed with the SEC on March 15, 2007).
3.3	Articles of Amendment to the Articles of Restatement of UDR, Inc. dated August 30, 2011 and filed with the State Department of Assessments and Taxation of the State of Maryland on August 31, 2011 (incorporated by reference to Exhibit 3.1 to UDR, Inc.’s Current Report on Form 8‑K dated August 29, 2011 and filed with the SEC on September 1, 2011).
3.4	Articles of Amendment to the Articles of Restatement of UDR, Inc. dated and filed with the State Department of Assessments and Taxation of the State of Maryland on May 24, 2018 (incorporated by reference to Exhibit 3.1 to UDR, Inc.’s Current Report on Form 8-K dated May 24, 2018 and filed with the SEC on May 29, 2018).
3.5	Articles Supplementary relating to UDR, Inc.’s 6.75% Series G Cumulative Redeemable Preferred Stock dated and filed with the State Department of Assessments and Taxation of the State of Maryland on May 30, 2007 (incorporated by reference to Exhibit 3.4 to UDR, Inc.’s Form 8‑A Registration Statement dated and filed with the SEC on May 30, 2007).
3.6	Amended and Restated Bylaws of UDR, Inc. (as amended through May 24, 2018) (incorporated by reference to Exhibit 3.6 to UDR, Inc.’s Quarterly Report on Form 10‑Q for the quarter ended September 30, 2018).
3.7	Certificate of Limited Partnership of United Dominion Realty, L.P. dated as of February 19, 2004 (incorporated by reference to Exhibit 3.4 to United Dominion Realty, L.P.’s Post-Effective Amendment No. 1 to Registration Statement on Form S‑3 dated and filed with the SEC on October 15, 2010).
3.8	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 UDR, Inc.’s Annual Report on Form 10‑K for the year ended December 31, 2003).
3.9	First Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of June 24, 2005 (incorporated by reference to Exhibit 10.06 to UDR, Inc.’s Quarterly Report on Form 10‑Q for the quarter ended June 30, 2005).
3.10	Second Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of February 23, 2006 (incorporated by reference to Exhibit 10.6 to UDR, Inc.’s Quarterly Report on Form 10‑Q for the quarter ended March 31, 2006).
3.11	Third Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of February 2, 2007 (incorporated by reference to Exhibit 99.1 to UDR, Inc.’s Quarterly Report on Form 10‑Q for the quarter ended September 30, 2009).
3.12	Fourth Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of December 27, 2007 (incorporated by reference to Exhibit 10.25 to UDR, Inc.’s Annual Report on Form 10‑K for the year ended December 31, 2007).
3.13	Fifth Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of March 7, 2008 (incorporated by reference to Exhibit 10.53 to UDR, Inc.’s Annual Report on Form 10‑K for the year ended December 31, 2008).
3.14	Sixth Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of December 9, 2008 (incorporated by reference to Exhibit 10.1 to UDR, Inc.’s Current Report on Form 8‑K dated December 9, 2008 and filed with the Commission on December 10, 2008).

99

Exhibit No.	Description
3.15	Seventh Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P., dated as of March 13, 2009 (incorporated by reference to Exhibit 10.1 to UDR, Inc.’s Current Report on Form 8‑K dated March 18, 2009 and filed with the SEC on March 19, 2009).
3.16	Eighth Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P., dated as of November 17, 2010 (incorporated by reference to Exhibit 10.1 to UDR, Inc.’s Current Report on Form 8‑K dated and filed with the SEC on November 18, 2010).
3.17	Ninth Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P., dated as of December 4, 2015 (incorporated by reference to Exhibit 10.1 to UDR, Inc.’s Current Report on Form 8‑K dated December 4, 2015 and filed with the SEC on December 10, 2015).
3.18	Tenth Amendment to the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. dated as of October 29, 2018 (incorporated by reference to Exhibit 3.18 to UDR, Inc.’s Quarterly Report on Form 10‑Q for the quarter ended September 30, 2018).
31.1	Rule 13a‑14(a) Certification of the Chief Executive Officer of UDR, Inc.
31.2	Rule 13a‑14(a) Certification of the Chief Financial Officer of UDR, Inc.
31.3	Rule 13a‑14(a) Certification of the Chief Executive Officer of UDR, Inc., general partner of United Dominion Realty, L.P.
31.4	Rule 13a‑14(a) Certification of the Chief Financial Officer of UDR, Inc., general partner of United Dominion Realty, L.P.
32.1	Section 1350 Certification of the Chief Executive Officer of UDR, Inc.
32.2	Section 1350 Certification of the Chief Financial Officer of UDR, Inc.
32.3	Section 1350 Certification of the Chief Executive Officer of UDR, Inc., general partner of United Dominion Realty, L.P.
32.4	Section 1350 Certification of the Chief Financial Officer of UDR, Inc., general partner of United Dominion Realty, L.P.
101	XBRL (Extensible Business Reporting Language). The following materials from this Quarterly Report on Form 10‑Q for the periods ended March 31, 2019, formatted in XBRL: (i) consolidated balance sheets of UDR, Inc., (ii) consolidated statements of operations of UDR, Inc., (iii) consolidated statements of comprehensive income/(loss) of UDR, Inc., (iv) consolidated statements of changes in equity of UDR, Inc., (v) consolidated statements of cash flows of UDR, Inc., (vi) notes to consolidated financial statements of UDR, Inc., (vii) consolidated balance sheets of United Dominion Realty, L.P., (viii) consolidated statements of operations of United Dominion Realty, L.P., (ix) consolidated statements of changes in capital of United Dominion Realty, L.P., (x) consolidated statements of cash flows of United Dominion Realty, L.P., and (xi) notes to consolidated financial statements of United Dominion Realty, L.P.

100

SIGNATURES

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

		UDR, Inc.
Date:	May 1, 2019	/s/ Joseph D. Fisher
		Joseph D. Fisher
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)
		United Dominion Realty, L.P.
		By: UDR, Inc., its general partner
Date:	May 1, 2019	/s/ Joseph D. Fisher
		Joseph D. Fisher
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

101

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Thomas W. Toomey, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of UDR, Inc.;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The 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;

(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:   May 1, 2019	/s/ Thomas W. Toomey
	Thomas W. Toomey
	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Joseph D. Fisher, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of UDR, Inc.;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The 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;

(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:   May 1, 2019	/s/ Joseph D. Fisher
	Joseph D. Fisher
	Chief Financial Officer and Senior Vice President (Principal Financial Officer)

EX-31.3

EXHIBIT 31.3

CERTIFICATION

I, Thomas W. Toomey, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of United Dominion Realty, L.P.;

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;

(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:  May 1, 2019	/s/ Thomas W. Toomey
	Thomas W. Toomey
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer) of UDR, Inc.,
	general partner of United Dominion Realty, L.P.

EX-31.4

EXHIBIT 31.4

CERTIFICATION

I, Joseph D. Fisher, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of United Dominion Realty, L.P.;

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;

(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:   May 1, 2019	/s/ Joseph D. Fisher
	Joseph D. Fisher
	Chief Financial Officer and Senior Vice President (Principal Financial Officer) of UDR, Inc.,
	general partner of United Dominion Realty, L.P.

EX-32.1

EXHIBIT 32.1

CERTIFICATION

In connection with the periodic report of UDR, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas W. Toomey, Chairman of the Board and 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.

Uly 27Jul
Date:  May 1, 2019	/s/ Thomas W. Toomey
	Thomas W. Toomey
	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION

In connection with the periodic report of UDR, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Joseph D. Fisher, Senior Vice President and 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.

Uly 27
Date:  May 1, 2019	/s/ Joseph D. Fisher
	Joseph D. Fisher
	Chief Financial Officer and Senior Vice President (Principal Financial Officer)

EX-32.3

EXHIBIT 32.3

CERTIFICATION

In connection with the periodic report of United Dominion Realty, L.P. (the “Operating Partnership”) on Form 10-Q for the quarter ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas W. Toomey, Chairman of the Board and Chief Executive Officer of UDR, Inc., the general partner of the Operating Partnership, 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 Operating Partnership at the dates and for the periods indicated.

Date:  May 1, 2019	/s/ Thomas W. Toomey
	Thomas W. Toomey
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer) of UDR, Inc.,
	general partner of United Dominion Realty, L.P.

EX-32.4

EXHIBIT 32.4

CERTIFICATION

In connection with the periodic report of United Dominion Realty, L.P. (the “Operating Partnership”) on Form 10-Q for the quarter ended March 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), I, Joseph D. Fisher, Senior Vice President and Chief Financial Officer of UDR, Inc., the general partner of the Operating Partnership, 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 Operating Partnership at the dates and for the periods indicated.

Date:  May 1, 2019	/s/ Joseph D. Fisher
	Joseph D. Fisher
	Chief Financial Officer and Senior Vice President
	(Principal Financial Officer) of UDR, Inc.,
	general partner of United Dominion Realty, L.P.

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 29, 2019
Entity information
Entity Registrant Name	UDR, Inc.
Entity Central Index Key	0000074208
Document Type	10-Q
Document period end date	Mar. 31, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		281,794,814
Entity Small Business	false
Entity Emerging Growth Company	false
United Dominion Reality L.P.
Entity information
Entity Registrant Name	United Dominion Realty, L.P.
Entity Central Index Key	0001018254
Document Type	10-Q
Document period end date	Mar. 31, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Real estate owned:
Real estate held for investment	$ 10,680,555	$ 10,196,159
Less: accumulated depreciation	(3,764,099)	(3,654,160)
Total real estate owned, net of accumulated depreciation	6,916,456	6,541,999
Cash and cash equivalents	1,043	185,216
Restricted cash	23,111	23,675
Notes receivable, net	36,974	42,259
Investment in and advances to unconsolidated joint ventures, net	749,100	780,869
Operating lease right-of-use assets	94,145
Other assets	134,896	137,710
Total assets	7,955,725	7,711,728
Liabilities:
Secured debt, net	599,796	601,227
Unsecured debt, net	2,990,033	2,946,560
Operating lease liabilities	88,218
Real estate taxes payable	27,205	20,608
Accrued interest payable	29,397	38,747
Security deposits and prepaid rent	36,332	35,060
Distributions payable	105,548	97,666
Accounts payable, accrued expenses, and other liabilities	65,334	76,343
Total liabilities	3,941,863	3,816,211
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	1,051,498	972,740
Equity:
Common stock, $0.01 par value; 350,000,000 shares authorized: 281,791,932 and 275,545,900 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively	2,818	2,755
Additional paid-in capital	5,184,195	4,920,732
Distributions in excess of net income	(2,281,262)	(2,063,996)
Accumulated other comprehensive income/(loss), net	(2,970)	(67)
Total stockholders’ equity	2,948,982	2,905,625
Noncontrolling interests	13,382	17,152
Total equity	2,962,364	2,922,777
Total liabilities and equity	7,955,725	7,711,728
8.00% Series E Cumulative Convertible Preferred Stock
Equity:
Preferred stock, no par value; 50,000,000 shares authorized:	46,200	46,200
Series F
Equity:
Preferred stock, no par value; 50,000,000 shares authorized:	$ 1	$ 1

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Equity:
Preferred stock, no par value	$ 0.00	$ 0.00
Preferred stock, shares authorized	50,000,000	50,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	350,000,000	350,000,000
Common stock, shares issued	281,791,932	275,545,900
Common stock, shares outstanding	281,791,932	275,545,900
8.00% Series E Cumulative Convertible Preferred Stock
Equity:
Preferred stock, dividend rate percentage	8.00%	8.00%
Preferred stock, shares issued	2,780,994	2,780,994
Preferred stock, shares outstanding	2,780,994	2,780,994
Series F
Equity:
Preferred stock, shares issued	15,797,155	15,802,393
Preferred stock, shares outstanding	15,797,155	15,802,393

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
REVENUES:
Rental income	$ 267,922	$ 250,483
Joint venture management and other fees	$ 2,751	$ 2,822
Type of revenue	udr:ManagementAndOtherFeesMember	udr:ManagementAndOtherFeesMember
Total revenues	$ 270,673	$ 253,305
OPERATING EXPENSES:
Property operating and maintenance	41,939	40,587
Real estate taxes and insurance	36,300	33,282
Property management	7,703	6,888
Other operating expenses	5,646	2,009
Real estate depreciation and amortization	112,468	108,136
General and administrative	12,467	11,759
Casualty-related charges/(recoveries), net		940
Other depreciation and amortization	1,656	1,691
Total operating expenses	218,179	205,292
Gain/(loss) on sale of real estate owned		70,300
Operating income	52,494	118,313
Income/(loss) from unconsolidated entities	49	(1,677)
Interest expense	(33,542)	(29,943)
Interest income and other income/(expense), net	9,813	2,759
Income/(loss) before income taxes	28,814	89,452
Tax (provision)/benefit, net	(2,212)	(227)
Net income/(loss)	26,602	89,225
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	(2,057)	(7,390)
Net (income)/loss attributable to noncontrolling interests	(42)	(79)
Net income/(loss) attributable to UDR, Inc.	24,503	81,756
Distributions to preferred stockholders — Series E (Convertible)	(1,011)	(955)
Net income/(loss) attributable to common stockholders	$ 23,492	$ 80,801
Income/(loss) per weighted average common share - basic	$ 0.08	$ 0.30
Income/(loss) per weighted average common share - diluted	$ 0.08	$ 0.30
Weighted average number of common shares outstanding — Basic	277,002	267,546
Weighted average number of common shares outstanding — diluted	277,557	269,208

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
Net income/(loss)	$ 26,602	$ 89,225
Other comprehensive income/(loss), including portion attributable to noncontrolling interests:
Unrealized holding gain/(loss)	(2,210)	1,710
(Gain)/loss reclassified into earnings from other comprehensive income/(loss)	(945)	(172)
Other comprehensive income/(loss), including portion attributable to noncontrolling interests	(3,155)	1,538
Comprehensive income/(loss)	23,447	90,763
Comprehensive (income)/loss attributable to noncontrolling interests	(1,847)	(7,602)
Comprehensive income/(loss) attributable to UDR, Inc.	$ 21,600	$ 83,161

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands	Preferred Stock	Common Stock	Paid-in Capital	Distributions in Excess of Net Income	Accumulated Other Comprehensive Income/(Loss), net	Noncontrolling Interests	Total
Beginning Balance at Dec. 31, 2017	$ 46,201	$ 2,678	$ 4,651,205	$ (1,871,603)	$ (2,681)	$ 9,564	$ 2,835,364
Consolidated Statements of Changes in Equity
Net income/(loss) attributable to UDR, Inc.				81,756			81,756
Net income/(loss) attributable to noncontrolling interests						70	70
Contribution of noncontrolling interests in consolidated real estate						108	108
Repurchase of common shares		(6)	(19,982)				(19,988)
Long Term Incentive Plan Unit grants/(vestings), net						(1,424)	(1,424)
Other comprehensive income/(loss)					1,405		1,405
Issuance/(forfeiture) of common and restricted shares, net			(4,148)				(4,148)
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		4	11,691				11,695
Common stock distributions declared ($0.3425, $0.3225 per share for the three months ended March 31, 2019 and 2018, respectively)				(86,322)			(86,322)
Preferred stock distributions declared-Series E ($0.3708, $0.3492 per share for the three months ended March 31, 2019 and 2018, respectively)				(955)			(955)
Adjustment to reflect redemption value of redeemable noncontrolling interests				68,217			68,217
Ending Balance at Mar. 31, 2018	46,201	2,676	4,638,766	(1,808,907)	(1,276)	8,318	2,885,778
Beginning Balance at Dec. 31, 2018	46,201	2,755	4,920,732	(2,063,996)	(67)	17,152	2,922,777
Consolidated Statements of Changes in Equity
Net income/(loss) attributable to UDR, Inc.				24,503			24,503
Net income/(loss) attributable to noncontrolling interests						30	30
Contribution of noncontrolling interests in consolidated real estate						125	125
Long Term Incentive Plan Unit grants/(vestings), net						(3,925)	(3,925)
Other comprehensive income/(loss)					(2,903)		(2,903)
Issuance/(forfeiture) of common and restricted shares, net			(1,499)				(1,499)
Issuance of common shares through public offering, net		44	192,135				192,179
Adjustment for conversion of noncontrolling interest of unitholders in the Operating Partnership and DownREIT Partnership		19	72,827				72,846
Common stock distributions declared ($0.3425, $0.3225 per share for the three months ended March 31, 2019 and 2018, respectively)				(96,561)			(96,561)
Preferred stock distributions declared-Series E ($0.3708, $0.3492 per share for the three months ended March 31, 2019 and 2018, respectively)				(1,011)			(1,011)
Adjustment to reflect redemption value of redeemable noncontrolling interests				(144,197)			(144,197)
Ending Balance at Mar. 31, 2019	$ 46,201	$ 2,818	$ 5,184,195	$ (2,281,262)	$ (2,970)	$ 13,382	$ 2,962,364

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Common distributions declared per share	$ 0.3425	$ 0.3225
8.00% Series E Cumulative Convertible Preferred Stock
Preferred stock distributions declared	$ 0.3708	$ 0.3492

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating Activities
Net income/(loss)	$ 26,602	$ 89,225
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization	114,124	109,827
(Gain)/loss on sale of real estate owned		(70,300)
(Income)/loss from unconsolidated entities	(49)	1,677
Return on investment in unconsolidated joint ventures	1,977	678
Amortization of share-based compensation	5,937	3,504
Other	3,910	1,745
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets	2,295	3,560
Increase/(decrease) in operating liabilities	(17,463)	(7,660)
Net cash provided by/(used in) operating activities	137,333	132,256
Investing Activities
Acquisition of real estate assets	(403,245)
Proceeds from sales of real estate investments, net		89,433
Development of real estate assets	(6,237)	(63,718)
Capital expenditures and other major improvements — real estate assets	(31,264)	(14,765)
Capital expenditures — non-real estate assets	(3,346)	(433)
Investment in unconsolidated joint ventures	(21,389)	(19,736)
Distributions received from unconsolidated joint ventures	10,797	5,633
Purchase deposits on pending acquisitions	(10,350)	(1,000)
Repayment/(issuance) of notes receivable, net	5,285	(20,000)
Net cash provided by/(used in) investing activities	(459,749)	(24,586)
Financing Activities
Payments on secured debt	(962)	(1,172)
Payments on unsecured debt		(25,000)
Net proceeds/(repayment) of commercial paper	(11,115)
Net proceeds/(repayment) of revolving bank debt	54,294	35,940
Proceeds from the issuance of common shares through public offering, net	192,179
Repurchase of common shares		(19,988)
Distributions paid to redeemable noncontrolling interests	(8,553)	(7,990)
Distributions paid to preferred stockholders	(959)	(915)
Distributions paid to common stockholders	(88,911)	(83,051)
Other	1,706	(6,471)
Net cash provided by/(used in) financing activities	137,679	(108,647)
Net increase/(decrease) in cash, cash equivalents, and restricted cash	(184,737)	(977)
Cash, cash equivalents, and restricted cash, beginning of year	208,891	21,830
Cash, cash equivalents, and restricted cash, end of period	24,154	20,853
Supplemental Information:
Interest paid during the period, net of amounts capitalized	44,271	35,155
Cash paid/(refunds received) for income taxes	241	(22)
Non-cash transactions:
Transfer of investment in and advances to unconsolidated joint ventures to real estate owned	40,433
Recognition of operating lease right-of-use assets	94,349
Recognition of operating lease liabilities	88,336
Vesting of LTIP Units	14,335	4,397
Development costs and capital expenditures incurred but not yet paid	10,745	39,749
Conversion of Operating Partnership and DownREIT Partnership noncontrolling interests to common stock (1,838,133 shares in 2019 and 303,498 shares in 2018)	72,846	11,695
Distributions declared but not yet paid	$ 105,548	$ 95,122

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CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
The following reconciles cash, cash equivalents, and restricted cash to the total of the same amounts as shown above:
Cash and cash equivalents	$ 1,043	$ 185,216	$ 1,083	$ 2,038
Restricted cash	23,111	23,675	19,770	19,792
Total cash, cash equivalents, and restricted cash as shown above	$ 24,154	$ 208,891	$ 20,853	$ 21,830

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Non-cash transactions:
Conversion of OP Units into common shares	1,838,133	303,498

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2019

BASIS OF PRESENTATION

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

Basis of Presentation

UDR, Inc., collectively with our consolidated subsidiaries (“UDR,” the “Company,” “we,” “our,” or “us”), is a self-administered real estate investment trust, or REIT, that owns, operates, acquires, renovates, develops, redevelops, and manages apartment communities. The accompanying consolidated financial statements include the accounts of UDR and its subsidiaries, including United Dominion Realty, L.P. (the “Operating Partnership” or the “OP”) and UDR Lighthouse DownREIT L.P. (the “DownREIT Partnership”). As of March 31, 2019, there were 184,053,122 units in the Operating Partnership (“OP Units”) outstanding, of which 176,057,247 OP Units, or 95.7%, were owned by UDR and 7,995,875 OP Units, or 4.3%, were owned by outside limited partners. As of March 31, 2019, there were 32,367,380 units in the DownREIT Partnership (“DownREIT Units”) outstanding, of which 17,233,074, or 53.2%, were owned by UDR (including 13,470,651 DownREIT Units, or 41.6%, that were held by the Operating Partnership) and 15,134,306, or 46.8%, were owned by outside limited partners. The consolidated financial statements of UDR include the noncontrolling interests of the unitholders in the Operating Partnership and DownREIT Partnership.

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 note 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. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of our financial position as of March 31, 2019, and results of operations for the three months ended March 31, 2019 and 2018,  have been included. 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 accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 appearing in UDR’s Annual Report on Form 10‑K, filed with the Securities and Exchange Commission on February 19, 2019.

The accompanying interim unaudited consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP 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 interim unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company evaluated subsequent events through the date its financial statements were issued. No significant recognized or non-recognized subsequent events were noted other than those noted in Note 3, Real Estate Owned, Note 5, Joint Ventures and Partnerships and Note 13, Commitments and Contingencies.

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SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2019

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

2. SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Company on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Company is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Company on January 1, 2019.

The Company elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Company also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Company recognized right-of-use assets of $94.3 million and lease liabilities of $88.3 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizing the lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.7 million and $140.7 million, respectively, during the remainder of 2019. The Company will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Company also elected.

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the consolidation guidance. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Company generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Company will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Company sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Company will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Company will record a full gain or loss in the period the property is contributed.

To the extent that the Company acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Company will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Company will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Company will not recognize a gain or loss on consolidation of a property.

Notes Receivable

The following table summarizes our Notes receivable, net as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due December 2019 (a)	12.00	%	$	20,000	$	20,000
Note due February 2020 (b)	10.00	%		14,974		14,659
Note due October 2020 (c)	8.00	%		2,000		2,000
Note due August 2022 (d)	10.00	%		—		5,600
Total notes receivable, net			$	36,974	$	42,259

(a) In March 2018, the Company entered into a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million, of which $20.0 million has been funded. Interest payments are due when the loan matures. In March 2019, the note’s maturity was extended to December 27, 2019, and the note is secured by a parcel of land.

(b) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $16.4 million, of which $15.0 million has been funded, including $0.3 million during the three months ended March 31, 2019. Interest payments are due monthly. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $5.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the eighth anniversary of the date of the note (February 2020).

(c) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $2.0 million, of which $2.0 million has been funded. Interest payments are due when the loan matures. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $10.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the fifth anniversary of the date of the note (October 2020).

(d) In January 2019, the $5.6 million secured note was repaid in full along with the contractually accrued interest of $0.2 million and an additional $8.5 million of promoted interest in conjunction with the unaffiliated third party being acquired.

The Company recognized $1.1 million and $0.6 million of interest income and $8.5 million and zero of promoted interest from notes receivable during the three months ended March 31, 2019 and 2018, respectively, none of which was related party interest. Interest income and promoted interest are included in Interest income and other income/(expense), net on the Consolidated Statements of Operations.

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to stockholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Company’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges, (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) into earnings, and the allocation of other comprehensive income/(loss) to noncontrolling interests. The (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 11, Derivatives and Hedging Activity, for further discussion. The allocation of other comprehensive income/(loss) to redeemable noncontrolling interests during the three months ended March 31, 2019 and 2018, was $(0.3) million and $0.1 million, respectively.

Income Taxes

Due to the structure of the Company as a REIT and the nature of the operations for the operating properties, no provision for federal income taxes has been provided for at UDR. Historically, the Company has generally incurred only state and local excise and franchise taxes. UDR has elected for certain consolidated subsidiaries to be treated as taxable REIT subsidiaries (“TRS”).

Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. The Company’s deferred tax assets are generally the result of differing depreciable lives on capitalized assets and timing of expense recognition for certain accrued liabilities. As of March 31, 2019 and December 31, 2018, UDR’s net deferred tax asset/(liability) was less than $(0.1) million and less than $(0.1) million, respectively.

GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. GAAP also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

The Company recognizes its tax positions and evaluates them using a two-step process. First, UDR determines whether a tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

UDR had no material unrecognized tax benefit, accrued interest or penalties at March 31, 2019. UDR and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2015 through 2018 remain open to examination by tax jurisdictions to which we are subject. When applicable, UDR recognizes interest and/or penalties related to uncertain tax positions in Tax (provision)/benefit, net on the Consolidated Statements of Operations. 

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REAL ESTATE OWNED

3 Months Ended

Mar. 31, 2019

REAL ESTATE OWNED

REAL ESTATE OWNED

3. REAL ESTATE OWNED

Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and held for disposition properties. As of March 31, 2019, the Company owned and consolidated 131 communities in 11 states plus the District of Columbia totaling 41,041 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	1,954,363	$	1,849,799
Depreciable property — held and used:
Land improvements		214,483		213,224
Building, improvements, and furniture, fixtures and equipment		8,475,755		8,133,136
Real estate intangible assets		35,954		—
Real estate owned		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Real estate owned, net	$	6,916,456	$	6,541,999

Acquisitions

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 386 apartment home operating community in Anaheim, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. In connection with the acquisition, the Company repaid approximately $59.8 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $115.7 million and recorded approximately $2.4 million of in-place lease intangibles.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 155 apartment home operating community located in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. In connection with the acquisition, the Company repaid approximately $26.0 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $58.1 million and recorded approximately $2.4 million of real estate intangibles and approximately $0.6 million of in-place lease intangibles.

In January 2019, the Company acquired a to-be-developed parcel of land located in Washington D.C. for approximately $27.1 million.

In February 2019, the Company acquired a to-be-developed parcel of land located in Denver, Colorado for approximately $13.7 million.

In February 2019, the Company acquired a 188 apartment home operating community located in Brooklyn, New York for approximately $132.1 million. The Company increased its real estate assets owned by approximately $97.5 million and recorded approximately $33.6 million of real estate intangibles and approximately $1.0 million of in-place lease intangibles.

In February 2019, the Company acquired a 381 apartment home operating community located in St. Petersburg, Florida for approximately $98.3 million.  The Company increased its real estate assets owned by approximately $96.0 million and recorded approximately $2.3 million of in-place lease intangibles.

In April 2019, the Company acquired a 498 apartment home operating community located in Towson, Maryland for approximately $86.4 million.

Dispositions

The Company did not have any dispositions during the three months ended March 31, 2019.

Other Activity

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Company capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, for the three months ended March 31, 2019 and 2018,  were $3.3 million and $3.4 million, respectively.  Total interest capitalized was $1.1 million and $4.6 million for the three months ended March 31, 2019 and 2018, respectively. As each home in a capital project is completed and becomes available for lease-up, the Company ceases capitalization on the related portion of the costs and depreciation commences over the estimated useful life.

In connection with the acquisition of certain properties, the Company agreed to pay certain of the tax liabilities of certain contributors if the Company sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Company may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax-deferred Section 1031 exchange. 

Further, the Company has agreed to maintain certain debt that may be guaranteed by certain contributors for specified periods of time following the acquisition. The Company, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.

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VARIABLE INTEREST ENTITIES

3 Months Ended

Mar. 31, 2019

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

4. VARIABLE INTEREST ENTITIES

The Company has determined that the Operating Partnership and DownREIT Partnership are VIEs as the limited partners lack substantive kick-out rights and substantive participating rights. The Company has concluded that it is the primary beneficiary of, and therefore consolidates, the Operating Partnership and DownREIT Partnership based on its role as the sole general partner of the Operating Partnership and DownREIT Partnership. The Company’s role as community manager and its equity interests give us the power to direct the activities that most significantly impact the economic performance and the obligation to absorb potentially significant losses or the right to receive potentially significant benefits of the Operating Partnership and DownREIT Partnership.

See the consolidated financial statements of the Operating Partnership presented within this Report and Note 4, Unconsolidated Entities, to the Operating Partnership’s consolidated financial statements for the results of operations of the DownREIT Partnership.

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JOINT VENTURES AND PARTNERSHIPS

3 Months Ended

Mar. 31, 2019

JOINT VENTURES AND PARTNERSHIPS

JOINT VENTURES AND PARTNERSHIPS

5. JOINT VENTURES AND PARTNERSHIPS

UDR has entered into joint ventures and partnerships with unrelated third parties to acquire real estate assets that are either consolidated and included in Real estate owned on the Consolidated Balance Sheets or are accounted for under the equity method of accounting, and are included in Investment in and advances to unconsolidated joint ventures, net, on the Consolidated Balance Sheets. The Company consolidates the entities that we control as well as any variable interest entity where we are the primary beneficiary. Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

UDR’s joint ventures and partnerships are funded with a combination of debt and equity. Our losses are limited to our investment and except as noted below, the Company does not guarantee any debt, capital payout or other obligations associated with our joint ventures and partnerships.

The Company recognizes earnings or losses from our investments in unconsolidated joint ventures and partnerships consisting of our proportionate share of the net earnings or losses of the joint ventures and partnerships. In addition, we may earn fees for providing management services to the unconsolidated joint ventures and partnerships.

The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of March 31, 2019 and December 31, 2018 (dollars in thousands):

				Number of
		Number of		Apartment
		Properties		Homes	Investment at				UDR’s Ownership Interest
	Location of	March 31,		March 31,	March 31,		December 31,		March 31,		December 31,
Joint Venture	Properties	2019		2019	2019		2018		2019		2018
Operating and development:
UDR/MetLife I	Los Angeles, CA	1	operating community	150	$	30,817	$	30,839	50.0	%	50.0	%
UDR/MetLife II	Various	18	operating communities	4,059		303,893		296,807	50.0	%	50.0	%
Other UDR/MetLife	Various	5	operating communities	1,437		111,377		115,668	50.6	%	50.6	%
Joint Ventures
UDR/MetLife Vitruvian Park®	Addison, TX	4	operating communities;	1,879		73,199		71,730	50.0	%	50.0	%
		1	development community (a);
		4	land parcels
UDR/KFH	Washington, D.C.	3	operating communities	660		4,357		5,507	30.0	%	30.0	%
West Coast Development Joint Ventures (d)	Los Angeles, CA	1	operating community	293		35,994		36,143	47.0	%	47.0	%
Investment in and advances to unconsolidated joint ventures, net, before participating loan investment, preferred equity investments and other investments					$	559,637	$	556,694

											Income/(loss) from investments
							Investment at				Three Months Ended
				Years To	UDR		March 31,		December 31,		March 31,
Developer Capital Program (b)	Location	Rate		Maturity	Commitment (c)		2019		2018		2019		2018
Preferred equity investments:
West Coast Development Joint Ventures (d)	Various	6.5	%	N/A	$	—	$	17,298	$	65,417	$	(161)	$	796
1532 Harrison (e)	San Francisco, CA	11.0	%	3.3		24,645		28,163		24,986		748		341
1200 Broadway (f)	Nashville, TN	8.0	%	3.5		55,558		60,185		58,982		1,169		408
Junction (g)	Santa Monica, CA	12.0	%	3.3		8,800		9,486		9,211		275		—
1300 Fairmount (h)	Philadelphia, PA	Variable		4.4		51,393		13,887		8,318		275		—
Essex (i)	Orlando, FL	12.5	%	4.4		12,886		11,824		9,940		332		—
Other investments:
The Portals (j)	Washington, D.C.	11.0	%	2.2		38,559		44,340		43,167		1,173		679
Other investment ventures	N/A	N/A		N/A	$	18,000		4,280		4,154	$	125	$	(90)
Total Developer Capital Program								189,463		224,175
Total investment in and advances to unconsolidated joint ventures, net							$	749,100	$	780,869

(a) The number of apartment homes for the communities under development presented in the table above is based on the projected number of total homes upon completion of development. As of March 31, 2019, no apartment homes had been completed in the development community held by UDR/MetLife Vitruvian Park® .

(b) The Developer Capital Program is the program through which the Company makes investments, including preferred equity investments, mezzanine loans or other structured investments that may receive a fixed or variable yield on the investment and may include provisions pursuant to which the Company participates in the increase in value of the property upon monetization of the applicable property and/or holds fixed price purchase options.

(c) Represents UDR’s maximum funding commitment only and therefore excludes other activity such as income from investments.

(d) In 2015, the Company entered into a joint venture agreement with an unaffiliated joint venture partner and paid $136.3 million for a 48% ownership interest in a portfolio of five communities that were under construction. The communities are located in three of the Company’s core, coastal markets: Seattle, Washington, Los Angeles, California and Orange County, California. UDR earns a 6.5% preferred return on its investment through each individual community’s date of stabilization, defined as when a community reaches 80% occupancy for 90 consecutive days, while the joint venture partner is allocated all operating income and expense during the pre-stabilization period. Upon stabilization, income and expense are shared based on each partner’s ownership percentage and the Company no longer receives a 6.5% preferred return on its investment in the stabilized community. The Company serves as property manager and earns a management fee during the lease-up phase and subsequent operation of each of the communities. The unaffiliated joint venture partner is the general partner of the joint venture and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

At inception of the agreement, the Company had a fixed-price option to acquire the remaining interest in each community commencing one year after completion. The unaffiliated joint venture partner is providing certain guaranties.

During 2017, the Company exercised its fixed-price option to purchase the joint venture partner’s ownership interest in one of the five communities, and the joint venture sold two of the four remaining communities. 

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in one of the two remaining communities, a 386 apartment home operating community in Orange County, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company and its joint venture partner plan to continue operating the one remaining community. 

In 2017, the Company entered into two additional joint venture agreements with the unaffiliated joint venture partner and paid $15.5 million for a 49% ownership interest in a 155 apartment home community in Seattle, Washington and $16.1 million for a 49% ownership interest in a 276 apartment home community in Hillsboro, Oregon (together with the 2015 joint venture described above, the “West Coast Development Joint Ventures”). UDR earns a 6.5% preferred return on its investments through the communities’ date of stabilization, as defined above, while our joint venture partner is allocated all operating income and expense during the pre-stabilization period. Upon stabilization of the communities, income and expense will be shared based on each partner’s ownership percentage and the Company will no longer receive a 6.5% preferred return on its investment. The Company will serve as property manager and will earn a management fee during the lease-up phase and subsequent operation of the stabilized communities. The unaffiliated joint venture partner is the general partner and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

The Company has a fixed-price option to acquire the remaining interest in the communities beginning one year after completion. The unaffiliated joint venture partner is providing certain guaranties and there are construction loans on the communities.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in the 155 apartment home operating community in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company’s recorded equity investment in the West Coast Development Joint Ventures at March 31, 2019 and December 31, 2018, of $53.3 million and $101.6 million, respectively, is inclusive of outside basis costs and our accrued but unpaid preferred return.

(e) In June 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 136 apartment home community in San Francisco, California. The Company’s preferred equity investment of up to $24.6 million earns a preferred return of 11.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(f) In September 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 313 apartment home community in Nashville, Tennessee. The Company’s preferred equity investment of up to $55.6 million earns a preferred return of 8.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(g) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 66 apartment home community in Santa Monica, CA. The Company’s preferred equity investment of $8.8 million earns a preferred return of 12.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(h) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 471 apartment home community in Philadelphia, PA. The Company’s preferred equity investment of up to $51.4 million earns a preferred return between 8.5% and 12.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(i) In September 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 330 apartment home community in Orlando, FL. The Company’s preferred equity investment of up to $12.9 million earns a preferred return of 12.5% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(j) In May 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner. The joint venture has made a mezzanine loan to a third party developer of a 373 apartment home community in Washington, D.C. The unaffiliated joint venture partner is the managing member of the joint venture. The mezzanine loan is for up to $71.0 million at an interest rate of 13.5% per annum and carries a term of four years with one 12-month extension option. The Company’s commitment to the joint venture is approximately $38.6 million and earns a weighted average return of approximately 11.0% per annum. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

In April 2019, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 173 apartment home community in Oakland, California. The Company’s preferred equity investment of up to $27.3 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

As of March 31, 2019 and December 31, 2018, the Company had deferred fees of $10.8 million and $11.0 million, respectively, which will be recognized through earnings over the weighted average life of the related properties, upon the disposition of the properties to a third party, or upon completion of certain development obligations.

The Company recognized management fees of $2.8 million and $2.7 million for the three months ended March 31, 2019 and 2018, respectively, for management of the communities held by the joint ventures and partnerships. The management fees are included in Joint venture management and other fees on the Consolidated Statements of Operations.

The Company may, in the future, make additional capital contributions to certain of our joint ventures and partnerships should additional capital contributions be necessary to fund acquisitions or operations.

We evaluate our investments in unconsolidated joint ventures and partnerships when events or changes in circumstances indicate that there may be an other-than-temporary decline in value. We consider various factors to determine if a decrease in the value of the investment is other-than-temporary. The Company did not recognize any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures or partnerships during the three months ended March 31, 2019 and 2018.

Combined summary balance sheets relating to the unconsolidated joint ventures and partnerships (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	3,193,477	$	3,311,034
Cash and cash equivalents		44,714		49,867
Other assets		127,789		124,428
Total assets	$	3,365,980	$	3,485,329
Third party debt, net	$	2,032,098	$	2,125,350
Accounts payable and accrued liabilities		59,096		71,272
Total liabilities		2,091,194		2,196,622
Total equity	$	1,274,786	$	1,288,707

Combined summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Total revenues	$	81,532	$	67,957
Property operating expenses		30,312		26,937
Real estate depreciation and amortization		29,580		26,848
Operating income/(loss)		21,640		14,172
Interest expense		(21,924)		(19,406)
Other income/(loss)		1,625		(5)
Net income/(loss)	$	1,341	$	(5,239)

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LEASES

3 Months Ended

Mar. 31, 2019

LEASES

Leases

6. LEASES

Lessee - Ground and Office Leases

UDR owns six communities that are subject to ground leases, under which UDR is the lessee, expiring between 2043 and 2103, inclusive of extension options we are reasonably certain will be exercised. In addition, UDR is a lessee to an operating lease related to office space rented by the Company with an expiration date in 2021. All of these leases existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, these leases will continue to be classified as operating leases through the lease term expiration. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the remaining lease term. We currently do not hold any finance leases.

As of March 31, 2019, the Operating lease right-of-use assets was $94.1 million and the Operating lease liabilities was $88.2 million on our Consolidated Balance Sheets related to our ground and office space leases. The value of the Operating lease right-of-use assets exceeds the value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in earnings in the period in which the obligation for those payments is incurred.

As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases utilizing the Company’s incremental borrowing rate at a portfolio level, adjusted for the remaining lease term, and the form of underlying collateral.  

The weighted average remaining lease term for these leases was 70.9 years at March 31, 2019 and the weighted average discount rate was 5.2% at March 31, 2019.

Future minimum lease payments and total operating lease liabilities from our ground leases and office space as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases		Office Space		Total
2019	$	3,676	$	57	$	3,733
2020		4,901		76		4,977
2021		4,901		32		4,933
2022		4,901		-		4,901
2023		4,901		-		4,901
Thereafter		313,919		-		313,919
Total future minimum lease payments (undiscounted)		337,199		165		337,364
Difference between future undiscounted cash flows and discounted cash flows		(249,138)		(8)		(249,146)
Total operating lease liabilities (discounted)	$	88,061	$	157	$	88,218

For purposes of recognizing our ground lease contracts, the Company uses the minimum lease payments, if stated in the agreement. For ground lease agreements where there is a rent reset provision based on fair market value or changes in the consumer price index but that does not include a specified minimum lease payment, the Company uses the current rent over the remainder of the lease term. We are currently in a dispute with the lessor of one of our ground lease contracts as it relates to a rent reset provision that requires both parties to agree to a new rent based on the current fair market value of the land or, absent agreement, have it determined by an appraisal process. The current annual lease payment under the ground lease contract to which the dispute relates, exclusive of variable payments, is $0.5 million, which is reflected in the table above. Depending on the outcome of the dispute, the future annual lease payments under such ground lease contract are likely to be between $1.2 million and $4.0 million.

The components of operating lease expenses from our ground leases and office space were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total ground lease expense (b)		2,279
Contractual office space expense (b)		19
Total operating lease expense	$	2,298

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses and office space expense is recorded in General and administrative on the Consolidated Statements of Operations.

Lessor - Apartment Home,  Retail and Commercial Space and Ground Leases

UDR’s communities and retail and commercial space are leased to tenants under operating leases. Nearly all of our apartment home leases have initial terms of 12 months or less. Our retail and commercial space leases expire between 2019 and 2107. (See Note 14, Reportable Segments for further discussion around our major revenue streams and disaggregation of our revenue.)

We also have one parcel of land subject to a ground lease, under which UDR is the lessor, expiring in 2065. The lease includes a purchase option for the lessee to acquire the land during specific periods of the lease term. The purchase option was not deemed to be a bargain purchase option. This lease existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, this lease will continue to be classified as an operating lease through the lease term expiration and the land parcel subject to the ground lease will continue to be recognized in Real estate held for investment on our Consolidated Balance Sheets. Rental income for lease payments related to this lease is recognized on a straight-line basis over the remaining lease term.

Future minimum lease payments from our retail and commercial leases and our ground lease as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases		Ground Lease		Total
2019	$	14,826	$	1,995	$	16,821
2020		19,825		2,660		22,485
2021		18,768		2,660		21,428
2022		17,071		2,660		19,731
2023		15,712		2,660		18,372
Thereafter		85,712		110,168		195,880
Total future minimum lease payments (a)	$	171,914	$	122,803	$	294,717

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage rents. The Company recorded variable percentage rents of less than $0.2 million during the three months ended March 31, 2019.

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SECURED AND UNSECURED DEBT, NET

3 Months Ended

Mar. 31, 2019

SECURED AND UNSECURED DEBT, NET

SECURED AND UNSECURED DEBT, NET

7. SECURED AND UNSECURED DEBT, NET

The following is a summary of our secured and unsecured debt at March 31, 2019 and December 31, 2018  (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
					Weighted		Weighted
					Average		Average	Number of
	March 31,		December 31,		Interest		Years to	Communities
	2019		2018		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	416,468	$	417,989	3.82	%	5.6	7
Fannie Mae credit facilities (b)		90,000		90,000	3.95	%	1.3	1
Deferred financing costs		(1,275)		(1,343)
Total fixed rate secured debt, net		505,193		506,646	3.85	%	4.8	8
Variable Rate Debt
Tax-exempt secured notes payable (c)		94,700		94,700	2.31	%	3.9	2
Deferred financing costs		(97)		(119)
Total variable rate secured debt, net		94,603		94,581	2.31	%	3.9	2
Total Secured Debt, net		599,796		601,227	3.60	%	4.7	10
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2023 (d) (j)		—		—	—	%	3.8
Borrowings outstanding under unsecured commercial paper program due April 2019 (e) (j)		90,000		101,115	2.78	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2021(f)		54,310		16	3.32	%	1.8
Term Loan due September 2023 (d) (j)		35,000		35,000	3.39	%	4.5
Fixed Rate Debt
3.70% Medium-Term Notes due October 2020 (net of discounts of $12 and $14, respectively) (j)		299,988		299,986	3.70	%	1.5
4.63% Medium-Term Notes due January 2022 (net of discounts of $997 and $1,087, respectively) (j)		399,003		398,913	4.63	%	2.8
1.93% Term Loan due September 2023 (d) (j)		315,000		315,000	1.93	%	4.5
3.75% Medium-Term Notes due July 2024 (net of discounts of $548 and $574, respectively) (g) (j)		299,452		299,426	3.75	%	5.3
8.50% Debentures due September 2024		15,644		15,644	8.50	%	5.5
4.00% Medium-Term Notes due October 2025 (net of discounts of $447 and $465, respectively) (h) (j)		299,553		299,535	4.00	%	6.5
2.95% Medium-Term Notes due September 2026 (j)		300,000		300,000	2.95	%	7.4
3.50% Medium-Term Notes due July 2027 (net of discounts of $582 and $600, respectively) (j)		299,418		299,400	3.50	%	8.3
3.50% Medium-Term Notes due January 2028 (net of discounts of $1,043 and $1,072, respectively) (j)		298,957		298,928	3.50	%	8.8
4.40% Medium-Term Notes due January 2029 (net of discounts of $6 and $6, respectively) (i) (j)		299,994		299,994	4.40	%	9.8
Other		15		16
Deferred financing costs		(16,301)		(16,413)
Total Unsecured Debt, net		2,990,033		2,946,560	3.65	%	5.7
Total Debt, net	$	3,589,829	$	3,547,787	3.73	%	5.5

For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument.

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of March 31, 2019, secured debt encumbered $1.3 billion or 12.2% of UDR’s total real estate owned based upon gross book value ($9.4 billion or 87.8% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At March 31, 2019, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2020 through September 2028 and carry interest rates ranging from 3.15% to 4.35%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the Company records the debt at its estimated fair value and amortizes any difference between the fair value and par value to interest expense over the life of the underlying debt instrument.

During the three months ended March 31, 2019 and 2018, the Company had $0.6 million and $0.7 million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $4.4 million and $5.0 million at March 31, 2019 and December 31, 2018, respectively.

(b) UDR had one secured credit facility  with Fannie Mae with a commitment of $90.0 million at March 31, 2019.  The Fannie Mae credit facility matures in July 2020  and bears interest at a fixed rate of 3.95%.

Further information related to this credit facility is as follows (dollars in thousands):

	March 31,			December 31,
	2019			2018
Borrowings outstanding	$	90,000		$	90,000
Weighted average borrowings during the period ended		90,000			253,813
Maximum daily borrowings during the period ended		90,000			314,869
Weighted average interest rate during the period ended		4.0	%		4.7	%
Weighted average interest rate at the end of the period		4.0	%		4.0	%

(c) The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature in August 2019 and March 2032. Interest on these notes is payable in monthly installments. The variable rate mortgage notes have interest rates ranging from 2.25% to 2.47% as of March 31, 2019.

(d) The Company has a $1.1 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”). The credit agreement for these facilities (the “Credit Agreement”) allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023. 

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from 75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to 165 basis points.

The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Credit Agreement also includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable.

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total revolving credit facility	$	1,100,000		$	1,100,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		—			—
Maximum daily borrowings during the period ended		—			—
Weighted average interest rate during the period ended		—	%		—	%
Interest rate at end of the period		—	%		—	%

(1) Excludes $3.3 million and $3.3 million of letters of credit at March 31, 2019 and December 31, 2018, respectively.

(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total unsecured commercial paper program	$	500,000		$	500,000
Borrowings outstanding at end of period		90,000			101,115
Weighted average daily borrowings during the period ended		149,365			344,235
Maximum daily borrowings during the period ended		330,000			440,000
Weighted average interest rate during the period ended		2.8	%		2.4	%
Interest rate at end of the period		2.8	%		2.9	%

(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 15, 2021. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		54,310			16
Weighted average daily borrowings during the period ended		22,967			26,101
Maximum daily borrowings during the period ended		66,170			64,633
Weighted average interest rate during the period ended		3.3	%		2.9	%
Interest rate at end of the period		3.3	%		3.3	%

(g) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.69%.

(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.53%.

(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $150.0 million of this debt. The all in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.27%.

(j) The Operating Partnership is a guarantor of this debt.

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten calendar years subsequent to March 31, 2019 are as follows (dollars in thousands):

	Total Fixed		Total Variable		Total		Total		Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt		Debt
2019	$	2,860	$	67,700	$	70,560	$	90,000	$	160,560
2020		198,076		—		198,076		300,000		498,076
2021		1,117		—		1,117		54,310		55,427
2022		1,157		—		1,157		400,000		401,157
2023		41,245		—		41,245		350,000		391,245
2024		—		—		—		315,644		315,644
2025		127,600		—		127,600		300,000		427,600
2026		50,000		—		50,000		300,000		350,000
2027		—		—		—		300,000		300,000
2028		80,000		—		80,000		300,000		380,000
Thereafter		—		27,000		27,000		300,000		327,000
Subtotal		502,055		94,700		596,755		3,009,954		3,606,709
Non-cash (a)		3,138		(97)		3,041		(19,921)		(16,880)
Total	$	505,193	$	94,603	$	599,796	$	2,990,033	$	3,589,829

(a) Includes the unamortized balance of fair market value adjustments, premiums/discounts and deferred financing costs. For the three months ended March 31, 2019 and 2018, the Company amortized $1.0 million and $1.0 million, respectively, of deferred financing costs into Interest expense.    

We were in compliance with the covenants of our debt instruments at March 31, 2019.

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INCOME/(LOSS) PER SHARE

3 Months Ended

Mar. 31, 2019

INCOME/(LOSS) PER SHARE

INCOME/(LOSS) PER SHARE

8. INCOME/(LOSS) PER SHARE

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

	March 31,
	2019		2018
Numerator for income/(loss) per share:
Net income/(loss)	$	26,602	$	89,225
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.		24,503		81,756
Distributions to preferred stockholders — Series E (Convertible)		(1,011)		(955)
Income/(loss) attributable to common stockholders - basic and diluted	$	23,492	$	80,801
Denominator for income/(loss) per share:
Weighted average common shares outstanding		277,297		267,963
Non-vested restricted stock awards		(295)		(417)
Denominator for basic income/(loss) per share		277,002		267,546
Incremental shares issuable from assumed conversion of stock options, unvested LTIP Units and unvested restricted stock		555		1,662
Denominator for diluted income/(loss) per share		277,557		269,208
Income/(loss) per weighted average common share:
Basic	$	0.08	$	0.30
Diluted	$	0.08	$	0.30

Basic income/(loss) per common share is computed based upon the weighted average number of common shares outstanding. Diluted income/(loss) per common share is computed based upon the weighted average number of common shares outstanding plus the common shares issuable from the assumed conversion of the OP Units and DownREIT Units, convertible preferred stock, stock options, unvested long-term incentive plan units (“LTIP Units”), unvested restricted stock and continuous equity program forward sales agreements. Only those instruments having a dilutive impact on our basic income/(loss) per share are included in diluted income/(loss) per share during the periods. For the three months ended March 31, 2019 and 2018, the effect of the conversion of the OP Units, DownREIT Units, LTIP Units and the Company’s Series E preferred stock was not dilutive and therefore not included in the above calculation. 

In July 2017, the Company entered into an ATM sales agreement under which the Company may offer and sell up to 20 million shares of its common stock, from time to time, to or through its sales agents and may enter into separate forward sales agreements to or through its forward purchasers. Upon entering into the ATM sales agreement, the Company simultaneously terminated the sales agreement for its prior at-the-market equity offering program, which was entered into in April 2017, which replaced the prior at-the-market equity offering program entered into in April 2012. During the three months ended March 31, 2019,  the Company sold 4.4 million shares of common stock through its ATM program for aggregate gross proceeds of approximately $195.0 million at a weighted average price per share of $44.80. Aggregate net proceeds from such sales, after deducting related expenses, including commissions paid to the sales agents of approximately $2.8 million, were approximately $192.2 million, which were primarily used to fund the Company’s recent acquisitions. As of March 31, 2019, we had 15.6 million shares of common stock available for future issuance under the ATM program.

For the three months ended March 31, 2019 and 2018, the Company did not enter into any forward purchase agreements under its continuous equity program.

The following table sets forth the additional shares of common stock outstanding by equity instrument if converted to common stock for each of the three months ended March 31, 2019 and 2018 (in thousands):

	March 31,
	2019	2018
OP/DownREIT Units	24,280	24,506
Convertible preferred stock	3,011	3,011
Stock options, unvested LTIP Units and unvested restricted stock	555	1,662

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NONCONTROLLING INTERESTS

3 Months Ended

Mar. 31, 2019

NONCONTROLLING INTERESTS

NONCONTROLLING INTERESTS

9. NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interests in the Operating Partnership and DownREIT Partnership

Interests in the Operating Partnership and the DownREIT Partnership held by limited partners are represented by OP Units and DownREIT Units, respectively. The income is allocated to holders of OP Units/DownREIT Units based upon net income attributable to common stockholders and the weighted average number of OP Units/DownREIT Units outstanding to total common shares plus OP Units/DownREIT Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to noncontrolling interests in accordance with the terms of the partnership agreements of the Operating Partnership and the DownREIT Partnership.

Limited partners of the Operating Partnership and the DownREIT Partnership have the right to require such partnership to redeem all or a portion of the OP Units/DownREIT Units held by the limited partner at a redemption price equal to and in the form of the Cash Amount (as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as applicable), provided that such OP Units/DownREIT Units have been outstanding for at least one year, subject to certain exceptions. UDR, as the general partner of the Operating Partnership and the DownREIT Partnership may, in its sole discretion, purchase the OP Units/DownREIT Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (generally one share of common stock of the Company for each OP Unit/DownREIT Unit), as defined in the partnership agreement of the Operating Partnership or the DownREIT Partnership, as applicable. Accordingly, the Company records the OP Units/DownREIT Units outside of permanent equity and reports the OP Units/DownREIT Units at their redemption value using the Company’s stock price at each balance sheet date.

The following table sets forth redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership for the following period (dollars in thousands):

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, December 31, 2018	$	972,740
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		144,197
Conversion of OP Units/DownREIT Units to Common Stock		(72,846)
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		2,057
Distributions to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(8,733)
Vesting of Long-Term Incentive Plan Units		14,335
Allocation of other comprehensive income/(loss)		(252)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, March 31, 2019	$	1,051,498

Noncontrolling Interests

Noncontrolling interests represent interests of unrelated partners and unvested LTIP Units in certain consolidated affiliates, and are presented as part of equity on the Consolidated Balance Sheets since these interests are not redeemable. Net (income)/loss attributable to noncontrolling interests was less than $(0.1) million and $(0.1) million during the three months ended March 31, 2019 and 2018, respectively.

The Company grants LTIP Units to certain employees and non-employee directors. The LTIP Units represent an ownership interest in the Operating Partnership and have vesting terms of between one and three years, specific to the individual grants.

Noncontrolling interests related to long-term incentive plan units represent the unvested LTIP Units of these employees and non-employee directors in the Operating Partnership. The net income/(loss) allocated to the unvested LTIP Units is included in Net (income)/loss attributable to noncontrolling interests on the Consolidated Statements of Operations.

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FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2019

FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

10. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

· Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

· Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018, are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	36,974	$	40,329	$	—	$	—	$	40,329
Derivatives - Interest rate contracts (b)		3,315		3,315		—		3,315		—
Total assets	$	40,289	$	43,644	$	—	$	3,315	$	40,329
Derivatives - Interest rate contracts (b)	$	2,285	$	2,285	$	—	$	2,285	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		416,468		423,329		—		—		423,329
Fannie Mae credit facilities		90,000		90,540		—		—		90,540
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		54,310		54,310		—		—		54,310
Commercial paper program		90,000		90,000		—		—		90,000
Unsecured notes		2,862,024		2,897,215		—		—		2,897,215
Total liabilities	$	3,609,787	$	3,652,379	$	—	$	2,285	$	3,650,094
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	1,051,498	$	1,051,498	$	—	$	1,051,498	$	—

					Fair Value at December 31, 2018, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	42,259	$	45,026	$	—	$	—	$	45,026
Derivatives - Interest rate contracts (b)		4,757		4,757		—		4,757		—
Total assets	$	47,016	$	49,783	$	—	$	4,757	$	45,026
Derivatives - Interest rate contracts (b)	$	356	$	356	$	—	$	356	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		417,989		416,314		—		—		416,314
Fannie Mae credit facilities		90,000		90,213		—		—		90,213
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		16		16		—		—		16
Commercial paper program		101,115		101,115		—		—		101,115
Unsecured notes		2,861,842		2,829,390		—		—		2,829,390
Total liabilities	$	3,566,018	$	3,532,104	$	—	$	356	$	3,531,748
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	972,740	$	972,740	$	—	$	972,740	$	—

(a) See Note 2, Significant Accounting Policies.

(b) See Note 11,  Derivatives and Hedging Activity.

(c) See Note 7,  Secured and Unsecured Debt, Net.

(d) See Note 9,  Noncontrolling Interests.

There were no transfers into or out of any of the levels of the fair value hierarchy during the three months ended March 31, 2019.

Financial Instruments Carried at Fair Value

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2019 and December 31, 2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership have a redemption feature and are marked to their redemption value. The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership are classified as Level 2.

Financial Instruments Not Carried at Fair Value

At March 31, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes notes receivable and debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Our cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair value. Our estimates of fair value represent our best estimate based upon Level 3 inputs such as industry trends and reference to market rates and transactions.

We consider various factors to determine if a decrease in the value of our Investment in and advances to unconsolidated joint ventures, net is other-than-temporary. These factors include, but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships with the other joint venture partners and its lenders. Based on the significance of the unobservable inputs, we classify these fair value measurements within Level 3 of the valuation hierarchy. The Company did not incur any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures during the three months ended March 31, 2019 and 2018.

After determining an other-than-temporary decrease in the value of an equity method investment has occurred, we estimate the fair value of our investment by estimating the proceeds we would receive upon a hypothetical liquidation of the investment at the date of measurement. Inputs reflect management’s best estimate of what market participants would use in pricing the investment giving consideration to the terms of the joint venture agreement and the estimated discounted future cash flows to be generated from the underlying joint venture assets. The inputs and assumptions utilized to estimate the future cash flows of the underlying assets are based upon the Company’s evaluation of the economy, market trends, operating results, and other factors, including judgments regarding costs to complete any construction activities, lease up and occupancy rates, rental rates, inflation rates, capitalization rates utilized to estimate the projected cash flows at the disposition, and discount rates.

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DERIVATIVES AND HEDGING ACTIVITY

3 Months Ended

Mar. 31, 2019

DERIVATIVES AND HEDGING ACTIVITY

DERIVATIVES AND HEDGING ACTIVITY

11. DERIVATIVES AND HEDGING ACTIVITY

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2019 and 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

Amounts reported in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets related to derivatives that will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Through March 31, 2020, the Company estimates that an additional $3.2 million will be reclassified as a decrease to Interest expense.

As of March 31, 2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate swaps (a)	4	$	315,000
Interest rate caps	1	$	65,197

(a) In addition to the interest rate swaps summarized above, the Company entered into two additional interest rate swaps with a notional value totaling $75.0 million that will become effective in December 2019.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in no gain or loss and a loss of less than $0.1 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Asset Derivatives				Liability Derivatives
	(included in Other assets)				(included in Other liabilities)
	Fair Value at:				Fair Value at:
	March 31,		December 31,		March 31,		December 31,
	2019		2018		2019		2018
Derivatives designated as hedging instruments:
Interest rate products	$	3,315	$	4,757	$	2,285	$	356

Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018  (dollars in thousands):

									Gain/(Loss) Recognized in
					Gain/(Loss) Reclassified				Interest expense
	Unrealized holding gain/(loss)				from Accumulated OCI into				(Amount Excluded from
	Recognized in OCI				Interest expense				Effectiveness Testing)
Derivatives in Cash Flow Hedging Relationships	2019		2018		2019		2018		2019		2018
Three Months Ended March 31,
Interest rate products	$	(2,210)	$	1,710	$	945	$	172	$	—	$	—

	Three Months Ended
	March 31,
	2019		2018
Total amount of Interest expense presented on the Consolidated Statements of Operations	$	33,542	$	29,943

The Company did not recognize any gain/(loss) in Interest income and other income/(expense), net related to derivatives not designated during each of the three months ended March 31, 2019 and 2018.

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.

The Company has certain agreements with some of its derivative counterparties that contain a provision where, in the event of default by the Company or the counterparty, the right of setoff may be exercised. Any amount payable to one party by the other party may be reduced by its setoff against any amounts payable by the other party. Events that give rise to default by either party may include, but are not limited to, the failure to pay or deliver payment under the derivative agreement, the failure to comply with or perform under the derivative agreement, bankruptcy, a merger without assumption of the derivative agreement, or in a merger, a surviving entity’s creditworthiness is materially weaker than the original party to the derivative agreement.

As of March 31, 2019, the fair value of derivatives was in a net asset position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, of $1.4 million. 

Tabular Disclosure of Offsetting Derivatives

The Company has elected not to offset derivative positions on the consolidated financial statements. The tables below present the effect on its financial position had the Company made the election to offset its derivative positions as of March 31, 2019 and December 31, 2018 (dollars in thousands):

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Assets		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Assets	Assets		Sheets		(a)		Instruments		Received		Net Amount
March 31, 2019	$	3,315	$	—	$	3,315	$	—	$	—	$	3,315
December 31, 2018	$	4,757	$	—	$	4,757	$	—	$	—	$	4,757

(a) Amounts reconcile to the aggregate fair value of derivative assets in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote. 

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Liabilities		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Liabilities	Liabilities		Sheets		(a)		Instruments		Posted		Net Amount
March 31, 2019	$	2,285	$	—	$	2,285	$	—	$	—	$	2,285
December 31, 2018	$	356	$	—	$	356	$	—	$	—	$	356

(a) Amounts reconcile to the aggregate fair value of derivative liabilities in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.

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STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2019

EMPLOYEE BENEFIT PLANS

STOCK BASED COMPENSATION

12. STOCK BASED COMPENSATION

The Company recognized stock based compensation expense, inclusive of awards granted to our non-employee directors, net of capitalization, of $4.2 million and $3.5 million during the three months ended March 31, 2019 and 2018, respectively.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2019

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

13. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Commitments

The following summarizes the Company’s real estate commitments at March 31, 2019  (dollars in thousands):

	Number	UDR's			UDR's Remaining
	Properties	Investment (a)			Commitment
Wholly-owned — redevelopment	2	$	245		$	35,255
Joint ventures:
Unconsolidated joint ventures - development	1		5,471			26,530	(b)
Preferred equity investments	2		25,711	(c)		39,618	(d)
Other investments	-		4,280			13,500	(e)
Total		$	35,707		$	114,903

(a) Represents UDR’s investment as of March 31, 2019.

(b) Represents UDR’s proportionate share of expected remaining costs to complete the development.

(c) Represents UDR’s investment in 1300 Fairmount and Essex for the properties under development as of March 31, 2019.

(d) Represents UDR’s remaining commitment for 1300 Fairmount and Essex.

(e) Represents UDR’s remaining commitment for other investment ventures.

Purchase Commitments

During the three months ended March 31, 2019, the Company entered into a contract to purchase a  313 apartment home operating community located in King of Prussia, Pennsylvania for approximately $108.5 million. The Company made a $5.4 million deposit on the purchase which, as of March 31, 2019, is generally non-refundable other than due to a failure of closing conditions pursuant to the terms of the agreement. The acquisition is expected to close in the second quarter of 2019, subject to customary closing conditions.

Contingencies

Litigation and Legal Matters

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. The Company cannot determine the ultimate liability with respect to such legal proceedings and claims at this time. The Company 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 flows.

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REPORTABLE SEGMENTS

3 Months Ended

Mar. 31, 2019

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS

14. REPORTABLE SEGMENTS

GAAP guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker to decide how to allocate resources and for purposes of assessing such segments’ performance. UDR’s Chief Operating Decision Maker is comprised of several members of its executive management team who use several generally accepted industry financial measures to assess the performance of the business for our reportable operating segments.

UDR owns and operates multifamily apartment communities that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures for UDR’s apartment communities are rental income and net operating income (“NOI”). Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI is defined as rental income less direct property rental expenses. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense, which is calculated as 2.875% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations, and land rent. UDR’s Chief Operating Decision Maker utilizes NOI as the key measure of segment profit or loss.

UDR’s two reportable segments are Same-Store Communities and Non-Mature Communities/Other:

· Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2018 and held as of March 31, 2019. A comparison of operating results from the prior year is meaningful as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior period, there is no plan to conduct substantial redevelopment activities, and the community is not held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

· Non-Mature Communities/Other represent those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.

Management evaluates the performance of each of our apartment communities on a Same-Store Community and Non-Mature Community/Other basis, as well as individually and geographically. This is consistent with the aggregation criteria under GAAP as each of our apartment communities generally has similar economic characteristics, facilities, services, and tenants. Therefore, the Company’s reportable segments have been aggregated by geography in a manner identical to that which is provided to the Chief Operating Decision Maker.

Revenue is measured based on consideration specified in contracts with customers. The Company recognizes revenue when it satisfies a performance obligation by providing the services specified in a contract to the customer. All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of UDR’s total revenues during the three months ended March 31, 2019 and 2018.

The following is a description of the principal streams from which the Company generates its revenue:

Lease Revenue

Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the noncancellable lease term, inclusive of any periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a straight-line basis over the lease term.

Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance reimbursements from retail leases. These services represent non-lease components in a contract as the Company transfers a service to the lessee other than the right to use the underlying asset. The Company has elected the practical expedient under the leasing standard to not separate lease and non-lease components from its resident and retail lease contracts as the timing and pattern of revenue recognition for the non-lease component and related lease component are the same and the combined single lease component would be classified as an operating lease. 

Other Revenue

Other revenue is generated by services provided by the Company to its retail and residential tenants and other unrelated third parties. These fees are generally recognized as earned.

Joint venture management and other fees

The Joint venture management and other fees revenue consists of management fees charged to our equity method joint ventures per the terms of contractual agreements and other fees. Joint venture fee revenue is recognized monthly as the management services are provided and the fees are earned or upon a transaction whereby the Company earns a fee. Joint venture management and other fees are not allocable to a specific reportable segment or segments.

The following table details rental income and NOI for UDR’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	100,565	$	96,665
Mid-Atlantic Region		54,300		52,694
Southeast Region		29,532		28,339
Northeast Region		30,192		29,585
Southwest Region		14,152		13,821
Non-Mature Communities/Other		30,162		21,393
Total segment and consolidated rental income	$	258,903	$	242,497
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	3,154	$	2,738
Mid-Atlantic Region		2,003		1,736
Southeast Region		1,788		1,697
Northeast Region		630		581
Southwest Region		733		569
Non-Mature Communities/Other		711		665
Total segment and consolidated rental income	$	9,019	$	7,986
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	103,719	$	99,403
Mid-Atlantic Region		56,303		54,430
Southeast Region		31,320		30,036
Northeast Region		30,822		30,166
Southwest Region		14,885		14,390
Non-Mature Communities/Other		30,873		22,058
Total segment and consolidated rental income	$	267,922	$	250,483
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	78,439	$	74,979
Mid-Atlantic Region		39,179		37,506
Southeast Region		22,010		21,047
Northeast Region		20,977		20,951
Southwest Region		8,992		8,477
Non-Mature Communities/Other		20,086		13,654
Total segment and consolidated NOI		189,683		176,614
Reconciling items:
Joint venture management and other fees		2,751		2,822
Property management		(7,703)		(6,888)
Other operating expenses		(5,646)		(2,009)
Real estate depreciation and amortization		(112,468)		(108,136)
General and administrative		(12,467)		(11,759)
Casualty-related (charges)/recoveries, net		—		(940)
Other depreciation and amortization		(1,656)		(1,691)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		49		(1,677)
Interest expense		(33,542)		(29,943)
Interest income and other income/(expense), net		9,813		2,759
Tax (provision)/benefit, net		(2,212)		(227)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.	$	24,503	$	81,756

(a) Same-Store Community population consisted of 37,959 apartment homes.

The following table details the assets of UDR’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets:
Same-Store Communities:
West Region	$	3,773,413	$	3,763,366
Mid-Atlantic Region		2,323,591		2,317,369
Southeast Region		786,575		779,310
Northeast Region		1,494,009		1,491,994
Southwest Region		448,299		447,305
Non-Mature Communities/Other		1,854,668		1,396,815
Total segment assets		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Total segment assets — net book value		6,916,456		6,541,999
Reconciling items:
Cash and cash equivalents		1,043		185,216
Restricted cash		23,111		23,675
Notes receivable, net		36,974		42,259
Investment in and advances to unconsolidated joint ventures, net		749,100		780,869
Operating lease right-of-use assets		94,145		—
Other assets		134,896		137,710
Total consolidated assets	$	7,955,725	$	7,711,728

Markets included in the above geographic segments are as follows:

i. West Region — Orange County, San Francisco, Seattle, Los Angeles, Monterey Peninsula, Other Southern California and Portland

ii. Mid-Atlantic Region — Metropolitan D.C., Richmond and Baltimore

iii. Southeast Region — Orlando, Tampa, Nashville and Other Florida

iv. Northeast Region — New York and Boston

v. Southwest Region — Dallas, Austin and Denver

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2019

SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Company on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Company is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Company on January 1, 2019.

The Company elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Company also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Company recognized right-of-use assets of $94.3 million and lease liabilities of $88.3 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizing the lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.7 million and $140.7 million, respectively, during the remainder of 2019. The Company will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Company also elected.

Principles of Consolidation

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the consolidation guidance. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

Real Estate Sales Gain Recognition

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Company generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Company will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Company sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Company will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Company will record a full gain or loss in the period the property is contributed.

To the extent that the Company acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Company will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Company will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Company will not recognize a gain or loss on consolidation of a property.

Notes Receivable

Notes Receivable

The following table summarizes our Notes receivable, net as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due December 2019 (a)	12.00	%	$	20,000	$	20,000
Note due February 2020 (b)	10.00	%		14,974		14,659
Note due October 2020 (c)	8.00	%		2,000		2,000
Note due August 2022 (d)	10.00	%		—		5,600
Total notes receivable, net			$	36,974	$	42,259

(a) In March 2018, the Company entered into a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million, of which $20.0 million has been funded. Interest payments are due when the loan matures. In March 2019, the note’s maturity was extended to December 27, 2019, and the note is secured by a parcel of land.

(b) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $16.4 million, of which $15.0 million has been funded, including $0.3 million during the three months ended March 31, 2019. Interest payments are due monthly. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $5.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the eighth anniversary of the date of the note (February 2020).

(c) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $2.0 million, of which $2.0 million has been funded. Interest payments are due when the loan matures. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $10.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the fifth anniversary of the date of the note (October 2020).

(d) In January 2019, the $5.6 million secured note was repaid in full along with the contractually accrued interest of $0.2 million and an additional $8.5 million of promoted interest in conjunction with the unaffiliated third party being acquired.

The Company recognized $1.1 million and $0.6 million of interest income and $8.5 million and zero of promoted interest from notes receivable during the three months ended March 31, 2019 and 2018, respectively, none of which was related party interest. Interest income and promoted interest are included in Interest income and other income/(expense), net on the Consolidated Statements of Operations.

Comprehensive Income/(Loss)

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to stockholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Company’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges, (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) into earnings, and the allocation of other comprehensive income/(loss) to noncontrolling interests. The (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 11, Derivatives and Hedging Activity, for further discussion. The allocation of other comprehensive income/(loss) to redeemable noncontrolling interests during the three months ended March 31, 2019 and 2018, was $(0.3) million and $0.1 million, respectively.

Income Taxes

Income Taxes

Due to the structure of the Company as a REIT and the nature of the operations for the operating properties, no provision for federal income taxes has been provided for at UDR. Historically, the Company has generally incurred only state and local excise and franchise taxes. UDR has elected for certain consolidated subsidiaries to be treated as taxable REIT subsidiaries (“TRS”).

Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. The Company’s deferred tax assets are generally the result of differing depreciable lives on capitalized assets and timing of expense recognition for certain accrued liabilities. As of March 31, 2019 and December 31, 2018, UDR’s net deferred tax asset/(liability) was less than $(0.1) million and less than $(0.1) million, respectively.

GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. GAAP also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

The Company recognizes its tax positions and evaluates them using a two-step process. First, UDR determines whether a tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

UDR had no material unrecognized tax benefit, accrued interest or penalties at March 31, 2019. UDR and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2015 through 2018 remain open to examination by tax jurisdictions to which we are subject. When applicable, UDR recognizes interest and/or penalties related to uncertain tax positions in Tax (provision)/benefit, net on the Consolidated Statements of Operations.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2019

SIGNIFICANT ACCOUNTING POLICIES

Summary of notes receivable, net

The following table summarizes our Notes receivable, net as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due December 2019 (a)	12.00	%	$	20,000	$	20,000
Note due February 2020 (b)	10.00	%		14,974		14,659
Note due October 2020 (c)	8.00	%		2,000		2,000
Note due August 2022 (d)	10.00	%		—		5,600
Total notes receivable, net			$	36,974	$	42,259

(a) In March 2018, the Company entered into a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million, of which $20.0 million has been funded. Interest payments are due when the loan matures. In March 2019, the note’s maturity was extended to December 27, 2019, and the note is secured by a parcel of land.

(b) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $16.4 million, of which $15.0 million has been funded, including $0.3 million during the three months ended March 31, 2019. Interest payments are due monthly. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $5.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the eighth anniversary of the date of the note (February 2020).

(c) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $2.0 million, of which $2.0 million has been funded. Interest payments are due when the loan matures. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $10.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the fifth anniversary of the date of the note (October 2020).

(d) In January 2019, the $5.6 million secured note was repaid in full along with the contractually accrued interest of $0.2 million and an additional $8.5 million of promoted interest in conjunction with the unaffiliated third party being acquired.

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REAL ESTATE OWNED (Tables)

3 Months Ended

Mar. 31, 2019

REAL ESTATE OWNED

Summary of carrying amounts for real estate owned (at cost)

The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	1,954,363	$	1,849,799
Depreciable property — held and used:
Land improvements		214,483		213,224
Building, improvements, and furniture, fixtures and equipment		8,475,755		8,133,136
Real estate intangible assets		35,954		—
Real estate owned		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Real estate owned, net	$	6,916,456	$	6,541,999

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JOINT VENTURES AND PARTNERSHIPS (Tables)

3 Months Ended

Mar. 31, 2019

JOINT VENTURES AND PARTNERSHIPS

Schedule of unconsolidated joint ventures and partnerships

The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of March 31, 2019 and December 31, 2018 (dollars in thousands):

				Number of
		Number of		Apartment
		Properties		Homes	Investment at				UDR’s Ownership Interest
	Location of	March 31,		March 31,	March 31,		December 31,		March 31,		December 31,
Joint Venture	Properties	2019		2019	2019		2018		2019		2018
Operating and development:
UDR/MetLife I	Los Angeles, CA	1	operating community	150	$	30,817	$	30,839	50.0	%	50.0	%
UDR/MetLife II	Various	18	operating communities	4,059		303,893		296,807	50.0	%	50.0	%
Other UDR/MetLife	Various	5	operating communities	1,437		111,377		115,668	50.6	%	50.6	%
Joint Ventures
UDR/MetLife Vitruvian Park®	Addison, TX	4	operating communities;	1,879		73,199		71,730	50.0	%	50.0	%
		1	development community (a);
		4	land parcels
UDR/KFH	Washington, D.C.	3	operating communities	660		4,357		5,507	30.0	%	30.0	%
West Coast Development Joint Ventures (d)	Los Angeles, CA	1	operating community	293		35,994		36,143	47.0	%	47.0	%
Investment in and advances to unconsolidated joint ventures, net, before participating loan investment, preferred equity investments and other investments					$	559,637	$	556,694

											Income/(loss) from investments
							Investment at				Three Months Ended
				Years To	UDR		March 31,		December 31,		March 31,
Developer Capital Program (b)	Location	Rate		Maturity	Commitment (c)		2019		2018		2019		2018
Preferred equity investments:
West Coast Development Joint Ventures (d)	Various	6.5	%	N/A	$	—	$	17,298	$	65,417	$	(161)	$	796
1532 Harrison (e)	San Francisco, CA	11.0	%	3.3		24,645		28,163		24,986		748		341
1200 Broadway (f)	Nashville, TN	8.0	%	3.5		55,558		60,185		58,982		1,169		408
Junction (g)	Santa Monica, CA	12.0	%	3.3		8,800		9,486		9,211		275		—
1300 Fairmount (h)	Philadelphia, PA	Variable		4.4		51,393		13,887		8,318		275		—
Essex (i)	Orlando, FL	12.5	%	4.4		12,886		11,824		9,940		332		—
Other investments:
The Portals (j)	Washington, D.C.	11.0	%	2.2		38,559		44,340		43,167		1,173		679
Other investment ventures	N/A	N/A		N/A	$	18,000		4,280		4,154	$	125	$	(90)
Total Developer Capital Program								189,463		224,175
Total investment in and advances to unconsolidated joint ventures, net							$	749,100	$	780,869

(a) The number of apartment homes for the communities under development presented in the table above is based on the projected number of total homes upon completion of development. As of March 31, 2019, no apartment homes had been completed in the development community held by UDR/MetLife Vitruvian Park® .

(b) The Developer Capital Program is the program through which the Company makes investments, including preferred equity investments, mezzanine loans or other structured investments that may receive a fixed or variable yield on the investment and may include provisions pursuant to which the Company participates in the increase in value of the property upon monetization of the applicable property and/or holds fixed price purchase options.

(c) Represents UDR’s maximum funding commitment only and therefore excludes other activity such as income from investments.

(d) In 2015, the Company entered into a joint venture agreement with an unaffiliated joint venture partner and paid $136.3 million for a 48% ownership interest in a portfolio of five communities that were under construction. The communities are located in three of the Company’s core, coastal markets: Seattle, Washington, Los Angeles, California and Orange County, California. UDR earns a 6.5% preferred return on its investment through each individual community’s date of stabilization, defined as when a community reaches 80% occupancy for 90 consecutive days, while the joint venture partner is allocated all operating income and expense during the pre-stabilization period. Upon stabilization, income and expense are shared based on each partner’s ownership percentage and the Company no longer receives a 6.5% preferred return on its investment in the stabilized community. The Company serves as property manager and earns a management fee during the lease-up phase and subsequent operation of each of the communities. The unaffiliated joint venture partner is the general partner of the joint venture and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

At inception of the agreement, the Company had a fixed-price option to acquire the remaining interest in each community commencing one year after completion. The unaffiliated joint venture partner is providing certain guaranties.

During 2017, the Company exercised its fixed-price option to purchase the joint venture partner’s ownership interest in one of the five communities, and the joint venture sold two of the four remaining communities. 

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in one of the two remaining communities, a 386 apartment home operating community in Orange County, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company and its joint venture partner plan to continue operating the one remaining community. 

In 2017, the Company entered into two additional joint venture agreements with the unaffiliated joint venture partner and paid $15.5 million for a 49% ownership interest in a 155 apartment home community in Seattle, Washington and $16.1 million for a 49% ownership interest in a 276 apartment home community in Hillsboro, Oregon (together with the 2015 joint venture described above, the “West Coast Development Joint Ventures”). UDR earns a 6.5% preferred return on its investments through the communities’ date of stabilization, as defined above, while our joint venture partner is allocated all operating income and expense during the pre-stabilization period. Upon stabilization of the communities, income and expense will be shared based on each partner’s ownership percentage and the Company will no longer receive a 6.5% preferred return on its investment. The Company will serve as property manager and will earn a management fee during the lease-up phase and subsequent operation of the stabilized communities. The unaffiliated joint venture partner is the general partner and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

The Company has a fixed-price option to acquire the remaining interest in the communities beginning one year after completion. The unaffiliated joint venture partner is providing certain guaranties and there are construction loans on the communities.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in the 155 apartment home operating community in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company’s recorded equity investment in the West Coast Development Joint Ventures at March 31, 2019 and December 31, 2018, of $53.3 million and $101.6 million, respectively, is inclusive of outside basis costs and our accrued but unpaid preferred return.

(e) In June 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 136 apartment home community in San Francisco, California. The Company’s preferred equity investment of up to $24.6 million earns a preferred return of 11.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(f) In September 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 313 apartment home community in Nashville, Tennessee. The Company’s preferred equity investment of up to $55.6 million earns a preferred return of 8.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(g) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 66 apartment home community in Santa Monica, CA. The Company’s preferred equity investment of $8.8 million earns a preferred return of 12.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(h) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 471 apartment home community in Philadelphia, PA. The Company’s preferred equity investment of up to $51.4 million earns a preferred return between 8.5% and 12.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(i) In September 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 330 apartment home community in Orlando, FL. The Company’s preferred equity investment of up to $12.9 million earns a preferred return of 12.5% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(j) In May 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner. The joint venture has made a mezzanine loan to a third party developer of a 373 apartment home community in Washington, D.C. The unaffiliated joint venture partner is the managing member of the joint venture. The mezzanine loan is for up to $71.0 million at an interest rate of 13.5% per annum and carries a term of four years with one 12-month extension option. The Company’s commitment to the joint venture is approximately $38.6 million and earns a weighted average return of approximately 11.0% per annum. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

Combined summary of balance sheets relating to unconsolidated joint ventures and partnerships

Combined summary balance sheets relating to the unconsolidated joint ventures and partnerships (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	3,193,477	$	3,311,034
Cash and cash equivalents		44,714		49,867
Other assets		127,789		124,428
Total assets	$	3,365,980	$	3,485,329
Third party debt, net	$	2,032,098	$	2,125,350
Accounts payable and accrued liabilities		59,096		71,272
Total liabilities		2,091,194		2,196,622
Total equity	$	1,274,786	$	1,288,707

Schedule of combined financial information relating to unconsolidated joint ventures and partnerships operations (not just proportionate share)

Combined summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Total revenues	$	81,532	$	67,957
Property operating expenses		30,312		26,937
Real estate depreciation and amortization		29,580		26,848
Operating income/(loss)		21,640		14,172
Interest expense		(21,924)		(19,406)
Other income/(loss)		1,625		(5)
Net income/(loss)	$	1,341	$	(5,239)

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LEASES (Tables)

3 Months Ended

Mar. 31, 2019

LEASES

Lessee - Future minimum lease payments and total operating lease liabilities

Future minimum lease payments and total operating lease liabilities from our ground leases and office space as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases		Office Space		Total
2019	$	3,676	$	57	$	3,733
2020		4,901		76		4,977
2021		4,901		32		4,933
2022		4,901		-		4,901
2023		4,901		-		4,901
Thereafter		313,919		-		313,919
Total future minimum lease payments (undiscounted)		337,199		165		337,364
Difference between future undiscounted cash flows and discounted cash flows		(249,138)		(8)		(249,146)
Total operating lease liabilities (discounted)	$	88,061	$	157	$	88,218

Lessee - components of operating lease expenses

The components of operating lease expenses from our ground leases and office space were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total ground lease expense (b)		2,279
Contractual office space expense (b)		19
Total operating lease expense	$	2,298

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses and office space expense is recorded in General and administrative on the Consolidated Statements of Operations.

Lessor - Future minimum lease payments

Future minimum lease payments from our retail and commercial leases and our ground lease as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases		Ground Lease		Total
2019	$	14,826	$	1,995	$	16,821
2020		19,825		2,660		22,485
2021		18,768		2,660		21,428
2022		17,071		2,660		19,731
2023		15,712		2,660		18,372
Thereafter		85,712		110,168		195,880
Total future minimum lease payments (a)	$	171,914	$	122,803	$	294,717

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

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SECURED AND UNSECURED DEBT, NET (Tables)

3 Months Ended

Mar. 31, 2019

Unsecured Debt

Schedule of debt instruments

The following is a summary of our secured and unsecured debt at March 31, 2019 and December 31, 2018  (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
					Weighted		Weighted
					Average		Average	Number of
	March 31,		December 31,		Interest		Years to	Communities
	2019		2018		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	416,468	$	417,989	3.82	%	5.6	7
Fannie Mae credit facilities (b)		90,000		90,000	3.95	%	1.3	1
Deferred financing costs		(1,275)		(1,343)
Total fixed rate secured debt, net		505,193		506,646	3.85	%	4.8	8
Variable Rate Debt
Tax-exempt secured notes payable (c)		94,700		94,700	2.31	%	3.9	2
Deferred financing costs		(97)		(119)
Total variable rate secured debt, net		94,603		94,581	2.31	%	3.9	2
Total Secured Debt, net		599,796		601,227	3.60	%	4.7	10
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2023 (d) (j)		—		—	—	%	3.8
Borrowings outstanding under unsecured commercial paper program due April 2019 (e) (j)		90,000		101,115	2.78	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2021(f)		54,310		16	3.32	%	1.8
Term Loan due September 2023 (d) (j)		35,000		35,000	3.39	%	4.5
Fixed Rate Debt
3.70% Medium-Term Notes due October 2020 (net of discounts of $12 and $14, respectively) (j)		299,988		299,986	3.70	%	1.5
4.63% Medium-Term Notes due January 2022 (net of discounts of $997 and $1,087, respectively) (j)		399,003		398,913	4.63	%	2.8
1.93% Term Loan due September 2023 (d) (j)		315,000		315,000	1.93	%	4.5
3.75% Medium-Term Notes due July 2024 (net of discounts of $548 and $574, respectively) (g) (j)		299,452		299,426	3.75	%	5.3
8.50% Debentures due September 2024		15,644		15,644	8.50	%	5.5
4.00% Medium-Term Notes due October 2025 (net of discounts of $447 and $465, respectively) (h) (j)		299,553		299,535	4.00	%	6.5
2.95% Medium-Term Notes due September 2026 (j)		300,000		300,000	2.95	%	7.4
3.50% Medium-Term Notes due July 2027 (net of discounts of $582 and $600, respectively) (j)		299,418		299,400	3.50	%	8.3
3.50% Medium-Term Notes due January 2028 (net of discounts of $1,043 and $1,072, respectively) (j)		298,957		298,928	3.50	%	8.8
4.40% Medium-Term Notes due January 2029 (net of discounts of $6 and $6, respectively) (i) (j)		299,994		299,994	4.40	%	9.8
Other		15		16
Deferred financing costs		(16,301)		(16,413)
Total Unsecured Debt, net		2,990,033		2,946,560	3.65	%	5.7
Total Debt, net	$	3,589,829	$	3,547,787	3.73	%	5.5

For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument.

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of March 31, 2019, secured debt encumbered $1.3 billion or 12.2% of UDR’s total real estate owned based upon gross book value ($9.4 billion or 87.8% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At March 31, 2019, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2020 through September 2028 and carry interest rates ranging from 3.15% to 4.35%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the Company records the debt at its estimated fair value and amortizes any difference between the fair value and par value to interest expense over the life of the underlying debt instrument.

During the three months ended March 31, 2019 and 2018, the Company had $0.6 million and $0.7 million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $4.4 million and $5.0 million at March 31, 2019 and December 31, 2018, respectively.

(b) UDR had one secured credit facility  with Fannie Mae with a commitment of $90.0 million at March 31, 2019.  The Fannie Mae credit facility matures in July 2020  and bears interest at a fixed rate of 3.95%.

Further information related to this credit facility is as follows (dollars in thousands):

	March 31,			December 31,
	2019			2018
Borrowings outstanding	$	90,000		$	90,000
Weighted average borrowings during the period ended		90,000			253,813
Maximum daily borrowings during the period ended		90,000			314,869
Weighted average interest rate during the period ended		4.0	%		4.7	%
Weighted average interest rate at the end of the period		4.0	%		4.0	%

(c) The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature in August 2019 and March 2032. Interest on these notes is payable in monthly installments. The variable rate mortgage notes have interest rates ranging from 2.25% to 2.47% as of March 31, 2019.

(d) The Company has a $1.1 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”). The credit agreement for these facilities (the “Credit Agreement”) allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023. 

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from 75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to 165 basis points.

The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Credit Agreement also includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable.

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total revolving credit facility	$	1,100,000		$	1,100,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		—			—
Maximum daily borrowings during the period ended		—			—
Weighted average interest rate during the period ended		—	%		—	%
Interest rate at end of the period		—	%		—	%

(1) Excludes $3.3 million and $3.3 million of letters of credit at March 31, 2019 and December 31, 2018, respectively.

(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total unsecured commercial paper program	$	500,000		$	500,000
Borrowings outstanding at end of period		90,000			101,115
Weighted average daily borrowings during the period ended		149,365			344,235
Maximum daily borrowings during the period ended		330,000			440,000
Weighted average interest rate during the period ended		2.8	%		2.4	%
Interest rate at end of the period		2.8	%		2.9	%

(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 15, 2021. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		54,310			16
Weighted average daily borrowings during the period ended		22,967			26,101
Maximum daily borrowings during the period ended		66,170			64,633
Weighted average interest rate during the period ended		3.3	%		2.9	%
Interest rate at end of the period		3.3	%		3.3	%

(g) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.69%.

(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.53%.

(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $150.0 million of this debt. The all in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.27%.

(j) The Operating Partnership is a guarantor of this debt.

Secured credit facilities

Further information related to this credit facility is as follows (dollars in thousands):

	March 31,			December 31,
	2019			2018
Borrowings outstanding	$	90,000		$	90,000
Weighted average borrowings during the period ended		90,000			253,813
Maximum daily borrowings during the period ended		90,000			314,869
Weighted average interest rate during the period ended		4.0	%		4.7	%
Weighted average interest rate at the end of the period		4.0	%		4.0	%

Schedule of aggregate maturities, including amortizing principal payments of secured and unsecured debt

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten calendar years subsequent to March 31, 2019 are as follows (dollars in thousands):

	Total Fixed		Total Variable		Total		Total		Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt		Debt
2019	$	2,860	$	67,700	$	70,560	$	90,000	$	160,560
2020		198,076		—		198,076		300,000		498,076
2021		1,117		—		1,117		54,310		55,427
2022		1,157		—		1,157		400,000		401,157
2023		41,245		—		41,245		350,000		391,245
2024		—		—		—		315,644		315,644
2025		127,600		—		127,600		300,000		427,600
2026		50,000		—		50,000		300,000		350,000
2027		—		—		—		300,000		300,000
2028		80,000		—		80,000		300,000		380,000
Thereafter		—		27,000		27,000		300,000		327,000
Subtotal		502,055		94,700		596,755		3,009,954		3,606,709
Non-cash (a)		3,138		(97)		3,041		(19,921)		(16,880)
Total	$	505,193	$	94,603	$	599,796	$	2,990,033	$	3,589,829

(a) Includes the unamortized balance of fair market value adjustments, premiums/discounts and deferred financing costs. For the three months ended March 31, 2019 and 2018, the Company amortized $1.0 million and $1.0 million, respectively, of deferred financing costs into Interest expense.    

Commercial Paper

Unsecured Debt

Schedule of short-term debt

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total unsecured commercial paper program	$	500,000		$	500,000
Borrowings outstanding at end of period		90,000			101,115
Weighted average daily borrowings during the period ended		149,365			344,235
Maximum daily borrowings during the period ended		330,000			440,000
Weighted average interest rate during the period ended		2.8	%		2.4	%
Interest rate at end of the period		2.8	%		2.9	%

Revolving Credit Facility

Unsecured Debt

Schedule of short-term debt

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total revolving credit facility	$	1,100,000		$	1,100,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		—			—
Maximum daily borrowings during the period ended		—			—
Weighted average interest rate during the period ended		—	%		—	%
Interest rate at end of the period		—	%		—	%

(1) Excludes $3.3 million and $3.3 million of letters of credit at March 31, 2019 and December 31, 2018, respectively.

Unsecured Working Capital Credit Facility due January 2021

Unsecured Debt

Schedule of short-term debt

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		54,310			16
Weighted average daily borrowings during the period ended		22,967			26,101
Maximum daily borrowings during the period ended		66,170			64,633
Weighted average interest rate during the period ended		3.3	%		2.9	%
Interest rate at end of the period		3.3	%		3.3	%

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INCOME/(LOSS) PER SHARE (Tables)

3 Months Ended

Mar. 31, 2019

INCOME/(LOSS) PER SHARE

Computation of basic and diluted income/(loss) per share

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

	March 31,
	2019		2018
Numerator for income/(loss) per share:
Net income/(loss)	$	26,602	$	89,225
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.		24,503		81,756
Distributions to preferred stockholders — Series E (Convertible)		(1,011)		(955)
Income/(loss) attributable to common stockholders - basic and diluted	$	23,492	$	80,801
Denominator for income/(loss) per share:
Weighted average common shares outstanding		277,297		267,963
Non-vested restricted stock awards		(295)		(417)
Denominator for basic income/(loss) per share		277,002		267,546
Incremental shares issuable from assumed conversion of stock options, unvested LTIP Units and unvested restricted stock		555		1,662
Denominator for diluted income/(loss) per share		277,557		269,208
Income/(loss) per weighted average common share:
Basic	$	0.08	$	0.30
Diluted	$	0.08	$	0.30

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table sets forth the additional shares of common stock outstanding by equity instrument if converted to common stock for each of the three months ended March 31, 2019 and 2018 (in thousands):

	March 31,
	2019	2018
OP/DownREIT Units	24,280	24,506
Convertible preferred stock	3,011	3,011
Stock options, unvested LTIP Units and unvested restricted stock	555	1,662

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NONCONTROLLING INTERESTS (Tables)

3 Months Ended

Mar. 31, 2019

NONCONTROLLING INTERESTS

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership

The following table sets forth redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership for the following period (dollars in thousands):

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, December 31, 2018	$	972,740
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		144,197
Conversion of OP Units/DownREIT Units to Common Stock		(72,846)
Net income/(loss) attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		2,057
Distributions to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(8,733)
Vesting of Long-Term Incentive Plan Units		14,335
Allocation of other comprehensive income/(loss)		(252)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, March 31, 2019	$	1,051,498

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FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2019

FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

Schedule of estimated fair values

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018, are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	36,974	$	40,329	$	—	$	—	$	40,329
Derivatives - Interest rate contracts (b)		3,315		3,315		—		3,315		—
Total assets	$	40,289	$	43,644	$	—	$	3,315	$	40,329
Derivatives - Interest rate contracts (b)	$	2,285	$	2,285	$	—	$	2,285	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		416,468		423,329		—		—		423,329
Fannie Mae credit facilities		90,000		90,540		—		—		90,540
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		54,310		54,310		—		—		54,310
Commercial paper program		90,000		90,000		—		—		90,000
Unsecured notes		2,862,024		2,897,215		—		—		2,897,215
Total liabilities	$	3,609,787	$	3,652,379	$	—	$	2,285	$	3,650,094
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	1,051,498	$	1,051,498	$	—	$	1,051,498	$	—

					Fair Value at December 31, 2018, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	42,259	$	45,026	$	—	$	—	$	45,026
Derivatives - Interest rate contracts (b)		4,757		4,757		—		4,757		—
Total assets	$	47,016	$	49,783	$	—	$	4,757	$	45,026
Derivatives - Interest rate contracts (b)	$	356	$	356	$	—	$	356	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		417,989		416,314		—		—		416,314
Fannie Mae credit facilities		90,000		90,213		—		—		90,213
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		16		16		—		—		16
Commercial paper program		101,115		101,115		—		—		101,115
Unsecured notes		2,861,842		2,829,390		—		—		2,829,390
Total liabilities	$	3,566,018	$	3,532,104	$	—	$	356	$	3,531,748
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	972,740	$	972,740	$	—	$	972,740	$	—

(a) See Note 2, Significant Accounting Policies.

(b) See Note 11,  Derivatives and Hedging Activity.

(c) See Note 7,  Secured and Unsecured Debt, Net.

(d) See Note 9,  Noncontrolling Interests.

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DERIVATIVES AND HEDGING ACTIVITY (Tables)

3 Months Ended

Mar. 31, 2019

DERIVATIVES AND HEDGING ACTIVITY

Schedule of outstanding interest rate derivatives

As of March 31, 2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate swaps (a)	4	$	315,000
Interest rate caps	1	$	65,197

(a) In addition to the interest rate swaps summarized above, the Company entered into two additional interest rate swaps with a notional value totaling $75.0 million that will become effective in December 2019.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in no gain or loss and a loss of less than $0.1 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

Fair value of Company's derivative financial instruments and their classification on Consolidated Balance Sheets

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Asset Derivatives				Liability Derivatives
	(included in Other assets)				(included in Other liabilities)
	Fair Value at:				Fair Value at:
	March 31,		December 31,		March 31,		December 31,
	2019		2018		2019		2018
Derivatives designated as hedging instruments:
Interest rate products	$	3,315	$	4,757	$	2,285	$	356

Effect of Company's derivative financial instruments on Consolidated Statements of Operations

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018  (dollars in thousands):

									Gain/(Loss) Recognized in
					Gain/(Loss) Reclassified				Interest expense
	Unrealized holding gain/(loss)				from Accumulated OCI into				(Amount Excluded from
	Recognized in OCI				Interest expense				Effectiveness Testing)
Derivatives in Cash Flow Hedging Relationships	2019		2018		2019		2018		2019		2018
Three Months Ended March 31,
Interest rate products	$	(2,210)	$	1,710	$	945	$	172	$	—	$	—

Effect of Company's derivatives not designated as hedging instruments on the Consolidated Statements of Operations

	Three Months Ended
	March 31,
	2019		2018
Total amount of Interest expense presented on the Consolidated Statements of Operations	$	33,542	$	29,943

Offsetting of Derivative Assets

The Company has elected not to offset derivative positions on the consolidated financial statements. The tables below present the effect on its financial position had the Company made the election to offset its derivative positions as of March 31, 2019 and December 31, 2018 (dollars in thousands):

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Assets		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Assets	Assets		Sheets		(a)		Instruments		Received		Net Amount
March 31, 2019	$	3,315	$	—	$	3,315	$	—	$	—	$	3,315
December 31, 2018	$	4,757	$	—	$	4,757	$	—	$	—	$	4,757

(a) Amounts reconcile to the aggregate fair value of derivative assets in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote. 

Offsetting of Derivative Liabilities

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Liabilities		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Liabilities	Liabilities		Sheets		(a)		Instruments		Posted		Net Amount
March 31, 2019	$	2,285	$	—	$	2,285	$	—	$	—	$	2,285
December 31, 2018	$	356	$	—	$	356	$	—	$	—	$	356

Amounts reconcile to the aggregate fair value of derivative liabilities in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2019

COMMITMENTS AND CONTINGENCIES

Summary of real estate commitments

The following summarizes the Company’s real estate commitments at March 31, 2019  (dollars in thousands):

	Number	UDR's			UDR's Remaining
	Properties	Investment (a)			Commitment
Wholly-owned — redevelopment	2	$	245		$	35,255
Joint ventures:
Unconsolidated joint ventures - development	1		5,471			26,530	(b)
Preferred equity investments	2		25,711	(c)		39,618	(d)
Other investments	-		4,280			13,500	(e)
Total		$	35,707		$	114,903

(a) Represents UDR’s investment as of March 31, 2019.

(b) Represents UDR’s proportionate share of expected remaining costs to complete the development.

(c) Represents UDR’s investment in 1300 Fairmount and Essex for the properties under development as of March 31, 2019.

(d) Represents UDR’s remaining commitment for 1300 Fairmount and Essex.

(e) Represents UDR’s remaining commitment for other investment ventures.

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REPORTABLE SEGMENTS (Tables)

3 Months Ended

Mar. 31, 2019

REPORTABLE SEGMENTS

Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to Net income/(loss)

The following table details rental income and NOI for UDR’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	100,565	$	96,665
Mid-Atlantic Region		54,300		52,694
Southeast Region		29,532		28,339
Northeast Region		30,192		29,585
Southwest Region		14,152		13,821
Non-Mature Communities/Other		30,162		21,393
Total segment and consolidated rental income	$	258,903	$	242,497
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	3,154	$	2,738
Mid-Atlantic Region		2,003		1,736
Southeast Region		1,788		1,697
Northeast Region		630		581
Southwest Region		733		569
Non-Mature Communities/Other		711		665
Total segment and consolidated rental income	$	9,019	$	7,986
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	103,719	$	99,403
Mid-Atlantic Region		56,303		54,430
Southeast Region		31,320		30,036
Northeast Region		30,822		30,166
Southwest Region		14,885		14,390
Non-Mature Communities/Other		30,873		22,058
Total segment and consolidated rental income	$	267,922	$	250,483
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	78,439	$	74,979
Mid-Atlantic Region		39,179		37,506
Southeast Region		22,010		21,047
Northeast Region		20,977		20,951
Southwest Region		8,992		8,477
Non-Mature Communities/Other		20,086		13,654
Total segment and consolidated NOI		189,683		176,614
Reconciling items:
Joint venture management and other fees		2,751		2,822
Property management		(7,703)		(6,888)
Other operating expenses		(5,646)		(2,009)
Real estate depreciation and amortization		(112,468)		(108,136)
General and administrative		(12,467)		(11,759)
Casualty-related (charges)/recoveries, net		—		(940)
Other depreciation and amortization		(1,656)		(1,691)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		49		(1,677)
Interest expense		(33,542)		(29,943)
Interest income and other income/(expense), net		9,813		2,759
Tax (provision)/benefit, net		(2,212)		(227)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.	$	24,503	$	81,756

(a) Same-Store Community population consisted of 37,959 apartment homes.

Details of assets of UDR's reportable segments

The following table details the assets of UDR’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets:
Same-Store Communities:
West Region	$	3,773,413	$	3,763,366
Mid-Atlantic Region		2,323,591		2,317,369
Southeast Region		786,575		779,310
Northeast Region		1,494,009		1,491,994
Southwest Region		448,299		447,305
Non-Mature Communities/Other		1,854,668		1,396,815
Total segment assets		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Total segment assets — net book value		6,916,456		6,541,999
Reconciling items:
Cash and cash equivalents		1,043		185,216
Restricted cash		23,111		23,675
Notes receivable, net		36,974		42,259
Investment in and advances to unconsolidated joint ventures, net		749,100		780,869
Operating lease right-of-use assets		94,145		—
Other assets		134,896		137,710
Total consolidated assets	$	7,955,725	$	7,711,728

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BASIS OF PRESENTATION (Details) - shares	Mar. 31, 2019	Dec. 31, 2018
Consolidation And Basis Of Presentation
Operating Partnership units outstanding related to limited partner	184,053,122	183,636,543
Operating Partnership outstanding units	184,053,122
United Dominion Reality L.P.
Consolidation And Basis Of Presentation
Operating Partnership units outstanding related to limited partner	176,057,247
General Partners' ownership (as a percent)	95.70%
UDR Lighthouse DownREIT L.P.
Consolidation And Basis Of Presentation
Operating Partnership outstanding units	13,470,651
Percentage of units outstanding in Partnership	41.60%
UDR Lighthouse DownREIT L.P.
Consolidation And Basis Of Presentation
Operating Partnership outstanding units	32,367,380
Non-affiliated Partners
Consolidation And Basis Of Presentation
Operating Partnership units outstanding related to limited partner	7,995,875
Operating Partnership outstanding units	15,134,306
Percentage of units outstanding in Partnership	4.30%
Non-affiliated Partners | United Dominion Reality L.P.
Consolidation And Basis Of Presentation
Operating Partnership units outstanding related to limited partner	7,995,875
Operating Partnership outstanding units		9,387,844
Percentage of units outstanding in Partnership	4.30%	5.10%
Non-affiliated Partners | UDR Lighthouse DownREIT L.P.
Consolidation And Basis Of Presentation
Percentage of units outstanding in Partnership	46.80%
UDR, Inc.
Consolidation And Basis Of Presentation
Operating Partnership units outstanding related to limited partner	175,946,364	174,137,816
General Partners' ownership (as a percent)	53.20%
Operating Partnership outstanding units	17,233,074
Percentage of units outstanding in Partnership	95.70%	94.90%
UDR, Inc. | United Dominion Reality L.P.
Consolidation And Basis Of Presentation
General Partners' ownership (as a percent)	95.70%
Operating Partnership outstanding units		174,248,699
Percentage of units outstanding in Partnership		94.90%

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SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Jan. 31, 2019	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Accounting policies
Notes receivable, net		$ 36,974				$ 42,259
Significant Accounting Policies
Lease classification per practical expedient		true
Operating lease right-of-use assets		$ 94,145
Operating lease liabilities		88,218
Proceeds from secured notes receivable	$ 5,600
Procceds from accrued interest	200
Note receivable interest income		1,100	$ 600
Promoted interest received	$ 8,500	8,500	0
Allocation of other comprehensive income/(loss)		(252)
Current Income Tax Expense (Benefit)		0
Interest Income, Related Party		0	0
Noncontrolling Interests
Significant Accounting Policies
Allocation of other comprehensive income/(loss)		$ (300)	100
Note due December 2019
Accounting policies
Note receivable interest rate		12.00%
Notes receivable, net		$ 20,000				20,000
Significant Accounting Policies
Notes receivable			$ 20,000
Note due February 2020
Accounting policies
Note receivable interest rate		10.00%
Notes receivable, net		$ 14,974				14,659
Significant Accounting Policies
Notes receivable		16,400
Note maturity public capital threshold		5,000
Notes Receivable Increase		$ 300
Note due October 2020
Accounting policies
Note receivable interest rate		8.00%
Notes receivable, net		$ 2,000				2,000
Significant Accounting Policies
Notes receivable		2,000
Note maturity public capital threshold		$ 10,000
Note due August 2022
Accounting policies
Note receivable interest rate		10.00%
Notes receivable, net						5,600
Maximum
Significant Accounting Policies
Deferred Tax Assets, Net		$ 100				100
ASU 2016-02 | Adjustment
Significant Accounting Policies
Operating lease right-of-use assets					$ 94,300
Operating lease liabilities					$ 88,300
Prepaid rent and intangible assets						$ 6,000
Forecast | ASU 2016-02 | Adjustment | Maximum
Significant Accounting Policies
Operating lease right-of-use assets				$ 146,700
Operating lease liabilities				$ 140,700

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REAL ESTATE OWNED - Summarizes the carrying amounts for our real estate owned (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
REAL ESTATE OWNED
Land	$ 1,954,363	$ 1,849,799
Depreciable property - held and used:
Land improvements	214,483	213,224
Building, improvements, and furniture, fixtures and equipment	8,475,755	8,133,136
In-place intangibles	35,954
Real estate owned	10,680,555	10,196,159
Accumulated depreciation	(3,764,099)	(3,654,160)
Total real estate owned, net of accumulated depreciation	$ 6,916,456	$ 6,541,999

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REAL ESTATE OWNED - Additional Information (Details) $ in Thousands	1 Months Ended			3 Months Ended
	Apr. 30, 2019 USD ($) community	Feb. 28, 2019 USD ($) community	Jan. 31, 2019 USD ($) item	Mar. 31, 2019 USD ($) state community item	Mar. 31, 2018 USD ($)	Dec. 31, 2018
Real Estate Owned Disclosure
Number of real estate properties | community				131
Number of states in which there are owned and consolidated communities | state				11
Number of apartment homes owned and consolidated | item				41,041
Development costs excluding direct costs and capitalized interest				$ 3,300	$ 3,400
Interest capitalized during period				1,100	$ 4,600
In-place intangibles				$ 35,954
386 Home Operating Community In Anaheim
Real Estate Owned Disclosure
Number of apartment homes acquired | item			386
Ownership (as a percent)			100.00%			49.00%
Payment to acquire real estate			$ 33,500
Repayments of joint venture construction financing			59,800
Real estate acquired			115,700
In-place intangibles			$ 2,400
155 Home Operating Community in Seattle
Real Estate Owned Disclosure
Number of apartment homes acquired | item			155
Ownership (as a percent)			100.00%			49.00%
Real estate intangibles			$ 2,400
Payment to acquire real estate			20,000
Repayments of joint venture construction financing			26,000
Real estate acquired			58,100
In-place intangibles			600
To-Be-Developed Parcel of Land in Washington D.C
Real Estate Owned Disclosure
Payment to acquire real estate			$ 27,100
To Be Developed Parcel Of Land In Denver, Colorado
Real Estate Owned Disclosure
Payment to acquire real estate		$ 13,700
Operating Community in Brooklyn, New York
Real Estate Owned Disclosure
Real estate intangibles		33,600
Payment to acquire real estate		132,100
Real estate acquired		97,500
In-place intangibles		$ 1,000
Number of communities acquired | community		188
Operating Community in St. Petersburg, Florida
Real Estate Owned Disclosure
Payment to acquire real estate		$ 98,300
Real estate acquired		96,000
In-place intangibles		$ 2,300
Number of communities acquired | community		381
Operating Community in Towson, Maryland
Real Estate Owned Disclosure
Payment to acquire real estate	$ 86,400
Number of communities acquired | community	498

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JOINT VENTURES AND PARTNERSHIPS - Summary (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) community	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 item	Aug. 31, 2018 item	Sep. 30, 2017 item	Dec. 31, 2015 community
Unconsolidated entities
Investment in unconsolidated entities	$ 749,100		$ 780,869
Number of real estate properties | community	131
Financial information relating to unconsolidated joint ventures operations
Operating income/(loss)	$ 49	$ (1,677)
Unconsolidated Joint Ventures
Unconsolidated entities
Investment in unconsolidated entities	559,637		556,694
Combined summary of balance sheets relating to unconsolidated joint ventures
Total real estate, net	3,193,477		3,311,034
Cash and cash equivalents	44,714		49,867
Other assets	127,789		124,428
Total assets	3,365,980		3,485,329
Third party debt, net	2,032,098		2,125,350
Accounts payable and accrued liabilities	59,096		71,272
Total liabilities	2,091,194		2,196,622
Total equity	1,274,786		1,288,707
Financial information relating to unconsolidated joint ventures operations
Total revenues	81,532	67,957
Property operating expenses	30,312	26,937
Real estate depreciation and amortization	29,580	26,848
Operating income/(loss)	21,640	14,172
Interest expense	(21,924)	(19,406)
Other income/(loss)	1,625	(5)
Net income /(loss)	1,341	(5,239)
Unconsolidated Joint Venture West Coast Development JV
Unconsolidated entities
Investment in unconsolidated entities	$ 53,300		101,600
Preferred Equity Investment West Coast Development JV
Unconsolidated entities
UDR's Ownership Interest							48.00%
Number of real estate properties | community							5
Rate	6.50%						6.50%
Preferred Equity Investment 1200 Broadway Nashville TN
Unconsolidated entities
Number of apartment homes | item						313
Rate						8.00%
Preferred Equity Investment 1641 Lincoln Santa Monica CA
Unconsolidated entities
Number of apartment homes | item					66
Rate					12.00%
Preferred Equity Investment 1300 Fairmount Philadelphia, PA
Unconsolidated entities
Number of apartment homes | item					471
Preferred Equity Investment Essex Orlando, FL
Unconsolidated entities
Number of apartment homes | item				330
Rate				12.50%
Operating Community | Unconsolidated Joint Venture UDR Met Life I Partnership
Unconsolidated entities
Number of apartment homes | community	150
Investment in unconsolidated entities	$ 30,817		$ 30,839
UDR's Ownership Interest	50.00%		50.00%
Number of real estate properties | community	1
Operating Community | Unconsolidated Joint Venture UDR MetLife II Partnership
Unconsolidated entities
Number of apartment homes | community	4,059
Investment in unconsolidated entities	$ 303,893		$ 296,807
UDR's Ownership Interest	50.00%		50.00%
Number of real estate properties | community	18
Operating Community | Unconsolidated Joint Venture Other MetLife
Unconsolidated entities
Number of apartment homes | community	1,437
Investment in unconsolidated entities	$ 111,377		$ 115,668
UDR's Ownership Interest	50.60%		50.60%
Number of real estate properties | community	5
Operating Community | Unconsolidated Joint Venture Vitruvian Park
Unconsolidated entities
Number of apartment homes | community	1,879
Investment in unconsolidated entities	$ 73,199		$ 71,730
UDR's Ownership Interest	50.00%		50.00%
Number of real estate properties | community	4
Operating Community | Unconsolidated Joint Venture Three Washington DC
Unconsolidated entities
Number of apartment homes | community	660
Investment in unconsolidated entities	$ 4,357		$ 5,507
UDR's Ownership Interest	30.00%		30.00%
Number of real estate properties | community	3
Operating Community | Unconsolidated Joint Venture West Coast Development JV
Unconsolidated entities
Number of apartment homes | community	293
Investment in unconsolidated entities	$ 35,994		$ 36,143
UDR's Ownership Interest	47.00%		47.00%
Number of real estate properties | community	1
Development Community
Unconsolidated entities
Investment in unconsolidated entities	$ 189,463		$ 224,175
Development Community | Unconsolidated Joint Venture Vitruvian Park
Unconsolidated entities
Number of real estate properties | community	1
Development Community | Preferred Equity Investment West Coast Development JV
Unconsolidated entities
Investment in unconsolidated entities	$ 17,298		65,417
Rate	6.50%
Income from investments	$ (161)	796
Development Community | Preferred Equity Investment 1532 Harrison San Francisco, CA
Unconsolidated entities
Investment in unconsolidated entities	28,163		24,986
UDR commitment	$ 24,645
Rate	11.00%
Years to Maturity	3 years 3 months 18 days
Income from investments	$ 748	341
Development Community | Preferred Equity Investment 1200 Broadway Nashville TN
Unconsolidated entities
Investment in unconsolidated entities	60,185		58,982
UDR commitment	$ 55,558
Rate	8.00%
Years to Maturity	3 years 6 months
Income from investments	$ 1,169	408
Development Community | Preferred Equity Investment 1641 Lincoln Santa Monica CA
Unconsolidated entities
Investment in unconsolidated entities	9,486		9,211
UDR commitment	$ 8,800
Rate	12.00%
Years to Maturity	3 years 3 months 18 days
Income from investments	$ 275
Development Community | Preferred Equity Investment 1300 Fairmount Philadelphia, PA
Unconsolidated entities
Investment in unconsolidated entities	13,887		8,318
UDR commitment	$ 51,393
Years to Maturity	4 years 4 months 24 days
Income from investments	$ 275
Development Community | Preferred Equity Investment Essex Orlando, FL
Unconsolidated entities
Investment in unconsolidated entities	11,824		9,940
UDR commitment	$ 12,886
Rate	12.50%
Years to Maturity	4 years 4 months 24 days
Income from investments	$ 332
Development Community | Other Investment The Portals Washington, DC
Unconsolidated entities
Investment in unconsolidated entities	44,340		43,167
UDR commitment	$ 38,559
Rate	11.00%
Years to Maturity	2 years 2 months 12 days
Income from investments	$ 1,173	679
Development Community | Other Investment Ventures
Unconsolidated entities
Investment in unconsolidated entities	4,280		$ 4,154
UDR commitment	18,000
Income from investments	$ 125	$ (90)
Land Parcel | Unconsolidated Joint Venture Vitruvian Park
Unconsolidated entities
Number of real estate properties | community	4

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JOINT VENTURES AND PARTNERSHIPS - Commitments (Details) $ in Thousands	1 Months Ended				3 Months Ended		12 Months Ended
	Apr. 30, 2019 USD ($) item	Jan. 31, 2019 USD ($) community item	May 31, 2017 USD ($) loan item	Mar. 31, 2017	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($) community item	Dec. 31, 2015 USD ($) item	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($) item	Aug. 31, 2018 USD ($) item	Sep. 30, 2017 USD ($) item	Jun. 30, 2017 USD ($) item
Joint Ventures
Real estate owned					$ 10,680,555				$ 10,196,159
Second installment of payable incurred in partial consideration for acquisition of ownership interest in joint venture					498,076
Investment in unconsolidated entities					$ 749,100				780,869
Condition for Community considered to have stabilized occupancy					90%
Time to maintain percent occupancy to be considered a community					3 months
Investment in unconsolidated joint ventures					$ 21,389	$ 19,736
Long-term Debt					3,589,829				3,547,787
Deferred fees from the sale of properties					10,800				11,000
Joint venture management and other fees					$ 2,751	$ 2,822
Type of revenue					udr:ManagementAndOtherFeesMember	udr:ManagementAndOtherFeesMember
Management Service
Joint Ventures
Joint venture management and other fees					$ 2,800	$ 2,700
Type of revenue					us-gaap:ManagementServiceMember	us-gaap:ManagementServiceMember
Unconsolidated Joint Venture Vitruvian Park
Joint Ventures
Number of apartments of development community					0
Unconsolidated Joint Venture West Coast Development JV
Joint Ventures
Investment in unconsolidated entities					$ 53,300				$ 101,600
Preferred Equity Investment West Coast Development JV
Joint Ventures
UDR's Ownership Interest								48.00%
Number of communities are located in coastal market | item								3
Preferred return (as a percent)					6.50%			6.50%
Condition for Community considered to have stabilized occupancy					80%
Time to maintain percent occupancy to be considered a community					90 days
Hold period			1 year	1 year	1 year
Number of communities acquired | community							1
Number of completed communities | community							5
Number of remaining communities sold | community							2
Number of remaining communities | community							4
Number of joint ventures agreements entered into | item							2
Cost of ownership interest								$ 136,300
Preferred Equity Investment Anaheim CA
Joint Ventures
UDR's Ownership Interest		100.00%							49.00%
Number of communities acquired | community		1
Number of apartment homes acquired		386
Payment to acquire real estate		$ 33,500
Number of remaining communities acquired | community		2
Number of remaining communities | community		1
Preferred Equity Investment Seattle WA
Joint Ventures
UDR's Ownership Interest		100.00%					49.00%		49.00%
Number of apartment homes acquired | item		155					155
Payment to acquire real estate		$ 20,000
Cost of ownership interest							$ 15,500
Preferred Equity Investment Hillsboro Oregon
Joint Ventures
UDR's Ownership Interest							49.00%
Number of apartment homes acquired | item							276
Cost of ownership interest							$ 16,100
Preferred Equity Investment San Francisco California JV
Joint Ventures
Preferred return (as a percent)													11.00%
Number of apartment homes | item													136
Equity Investment													$ 24,600
Preferred Equity Investment 1200 Broadway Nashville TN
Joint Ventures
Preferred return (as a percent)												8.00%
Number of apartment homes | item												313
Equity Investment												$ 55,600
Preferred Equity Investment 1641 Lincoln Santa Monica CA
Joint Ventures
Preferred return (as a percent)											12.00%
Number of apartment homes | item											66
Equity Investment											$ 8,800
Preferred Equity Investment 1300 Fairmount Philadelphia, PA
Joint Ventures
Number of apartment homes | item											471
Equity Investment											$ 51,400
Preferred Equity Investment 1300 Fairmount Philadelphia, PA | Minimum
Joint Ventures
Preferred return (as a percent)											8.50%
Preferred Equity Investment 1300 Fairmount Philadelphia, PA | Maximum
Joint Ventures
Preferred return (as a percent)											12.00%
Preferred Equity Investment Essex Orlando, FL
Joint Ventures
Preferred return (as a percent)										12.50%
Number of apartment homes | item										330
Equity Investment										$ 12,900
Preferred Equity Investment Oakland, California
Joint Ventures
Income from investments	$ 27,300
Preferred return (as a percent)	9.00%
Number of apartment homes | item	173
Third Party Developer in Washington D.C.
Joint Ventures
Number of apartments of development community | item			373
Equity Investment			$ 38,600
Long-term Debt			$ 71,000
Interest rate of medium-term notes			13.50%
Debt instrument term			4 years
Number of extensions available | loan			1
Loan extension term			12 months
Weighted average interest rate of Company's committed portion			11.0

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LEASES - Lessee Future Minimum Payments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) lease community
Lessee operating leases
Number of communities subject to ground leases | community	6
Operating leases existence of option to extend	true
Lease classification per practical expedient	true
Operating lease right-of-use assets	$ 94,145
Weighted average remaining lease term	70 years 10 months 24 days
Weighted average discount rate	5.20%
Number of ground lease contracts in dispute | lease	1
Future minimum lease payments
2019	$ 3,733
2020	4,977
2021	4,933
2022	4,901
2023	4,901
Thereafter	313,919
Total future minimum lease payments (undiscounted)	337,364
Difference between future undiscounted cash flows and discounted cash flows	(249,146)
Operating lease liabilities	$ 88,218
Ground Leases
Lessee operating leases
Lease classification per practical expedient	true
Future minimum lease payments
2019	$ 3,676
2020	4,901
2021	4,901
2022	4,901
2023	4,901
Thereafter	313,919
Total future minimum lease payments (undiscounted)	337,199
Difference between future undiscounted cash flows and discounted cash flows	(249,138)
Operating lease liabilities	88,061
Ground Leases | Disputed Operating Lease
Lessee operating leases
Annual lease payment	500
Ground Leases | Minimum
Lessee operating leases
Annual lease payment	1,200
Ground Leases | Maximum
Lessee operating leases
Annual lease payment	4,000
Office Space
Future minimum lease payments
2019	57
2020	76
2021	32
Total future minimum lease payments (undiscounted)	165
Difference between future undiscounted cash flows and discounted cash flows	(8)
Operating lease liabilities	$ 157

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LEASES - Lessee Expenses (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Lessee operating leases
Total lease expense	$ 2,298
Ground Leases
Lessee operating leases
Contractual lease expense	2,140
Variable lease expense	139
Ground Leases | Other operating expense
Lessee operating leases
Total lease expense	2,279
Office Space | General and administrative expense
Lessee operating leases
Contractual lease expense	$ 19

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LEASES - Lessor (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) property
Lessor leases
Number of properties subject to a ground lease | property	1
Future minimum lease payments
2019	$ 16,821
2020	22,485
2021	21,428
2022	19,731
2023	18,372
Thereafter	195,880
Total future minimum payments	294,717
Maximum
Future minimum lease payments
Variable lease expense	200
Ground Leases
Future minimum lease payments
2019	1,995
2020	2,660
2021	2,660
2022	2,660
2023	2,660
Thereafter	110,168
Total future minimum payments	122,803
Variable lease expense	139
Retail and Commercial Spaces
Future minimum lease payments
2019	14,826
2020	19,825
2021	18,768
2022	17,071
2023	15,712
Thereafter	85,712
Total future minimum payments	$ 171,914

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SECURED AND UNSECURED DEBT, NET - Summary (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) community item	Dec. 31, 2018 USD ($)
Secured debt instruments
Interest rate at end of the period	3.73%
Long-term Debt	$ 3,589,829	$ 3,547,787
Unsecured Debt	2,990,033	2,946,560
Borrowings outstanding	$ 3,300	3,300
Number of secured credit facilities with Fannie Mae | item	1
Weighted Average
Secured debt instruments
Years to maturity	5 years 6 months
Commercial Paper
Secured debt instruments
Interest rate at end of the period	2.78%
Borrowings outstanding at end of period	$ 90,000	101,115
Commercial Paper | Weighted Average
Secured debt instruments
Years to maturity	1 month 6 days
Mortgages Notes Payable | Fixed Rate Debt
Secured debt instruments
Principal outstanding	$ 416,468	417,989
Interest rate at end of the period	3.82%
Number of Communities Encumbered | community	7
Mortgages Notes Payable | Fixed Rate Debt | Weighted Average
Secured debt instruments
Years to maturity	5 years 7 months 6 days
Tax-exempt secured notes payable | Variable Rate Debt
Secured debt instruments
Principal outstanding	$ 94,700	94,700
Interest rate at end of the period	2.31%
Number of Communities Encumbered | community	2
Tax-exempt secured notes payable | Variable Rate Debt | Weighted Average
Secured debt instruments
Years to maturity	3 years 10 months 24 days
Fannie Mae credit facilities | Fixed Rate Debt
Secured debt instruments
Principal outstanding	$ 90,000	90,000
Interest rate at end of the period	3.95%
Number of Communities Encumbered | community	1
Fannie Mae credit facilities | Fixed Rate Debt | Weighted Average
Secured debt instruments
Years to maturity	1 year 3 months 18 days
Secured Debt
Secured debt instruments
Principal outstanding	$ 599,796	601,227
Interest rate at end of the period	3.60%
Long-term Debt	$ 599,796
Number of Communities Encumbered | community	10
Secured Debt | Weighted Average
Secured debt instruments
Years to maturity	4 years 8 months 12 days
Secured Debt | Fixed Rate Debt
Secured debt instruments
Principal outstanding	$ 505,193	506,646
Interest rate at end of the period	3.85%
Long-term Debt	$ 505,193
Number of Communities Encumbered | community	8
Deferred finance costs, net	$ (1,275)	(1,343)
Secured Debt | Fixed Rate Debt | Weighted Average
Secured debt instruments
Years to maturity	4 years 9 months 18 days
Secured Debt | Variable Rate Debt
Secured debt instruments
Principal outstanding	$ 94,603	94,581
Interest rate at end of the period	2.31%
Long-term Debt	$ 94,603
Number of Communities Encumbered | community	2
Deferred finance costs, net	$ (97)	(119)
Secured Debt | Variable Rate Debt | Weighted Average
Secured debt instruments
Years to maturity	3 years 10 months 24 days
Unsecured Revolving credit facility due 2023 | Weighted Average
Secured debt instruments
Years to maturity	3 years 9 months 18 days
Unsecured Working Capital Credit Facility due January 2021
Secured debt instruments
Interest rate at end of the period	3.32%
Borrowings outstanding	$ 54,310	16
Unsecured Working Capital Credit Facility due January 2021 | Weighted Average
Secured debt instruments
Years to maturity	1 year 9 months 18 days
Term Loan due September 2023
Secured debt instruments
Interest rate at end of the period	3.39%
Senior Notes	$ 35,000	35,000
Term Loan due September 2023 | Weighted Average
Secured debt instruments
Years to maturity	4 years 6 months
3.70% Term Notes Due October 2020
Secured debt instruments
Unamortized discount		14
Interest rate at end of the period	3.70%
Senior Notes	$ 299,988	299,986
3.70% Term Notes Due October 2020 | Weighted Average
Secured debt instruments
Years to maturity	1 year 6 months
4.63% Medium-Term Notes due January 2022
Secured debt instruments
Unamortized discount		1,087
Interest rate at end of the period	4.63%
Senior Notes	$ 399,003	398,913
4.63% Medium-Term Notes due January 2022 | Weighted Average
Secured debt instruments
Years to maturity	2 years 9 months 18 days
1.93% Term Loan due September 2023
Secured debt instruments
Interest rate at end of the period	1.93%
Senior Notes	$ 315,000	315,000
1.93% Term Loan due September 2023 | Weighted Average
Secured debt instruments
Years to maturity	4 years 6 months
3.75% Medium-Term Notes Due July 2024
Secured debt instruments
Unamortized discount		574
Interest rate at end of the period	3.75%
Senior Notes	$ 299,452	299,426
3.75% Medium-Term Notes Due July 2024 | Weighted Average
Secured debt instruments
Years to maturity	5 years 3 months 18 days
8.50% Debentures, Due September 2024
Secured debt instruments
Interest rate at end of the period	8.50%
Senior Notes	$ 15,644	15,644
8.50% Debentures, Due September 2024 | Weighted Average
Secured debt instruments
Years to maturity	5 years 6 months
4.00% Medium-Term Note due October 2025
Secured debt instruments
Unamortized discount		465
Interest rate at end of the period	4.00%
Senior Notes	$ 299,553	299,535
4.00% Medium-Term Note due October 2025 | Weighted Average
Secured debt instruments
Years to maturity	6 years 6 months
2.95% Medium-Term Note due September 2026
Secured debt instruments
Interest rate at end of the period	2.95%
Senior Notes	$ 300,000	300,000
2.95% Medium-Term Note due September 2026 | Weighted Average
Secured debt instruments
Years to maturity	7 years 4 months 24 days
3.50 Medium-Term Note due July 2027
Secured debt instruments
Unamortized discount		600
Interest rate at end of the period	3.50%
Senior Notes	$ 299,418	299,400
3.50 Medium-Term Note due July 2027 | Weighted Average
Secured debt instruments
Years to maturity	8 years 3 months 18 days
3.50% Medium-Term Notes Due January 2028
Secured debt instruments
Unamortized discount		1,072
Interest rate at end of the period	3.50%
Senior Notes	$ 298,957	298,928
3.50% Medium-Term Notes Due January 2028 | Weighted Average
Secured debt instruments
Years to maturity	8 years 9 months 18 days
4.40% Medium-Term Notes due January 2029
Secured debt instruments
Unamortized discount		6
Interest rate at end of the period	4.40%
Senior Notes	$ 299,994	299,994
4.40% Medium-Term Notes due January 2029 | Weighted Average
Secured debt instruments
Years to maturity	9 years 9 months 18 days
Other
Secured debt instruments
Senior Notes	$ 15	16
Unsecured Debt
Secured debt instruments
Interest rate at end of the period	3.65%
Long-term Debt	$ 2,990,033
Unsecured Debt	2,990,033	2,946,560
Deferred finance costs, net	$ (16,301)	(16,413)
Unsecured Debt | Weighted Average
Secured debt instruments
Years to maturity	5 years 8 months 12 days
United Dominion Reality L.P.
Secured debt instruments
Principal outstanding	$ 26,931	26,929
Interest rate at end of the period	2.50%
Number of Communities Encumbered | community	1
United Dominion Reality L.P. | Weighted Average
Secured debt instruments
Years to maturity	13 years
United Dominion Reality L.P. | Variable Rate Debt
Secured debt instruments
Deferred finance costs, net	$ (69)	(71)
United Dominion Reality L.P. | Tax-exempt secured notes payable | Variable Rate Debt
Secured debt instruments
Principal outstanding	$ 27,000	$ 27,000
Interest rate at end of the period	2.47%
Number of Communities Encumbered | community	1
United Dominion Reality L.P. | Tax-exempt secured notes payable | Variable Rate Debt | Weighted Average
Secured debt instruments
Years to maturity	13 years

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SECURED AND UNSECURED DEBT, NET - Variable Rate Debt (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Credit facilities
Unamortized net premium	$ 4,400		$ 5,000
Payments on secured debt	962	$ 1,172
Secured credit facilities
Borrowings outstanding at end of period	3,300		3,300
Fannie Mae
Secured credit facilities
Borrowings outstanding at end of period	90,000		90,000
Weighted average daily borrowings during the period ended	90,000		253,813
Maximum daily borrowings during the period ended	$ 90,000		$ 314,869
Weighted average interest rate during the period ended	4.00%		4.70%
Interest rate at the end of the period	4.00%		4.00%

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SECURED AND UNSECURED DEBT, NET - Credit Facilities (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Summary of short-term bank borrowings under unsecured commercial bank credit facility
Borrowings outstanding at end of period	$ 3,300	$ 3,300
Unsecured Commercial Bank Credit Facility
Summary of short-term bank borrowings under unsecured commercial bank credit facility
Total revolving credit facility	2,000,000
Unsecured Revolving credit facility due 2023 | Unsecured Commercial Bank Credit Facility
Summary of short-term bank borrowings under unsecured commercial bank credit facility
Total revolving credit facility	1,100,000
Term Loan due September 2023 | Unsecured Commercial Bank Credit Facility
Summary of short-term bank borrowings under unsecured commercial bank credit facility
Total revolving credit facility	350,000
Revolving Credit Facility | Unsecured Commercial Bank Credit Facility
Summary of short-term bank borrowings under unsecured commercial bank credit facility
Total revolving credit facility	1,100,000	1,100,000
Unsecured Working Capital Credit Facility due January 2021
Summary of short-term bank borrowings under unsecured commercial bank credit facility
Total revolving credit facility	75,000	75,000
Borrowings outstanding at end of period	54,310	16
Weighted average daily borrowings during the period ended	22,967	26,101
Maximum daily borrowings during the period ended	$ 66,170	$ 64,633
Weighted average interest rate during the period ended	3.30%	2.90%
Interest rate at the end of the period	3.30%	3.30%
Unsecured Commercial Paper | United Dominion Reality L.P.
Summary of short-term bank borrowings under unsecured commercial bank credit facility
Borrowings outstanding at end of period	$ 90,000	$ 101,100

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SECURED AND UNSECURED DEBT, NET - Short Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Commercial Paper
Unsecured Debt
Total unsecured commercial paper program	$ 500,000	$ 500,000
Borrowings outstanding at end of period	90,000	101,115
Weighted average daily borrowings during the period ended	149,365	344,235
Maximum daily borrowings during the period ended	$ 330,000	$ 440,000
Weighted average interest rate during the period ended	2.80%	2.40%
Interest rate at the end of the period	2.80%	2.90%
4.00% Medium-Term Note due October 2025
Unsecured Debt
Weighted average interest rate during the period ended	4.53%

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SECURED AND UNSECURED DEBT, NET - Unsecured Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Aggregate maturities of unsecured debt
2019	$ 160,560
2020	498,076
2021	55,427
2022	401,157
2023	391,245
2024	315,644
2025	427,600
2026	350,000
2027	300,000
2028	380,000
Thereafter	327,000
Subtotal	3,606,709
Non-cash (a)	(16,880)
Long-term Debt, Total	3,589,829	$ 3,547,787
Secured Debt
Aggregate maturities of unsecured debt
2019	70,560
2020	198,076
2021	1,117
2022	1,157
2023	41,245
2025	127,600
2026	50,000
2028	80,000
Thereafter	27,000
Subtotal	596,755
Non-cash (a)	3,041
Long-term Debt, Total	599,796
Unsecured Debt
Aggregate maturities of unsecured debt
2019	90,000
2020	300,000
2021	54,310
2022	400,000
2023	350,000
2024	315,644
2025	300,000
2026	300,000
2027	300,000
2028	300,000
Thereafter	300,000
Subtotal	3,009,954
Non-cash (a)	(19,921)
Long-term Debt, Total	2,990,033
Fixed Rate Debt | Secured Debt
Aggregate maturities of unsecured debt
2019	2,860
2020	198,076
2021	1,117
2022	1,157
2023	41,245
2025	127,600
2026	50,000
2028	80,000
Subtotal	502,055
Non-cash (a)	3,138
Long-term Debt, Total	505,193
Variable Rate Debt | Secured Debt
Aggregate maturities of unsecured debt
2019	67,700
Thereafter	27,000
Subtotal	94,700
Non-cash (a)	(97)
Long-term Debt, Total	$ 94,603

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SECURED AND UNSECURED DEBT, NET - Debt Covenants (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) loan	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Fixed and variable rate debt
Amortization of financing costs	$ 1,000	$ 1,000
Secured Debt
Secured debt amount which encumbers real estate owned based upon book value	$ 1,300,000
Percentage of secured debt which encumbers real estate owned based upon book value	12.20%
Secured debt amount of real estate owned which is unencumbered	$ 9,400,000
Percentage of secured debt of real estate owned which is unencumbered	87.80%
Long-term commercial paper	$ 500,000
Secured Debt	599,796		$ 601,227
Commercial Paper
Secured Debt
Commercial paper program	$ 90,000		101,115
Unsecured Debt
Secured Debt
Credit facility interest rate	90
Basis points added to to variable rate	90.00%
Unsecured Debt | Maximum
Secured Debt
Basis points added to to variable rate	165.00%
Unsecured Debt | Minimum
Secured Debt
Basis points added to to variable rate	80.00%
Unsecured Working Capital Credit Facility due January 2021
Secured Debt
Credit facilities with aggregate commitment	$ 75,000		75,000
Credit facility interest rate	82.5
Unsecured Working Capital Credit Facility due January 2021 | Maximum
Secured Debt
Basis points added to to variable rate	145.00%
Unsecured Working Capital Credit Facility due January 2021 | Minimum
Secured Debt
Basis points added to to variable rate	75.00%
3.75% Medium-Term Notes Due July 2024
Secured Debt
Portion of medium term note subject to interest rate swaps	$ 100,000
Long-term Debt, Weighted Average Interest Rate	3.69%
Senior Notes	$ 299,452		299,426
Debt Assumed As Part of Acquisition
Secured Debt
Amortization of Debt Discount (Premium)	$ 600	$ 700
Tax-exempt secured notes payable | Fixed Rate Debt
Secured Debt
Debt Instrument, Maturity Date Range, Start	Aug. 01, 2019
Debt instrument, maturity date range, end	Mar. 01, 2032
Fannie Mae credit facilities | Fixed Rate Debt
Secured Debt
Debt instrument, maturity date range, end	Jul. 01, 2020
Tax-exempt secured notes payable | Variable Rate Debt | Maximum
Secured Debt
Notes payable maximum interest rates range	2.47%
Tax-exempt secured notes payable | Variable Rate Debt | Minimum
Secured Debt
Notes payable maximum interest rates range	2.25%
Revolving Credit Facility
Secured Debt
Basis points added to to variable rate	82.50%
Commitment fee	15.00%
Revolving Credit Facility | Maximum
Secured Debt
Basis points added to to variable rate	145.00%
Commitment fee	30.00%
Revolving Credit Facility | Minimum
Secured Debt
Basis points added to to variable rate	75.00%
Commitment fee	10.00%
4.00% Medium-Term Note due October 2025
Secured Debt
Portion of medium term note subject to interest rate swaps	$ 200,000
Senior Notes	299,553		299,535
4.40% Medium-Term Notes due January 2029
Secured Debt
Portion of medium term note subject to interest rate swaps	$ 150,000
Long-term Debt, Weighted Average Interest Rate	4.27%
Senior Notes	$ 299,994		299,994
2.95% Medium-Term Note due September 2026
Secured Debt
Senior Notes	300,000		300,000
Unsecured Commercial Bank Credit Facility
Secured Debt
Credit facilities with aggregate commitment	$ 2,000,000
Unsecured Commercial Bank Credit Facility | Unsecured Debt
Secured Debt
Maturity date	Sep. 30, 2023
Unsecured Commercial Bank Credit Facility | Unsecured Revolving credit facility due 2023
Secured Debt
Credit facilities with aggregate commitment	$ 1,100,000
Number of Extensions of loan | loan	2
Extension period of option on loan	6 months
Unsecured Commercial Bank Credit Facility | Revolving Credit Facility
Secured Debt
Credit facilities with aggregate commitment	$ 1,100,000		1,100,000
Maturity date	Jan. 31, 2023
United Dominion Reality L.P.
Secured Debt
Notes payable maximum interest rates range		3.73%
Secured Debt	$ 26,931		$ 26,929
United Dominion Reality L.P. | Unsecured Commercial Bank Credit Facility
Secured Debt
Long-term commercial paper	$ 500,000
Mortgages Notes Payable | Fixed Rate Debt
Secured Debt
Debt Instrument, Maturity Date Range, Start	Aug. 01, 2020
Debt instrument, maturity date range, end	Sep. 01, 2028
Mortgages Notes Payable | Fixed Rate Debt | Maximum
Secured Debt
Notes payable maximum interest rates range	4.35%
Mortgages Notes Payable | Fixed Rate Debt | Minimum
Secured Debt
Notes payable maximum interest rates range	3.15%

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INCOME/(LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Jul. 31, 2017
Antidilutive securities
Net income/(loss)	$ 26,602	$ 89,225
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	(2,057)	(7,390)
Net (income)/loss attributable to noncontrolling interests	(42)	(79)
Net income/(loss) attributable to UDR, Inc.	24,503	81,756
Distributions to preferred stockholders — Series E (Convertible)	(1,011)	(955)
Net income/(loss) attributable to common stockholders	$ 23,492	$ 80,801
Denominator for earnings per share - basic and diluted:
Weighted average common shares outstanding	277,297,000	267,963,000
Non-vested restricted stock awards	(295,000)	(417,000)
Denominator for basic income/(loss) per share	277,002,000	267,546,000
Incremental shares issuable from assumed conversion of stock options, unvested LTIP Units and unvested restricted stock	555,000	1,662,000
Denominator for diluted income/(loss) per share	277,557,000	269,208,000
Income/(loss) per weighted average common share - basic	$ 0.08	$ 0.30
Income/(loss) per weighted average common share - diluted	$ 0.08	$ 0.30
Number of shares authorized	350,000,000		350,000,000
Aggregate gross proceeds	$ 192,179
Aggregate net proceeds from sales, after deducting related	$ 192,179
OP/DownREIT Units
Antidilutive securities
Antidilutive securities	24,280,000	24,506,000
Convertible preferred stock
Antidilutive securities
Antidilutive securities	3,011,000	3,011,000
Stock options, unvested LTIP Units and unvested restricted stock
Antidilutive securities
Antidilutive securities	555,000	1,662,000
ATM
Denominator for earnings per share - basic and diluted:
Number of shares authorized				20,000,000
Number of shares sold	4,400,000
Aggregate gross proceeds	$ 195,000
Weighted average price per share	$ 44.80
Commissions paid to sales agents	$ 2,800
Aggregate net proceeds from sales, after deducting related	$ 192,200
Shares of common stock available for future issuance	15,600,000

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NONCONTROLLING INTERESTS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Redeemable noncontrolling interests in the Operating Partnership
Minimum holding period prior to redemption (in years)	1 year
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, beginning of year	$ 972,740
Mark-to-market adjustment to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	144,197	$ (68,217)
Conversion of OP Units/DownREIT Units to Common Stock	(72,846)
Net income/(loss) attributable o redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	2,057	7,390
Distributions to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	(8,733)
Vesting of Long-Term Incentive Plan Units	14,335
Allocation of other comprehensive income/(loss)	(252)
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership, end of year	1,051,498
Net income/(loss) attributable to noncontrolling interests	30	70
Maximum
Redeemable noncontrolling interests in the Operating Partnership
Net income/(loss) attributable to noncontrolling interests	$ (100)	$ (100)
LTIP Units | Minimum
Redeemable noncontrolling interests in the Operating Partnership
Vesting period	1 year
LTIP Units | Maximum
Redeemable noncontrolling interests in the Operating Partnership
Vesting period	3 years

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FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value
Notes receivable, net	$ 36,974	$ 42,259
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Gross Amounts of Recognized Assets	3,315	4,757
Gross Amounts of Recognized Liabilities	2,285	356
Unsecured debt instruments
Redeemable Noncontrolling Interest, Equity, Carrying Amount	1,051,498	972,740
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	1,051,498	972,740
Carrying Amount | Fair Value, Measurements, Recurring
Fair Value
Notes receivable, net	36,974	42,259
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Total assets	40,289	47,016
Unsecured debt instruments
Total liabilities	3,609,787	3,566,018
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	1,051,498	972,740
Carrying Amount | Interest rate contracts | Fair Value, Measurements, Recurring
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Derivative Asset Designated as Hedging Instrument, Fair Value	3,315	4,757
Derivatives - Interest rate contracts (b)	2,285	356
Carrying Amount | Commercial bank | Fair Value, Measurements, Recurring
Unsecured debt instruments
Unsecured debt instruments	54,310	16
Commercial paper program	90,000	101,115
Carrying Amount | Senior Unsecured Notes | Fair Value, Measurements, Recurring
Unsecured debt instruments
Unsecured debt instruments	2,862,024	2,861,842
Fair Value | Fair Value, Measurements, Recurring
Fair Value
Notes receivable, net	40,329	45,026
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Total assets	43,644	49,783
Unsecured debt instruments
Total liabilities	3,652,379	3,532,104
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	1,051,498	972,740
Fair Value | Interest rate contracts | Fair Value, Measurements, Recurring
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Derivative Asset Designated as Hedging Instrument, Fair Value	3,315	4,757
Derivatives - Interest rate contracts (b)	2,285	356
Fair Value | Commercial bank | Fair Value, Measurements, Recurring
Unsecured debt instruments
Unsecured debt instruments	54,310	16
Commercial paper program	90,000	101,115
Fair Value | Senior Unsecured Notes | Fair Value, Measurements, Recurring
Unsecured debt instruments
Unsecured debt instruments	2,897,215	2,829,390
Fair Value | Level 2 | Fair Value, Measurements, Recurring
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Total assets	3,315	4,757
Unsecured debt instruments
Total liabilities	2,285	356
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	1,051,498	972,740
Fair Value | Level 2 | Interest rate contracts | Fair Value, Measurements, Recurring
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Derivative Asset Designated as Hedging Instrument, Fair Value	3,315	4,757
Derivatives - Interest rate contracts (b)	2,285	356
Fair Value | Level 3 | Fair Value, Measurements, Recurring
Fair Value
Notes receivable, net	40,329	45,026
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Total assets	40,329	45,026
Unsecured debt instruments
Total liabilities	3,650,094	3,531,748
Fair Value | Level 3 | Commercial bank | Fair Value, Measurements, Recurring
Unsecured debt instruments
Unsecured debt instruments	54,310	16
Commercial paper program	90,000	101,115
Fair Value | Level 3 | Senior Unsecured Notes | Fair Value, Measurements, Recurring
Unsecured debt instruments
Unsecured debt instruments	2,897,215	2,829,390
Tax-exempt secured notes payable | Variable Rate Debt
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Secured debt including debt on real estate held for sale	94,700	94,700
Tax-exempt secured notes payable | Variable Rate Debt | Carrying Amount | Tax-exempt secured notes payable | Fair Value, Measurements, Recurring
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Secured debt including debt on real estate held for sale	94,700	94,700
Tax-exempt secured notes payable | Variable Rate Debt | Fair Value | Tax-exempt secured notes payable | Fair Value, Measurements, Recurring
Debt instruments - fair value
Fair value	94,700	94,700
Tax-exempt secured notes payable | Variable Rate Debt | Fair Value | Level 3 | Tax-exempt secured notes payable | Fair Value, Measurements, Recurring
Debt instruments - fair value
Fair value	94,700	94,700
Fannie Mae credit facilities | Fixed Rate Debt
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Secured debt including debt on real estate held for sale	90,000	90,000
Fannie Mae credit facilities | Fixed Rate Debt | Carrying Amount | Fannie Mae credit facilities | Fair Value, Measurements, Recurring
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Secured debt including debt on real estate held for sale	90,000	90,000
Fannie Mae credit facilities | Fixed Rate Debt | Fair Value | Fannie Mae credit facilities | Fair Value, Measurements, Recurring
Debt instruments - fair value
Fair value	90,540	90,213
Fannie Mae credit facilities | Fixed Rate Debt | Fair Value | Level 3 | Fannie Mae credit facilities | Fair Value, Measurements, Recurring
Debt instruments - fair value
Fair value	90,540	90,213
Mortgages Notes Payable | Fixed Rate Debt
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Secured debt including debt on real estate held for sale	416,468	417,989
Mortgages Notes Payable | Fixed Rate Debt | Carrying Amount | Mortgages Notes Payable | Fair Value, Measurements, Recurring
Estimated fair values of the financial instruments either recorded or disclosed on a recurring basis
Secured debt including debt on real estate held for sale	416,468	417,989
Mortgages Notes Payable | Fixed Rate Debt | Fair Value | Mortgages Notes Payable | Fair Value, Measurements, Recurring
Debt instruments - fair value
Fair value	423,329	416,314
Mortgages Notes Payable | Fixed Rate Debt | Fair Value | Level 3 | Mortgages Notes Payable | Fair Value, Measurements, Recurring
Debt instruments - fair value
Fair value	$ 423,329	$ 416,314

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DERIVATIVES AND HEDGING ACTIVITY - Interest Rate Derivatives (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) instrument	Mar. 31, 2018 USD ($)
Derivatives
Unrealized holding gain/(loss)	$ (2,210)	$ 1,710
Unsecured Commercial Bank Credit Facility
Derivatives
Total revolving credit facility	$ 2,000,000
Designated as Hedging Instrument | Interest rate swaps
Derivatives
Number of Interest Rate Derivatives Held | instrument	4
Notional	$ 315,000
Designated as Hedging Instrument | Interest rate swaps subsequently terminated and settled
Derivatives
Number of Interest Rate Derivatives Held | instrument	2
Notional	$ 75,000
Designated as Hedging Instrument | Interest rate caps
Derivatives
Number of Interest Rate Derivatives Held | instrument	1
Notional	$ 65,197
Not Designated as Hedging Instrument | Interest rate caps
Derivatives
Number of Interest Rate Derivatives Held | instrument	1
Notional	$ 19,880

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DERIVATIVES AND HEDGING ACTIVITY - Undesignated Interest Rate Derivatives (Details) - Interest rate contracts - Designated as Hedging Instrument - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Other assets
Fair value of Company's derivative financial instruments and their classification on Consolidated Balance Sheet
Derivative Asset Designated as Hedging Instrument, Fair Value	$ 3,315	$ 4,757
Other liabilities
Fair value of Company's derivative financial instruments and their classification on Consolidated Balance Sheet
Derivative Liability Designated as Hedging Instrument, Fair Value	$ 2,285	$ 356

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DERIVATIVES AND HEDGING ACTIVITY - Fair Value (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Effect of derivative instruments on the Consolidated Statements of Operations
Unrealized holding gain/(loss)	$ (2,210)	$ 1,710
Interest rate contracts | Interest expense | Cash Flow Hedging
Effect of derivative instruments on the Consolidated Statements of Operations
Unrealized holding gain/(loss)	(2,210)	1,710
Gain/(Loss) reclassified from Accumulated OCI in Interest Expense	945	172
Interest rate contracts | Other income/(expense)
Effect of derivative instruments on the Consolidated Statements of Operations
Gain/(Loss) recognized in Interest Income and Other Income/(Expense), net	$ 0
Interest rate contracts | Other income/(expense) | Maximum
Effect of derivative instruments on the Consolidated Statements of Operations
Gain/(Loss) recognized in Interest Income and Other Income/(Expense), net		$ (100)

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DERIVATIVES AND HEDGING ACTIVITY - Effectiveness (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Derivatives and hedging activity
Estimated additional accumulated other comprehensive Income/(Loss) transferred to interest expense	$ 3,200
Total amount of Interest expense presented on the Consolidated Statements of Operations	33,542	$ 29,943
Payment required to pay for contract termination	1,400
Interest rate swaps | Designated as Hedging Instrument
Fair value
Notional	$ 315,000

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DERIVATIVES AND HEDGING ACTIVITY - Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Offsetting derivative assets
Net Amounts of Assets Presented in the Consolidated Balance Sheets (a)	$ 3,315	$ 4,757
Net Amount	3,315	4,757
Offsetting derivative liabilities
Gross Amounts of Recognized Liabilities	2,285	356
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets (b)	2,285	356
Net Amount	$ 2,285	$ 356

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STOCK BASED COMPENSATION (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock based compensation
Stock based compensation expense	$ 4.2	$ 3.5

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COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) community	Mar. 31, 2018 USD ($)
Real estate properties
Development costs and capital expenditures incurred but not yet paid	$ 10,745	$ 39,749
Number of communities owned (in communities) | community	131
Costs Incurred to Date	$ 35,707
UDR's Remaining Commitment	114,903
Investment in unconsolidated joint ventures	$ 21,389	$ 19,736
Wholly owned — redevelopment
Real estate properties
Number of communities owned (in communities) | community	2
Costs Incurred to Date	$ 245
UDR's Remaining Commitment	$ 35,255
Unconsolidated joint ventures -development
Real estate properties
Number of communities owned (in communities) | community	1
Costs Incurred to Date	$ 5,471
UDR's Remaining Commitment	$ 26,530
Preferred Equity Investments
Real estate properties
Number of communities owned (in communities) | community	2
Costs Incurred to Date	$ 25,711
UDR's Remaining Commitment	39,618
Other investments
Real estate properties
Costs Incurred to Date	4,280
UDR's Remaining Commitment	$ 13,500
Apartment homes in King of Prussia, Pennsylvania
Real estate properties
Number of communities owned (in communities) | community	313
Contractual purchase price commitment	$ 108,500
Deposit	$ 5,400

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REPORTABLE SEGMENTS (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) segment item	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Segments
Same store communities | item	37,959
Reportable Segments
Number of reportable segments | segment	2
Condition for Community considered to have stabilized occupancy	90%
Time to maintain percent occupancy to be considered a community	3 months
Practical expedient, single lease component	true
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Rental income	$ 267,922	$ 250,483
Reconciling items:
Joint venture management and other fees	$ 2,751	$ 2,822
Type of revenue	udr:ManagementAndOtherFeesMember	udr:ManagementAndOtherFeesMember
Property management	$ (7,703)	$ (6,888)
Other operating expenses	(5,646)	(2,009)
Real estate depreciation and amortization	(112,468)	(108,136)
General and administrative	(12,467)	(11,759)
Casualty-related (charges)/recoveries, net		(940)
Other depreciation and amortization	(1,656)	(1,691)
Gain/(loss) on sale of real estate owned		70,300
Income/(loss) from unconsolidated entities	49	(1,677)
Interest expense	(33,542)	(29,943)
Interest and other income/(expense), net	9,813	2,759
Tax (provision)/benefit, net	(2,212)	(227)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership	(2,057)	(7,390)
Net (income)/loss attributable to noncontrolling interests	(42)	(79)
Net income/(loss) attributable to UDR, Inc.	24,503	81,756
Reportable apartment home segment assets:
Total segment assets	10,680,555		$ 10,196,159
Accumulated depreciation	(3,764,099)		(3,654,160)
Total real estate owned, net of accumulated depreciation	6,916,456		6,541,999
Reconciling items:
Cash and cash equivalents	1,043	1,083	185,216	$ 2,038
Restricted cash	23,111	19,770	23,675	19,792
Notes receivable, net	36,974		42,259
Investment in and advances to unconsolidated joint ventures, net	749,100		780,869
Operating lease right-of-use assets	94,145
Other assets	134,896		137,710
Total consolidated assets	7,955,725		7,711,728
Same Store Communities West Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	100,565	96,665
Other revenue	3,154	2,738
Rental income	103,719	99,403
Reportable apartment home segment NOI	78,439	74,979
Reportable apartment home segment assets:
Total segment assets	3,773,413		3,763,366
Same Store Communities Mid-Atlantic Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	54,300	52,694
Other revenue	2,003	1,736
Rental income	56,303	54,430
Reportable apartment home segment NOI	39,179	37,506
Reportable apartment home segment assets:
Total segment assets	2,323,591		2,317,369
Same Store Communities Southeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	29,532	28,339
Other revenue	1,788	1,697
Rental income	31,320	30,036
Reportable apartment home segment NOI	22,010	21,047
Reportable apartment home segment assets:
Total segment assets	786,575		779,310
Same Store Communities Northeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	30,192	29,585
Other revenue	630	581
Rental income	30,822	30,166
Reportable apartment home segment NOI	20,977	20,951
Reportable apartment home segment assets:
Total segment assets	1,494,009		1,491,994
Same Store Communities Southwest Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	14,152	13,821
Other revenue	733	569
Rental income	14,885	14,390
Reportable apartment home segment NOI	8,992	8,477
Reportable apartment home segment assets:
Total segment assets	448,299		447,305
Non-Mature communities/Other
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	30,162	21,393
Other revenue	711	665
Rental income	30,873	22,058
Reportable apartment home segment NOI	20,086	13,654
Reportable apartment home segment assets:
Total segment assets	1,854,668		1,396,815
Total Communities
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	258,903	242,497
Other revenue	9,019	7,986
Rental income	267,922	250,483
Reportable apartment home segment NOI	$ 189,683	176,614
United Dominion Reality L.P.
Segments
Same store communities | item	15,723
Reportable Segments
Number of reportable segments | segment	2
Condition for Community considered to have stabilized occupancy	90%
Time to maintain percent occupancy to be considered a community	3 months
Practical expedient, single lease component	true
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Rental income	$ 108,334	106,592
Reconciling items:
Property management	(2,979)	(2,931)
Other operating expenses	(2,400)	(1,554)
Real estate depreciation and amortization	(34,654)	(37,565)
General and administrative	(4,661)	(4,309)
Casualty-related (charges)/recoveries, net		(342)
Gain/(loss) on sale of real estate owned		70,300
Income/(loss) from unconsolidated entities	(2,740)	(5,017)
Interest expense	(7,371)	(5,026)
Net (income)/loss attributable to noncontrolling interests	(388)	(418)
Net income/(loss) attributable to UDR, Inc.	23,946	91,427
Reportable apartment home segment assets:
Total segment assets	3,827,875		3,811,985
Accumulated depreciation	(1,692,702)		(1,658,161)
Total real estate owned, net of accumulated depreciation	2,135,173		2,153,824
Reconciling items:
Cash and cash equivalents	59	74	125	293
Restricted cash	14,010	13,011	13,563	$ 12,579
Investment in and advances to unconsolidated joint ventures, net	95,673		103,026
Operating lease right-of-use assets	93,987
Other assets	24,425		34,052
Total consolidated assets	2,363,327		2,304,590
United Dominion Reality L.P. | Same Store Communities West Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	60,782	58,340
Other revenue	1,994	1,824
Rental income	62,776	60,164
Reportable apartment home segment NOI	47,798	45,829
Reportable apartment home segment assets:
Total segment assets	1,988,360		1,981,007
United Dominion Reality L.P. | Same Store Communities Mid-Atlantic Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	14,810	14,532
Other revenue	535	495
Rental income	15,345	15,027
Reportable apartment home segment NOI	10,524	10,393
Reportable apartment home segment assets:
Total segment assets	664,103		663,083
United Dominion Reality L.P. | Same Store Communities Southeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	12,462	11,979
Other revenue	776	750
Rental income	13,238	12,729
Reportable apartment home segment NOI	9,257	8,792
Reportable apartment home segment assets:
Total segment assets	343,520		340,722
United Dominion Reality L.P. | Same Store Communities Northeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	7,972	7,848
Other revenue	166	166
Rental income	8,138	8,014
Reportable apartment home segment NOI	6,205	6,216
Reportable apartment home segment assets:
Total segment assets	406,759		406,149
United Dominion Reality L.P. | Non-Mature communities/Other
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	8,650	10,470
Other revenue	187	188
Rental income	8,837	10,658
Reportable apartment home segment NOI	5,355	7,059
Reportable apartment home segment assets:
Total segment assets	425,133		$ 421,024
United Dominion Reality L.P. | Total Communities
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	104,676	103,169
Other revenue	3,658	3,423
Rental income	108,334	106,592
Reportable apartment home segment NOI	$ 79,139	$ 78,289
Taxable REIT Subsidiaries
Reportable Segments
Management fee (as a percent)	2.875%

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CONSOLIDATED BALANCE SHEETS (UNITED DOMINION REALTY, L.P.) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Real estate owned:
Real estate held for investment	$ 10,680,555	$ 10,196,159
Less: accumulated depreciation	(3,764,099)	(3,654,160)
Total real estate owned, net of accumulated depreciation	6,916,456	6,541,999
Cash and cash equivalents	1,043	185,216
Restricted cash	23,111	23,675
Investment in unconsolidated entities	749,100	780,869
Operating lease right-of-use assets	94,145
Other assets	134,896	137,710
Total assets	7,955,725	7,711,728
LIABILITIES AND CAPITAL
Secured debt, net	599,796	601,227
Operating lease liabilities	88,218
Real estate taxes payable	27,205	20,608
Accrued interest payable	29,397	38,747
Security deposits and prepaid rent	36,332	35,060
Distributions payable	105,548	97,666
Accounts payable, accrued expenses, and other liabilities	65,334	76,343
Total liabilities	3,941,863	3,816,211
Commitments and contingencies (Note 11)
Partners’ capital:
Total liabilities and equity	7,955,725	7,711,728
United Dominion Reality L.P.
Real estate owned:
Real estate held for investment	3,827,875	3,811,985
Less: accumulated depreciation	(1,692,702)	(1,658,161)
Total real estate owned, net of accumulated depreciation	2,135,173	2,153,824
Cash and cash equivalents	59	125
Restricted cash	14,010	13,563
Investment in unconsolidated entities	95,673	103,026
Operating lease right-of-use assets	93,987
Other assets	24,425	34,052
Total assets	2,363,327	2,304,590
LIABILITIES AND CAPITAL
Secured debt, net	26,931	26,929
Notes payable due to the General Partner	690,974	700,115
Operating lease liabilities	88,061
Real estate taxes payable	8,593	2,699
Accrued interest payable	33	32
Security deposits and prepaid rent	14,978	15,250
Distributions payable	63,451	59,461
Accounts payable, accrued expenses, and other liabilities	13,520	14,215
Total liabilities	906,541	818,701
Commitments and contingencies (Note 11)
Partners’ capital:
General partner: 110,883 OP Units outstanding at March 31, 2019 and December 31, 2018	926	950
Limited partners: 183,942,239 and 183,525,660 OP Units outstanding at March 31, 2019 and December 31, 2018, respectively	1,441,653	1,471,120
Total partners’ capital	1,442,579	1,472,070
Noncontrolling interests	14,207	13,819
Total capital	1,456,786	1,485,889
Total liabilities and equity	$ 2,363,327	$ 2,304,590

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CONSOLIDATED BALANCE SHEETS (UNITED DOMINION REALTY, L.P.) (Parenthetical) - shares	Mar. 31, 2019	Dec. 31, 2018
Partners’ capital:
Operating Partnership units outstanding related to limited partner	184,053,122	183,636,543
United Dominion Reality L.P.
Partners’ capital:
OP units outstanding related to general partner	110,883	110,883
Operating Partnership units outstanding related to limited partner	183,942,239	183,525,660

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNITED DOMINION REALTY, L.P.) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
REVENUES:
Rental income	$ 267,922	$ 250,483
OPERATING EXPENSES:
Property operating and maintenance	41,939	40,587
Real estate taxes and insurance	36,300	33,282
Property management	7,703	6,888
Other operating expenses	5,646	2,009
Real estate depreciation and amortization	112,468	108,136
General and administrative	12,467	11,759
Casualty-related charges/(recoveries), net		940
Total operating expenses	218,179	205,292
Gain/(loss) on sale of real estate owned		70,300
Operating income	52,494	118,313
Income/(loss) from unconsolidated entities	49	(1,677)
Interest expense	(33,542)	(29,943)
Net income/(loss)	26,602	89,225
United Dominion Reality L.P.
REVENUES:
Rental income	108,334	106,592
OPERATING EXPENSES:
Property operating and maintenance	16,531	16,618
Real estate taxes and insurance	12,664	11,685
Property management	2,979	2,931
Other operating expenses	2,400	1,554
Real estate depreciation and amortization	34,654	37,565
General and administrative	4,661	4,309
Casualty-related charges/(recoveries), net		342
Total operating expenses	73,889	75,004
Gain/(loss) on sale of real estate owned		70,300
Operating income	34,445	101,888
Income/(loss) from unconsolidated entities	(2,740)	(5,017)
Interest expense	(190)	(1,973)
Interest expense on notes payable due to the General Partner	(7,181)	(3,053)
Net income/(loss)	24,334	91,845
Net (income)/loss attributable to noncontrolling interests	(388)	(418)
Net income/(loss) attributable to OP unitholders	$ 23,946	$ 91,427
Income/(loss) per OP unit- basic and diluted:
Net income/(loss) per weighted average OP Unit - basic and diluted	$ 0.13	$ 0.50
Weighted average OP Units outstanding - basic and diluted	183,949	183,523

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CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (UNITED DOMINION REALTY, L.P.) (Unaudited). - United Dominion Reality L.P. - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Beginning Balance	$ 1,485,889	$ 1,875,130
Net income/(loss)	24,334	91,845
Distributions	(63,469)	(59,459)
Long Term Incentive Plan Unit grants	10,032	7,109
Net change in advances (to)/from the General Partner		(107,097)
Ending Balance	1,456,786	1,807,528
Advances (to)/from General Partner
Beginning Balance		397,899
Net change in advances (to)/from the General Partner		(107,097)
Ending Balance		290,802
Total Partner's Capital
Beginning Balance	1,472,070	1,464,295
Net income/(loss)	23,946	91,427
Distributions	(63,469)	(59,459)
Long Term Incentive Plan Unit grants	10,032	7,109
Ending Balance	1,442,579	1,503,372
Noncontrolling Interests
Beginning Balance	13,819	12,936
Net income/(loss)	388	418
Ending Balance	14,207	13,354
Class A Limited Partner
Beginning Balance	69,401	67,474
Net income/(loss)	228	887
Distributions	(599)	(582)
Adjustment to reflect limited partners’ capital at redemption value	10,601	(5,384)
Ending Balance	79,631	62,395
Limited Partners and LTIP Units
Beginning Balance	302,545	283,568
Net income/(loss)	812	4,014
Distributions	(2,570)	(2,684)
OP Unit redemptions for common shares of UDR	(71,673)	(320)
Adjustment to reflect limited partners’ capital at redemption value	44,716	(19,590)
Long Term Incentive Plan Unit grants	10,032	7,109
Ending Balance	283,862	272,097
Limited Partner
Beginning Balance	1,099,174	1,112,298
Net income/(loss)	22,892	86,471
Distributions	(60,262)	(56,157)
OP Unit redemptions for common shares of UDR	71,673	320
Adjustment to reflect limited partners’ capital at redemption value	(55,317)	24,974
Ending Balance	1,078,160	1,167,906
General Partner
Beginning Balance	950	955
Net income/(loss)	14	55
Distributions	(38)	(36)
Ending Balance	$ 926	$ 974

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNITED DOMINION REALTY, L.P.) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating Activities
Net income/(loss)	$ 26,602	$ 89,225
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization	114,124	109,827
(Gain)/loss on sale of real estate owned		(70,300)
(Income)/loss from unconsolidated entities	(49)	1,677
Other	3,910	1,745
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets	2,295	3,560
Increase/(decrease) in operating liabilities	(17,463)	(7,660)
Net cash provided by/(used in) operating activities	137,333	132,256
Investing Activities
Proceeds from sales of real estate investments, net		89,433
Capital expenditures and other major improvements — real estate assets	(31,264)	(14,765)
Distributions received from unconsolidated entities	10,797	5,633
Net cash provided by/(used in) investing activities	(459,749)	(24,586)
Financing Activities
Other	1,706	(6,471)
Net cash provided by/(used in) financing activities	137,679	(108,647)
Net increase/(decrease) in cash, cash equivalents, and restricted cash	(184,737)	(977)
Cash, cash equivalents, and restricted cash, beginning of year	208,891	21,830
Cash, cash equivalents, and restricted cash, end of period	24,154	20,853
Supplemental Information:
Interest paid during the period, net of amounts capitalized	44,271	35,155
Non-cash transactions:
Development costs and capital expenditures incurred but not yet paid	10,745	39,749
Recognition of operating lease right-of-use assets	94,349
Recognition of operating lease liabilities	88,336
Distributions declared but not yet paid	105,548	95,122
United Dominion Reality L.P.
Operating Activities
Net income/(loss)	24,334	91,845
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization	34,654	37,565
(Gain)/loss on sale of real estate owned		(70,300)
(Income)/loss from unconsolidated entities	2,740	5,017
Other	1,364	1,091
Changes in operating assets and liabilities:
(Increase)/decrease in operating assets	2,529	2,091
Increase/(decrease) in operating liabilities	3,006	3,540
Net cash provided by/(used in) operating activities	68,627	70,849
Investing Activities
Proceeds from sales of real estate investments, net		89,433
Capital expenditures and other major improvements — real estate assets	(14,271)	(7,402)
Distributions received from unconsolidated entities	4,613	4,344
Net cash provided by/(used in) investing activities	(9,658)	86,375
Financing Activities
Advances (to)/from the General Partner, net		(154,101)
Issuance/(repayment) of notes payable to the General Partner	(55,599)
Distributions paid to partnership unitholders	(2,989)	(2,910)
Net cash provided by/(used in) financing activities	(58,588)	(157,011)
Net increase/(decrease) in cash, cash equivalents, and restricted cash	381	213
Cash, cash equivalents, and restricted cash, beginning of year	13,688	12,872
Cash, cash equivalents, and restricted cash, end of period	14,069	13,085
Supplemental Information:
Interest paid during the period, net of amounts capitalized	5,031	3,368
Non-cash transactions:
Development costs and capital expenditures incurred but not yet paid	3,676	1,903
Recognition of operating lease right-of-use assets	94,174
Recognition of operating lease liabilities	88,161
LTIP Unit grants	10,032	7,109
Distributions declared but not yet paid	$ 63,451	$ 59,461

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CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL (UNITED DOMINION REALTY, L.P.) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
The following reconciles cash, cash equivalents, and restricted cash to the total of the same amounts as shown above:
Cash and cash equivalents	$ 1,043	$ 185,216	$ 1,083	$ 2,038
Restricted cash	23,111	23,675	19,770	19,792
Total cash, cash equivalents, and restricted cash as shown above	24,154	208,891	20,853	21,830
United Dominion Reality L.P.
The following reconciles cash, cash equivalents, and restricted cash to the total of the same amounts as shown above:
Cash and cash equivalents	59	125	74	293
Restricted cash	14,010	13,563	13,011	12,579
Total cash, cash equivalents, and restricted cash as shown above	$ 14,069	$ 13,688	$ 13,085	$ 12,872

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CONSOLIDATION AND BASIS OF PRESENTATION (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

Basis of Presentation

UDR, Inc., collectively with our consolidated subsidiaries (“UDR,” the “Company,” “we,” “our,” or “us”), is a self-administered real estate investment trust, or REIT, that owns, operates, acquires, renovates, develops, redevelops, and manages apartment communities. The accompanying consolidated financial statements include the accounts of UDR and its subsidiaries, including United Dominion Realty, L.P. (the “Operating Partnership” or the “OP”) and UDR Lighthouse DownREIT L.P. (the “DownREIT Partnership”). As of March 31, 2019, there were 184,053,122 units in the Operating Partnership (“OP Units”) outstanding, of which 176,057,247 OP Units, or 95.7%, were owned by UDR and 7,995,875 OP Units, or 4.3%, were owned by outside limited partners. As of March 31, 2019, there were 32,367,380 units in the DownREIT Partnership (“DownREIT Units”) outstanding, of which 17,233,074, or 53.2%, were owned by UDR (including 13,470,651 DownREIT Units, or 41.6%, that were held by the Operating Partnership) and 15,134,306, or 46.8%, were owned by outside limited partners. The consolidated financial statements of UDR include the noncontrolling interests of the unitholders in the Operating Partnership and DownREIT Partnership.

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 note 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. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of our financial position as of March 31, 2019, and results of operations for the three months ended March 31, 2019 and 2018,  have been included. 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 accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 appearing in UDR’s Annual Report on Form 10‑K, filed with the Securities and Exchange Commission on February 19, 2019.

The accompanying interim unaudited consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP 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 interim unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company evaluated subsequent events through the date its financial statements were issued. No significant recognized or non-recognized subsequent events were noted other than those noted in Note 3, Real Estate Owned, Note 5, Joint Ventures and Partnerships and Note 13, Commitments and Contingencies.

United Dominion Reality L.P.

Entity information

BASIS OF PRESENTATION

1. CONSOLIDATION AND BASIS OF PRESENTATION

Basis of Presentation

United Dominion Realty, L.P. (“UDR, L.P.,” the “Operating Partnership,” “we” or “our”) is a Delaware limited partnership, that owns, acquires, renovates, redevelops, manages, and disposes of multifamily apartment communities generally located in high barrier to entry markets located in the United States. The high barrier to entry markets are characterized by limited land for new construction, difficult and lengthy entitlement process, expensive single-family home prices and significant employment growth potential. UDR, L.P. is a subsidiary of UDR, Inc. (“UDR” or the “General Partner”), a self-administered real estate investment trust, or REIT, through which UDR conducts a significant portion of its business. During the three months ended March 31, 2019 and 2018, rental revenues of the Operating Partnership represented 40% and 43%, respectively,  of the General Partner’s consolidated rental revenues. As of March 31, 2019, the Operating Partnership’s apartment portfolio consisted of 52 communities located in 15 markets consisting of 16,434 apartment homes.

Interests in UDR, L.P. are represented by operating partnership units (“OP Units”). The Operating Partnership’s net income is allocated to the partners, which is initially based on their respective distributions made during the year and secondly, their percentage interests. Distributions are made in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of United Dominion Realty, L.P. (the “Operating Partnership Agreement”), on a per unit basis that is generally equal to the dividend per share on UDR’s common stock, which is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “UDR.”

As of March 31, 2019, there were 184,053,122 OP Units outstanding, of which 176,057,247, or 95.7%, were owned by UDR and affiliated entities and 7,995,875, or 4.3%, were owned by non-affiliated limited partners. There were 183,636,543 OP Units outstanding as of December 31, 2018, of which 174,248,699, or 94.9%, were owned by UDR and affiliated entities and 9,387,844, or 5.1%, were owned by non-affiliated limited partners. See Note 10, Capital Structure.

The accompanying interim unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note 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. In the opinion of management, all adjustments and eliminations necessary for the fair presentation of our financial position as of March 31, 2019, and results of operations for the three months ended March 31, 2019 and 2018, have been included. 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 accompanying interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 included in the Annual Report on Form 10‑K filed by UDR and the Operating Partnership with the SEC on February 19, 2019.

The accompanying interim unaudited consolidated statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). GAAP 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 interim unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All intercompany accounts and transactions have been eliminated in consolidation.

The Operating Partnership evaluated subsequent events through the date its financial statements were issued. No significant recognized or non-recognized subsequent events were noted.

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SIGNIFICANT ACCOUNTING POLICIES (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

SIGNIFICANT ACCOUNTING POLICIES

2. SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Company on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Company is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Company on January 1, 2019.

The Company elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Company also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Company recognized right-of-use assets of $94.3 million and lease liabilities of $88.3 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizing the lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.7 million and $140.7 million, respectively, during the remainder of 2019. The Company will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Company also elected.

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the consolidation guidance. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Company generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Company will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Company sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Company will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Company will record a full gain or loss in the period the property is contributed.

To the extent that the Company acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Company will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Company will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Company will not recognize a gain or loss on consolidation of a property.

Notes Receivable

The following table summarizes our Notes receivable, net as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due December 2019 (a)	12.00	%	$	20,000	$	20,000
Note due February 2020 (b)	10.00	%		14,974		14,659
Note due October 2020 (c)	8.00	%		2,000		2,000
Note due August 2022 (d)	10.00	%		—		5,600
Total notes receivable, net			$	36,974	$	42,259

(a) In March 2018, the Company entered into a secured note with an unaffiliated third party with an aggregate commitment of $20.0 million, of which $20.0 million has been funded. Interest payments are due when the loan matures. In March 2019, the note’s maturity was extended to December 27, 2019, and the note is secured by a parcel of land.

(b) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $16.4 million, of which $15.0 million has been funded, including $0.3 million during the three months ended March 31, 2019. Interest payments are due monthly. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $5.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the eighth anniversary of the date of the note (February 2020).

(c) The Company has a secured note with an unaffiliated third party with an aggregate commitment of $2.0 million, of which $2.0 million has been funded. Interest payments are due when the loan matures. The note matures at the earliest of the following: (a) the closing of any private or public capital raising in the amount of $10.0 million or greater; (b) an acquisition; (c) acceleration in the event of default; or (d) the fifth anniversary of the date of the note (October 2020).

(d) In January 2019, the $5.6 million secured note was repaid in full along with the contractually accrued interest of $0.2 million and an additional $8.5 million of promoted interest in conjunction with the unaffiliated third party being acquired.

The Company recognized $1.1 million and $0.6 million of interest income and $8.5 million and zero of promoted interest from notes receivable during the three months ended March 31, 2019 and 2018, respectively, none of which was related party interest. Interest income and promoted interest are included in Interest income and other income/(expense), net on the Consolidated Statements of Operations.

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to stockholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Company’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges, (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) into earnings, and the allocation of other comprehensive income/(loss) to noncontrolling interests. The (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 11, Derivatives and Hedging Activity, for further discussion. The allocation of other comprehensive income/(loss) to redeemable noncontrolling interests during the three months ended March 31, 2019 and 2018, was $(0.3) million and $0.1 million, respectively.

Income Taxes

Due to the structure of the Company as a REIT and the nature of the operations for the operating properties, no provision for federal income taxes has been provided for at UDR. Historically, the Company has generally incurred only state and local excise and franchise taxes. UDR has elected for certain consolidated subsidiaries to be treated as taxable REIT subsidiaries (“TRS”).

Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. The Company’s deferred tax assets are generally the result of differing depreciable lives on capitalized assets and timing of expense recognition for certain accrued liabilities. As of March 31, 2019 and December 31, 2018, UDR’s net deferred tax asset/(liability) was less than $(0.1) million and less than $(0.1) million, respectively.

GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. GAAP also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

The Company recognizes its tax positions and evaluates them using a two-step process. First, UDR determines whether a tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

UDR had no material unrecognized tax benefit, accrued interest or penalties at March 31, 2019. UDR and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2015 through 2018 remain open to examination by tax jurisdictions to which we are subject. When applicable, UDR recognizes interest and/or penalties related to uncertain tax positions in Tax (provision)/benefit, net on the Consolidated Statements of Operations. 

United Dominion Reality L.P.

Entity information

SIGNIFICANT ACCOUNTING POLICIES

2. SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Operating Partnership on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Operating Partnership is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Operating Partnership on January 1, 2019.

The Operating Partnership elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Operating Partnership also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Operating Partnership recognized right-of-use assets of $94.2 million and lease liabilities of $88.2 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizingthe lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.5 million and $140.5 million, respectively, during the remainder of 2019. The Operating Partnership will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Operating Partnership elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Operating Partnership also elected.

Principles of Consolidation

The Operating Partnership accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the amended consolidation guidance. The Operating Partnership first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Operating Partnership consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Operating Partnership consolidates an entity when it controls the entity through ownership of a majority voting interest.

Income/(Loss) Per Operating Partnership Unit

Basic income/(loss) per OP Unit is computed by dividing net income/(loss) attributable to the general and limited partner unitholders by the weighted average number of general and limited partner units outstanding during the year. Diluted income/(loss) per OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units or resulted in the issuance of OP Units and then shared in the income/(loss) of the Operating Partnership.

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Operating Partnership generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Operating Partnership will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Operating Partnership sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Operating Partnership will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Operating Partnership will record a full gain or loss in the period the property is contributed.

To the extent that the Operating Partnership acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Operating Partnership will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Operating Partnership will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Operating Partnership will not recognize a gain or loss on consolidation of a property.

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to unitholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Operating Partnership’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges and (gain)/loss reclassified from other comprehensive income/(loss) into earnings. The (gain)/loss reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 9, Derivatives and Hedging Activity, for further discussion.

Income Taxes

The taxable income or loss of the Operating Partnership is reported on the tax returns of the partners. Accordingly, no provision has been made in the accompanying financial statements for federal or state income taxes on income that is passed through to the partners. However, any state or local revenue, excise or franchise taxes that result from the operating activities of the Operating Partnership are recorded at the entity level. The Operating Partnership’s tax returns are subject to examination by federal and state taxing authorities. Net income for financial reporting purposes differs from the net income for income tax reporting purposes primarily due to temporary differences, principally real estate depreciation and the tax deferral of certain gains on property sales. The differences in depreciation result from differences in the book and tax basis of certain real estate assets and the differences in the methods of depreciation and lives of the real estate assets.

The Operating Partnership evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Operating Partnership’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Management of the Operating Partnership is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The Operating Partnership has no examinations in progress and none are expected at this time.

Management of the Operating Partnership has reviewed all open tax years (2015 through 2018) of tax jurisdictions and concluded there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns.

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REAL ESTATE OWNED (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

REAL ESTATE OWNED

3. REAL ESTATE OWNED

Real estate assets owned by the Company consist of income producing operating properties, properties under development, land held for future development, and held for disposition properties. As of March 31, 2019, the Company owned and consolidated 131 communities in 11 states plus the District of Columbia totaling 41,041 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	1,954,363	$	1,849,799
Depreciable property — held and used:
Land improvements		214,483		213,224
Building, improvements, and furniture, fixtures and equipment		8,475,755		8,133,136
Real estate intangible assets		35,954		—
Real estate owned		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Real estate owned, net	$	6,916,456	$	6,541,999

Acquisitions

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 386 apartment home operating community in Anaheim, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. In connection with the acquisition, the Company repaid approximately $59.8 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $115.7 million and recorded approximately $2.4 million of in-place lease intangibles.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in a 155 apartment home operating community located in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. In connection with the acquisition, the Company repaid approximately $26.0 million of joint venture construction financing. As a result, in January 2019, the Company consolidated the operating community. The Company had previously accounted for its 49% ownership interest as a preferred equity investment in an unconsolidated joint venture (see Note 5, Joint Ventures and Partnerships). The Company accounted for the consolidation as an asset acquisition resulting in no gain or loss upon consolidation and increased its real estate assets owned by approximately $58.1 million and recorded approximately $2.4 million of real estate intangibles and approximately $0.6 million of in-place lease intangibles.

In January 2019, the Company acquired a to-be-developed parcel of land located in Washington D.C. for approximately $27.1 million.

In February 2019, the Company acquired a to-be-developed parcel of land located in Denver, Colorado for approximately $13.7 million.

In February 2019, the Company acquired a 188 apartment home operating community located in Brooklyn, New York for approximately $132.1 million. The Company increased its real estate assets owned by approximately $97.5 million and recorded approximately $33.6 million of real estate intangibles and approximately $1.0 million of in-place lease intangibles.

In February 2019, the Company acquired a 381 apartment home operating community located in St. Petersburg, Florida for approximately $98.3 million.  The Company increased its real estate assets owned by approximately $96.0 million and recorded approximately $2.3 million of in-place lease intangibles.

In April 2019, the Company acquired a 498 apartment home operating community located in Towson, Maryland for approximately $86.4 million.

Dispositions

The Company did not have any dispositions during the three months ended March 31, 2019.

Other Activity

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Company capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, for the three months ended March 31, 2019 and 2018,  were $3.3 million and $3.4 million, respectively.  Total interest capitalized was $1.1 million and $4.6 million for the three months ended March 31, 2019 and 2018, respectively. As each home in a capital project is completed and becomes available for lease-up, the Company ceases capitalization on the related portion of the costs and depreciation commences over the estimated useful life.

In connection with the acquisition of certain properties, the Company agreed to pay certain of the tax liabilities of certain contributors if the Company sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Company may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax-deferred Section 1031 exchange. 

Further, the Company has agreed to maintain certain debt that may be guaranteed by certain contributors for specified periods of time following the acquisition. The Company, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.

United Dominion Reality L.P.

Entity information

REAL ESTATE OWNED

3. REAL ESTATE OWNED

Real estate assets owned by the Operating Partnership consist of income producing operating properties, properties under development, land held for future development, and sold or held for disposition properties. At March 31, 2019, the Operating Partnership owned and consolidated 52 communities in nine states plus the District of Columbia totaling 16,434 apartment homes. The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	711,256	$	711,256
Depreciable property — held and used:
Land improvements		92,624		92,000
Buildings, improvements, and furniture, fixtures and equipment		3,023,995		3,008,729
Real estate owned		3,827,875		3,811,985
Accumulated depreciation		(1,692,702)		(1,658,161)
Real estate owned, net	$	2,135,173	$	2,153,824

Acquisitions

The Operating Partnership did not have any acquisitions of real estate during the three months ended March 31, 2019.

Dispositions

The Operating Partnership did not have any dispositions of real estate during the three months ended March 31, 2019.

Other Activity

Predevelopment, development, and redevelopment projects and related costs are capitalized and reported on the Consolidated Balance Sheets as Total real estate owned, net of accumulated depreciation. The Operating Partnership capitalizes costs directly related to the predevelopment, development, and redevelopment of a capital project, which include, but are not limited to, interest, real estate taxes, insurance, and allocated development and redevelopment overhead related to support costs for personnel working on the capital projects. We use our professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress and such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. These costs, excluding the direct costs of development and redevelopment and capitalized interest, were less than $0.1 million for both the three months ended March 31, 2019 and 2018. During each of the three months ended March 31, 2019 and 2018,  total interest capitalized was less than $0.1 million. As each home in a capital project is completed and becomes available for lease-up, the Operating Partnership ceases capitalization on the related portion of the costs and depreciation commences over the estimated useful life.

In connection with the acquisition of certain properties, the Operating Partnership agreed to pay certain of the tax liabilities of certain contributors if the Operating Partnership sells one or more of the properties contributed in a taxable transaction prior to the expiration of specified periods of time following the acquisition. The Operating Partnership may, however, sell, without being required to pay any tax liabilities, any of such properties in a non-taxable transaction, including, but not limited to, a tax deferred Section 1031 exchange. 

Further, the Operating Partnership has agreed to maintain certain debt that may be guaranteed by certain contributors for specified periods of time following the acquisition. The Operating Partnership, however, has the ability to refinance or repay guaranteed debt or to substitute new debt if the debt and the guaranty continue to satisfy certain conditions.

XML

UNCONSOLIDATED ENTITIES (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Unconsolidated entities

UNCONSOLIDATED ENTITIES

5. JOINT VENTURES AND PARTNERSHIPS

UDR has entered into joint ventures and partnerships with unrelated third parties to acquire real estate assets that are either consolidated and included in Real estate owned on the Consolidated Balance Sheets or are accounted for under the equity method of accounting, and are included in Investment in and advances to unconsolidated joint ventures, net, on the Consolidated Balance Sheets. The Company consolidates the entities that we control as well as any variable interest entity where we are the primary beneficiary. Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

UDR’s joint ventures and partnerships are funded with a combination of debt and equity. Our losses are limited to our investment and except as noted below, the Company does not guarantee any debt, capital payout or other obligations associated with our joint ventures and partnerships.

The Company recognizes earnings or losses from our investments in unconsolidated joint ventures and partnerships consisting of our proportionate share of the net earnings or losses of the joint ventures and partnerships. In addition, we may earn fees for providing management services to the unconsolidated joint ventures and partnerships.

The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of March 31, 2019 and December 31, 2018 (dollars in thousands):

				Number of
		Number of		Apartment
		Properties		Homes	Investment at				UDR’s Ownership Interest
	Location of	March 31,		March 31,	March 31,		December 31,		March 31,		December 31,
Joint Venture	Properties	2019		2019	2019		2018		2019		2018
Operating and development:
UDR/MetLife I	Los Angeles, CA	1	operating community	150	$	30,817	$	30,839	50.0	%	50.0	%
UDR/MetLife II	Various	18	operating communities	4,059		303,893		296,807	50.0	%	50.0	%
Other UDR/MetLife	Various	5	operating communities	1,437		111,377		115,668	50.6	%	50.6	%
Joint Ventures
UDR/MetLife Vitruvian Park®	Addison, TX	4	operating communities;	1,879		73,199		71,730	50.0	%	50.0	%
		1	development community (a);
		4	land parcels
UDR/KFH	Washington, D.C.	3	operating communities	660		4,357		5,507	30.0	%	30.0	%
West Coast Development Joint Ventures (d)	Los Angeles, CA	1	operating community	293		35,994		36,143	47.0	%	47.0	%
Investment in and advances to unconsolidated joint ventures, net, before participating loan investment, preferred equity investments and other investments					$	559,637	$	556,694

											Income/(loss) from investments
							Investment at				Three Months Ended
				Years To	UDR		March 31,		December 31,		March 31,
Developer Capital Program (b)	Location	Rate		Maturity	Commitment (c)		2019		2018		2019		2018
Preferred equity investments:
West Coast Development Joint Ventures (d)	Various	6.5	%	N/A	$	—	$	17,298	$	65,417	$	(161)	$	796
1532 Harrison (e)	San Francisco, CA	11.0	%	3.3		24,645		28,163		24,986		748		341
1200 Broadway (f)	Nashville, TN	8.0	%	3.5		55,558		60,185		58,982		1,169		408
Junction (g)	Santa Monica, CA	12.0	%	3.3		8,800		9,486		9,211		275		—
1300 Fairmount (h)	Philadelphia, PA	Variable		4.4		51,393		13,887		8,318		275		—
Essex (i)	Orlando, FL	12.5	%	4.4		12,886		11,824		9,940		332		—
Other investments:
The Portals (j)	Washington, D.C.	11.0	%	2.2		38,559		44,340		43,167		1,173		679
Other investment ventures	N/A	N/A		N/A	$	18,000		4,280		4,154	$	125	$	(90)
Total Developer Capital Program								189,463		224,175
Total investment in and advances to unconsolidated joint ventures, net							$	749,100	$	780,869

(a) The number of apartment homes for the communities under development presented in the table above is based on the projected number of total homes upon completion of development. As of March 31, 2019, no apartment homes had been completed in the development community held by UDR/MetLife Vitruvian Park® .

(b) The Developer Capital Program is the program through which the Company makes investments, including preferred equity investments, mezzanine loans or other structured investments that may receive a fixed or variable yield on the investment and may include provisions pursuant to which the Company participates in the increase in value of the property upon monetization of the applicable property and/or holds fixed price purchase options.

(c) Represents UDR’s maximum funding commitment only and therefore excludes other activity such as income from investments.

(d) In 2015, the Company entered into a joint venture agreement with an unaffiliated joint venture partner and paid $136.3 million for a 48% ownership interest in a portfolio of five communities that were under construction. The communities are located in three of the Company’s core, coastal markets: Seattle, Washington, Los Angeles, California and Orange County, California. UDR earns a 6.5% preferred return on its investment through each individual community’s date of stabilization, defined as when a community reaches 80% occupancy for 90 consecutive days, while the joint venture partner is allocated all operating income and expense during the pre-stabilization period. Upon stabilization, income and expense are shared based on each partner’s ownership percentage and the Company no longer receives a 6.5% preferred return on its investment in the stabilized community. The Company serves as property manager and earns a management fee during the lease-up phase and subsequent operation of each of the communities. The unaffiliated joint venture partner is the general partner of the joint venture and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

At inception of the agreement, the Company had a fixed-price option to acquire the remaining interest in each community commencing one year after completion. The unaffiliated joint venture partner is providing certain guaranties.

During 2017, the Company exercised its fixed-price option to purchase the joint venture partner’s ownership interest in one of the five communities, and the joint venture sold two of the four remaining communities. 

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in one of the two remaining communities, a 386 apartment home operating community in Orange County, California, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $33.5 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company and its joint venture partner plan to continue operating the one remaining community. 

In 2017, the Company entered into two additional joint venture agreements with the unaffiliated joint venture partner and paid $15.5 million for a 49% ownership interest in a 155 apartment home community in Seattle, Washington and $16.1 million for a 49% ownership interest in a 276 apartment home community in Hillsboro, Oregon (together with the 2015 joint venture described above, the “West Coast Development Joint Ventures”). UDR earns a 6.5% preferred return on its investments through the communities’ date of stabilization, as defined above, while our joint venture partner is allocated all operating income and expense during the pre-stabilization period. Upon stabilization of the communities, income and expense will be shared based on each partner’s ownership percentage and the Company will no longer receive a 6.5% preferred return on its investment. The Company will serve as property manager and will earn a management fee during the lease-up phase and subsequent operation of the stabilized communities. The unaffiliated joint venture partner is the general partner and the developer of the communities. The Company has concluded it does not control the joint ventures and accounts for them under the equity method of accounting.

The Company has a fixed-price option to acquire the remaining interest in the communities beginning one year after completion. The unaffiliated joint venture partner is providing certain guaranties and there are construction loans on the communities.

In January 2019, the Company exercised its fixed-price option to purchase its joint venture partner’s ownership interest in the 155 apartment home operating community in Seattle, Washington, thereby increasing its ownership interest from 49% to 100%, for a cash purchase price of approximately $20.0 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

The Company’s recorded equity investment in the West Coast Development Joint Ventures at March 31, 2019 and December 31, 2018, of $53.3 million and $101.6 million, respectively, is inclusive of outside basis costs and our accrued but unpaid preferred return.

(e) In June 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 136 apartment home community in San Francisco, California. The Company’s preferred equity investment of up to $24.6 million earns a preferred return of 11.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(f) In September 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 313 apartment home community in Nashville, Tennessee. The Company’s preferred equity investment of up to $55.6 million earns a preferred return of 8.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(g) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 66 apartment home community in Santa Monica, CA. The Company’s preferred equity investment of $8.8 million earns a preferred return of 12.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(h) In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 471 apartment home community in Philadelphia, PA. The Company’s preferred equity investment of up to $51.4 million earns a preferred return between 8.5% and 12.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(i) In September 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 330 apartment home community in Orlando, FL. The Company’s preferred equity investment of up to $12.9 million earns a preferred return of 12.5% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

(j) In May 2017, the Company entered into a joint venture agreement with an unaffiliated joint venture partner. The joint venture has made a mezzanine loan to a third party developer of a 373 apartment home community in Washington, D.C. The unaffiliated joint venture partner is the managing member of the joint venture. The mezzanine loan is for up to $71.0 million at an interest rate of 13.5% per annum and carries a term of four years with one 12-month extension option. The Company’s commitment to the joint venture is approximately $38.6 million and earns a weighted average return of approximately 11.0% per annum. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

In April 2019, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 173 apartment home community in Oakland, California. The Company’s preferred equity investment of up to $27.3 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.

As of March 31, 2019 and December 31, 2018, the Company had deferred fees of $10.8 million and $11.0 million, respectively, which will be recognized through earnings over the weighted average life of the related properties, upon the disposition of the properties to a third party, or upon completion of certain development obligations.

The Company recognized management fees of $2.8 million and $2.7 million for the three months ended March 31, 2019 and 2018, respectively, for management of the communities held by the joint ventures and partnerships. The management fees are included in Joint venture management and other fees on the Consolidated Statements of Operations.

The Company may, in the future, make additional capital contributions to certain of our joint ventures and partnerships should additional capital contributions be necessary to fund acquisitions or operations.

We evaluate our investments in unconsolidated joint ventures and partnerships when events or changes in circumstances indicate that there may be an other-than-temporary decline in value. We consider various factors to determine if a decrease in the value of the investment is other-than-temporary. The Company did not recognize any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures or partnerships during the three months ended March 31, 2019 and 2018.

Combined summary balance sheets relating to the unconsolidated joint ventures and partnerships (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	3,193,477	$	3,311,034
Cash and cash equivalents		44,714		49,867
Other assets		127,789		124,428
Total assets	$	3,365,980	$	3,485,329
Third party debt, net	$	2,032,098	$	2,125,350
Accounts payable and accrued liabilities		59,096		71,272
Total liabilities		2,091,194		2,196,622
Total equity	$	1,274,786	$	1,288,707

Combined summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Total revenues	$	81,532	$	67,957
Property operating expenses		30,312		26,937
Real estate depreciation and amortization		29,580		26,848
Operating income/(loss)		21,640		14,172
Interest expense		(21,924)		(19,406)
Other income/(loss)		1,625		(5)
Net income/(loss)	$	1,341	$	(5,239)

United Dominion Reality L.P.

Unconsolidated entities

UNCONSOLIDATED ENTITIES

4. UNCONSOLIDATED ENTITIES

The DownREIT Partnership is accounted for by the Operating Partnership under the equity method of accounting and is included in Investment in unconsolidated entities on the Consolidated Balance Sheets. The Operating Partnership recognizes earnings or losses from its investments in unconsolidated entities consisting of our proportionate share of the net earnings or losses of the partnership in accordance with the Partnership Agreement.

The DownREIT Partnership is a VIE as the limited partners lack substantive kick-out rights and substantive participating rights. The Operating Partnership is not the primary beneficiary of the DownREIT Partnership as it lacks the power to direct the activities that most significantly impact its economic performance and will continue to account for its interest as an equity method investment. See Note 2, Significant Accounting Policies.

As of March 31, 2019, the DownREIT Partnership owned 12 communities with 5,657 apartment homes. The Operating Partnership’s investment in the DownREIT Partnership was $95.7 million and $103.0 million as of March 31, 2019 and December 31, 2018, respectively.

Combined summary balance sheets relating to all of the DownREIT Partnership (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	1,151,740	$	1,167,720
Cash and cash equivalents		21		39
Note receivable from the General Partner		218,520		221,022
Other assets		4,855		5,561
Total assets	$	1,375,136	$	1,394,342
Secured debt, net	$	430,890	$	431,735
Other liabilities		23,006		26,597
Total liabilities		453,896		458,332
Total capital	$	921,240	$	936,010

Combined summary financial information relating to all of the DownREIT Partnership (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Rental income	$	31,606	$	34,012
Property operating expenses		(13,096)		(14,487)
Real estate depreciation and amortization		(20,294)		(21,495)
Operating income/(loss)		(1,784)		(1,970)
Interest expense		(3,888)		(3,574)
Interest income on note receivable from the General Partner		1,988		1,196
Net income/(loss)	$	(3,684)	$	(4,348)

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LEASES (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

Leases

6. LEASES

Lessee - Ground and Office Leases

UDR owns six communities that are subject to ground leases, under which UDR is the lessee, expiring between 2043 and 2103, inclusive of extension options we are reasonably certain will be exercised. In addition, UDR is a lessee to an operating lease related to office space rented by the Company with an expiration date in 2021. All of these leases existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, these leases will continue to be classified as operating leases through the lease term expiration. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the remaining lease term. We currently do not hold any finance leases.

As of March 31, 2019, the Operating lease right-of-use assets was $94.1 million and the Operating lease liabilities was $88.2 million on our Consolidated Balance Sheets related to our ground and office space leases. The value of the Operating lease right-of-use assets exceeds the value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in earnings in the period in which the obligation for those payments is incurred.

As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases utilizing the Company’s incremental borrowing rate at a portfolio level, adjusted for the remaining lease term, and the form of underlying collateral.  

The weighted average remaining lease term for these leases was 70.9 years at March 31, 2019 and the weighted average discount rate was 5.2% at March 31, 2019.

Future minimum lease payments and total operating lease liabilities from our ground leases and office space as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases		Office Space		Total
2019	$	3,676	$	57	$	3,733
2020		4,901		76		4,977
2021		4,901		32		4,933
2022		4,901		-		4,901
2023		4,901		-		4,901
Thereafter		313,919		-		313,919
Total future minimum lease payments (undiscounted)		337,199		165		337,364
Difference between future undiscounted cash flows and discounted cash flows		(249,138)		(8)		(249,146)
Total operating lease liabilities (discounted)	$	88,061	$	157	$	88,218

For purposes of recognizing our ground lease contracts, the Company uses the minimum lease payments, if stated in the agreement. For ground lease agreements where there is a rent reset provision based on fair market value or changes in the consumer price index but that does not include a specified minimum lease payment, the Company uses the current rent over the remainder of the lease term. We are currently in a dispute with the lessor of one of our ground lease contracts as it relates to a rent reset provision that requires both parties to agree to a new rent based on the current fair market value of the land or, absent agreement, have it determined by an appraisal process. The current annual lease payment under the ground lease contract to which the dispute relates, exclusive of variable payments, is $0.5 million, which is reflected in the table above. Depending on the outcome of the dispute, the future annual lease payments under such ground lease contract are likely to be between $1.2 million and $4.0 million.

The components of operating lease expenses from our ground leases and office space were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total ground lease expense (b)		2,279
Contractual office space expense (b)		19
Total operating lease expense	$	2,298

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses and office space expense is recorded in General and administrative on the Consolidated Statements of Operations.

Lessor - Apartment Home,  Retail and Commercial Space and Ground Leases

UDR’s communities and retail and commercial space are leased to tenants under operating leases. Nearly all of our apartment home leases have initial terms of 12 months or less. Our retail and commercial space leases expire between 2019 and 2107. (See Note 14, Reportable Segments for further discussion around our major revenue streams and disaggregation of our revenue.)

We also have one parcel of land subject to a ground lease, under which UDR is the lessor, expiring in 2065. The lease includes a purchase option for the lessee to acquire the land during specific periods of the lease term. The purchase option was not deemed to be a bargain purchase option. This lease existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, this lease will continue to be classified as an operating lease through the lease term expiration and the land parcel subject to the ground lease will continue to be recognized in Real estate held for investment on our Consolidated Balance Sheets. Rental income for lease payments related to this lease is recognized on a straight-line basis over the remaining lease term.

Future minimum lease payments from our retail and commercial leases and our ground lease as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases		Ground Lease		Total
2019	$	14,826	$	1,995	$	16,821
2020		19,825		2,660		22,485
2021		18,768		2,660		21,428
2022		17,071		2,660		19,731
2023		15,712		2,660		18,372
Thereafter		85,712		110,168		195,880
Total future minimum lease payments (a)	$	171,914	$	122,803	$	294,717

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage rents. The Company recorded variable percentage rents of less than $0.2 million during the three months ended March 31, 2019.

United Dominion Reality L.P.

Entity information

Leases

5. LEASES

Lessee - Ground Leases

The Operating Partnership owns six communities that are subject to ground leases, under which the Operating Partnership is the lessee, expiring between 2043 and 2103, inclusive of extension options we are reasonably certain will be exercised. All of these leases existed as of the adoption of the new lease accounting guidance on January 1, 2019 and we did not reassess lease classification per the practical expedient provided by the standard. As such, these leases will continue to be classified as operating leases through the lease term expiration. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the remaining lease term. We currently do not hold any finance leases.

As of March 31, 2019, the Operating lease right-of-use assets was $94.0 million and the Operating lease liabilities was $88.1 million on our Consolidated Balance Sheets related to our ground leases. The value of the Operating lease right-of-use assets exceeds the value of the Operating lease liabilities due to prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. The calculation of these amounts includes minimum lease payments over the remaining lease term (described further in the table below). Variable lease payments are excluded from the right-of-use assets and lease liabilities and are recognized in earnings in the period in which the obligation for those payments is incurred.

As the discount rate implicit in the leases was not readily determinable, we determined the discount rate for these leases utilizing the Operating Partnership’s incremental borrowing rate at a portfolio level, adjusted for the remaining lease term, and the form of underlying collateral.  

The weighted average remaining lease term for these leases was 71.1 years at March 31, 2019 and the weighted average discount rate was 5.2% at March 31, 2019. 

Future minimum lease payments and total operating lease liabilities from our ground leases as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases
2019	$	3,676
2020		4,901
2021		4,901
2022		4,901
2023		4,901
Thereafter		313,919
Total future minimum lease payments (undiscounted)		337,199
Difference between future undiscounted cash flows and discounted cash flows		(249,138)
Total operating lease liabilities (discounted)	$	88,061

For purposes of recognizing our ground lease contracts, the Operating Partnership uses the minimum lease payments, if stated in the agreement. For ground lease agreements where there is a rent reset provision based on fair market value or changes in the consumer price index but that does not include a specified minimum lease payment, the Company uses the current rent over the remainder of the lease term. We are currently in a dispute with the lessor of one of our ground lease contracts as it relates to a rent reset provision that requires both parties to agree to a new rent based on the current fair market value of the land or, absent agreement, have it determined by an appraisal process. The current annual lease payment under the ground lease contract to which the dispute relates, exclusive of variable payments, is $0.5 million, which is reflected in the table above. Depending on the outcome of the dispute, the future annual lease payments under such ground lease contract are likely to be between $1.2 million and $4.0 million.

The components of operating lease expenses from our ground leases were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total operating lease expense	$	2,279

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses on the Consolidated Statements of Operations.

Lessor - Apartment Home and Retail and Commercial Leases

The Operating Partnership’s communities and retail and commercial space are leased to tenants under operating leases. Nearly all of our apartment home leases have initial terms of 12 months or less. Our retail and commercial space leases expire between 2019 and 2030. (See Note 12, Reportable Segments for further discussion around our major revenue streams and disaggregation of our revenue.)

Future minimum lease payments from our retail and commercial leases as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases
2019	$	5,357
2020		7,600
2021		7,270
2022		6,684
2023		6,375
Thereafter		19,578
Total future minimum lease payments (a)	$	52,864

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

Certain of our leases with retail and commercial tenants provide for the payment by the lessee of additional variable rent based on a percentage of the tenant’s revenue. The amounts shown in the table above do not include these variable percentage rents. The Operating Partnership recorded variable percentage rents of less than $0.1 million during the three months ended March 31, 2019.

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DEBT, NET (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

DEBT, NET

7. SECURED AND UNSECURED DEBT, NET

The following is a summary of our secured and unsecured debt at March 31, 2019 and December 31, 2018  (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
					Weighted		Weighted
					Average		Average	Number of
	March 31,		December 31,		Interest		Years to	Communities
	2019		2018		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	416,468	$	417,989	3.82	%	5.6	7
Fannie Mae credit facilities (b)		90,000		90,000	3.95	%	1.3	1
Deferred financing costs		(1,275)		(1,343)
Total fixed rate secured debt, net		505,193		506,646	3.85	%	4.8	8
Variable Rate Debt
Tax-exempt secured notes payable (c)		94,700		94,700	2.31	%	3.9	2
Deferred financing costs		(97)		(119)
Total variable rate secured debt, net		94,603		94,581	2.31	%	3.9	2
Total Secured Debt, net		599,796		601,227	3.60	%	4.7	10
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2023 (d) (j)		—		—	—	%	3.8
Borrowings outstanding under unsecured commercial paper program due April 2019 (e) (j)		90,000		101,115	2.78	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2021(f)		54,310		16	3.32	%	1.8
Term Loan due September 2023 (d) (j)		35,000		35,000	3.39	%	4.5
Fixed Rate Debt
3.70% Medium-Term Notes due October 2020 (net of discounts of $12 and $14, respectively) (j)		299,988		299,986	3.70	%	1.5
4.63% Medium-Term Notes due January 2022 (net of discounts of $997 and $1,087, respectively) (j)		399,003		398,913	4.63	%	2.8
1.93% Term Loan due September 2023 (d) (j)		315,000		315,000	1.93	%	4.5
3.75% Medium-Term Notes due July 2024 (net of discounts of $548 and $574, respectively) (g) (j)		299,452		299,426	3.75	%	5.3
8.50% Debentures due September 2024		15,644		15,644	8.50	%	5.5
4.00% Medium-Term Notes due October 2025 (net of discounts of $447 and $465, respectively) (h) (j)		299,553		299,535	4.00	%	6.5
2.95% Medium-Term Notes due September 2026 (j)		300,000		300,000	2.95	%	7.4
3.50% Medium-Term Notes due July 2027 (net of discounts of $582 and $600, respectively) (j)		299,418		299,400	3.50	%	8.3
3.50% Medium-Term Notes due January 2028 (net of discounts of $1,043 and $1,072, respectively) (j)		298,957		298,928	3.50	%	8.8
4.40% Medium-Term Notes due January 2029 (net of discounts of $6 and $6, respectively) (i) (j)		299,994		299,994	4.40	%	9.8
Other		15		16
Deferred financing costs		(16,301)		(16,413)
Total Unsecured Debt, net		2,990,033		2,946,560	3.65	%	5.7
Total Debt, net	$	3,589,829	$	3,547,787	3.73	%	5.5

For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument.

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of March 31, 2019, secured debt encumbered $1.3 billion or 12.2% of UDR’s total real estate owned based upon gross book value ($9.4 billion or 87.8% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At March 31, 2019, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2020 through September 2028 and carry interest rates ranging from 3.15% to 4.35%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the Company records the debt at its estimated fair value and amortizes any difference between the fair value and par value to interest expense over the life of the underlying debt instrument.

During the three months ended March 31, 2019 and 2018, the Company had $0.6 million and $0.7 million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $4.4 million and $5.0 million at March 31, 2019 and December 31, 2018, respectively.

(b) UDR had one secured credit facility  with Fannie Mae with a commitment of $90.0 million at March 31, 2019.  The Fannie Mae credit facility matures in July 2020  and bears interest at a fixed rate of 3.95%.

Further information related to this credit facility is as follows (dollars in thousands):

	March 31,			December 31,
	2019			2018
Borrowings outstanding	$	90,000		$	90,000
Weighted average borrowings during the period ended		90,000			253,813
Maximum daily borrowings during the period ended		90,000			314,869
Weighted average interest rate during the period ended		4.0	%		4.7	%
Weighted average interest rate at the end of the period		4.0	%		4.0	%

(c) The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature in August 2019 and March 2032. Interest on these notes is payable in monthly installments. The variable rate mortgage notes have interest rates ranging from 2.25% to 2.47% as of March 31, 2019.

(d) The Company has a $1.1 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”). The credit agreement for these facilities (the “Credit Agreement”) allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023. 

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from 75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to 165 basis points.

The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Credit Agreement also includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable.

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total revolving credit facility	$	1,100,000		$	1,100,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		—			—
Maximum daily borrowings during the period ended		—			—
Weighted average interest rate during the period ended		—	%		—	%
Interest rate at end of the period		—	%		—	%

(1) Excludes $3.3 million and $3.3 million of letters of credit at March 31, 2019 and December 31, 2018, respectively.

(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total unsecured commercial paper program	$	500,000		$	500,000
Borrowings outstanding at end of period		90,000			101,115
Weighted average daily borrowings during the period ended		149,365			344,235
Maximum daily borrowings during the period ended		330,000			440,000
Weighted average interest rate during the period ended		2.8	%		2.4	%
Interest rate at end of the period		2.8	%		2.9	%

(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 15, 2021. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		54,310			16
Weighted average daily borrowings during the period ended		22,967			26,101
Maximum daily borrowings during the period ended		66,170			64,633
Weighted average interest rate during the period ended		3.3	%		2.9	%
Interest rate at end of the period		3.3	%		3.3	%

(g) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.69%.

(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.53%.

(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $150.0 million of this debt. The all in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.27%.

(j) The Operating Partnership is a guarantor of this debt.

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten calendar years subsequent to March 31, 2019 are as follows (dollars in thousands):

	Total Fixed		Total Variable		Total		Total		Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt		Debt
2019	$	2,860	$	67,700	$	70,560	$	90,000	$	160,560
2020		198,076		—		198,076		300,000		498,076
2021		1,117		—		1,117		54,310		55,427
2022		1,157		—		1,157		400,000		401,157
2023		41,245		—		41,245		350,000		391,245
2024		—		—		—		315,644		315,644
2025		127,600		—		127,600		300,000		427,600
2026		50,000		—		50,000		300,000		350,000
2027		—		—		—		300,000		300,000
2028		80,000		—		80,000		300,000		380,000
Thereafter		—		27,000		27,000		300,000		327,000
Subtotal		502,055		94,700		596,755		3,009,954		3,606,709
Non-cash (a)		3,138		(97)		3,041		(19,921)		(16,880)
Total	$	505,193	$	94,603	$	599,796	$	2,990,033	$	3,589,829

(a) Includes the unamortized balance of fair market value adjustments, premiums/discounts and deferred financing costs. For the three months ended March 31, 2019 and 2018, the Company amortized $1.0 million and $1.0 million, respectively, of deferred financing costs into Interest expense.    

We were in compliance with the covenants of our debt instruments at March 31, 2019.

United Dominion Reality L.P.

Entity information

DEBT, NET

6. DEBT, NET

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. For purposes of classification in the following table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Operating Partnership having effectively established the fixed interest rate for the underlying debt instrument. Secured debt consists of the following as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
							Weighted
					Weighted		Average
	March 31,		December 31,		Average		Years to	Communities
	2019		2018		Interest Rate		Maturity	Encumbered
Secured Debt
Tax-exempt secured note payable	$	27,000	$	27,000	2.47	%	13.0	1
Deferred financing costs		(69)		(71)
Total Secured Debt, Net	$	26,931	$	26,929	2.50	%	13.0	1

The Operating Partnership may from time to time acquire properties subject to fixed rate debt instruments. In those situations, management will record the secured debt at its estimated fair value and amortize any difference between the fair value and par to interest expense over the life of the underlying debt instrument. The Operating Partnership did not have any unamortized fair value adjustments associated with the fixed rate debt instruments on the Operating Partnership’s properties.

Variable Rate Debt

Tax-exempt secured note payable. The variable rate mortgage note payable that secures tax-exempt housing bond issues matures March 2032. Interest on this note is payable in monthly installments. The mortgage note payable has an interest rate of 2.47% as of March 31, 2019.

Guarantor on Unsecured Debt

The Operating Partnership is a guarantor on the General Partner’s unsecured revolving credit facility with an aggregate borrowing capacity of $1.1 billion, an unsecured commercial paper program with an aggregate borrowing capacity of $500 million, $300 million of medium-term notes due October 2020, $400 million of medium-term notes due January 2022, a  $350 million term loan due September 2023, $300 million of medium-term notes due July 2024, $300 million of medium-term notes due October 2025, $300 million of medium-term notes due September 2026, $300 million of medium-term notes due July 2027, $300 million of medium-term notes due January 2028, and $300 million of medium-term notes due January 2029. As of March 31, 2019 and December 31, 2018, the General Partner did not have an outstanding balance under the unsecured revolving credit facility and had $90.0 million and $101.1 million, respectively, outstanding under its unsecured commercial paper program.

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RELATED PARTY TRANSACTIONS (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

United Dominion Reality L.P.

Entity information

RELATED PARTY TRANSACTIONS

7. RELATED PARTY TRANSACTIONS

Allocation of General and Administrative Expenses

The General Partner shares various general and administrative costs, employees and other overhead costs with the Operating Partnership including legal assistance, acquisitions analysis, marketing, human resources, IT, accounting, rent, supplies and advertising, and allocates these costs to the Operating Partnership first on the basis of direct usage when identifiable, with the remainder allocated based on the reasonably anticipated benefits to the parties. The general and administrative expenses allocated to the Operating Partnership by UDR were $3.6 million and $3.5 million during the three months ended March 31, 2019 and 2018, respectively, and are included in General and administrative on the Consolidated Statements of Operations. In the opinion of management, this method of allocation reflects the level of services received by the Operating Partnership from the General Partner.

During the three months ended March 31, 2019 and 2018, the Operating Partnership reimbursed the General Partner $4.0 million and $3.7 million, respectively, for shared services related to corporate level property management costs incurred by the General Partner. These shared cost reimbursements are initially recorded within the line item General and administrative on the Consolidated Statements of Operations, and a portion related to management costs is reclassified to Property management on the Consolidated Statements of Operations. (See further discussion below.)

Shared Services

The Operating Partnership self-manages its own properties and is party to an Inter-Company Employee and Cost Sharing Agreement with the General Partner. This agreement provides for reimbursements to the General Partner for the Operating Partnership’s allocable share of costs incurred by the General Partner for (a) shared services of corporate level property management employees and related support functions and costs, and (b) general and administrative costs. As discussed above, the reimbursement for shared services is classified in Property management on the Consolidated Statements of Operations.

Notes Payable to the General Partner

The following table summarizes the Operating Partnership’s Notes payable due to the General Partner as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due August 2021	5.34	%	$	5,500	$	5,500
Note due December 2023	5.18	%		83,196		83,196
Note due April 2026	4.12	%		184,638		184,638
Note due November 2028	4.69	%		133,205		133,205
Note due December 2028 (a)	3.73	%		284,435		293,576
Total notes payable due to the General Partner			$	690,974	$	700,115

(a) In December 2018, the Operating Partnership converted the remaining outstanding portion of the Advances (to)/from the General Partner capital balance in connection with entering into an unsecured revolving note payable with the General Partner.  There is no limit on the total commitments under this note. Interest is incurred on the unpaid principal balance at a variable interest rate equivalent to the General Partner’s weighted average interest rate on borrowings, or 3.73% as of March 31, 2019. The note matures on December 1, 2028.  To the extent there is an outstanding principal balance on the revolving note payable, the General Partner, at its discretion, can demand payment at any time prior to the stated maturity date of the note,

Certain limited partners of the Operating Partnership have provided guarantees or reimbursement agreements related to these notes payable. The guarantees were provided by the limited partners in conjunction with their contribution of properties to the Operating Partnership. The Operating Partnership recognized interest expense on the notes payable of $7.2 million and $3.1 million during the three months ended March 31, 2019 and 2018, respectively.

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FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

10. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

· Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

· Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018, are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	36,974	$	40,329	$	—	$	—	$	40,329
Derivatives - Interest rate contracts (b)		3,315		3,315		—		3,315		—
Total assets	$	40,289	$	43,644	$	—	$	3,315	$	40,329
Derivatives - Interest rate contracts (b)	$	2,285	$	2,285	$	—	$	2,285	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		416,468		423,329		—		—		423,329
Fannie Mae credit facilities		90,000		90,540		—		—		90,540
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		54,310		54,310		—		—		54,310
Commercial paper program		90,000		90,000		—		—		90,000
Unsecured notes		2,862,024		2,897,215		—		—		2,897,215
Total liabilities	$	3,609,787	$	3,652,379	$	—	$	2,285	$	3,650,094
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	1,051,498	$	1,051,498	$	—	$	1,051,498	$	—

					Fair Value at December 31, 2018, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	42,259	$	45,026	$	—	$	—	$	45,026
Derivatives - Interest rate contracts (b)		4,757		4,757		—		4,757		—
Total assets	$	47,016	$	49,783	$	—	$	4,757	$	45,026
Derivatives - Interest rate contracts (b)	$	356	$	356	$	—	$	356	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		417,989		416,314		—		—		416,314
Fannie Mae credit facilities		90,000		90,213		—		—		90,213
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		16		16		—		—		16
Commercial paper program		101,115		101,115		—		—		101,115
Unsecured notes		2,861,842		2,829,390		—		—		2,829,390
Total liabilities	$	3,566,018	$	3,532,104	$	—	$	356	$	3,531,748
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	972,740	$	972,740	$	—	$	972,740	$	—

(a) See Note 2, Significant Accounting Policies.

(b) See Note 11,  Derivatives and Hedging Activity.

(c) See Note 7,  Secured and Unsecured Debt, Net.

(d) See Note 9,  Noncontrolling Interests.

There were no transfers into or out of any of the levels of the fair value hierarchy during the three months ended March 31, 2019.

Financial Instruments Carried at Fair Value

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2019 and December 31, 2018, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership have a redemption feature and are marked to their redemption value. The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership are classified as Level 2.

Financial Instruments Not Carried at Fair Value

At March 31, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes notes receivable and debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.

We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Our cash flow estimates are based upon historical results adjusted to reflect our best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair value. Our estimates of fair value represent our best estimate based upon Level 3 inputs such as industry trends and reference to market rates and transactions.

We consider various factors to determine if a decrease in the value of our Investment in and advances to unconsolidated joint ventures, net is other-than-temporary. These factors include, but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships with the other joint venture partners and its lenders. Based on the significance of the unobservable inputs, we classify these fair value measurements within Level 3 of the valuation hierarchy. The Company did not incur any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures during the three months ended March 31, 2019 and 2018.

After determining an other-than-temporary decrease in the value of an equity method investment has occurred, we estimate the fair value of our investment by estimating the proceeds we would receive upon a hypothetical liquidation of the investment at the date of measurement. Inputs reflect management’s best estimate of what market participants would use in pricing the investment giving consideration to the terms of the joint venture agreement and the estimated discounted future cash flows to be generated from the underlying joint venture assets. The inputs and assumptions utilized to estimate the future cash flows of the underlying assets are based upon the Company’s evaluation of the economy, market trends, operating results, and other factors, including judgments regarding costs to complete any construction activities, lease up and occupancy rates, rental rates, inflation rates, capitalization rates utilized to estimate the projected cash flows at the disposition, and discount rates.

United Dominion Reality L.P.

Entity information

FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

8. FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS

Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level valuation hierarchy prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

· Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

· Level 2 — Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

· Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The estimated fair values of the Operating Partnership’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018 are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Secured debt instruments - variable rate: (a)
Tax-exempt secured notes payable	$	27,000	$	27,000	$	—	$	—	$	27,000
Total liabilities	$	27,000	$	27,000	$	—	$	—	$	27,000

					Fair Value at December 31, 2018, Using
					Quoted
	Total				Prices in
	Carrying				Active
	Amount in				Markets
	Statement of				for Identical		Significant
	Financial		Fair Value		Assets		Other		Significant
	Position at		Estimate at		or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Secured debt instruments - variable rate: (a)
Tax-exempt secured notes payable	$	27,000	$	27,000	$	—	$	—	$	27,000
Total liabilities	$	27,000	$	27,000	$	—	$	—	$	27,000

(a) See Note 6,  Debt, Net.

There were no transfers into or out of each of the levels of the fair value hierarchy during the three months ended March 31, 2019.

Financial Instruments Carried at Fair Value

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate options are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

The General Partner, on behalf of the Operating Partnership, incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Operating Partnership has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the General Partner, on behalf of the Operating Partnership, has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2019 and December 31, 2018, the Operating Partnership has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Operating Partnership has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Operating Partnership made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Financial Instruments Not Carried at Fair Value

As of March 31, 2019, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.

The Operating Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by the future operation and disposition of those assets are less than the net book value of those assets. Cash flow estimates are based upon historical results adjusted to reflect management’s best estimate of future market and operating conditions and our estimated holding periods. The net book value of impaired assets is reduced to fair value. The General Partner’s estimates of fair value represent management’s estimates based upon Level 3 inputs such as industry trends and reference to market rates and transactions. The Operating Partnership did not incur any other-than-temporary impairments in the value of its investments in unconsolidated entities during the three months ended March 31, 2019 and 2018.

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DERIVATIVES AND HEDGING ACTIVITY (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

DERIVATIVES AND HEDGING ACTIVITY

11. DERIVATIVES AND HEDGING ACTIVITY

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2019 and 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

Amounts reported in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets related to derivatives that will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Through March 31, 2020, the Company estimates that an additional $3.2 million will be reclassified as a decrease to Interest expense.

As of March 31, 2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate swaps (a)	4	$	315,000
Interest rate caps	1	$	65,197

(a) In addition to the interest rate swaps summarized above, the Company entered into two additional interest rate swaps with a notional value totaling $75.0 million that will become effective in December 2019.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in no gain or loss and a loss of less than $0.1 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Asset Derivatives				Liability Derivatives
	(included in Other assets)				(included in Other liabilities)
	Fair Value at:				Fair Value at:
	March 31,		December 31,		March 31,		December 31,
	2019		2018		2019		2018
Derivatives designated as hedging instruments:
Interest rate products	$	3,315	$	4,757	$	2,285	$	356

Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018  (dollars in thousands):

									Gain/(Loss) Recognized in
					Gain/(Loss) Reclassified				Interest expense
	Unrealized holding gain/(loss)				from Accumulated OCI into				(Amount Excluded from
	Recognized in OCI				Interest expense				Effectiveness Testing)
Derivatives in Cash Flow Hedging Relationships	2019		2018		2019		2018		2019		2018
Three Months Ended March 31,
Interest rate products	$	(2,210)	$	1,710	$	945	$	172	$	—	$	—

	Three Months Ended
	March 31,
	2019		2018
Total amount of Interest expense presented on the Consolidated Statements of Operations	$	33,542	$	29,943

The Company did not recognize any gain/(loss) in Interest income and other income/(expense), net related to derivatives not designated during each of the three months ended March 31, 2019 and 2018.

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.

The Company has certain agreements with some of its derivative counterparties that contain a provision where, in the event of default by the Company or the counterparty, the right of setoff may be exercised. Any amount payable to one party by the other party may be reduced by its setoff against any amounts payable by the other party. Events that give rise to default by either party may include, but are not limited to, the failure to pay or deliver payment under the derivative agreement, the failure to comply with or perform under the derivative agreement, bankruptcy, a merger without assumption of the derivative agreement, or in a merger, a surviving entity’s creditworthiness is materially weaker than the original party to the derivative agreement.

As of March 31, 2019, the fair value of derivatives was in a net asset position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, of $1.4 million. 

Tabular Disclosure of Offsetting Derivatives

The Company has elected not to offset derivative positions on the consolidated financial statements. The tables below present the effect on its financial position had the Company made the election to offset its derivative positions as of March 31, 2019 and December 31, 2018 (dollars in thousands):

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Assets		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Assets	Assets		Sheets		(a)		Instruments		Received		Net Amount
March 31, 2019	$	3,315	$	—	$	3,315	$	—	$	—	$	3,315
December 31, 2018	$	4,757	$	—	$	4,757	$	—	$	—	$	4,757

(a) Amounts reconcile to the aggregate fair value of derivative assets in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote. 

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Liabilities		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Liabilities	Liabilities		Sheets		(a)		Instruments		Posted		Net Amount
March 31, 2019	$	2,285	$	—	$	2,285	$	—	$	—	$	2,285
December 31, 2018	$	356	$	—	$	356	$	—	$	—	$	356

(a) Amounts reconcile to the aggregate fair value of derivative liabilities in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.

United Dominion Reality L.P.

Entity information

DERIVATIVES AND HEDGING ACTIVITY

9. DERIVATIVES AND HEDGING ACTIVITY

Risk Management Objective of Using Derivatives

The Operating Partnership is exposed to certain risks arising from both its business operations and economic conditions. The General Partner principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The General Partner manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the General Partner enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The General Partner’s and the Operating Partnership’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the General Partner’s known or expected cash payments principally related to the General Partner’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The General Partner’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the General Partner primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the General Partner making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an upfront premium.

A portion of the General Partner’s interest rate derivatives are owed by the Operating Partnership based on the General Partner’s underlying debt instruments owed by the Operating Partnership. (See Note 6, Debt, Net.)

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated other comprehensive income/(loss), net on the Consolidated Balance Sheets and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. As of and during the three months ended March 31, 2019 and 2018, no derivatives designated as cash flow hedges were held by the Operating Partnership.

Amounts reported in Accumulated other comprehensive income/(loss), net related to derivatives will be reclassified to interest expense as interest payments are made on the General Partner’s variable-rate debt that is owed by the Operating Partnership. As of March 31, 2019, no derivatives designated as cash flow hedges were held by the Operating Partnership and, as a result, no amounts are anticipated to be reclassified as an increase to interest expense through March 31, 2020.

Derivatives not designated as hedges are not speculative and are used to manage the Operating Partnership’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in no gain or loss for both the three months ended March 31, 2019 and 2018.

As of March 31, 2019, we had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets

As of March 31, 2019 and December 31, 2018, the fair value of the Operating Partnership’s derivative financial instruments was zero.  

Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Operations

During the three months ended March 31, 2019 and 2018, the Operating Partnership’s derivative instruments did not impact the Consolidated Statement of Operations.

Credit-risk-related Contingent Features

The General Partner has agreements with its derivative counterparties that contain a provision where the General Partner could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the General Partner’s default on the indebtedness.

The General Partner has certain agreements with some of its derivative counterparties that contain a provision where, in the event of default by the General Partner or the counterparty, the right of setoff may be exercised. Any amount payable to one party by the other party may be reduced by its setoff against any amounts payable by the other party. Events that give rise to default by either party may include, but are not limited to, the failure to pay or deliver payment under the derivative agreement, the failure to comply with or perform under the derivative agreement, bankruptcy, a merger without assumption of the derivative agreement, or in a merger, a surviving entity’s creditworthiness is materially weaker than the original party to the derivative agreement.

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CAPITAL STRUCTURE (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

United Dominion Reality L.P.

Entity information

CAPITAL STRUCTURE

10. CAPITAL STRUCTURE

General Partnership Units

The General Partner has complete discretion to manage and control the operations and business of the Operating Partnership, which includes but is not limited to the acquisition and disposition of real property, construction of buildings and making capital improvements, and the borrowing of funds from outside lenders or UDR and its subsidiaries to finance such activities. The General Partner can generally authorize, issue, sell, redeem or purchase any OP Unit or securities of the Operating Partnership without the approval of the limited partners. The General Partner can also approve, with regard to the issuances of OP Units, the class or one or more series of classes, with designations, preferences, participating, optional or other special rights, powers and duties including rights, powers and duties senior to limited partnership interests without approval of any limited partners except holders of Class A Limited Partnership Units. There were 110,883 General Partnership units outstanding at March 31, 2019 and December 31, 2018, all of which were held by UDR.

Limited Partnership Units

As of March 31, 2019 and December 31, 2018, there were 183,942,239 and 183,525,660, respectively, of limited partnership units outstanding, of which 1,873,332 were Class A Limited Partnership Units for both periods. UDR owned 175,946,364, or 95.7%, and 174,137,816, or 94.9%, of OP Units outstanding at March 31, 2019 and December 31, 2018, respectively, of which 121,661 were Class A Limited Partnership Units for both periods. The remaining 7,995,875, or 4.3%, and 9,387,844, or 5.1%, of OP Units outstanding were held by non-affiliated partners at March 31, 2019 and December 31, 2018, respectively, of which 1,751,671 were Class A Limited Partnership Units for both periods.

Subject to the terms of the Operating Partnership Agreement, the limited partners have the right to require the Operating Partnership to redeem all or a portion of the OP Units held by the limited partner at a redemption price equal to and in the form of the Cash Amount (as defined in the Operating Partnership Agreement), provided that such OP Units have been outstanding for at least one year. UDR, as general partner of the Operating Partnership, may, in its sole discretion, purchase the OP Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (generally one share of common stock of UDR for each OP Unit), as defined in the Operating Partnership Agreement.

The non-affiliated limited partners’ capital is adjusted to redemption value at the end of each reporting period with the corresponding offset against UDR’s limited partner capital account based on the redemption rights noted above. The aggregate value upon redemption of the then-outstanding OP Units held by limited partners was $363.5 million and $371.9 million as of March 31, 2019 and December 31, 2018, respectively, based on the value of UDR’s common stock at each period end. A limited partner has no right to receive any distributions from the Operating Partnership on or after the date of redemption of its OP Units.

Class A Limited Partnership Units

Class A Limited Partnership Units have a cumulative, annual, non-compounded preferred return, which is equal to 8% based on a value of $16.61 per Class A Limited Partnership Unit.

Holders of the Class A Limited Partnership Units exclusively possess certain voting rights. The Operating Partnership may not do the following without approval of the holders of the Class A Limited Partnership Units: (i) increase the authorized or issued amount of Class A Limited Partnership Units, (ii) reclassify any other partnership interest into Class A Limited Partnership Units, (iii) create, authorize or issue any obligations or security convertible into or the right to purchase Class A Limited Partnership Units, (iv) enter into a merger or acquisition, or (v) amend or modify the Operating Partnership Agreement in a manner that adversely affects the relative rights, preferences or privileges of the Class A Limited Partnership Units.

The following table shows OP Units outstanding and OP Unit activity as of and for the three months ended March 31, 2019:

			UDR, Inc.
	Class A			Class A
	Limited	Limited	Limited	Limited	General
	Partners	Partners	Partner	Partner	Partner	Total
Ending balance at December 31, 2018	1,751,671	7,636,173	174,016,155	121,661	110,883	183,636,543
Vesting of LTIP Units	—	416,579	—	—	—	416,579
OP redemptions for UDR stock	—	(1,808,548)	1,808,548	—	—	—
Ending balance at March 31, 2019	1,751,671	6,244,204	175,824,703	121,661	110,883	184,053,122

LTIP Units

UDR grants long-term incentive plan units (“LTIP Units”) to certain employees and non-employee directors. The LTIP Units represent an ownership interest in the Operating Partnership and have voting and distribution rights consistent with OP Units. The LTIP Units are subject to the terms of UDR’s long-term incentive plan.

Two classes of LTIP Units are granted, Class 1 LTIP Units and Class 2 LTIP Units. Class 1 LTIP Units are granted to certain employees and non-employee directors and vest over a period of up to four years. Class 2 LTIP Units are granted to certain employees and vest over a period from one to three years subject to certain performance and market conditions being achieved. Vested LTIP Units may be converted into OP Units provided that such LTIP Units have been outstanding for at least two years from the date of grant.

Allocation of Profits and Losses

Profit of the Operating Partnership is allocated in the following order: (i) to the General Partner and the Limited Partners in proportion to and up to the amount of cash distributions made during the year, and (ii) to the General Partner and Limited Partners in accordance with their percentage interests. Losses and depreciation and amortization expenses, non-recourse liabilities are allocated to the General Partner and Limited Partners in accordance with their percentage interests. Losses allocated to the Limited Partners are capped to the extent that such an allocation would not cause a deficit in the Limited Partners’ capital account. Such losses are, therefore, allocated to the General Partner. If any Partner’s capital balance were to fall into a deficit, any income and gains are allocated to each Partner sufficient to eliminate its negative capital balance.

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COMMITMENTS AND CONTINGENCIES (UNITED DOMINION REALTY, L.P.) Commitments and Contingencies (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

COMMITMENTS AND CONTINGENCIES

13. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Commitments

The following summarizes the Company’s real estate commitments at March 31, 2019  (dollars in thousands):

	Number	UDR's			UDR's Remaining
	Properties	Investment (a)			Commitment
Wholly-owned — redevelopment	2	$	245		$	35,255
Joint ventures:
Unconsolidated joint ventures - development	1		5,471			26,530	(b)
Preferred equity investments	2		25,711	(c)		39,618	(d)
Other investments	-		4,280			13,500	(e)
Total		$	35,707		$	114,903

(a) Represents UDR’s investment as of March 31, 2019.

(b) Represents UDR’s proportionate share of expected remaining costs to complete the development.

(c) Represents UDR’s investment in 1300 Fairmount and Essex for the properties under development as of March 31, 2019.

(d) Represents UDR’s remaining commitment for 1300 Fairmount and Essex.

(e) Represents UDR’s remaining commitment for other investment ventures.

Purchase Commitments

During the three months ended March 31, 2019, the Company entered into a contract to purchase a  313 apartment home operating community located in King of Prussia, Pennsylvania for approximately $108.5 million. The Company made a $5.4 million deposit on the purchase which, as of March 31, 2019, is generally non-refundable other than due to a failure of closing conditions pursuant to the terms of the agreement. The acquisition is expected to close in the second quarter of 2019, subject to customary closing conditions.

Contingencies

Litigation and Legal Matters

The Company is subject to various legal proceedings and claims arising in the ordinary course of business. The Company cannot determine the ultimate liability with respect to such legal proceedings and claims at this time. The Company 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 flows.

United Dominion Reality L.P.

Entity information

COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES

Commitments

Real Estate Commitments

The following summarizes the Operating Partnership’s real estate commitments at March 31, 2019 (dollars in thousands):

	Number			Operating Partnership's
	Properties	Investment		Remaining Commitment
Real estate communities - redevelopment	1	$	108	$	24,892

Contingencies

Litigation and Legal Matters

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

XML

REPORTABLE SEGMENTS (UNITED DOMINION REALTY, L.P.)

3 Months Ended

Mar. 31, 2019

Entity information

REPORTABLE SEGMENTS

14. REPORTABLE SEGMENTS

GAAP guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker to decide how to allocate resources and for purposes of assessing such segments’ performance. UDR’s Chief Operating Decision Maker is comprised of several members of its executive management team who use several generally accepted industry financial measures to assess the performance of the business for our reportable operating segments.

UDR owns and operates multifamily apartment communities that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures for UDR’s apartment communities are rental income and net operating income (“NOI”). Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI is defined as rental income less direct property rental expenses. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI is property management expense, which is calculated as 2.875% of property revenue to cover the regional supervision and accounting costs related to consolidated property operations, and land rent. UDR’s Chief Operating Decision Maker utilizes NOI as the key measure of segment profit or loss.

UDR’s two reportable segments are Same-Store Communities and Non-Mature Communities/Other:

· Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2018 and held as of March 31, 2019. A comparison of operating results from the prior year is meaningful as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior period, there is no plan to conduct substantial redevelopment activities, and the community is not held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

· Non-Mature Communities/Other represent those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.

Management evaluates the performance of each of our apartment communities on a Same-Store Community and Non-Mature Community/Other basis, as well as individually and geographically. This is consistent with the aggregation criteria under GAAP as each of our apartment communities generally has similar economic characteristics, facilities, services, and tenants. Therefore, the Company’s reportable segments have been aggregated by geography in a manner identical to that which is provided to the Chief Operating Decision Maker.

Revenue is measured based on consideration specified in contracts with customers. The Company recognizes revenue when it satisfies a performance obligation by providing the services specified in a contract to the customer. All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of UDR’s total revenues during the three months ended March 31, 2019 and 2018.

The following is a description of the principal streams from which the Company generates its revenue:

Lease Revenue

Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the noncancellable lease term, inclusive of any periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a straight-line basis over the lease term.

Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance reimbursements from retail leases. These services represent non-lease components in a contract as the Company transfers a service to the lessee other than the right to use the underlying asset. The Company has elected the practical expedient under the leasing standard to not separate lease and non-lease components from its resident and retail lease contracts as the timing and pattern of revenue recognition for the non-lease component and related lease component are the same and the combined single lease component would be classified as an operating lease. 

Other Revenue

Other revenue is generated by services provided by the Company to its retail and residential tenants and other unrelated third parties. These fees are generally recognized as earned.

Joint venture management and other fees

The Joint venture management and other fees revenue consists of management fees charged to our equity method joint ventures per the terms of contractual agreements and other fees. Joint venture fee revenue is recognized monthly as the management services are provided and the fees are earned or upon a transaction whereby the Company earns a fee. Joint venture management and other fees are not allocable to a specific reportable segment or segments.

The following table details rental income and NOI for UDR’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	100,565	$	96,665
Mid-Atlantic Region		54,300		52,694
Southeast Region		29,532		28,339
Northeast Region		30,192		29,585
Southwest Region		14,152		13,821
Non-Mature Communities/Other		30,162		21,393
Total segment and consolidated rental income	$	258,903	$	242,497
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	3,154	$	2,738
Mid-Atlantic Region		2,003		1,736
Southeast Region		1,788		1,697
Northeast Region		630		581
Southwest Region		733		569
Non-Mature Communities/Other		711		665
Total segment and consolidated rental income	$	9,019	$	7,986
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	103,719	$	99,403
Mid-Atlantic Region		56,303		54,430
Southeast Region		31,320		30,036
Northeast Region		30,822		30,166
Southwest Region		14,885		14,390
Non-Mature Communities/Other		30,873		22,058
Total segment and consolidated rental income	$	267,922	$	250,483
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	78,439	$	74,979
Mid-Atlantic Region		39,179		37,506
Southeast Region		22,010		21,047
Northeast Region		20,977		20,951
Southwest Region		8,992		8,477
Non-Mature Communities/Other		20,086		13,654
Total segment and consolidated NOI		189,683		176,614
Reconciling items:
Joint venture management and other fees		2,751		2,822
Property management		(7,703)		(6,888)
Other operating expenses		(5,646)		(2,009)
Real estate depreciation and amortization		(112,468)		(108,136)
General and administrative		(12,467)		(11,759)
Casualty-related (charges)/recoveries, net		—		(940)
Other depreciation and amortization		(1,656)		(1,691)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		49		(1,677)
Interest expense		(33,542)		(29,943)
Interest income and other income/(expense), net		9,813		2,759
Tax (provision)/benefit, net		(2,212)		(227)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.	$	24,503	$	81,756

(a) Same-Store Community population consisted of 37,959 apartment homes.

The following table details the assets of UDR’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets:
Same-Store Communities:
West Region	$	3,773,413	$	3,763,366
Mid-Atlantic Region		2,323,591		2,317,369
Southeast Region		786,575		779,310
Northeast Region		1,494,009		1,491,994
Southwest Region		448,299		447,305
Non-Mature Communities/Other		1,854,668		1,396,815
Total segment assets		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Total segment assets — net book value		6,916,456		6,541,999
Reconciling items:
Cash and cash equivalents		1,043		185,216
Restricted cash		23,111		23,675
Notes receivable, net		36,974		42,259
Investment in and advances to unconsolidated joint ventures, net		749,100		780,869
Operating lease right-of-use assets		94,145		—
Other assets		134,896		137,710
Total consolidated assets	$	7,955,725	$	7,711,728

Markets included in the above geographic segments are as follows:

i. West Region — Orange County, San Francisco, Seattle, Los Angeles, Monterey Peninsula, Other Southern California and Portland

ii. Mid-Atlantic Region — Metropolitan D.C., Richmond and Baltimore

iii. Southeast Region — Orlando, Tampa, Nashville and Other Florida

iv. Northeast Region — New York and Boston

v. Southwest Region — Dallas, Austin and Denver

United Dominion Reality L.P.

Entity information

REPORTABLE SEGMENTS

12. REPORTABLE SEGMENTS

GAAP guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker to decide how to allocate resources and for purposes of assessing such segments’ performance. The Operating Partnership has the same Chief Operating Decision Maker as that of its parent, the General Partner. The Chief Operating Decision Maker consists of several members of UDR’s executive management team who use several generally accepted industry financial measures to assess the performance of the business for our reportable operating segments.

The Operating Partnership owns and operates multifamily apartment communities throughout the United States that generate rental and other property related income through the leasing of apartment homes to a diverse base of tenants. The primary financial measures of the Operating Partnership’s apartment communities are rental income and net operating income (“NOI”), and are included in the Chief Operating Decision Maker’s assessment of the Operating Partnership’s performance on a consolidated basis. Rental income represents gross market rent less adjustments for concessions, vacancy loss and bad debt. NOI is defined as total revenues less direct property operating expenses. Rental expenses include real estate taxes, insurance, personnel, utilities, repairs and maintenance, administrative and marketing. Excluded from NOI are property management costs, which are the Operating Partnership’s allocable share of costs incurred by the General Partner for shared services of corporate level property management employees and related support functions and costs. The Chief Operating Decision Maker of the General Partner utilizes NOI as the key measure of segment profit or loss.

The Operating Partnership’s two reportable segments are Same-Store Communities and Non-Mature Communities/Other:

· Same-Store Communities represent those communities acquired, developed, and stabilized prior to January 1, 2018 and held as of March 31, 2019. A comparison of operating results from the prior year is meaningful as these communities were owned and had stabilized occupancy and operating expenses as of the beginning of the prior period, there is no plan to conduct substantial redevelopment activities, and the community is not held for disposition within the current year. A community is considered to have stabilized occupancy once it achieves 90% occupancy for at least three consecutive months.

· Non-Mature Communities/Other represent those communities that do not meet the criteria to be included in Same-Store Communities, including, but not limited to, recently acquired, developed and redeveloped communities, and the non-apartment components of mixed use properties.

Management of the General Partner evaluates the performance of each of the Operating Partnership’s apartment communities on a Same-Store Community and Non-Mature Community/Other basis, as well as individually and geographically. This is consistent with the aggregation criteria under GAAP as each of our apartment communities generally has similar economic characteristics, facilities, services, and tenants. Therefore, the Operating Partnership’s reportable segments have been aggregated by geography in a manner identical to that which is provided to the Chief Operating Decision Maker.

All revenues are from external customers and no single tenant or related group of tenants contributed 10% or more of the Operating Partnership’s total revenues during the three months ended March 31, 2019 and 2018.

The following is a description of the principal streams from which the Operating Partnership generates its revenue:

Lease Revenue

Lease revenue related to leases is recognized on an accrual basis when due from residents or tenants in accordance with ASC 842, Leases. Rental payments are generally due on a monthly basis and recognized on a straight-line basis over the noncancellable lease term, inclusive of any periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. In addition, in circumstances where a lease incentive is provided to tenants, the incentive is recognized as a reduction of lease revenue on a straight-line basis over the lease term.

Lease revenue also includes all pass-through revenue from retail and residential leases and common area maintenance reimbursements from retail leases. These services represent non-lease components in a contract as the Operating Partnership transfers a service to the lessee other than the right to use the underlying asset. The Operating Partnership has elected the practical expedient under the leasing standard to not separate lease and non-lease components from its resident and retail lease contracts as the timing and pattern of revenue recognition for the non-lease component and related lease component are the same and the combined single lease component would be classified as an operating lease. 

Other Revenue

Other revenue is generated by services provided by the Operating Partnership to its retail and residential tenants and other unrelated third parties. These fees are generally recognized as earned.

The following table details rental income and NOI for the Operating Partnership’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to OP unitholders on the Consolidated Statements of Operations (dollars in thousands):

	Three Months Ended
	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	60,782	$	58,340
Mid-Atlantic Region		14,810		14,532
Southeast Region		12,462		11,979
Northeast Region		7,972		7,848
Non-Mature Communities/Other		8,650		10,470
Total segment and consolidated rental income	$	104,676	$	103,169
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	1,994	$	1,824
Mid-Atlantic Region		535		495
Southeast Region		776		750
Northeast Region		166		166
Non-Mature Communities/Other		187		188
Total segment and consolidated rental income	$	3,658	$	3,423
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	62,776	$	60,164
Mid-Atlantic Region		15,345		15,027
Southeast Region		13,238		12,729
Northeast Region		8,138		8,014
Non-Mature Communities/Other		8,837		10,658
Total segment and consolidated rental income	$	108,334	$	106,592
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	47,798	$	45,829
Mid-Atlantic Region		10,524		10,393
Southeast Region		9,257		8,792
Northeast Region		6,205		6,216
Non-Mature Communities/Other		5,355		7,059
Total segment and consolidated NOI		79,139		78,289
Reconciling items:
Property management		(2,979)		(2,931)
Other operating expenses		(2,400)		(1,554)
Real estate depreciation and amortization		(34,654)		(37,565)
General and administrative		(4,661)		(4,309)
Casualty-related (charges)/recoveries, net		—		(342)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		(2,740)		(5,017)
Interest expense		(7,371)		(5,026)
Net (income)/loss attributable to noncontrolling interests		(388)		(418)
Net income/(loss) attributable to OP unitholders	$	23,946	$	91,427

(a) Same-Store Community population consisted of 15,723 apartment homes.

The following table details the assets of the Operating Partnership’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets
Same-Store Communities
West Region	$	1,988,360	$	1,981,007
Mid-Atlantic Region		664,103		663,083
Southeast Region		343,520		340,722
Northeast Region		406,759		406,149
Non-Mature Communities/Other		425,133		421,024
Total segment assets		3,827,875		3,811,985
Accumulated depreciation		(1,692,702)		(1,658,161)
Total segment assets - net book value		2,135,173		2,153,824
Reconciling items:
Cash and cash equivalents		59		125
Restricted cash		14,010		13,563
Investment in unconsolidated entities		95,673		103,026
Operating lease right-of-use assets		93,987		—
Other assets		24,425		34,052
Total consolidated assets	$	2,363,327	$	2,304,590

Markets included in the above geographic segments are as follows:

i. West Region — Orange County, San Francisco, Seattle, Los Angeles, Monterey Peninsula, Other Southern California and Portland

ii. Mid-Atlantic Region — Metropolitan, D.C. and Baltimore

iii. Southeast Region —  Tampa, Nashville and Other Florida

iv. Northeast Region — New York and Boston

v. Southwest Region — Denver

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SIGNIFICANT ACCOUNTING POLICIES (UNITED DOMINION REALTY, L.P.) (Policies)

3 Months Ended

Mar. 31, 2019

Entity information

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Company on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Company is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Company on January 1, 2019.

The Company elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Company also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Company recognized right-of-use assets of $94.3 million and lease liabilities of $88.3 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizing the lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.7 million and $140.7 million, respectively, during the remainder of 2019. The Company will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Company also elected.

Principles of Consolidation

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the consolidation guidance. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest.

Real Estate Sales Gain Recognition

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Company generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Company will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Company sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Company will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Company will record a full gain or loss in the period the property is contributed.

To the extent that the Company acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Company will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Company will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Company will not recognize a gain or loss on consolidation of a property.

Comprehensive Income/(Loss)

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to stockholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Company’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges, (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) into earnings, and the allocation of other comprehensive income/(loss) to noncontrolling interests. The (gain)/loss on derivative instruments reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 11, Derivatives and Hedging Activity, for further discussion. The allocation of other comprehensive income/(loss) to redeemable noncontrolling interests during the three months ended March 31, 2019 and 2018, was $(0.3) million and $0.1 million, respectively.

Income Taxes

Income Taxes

Due to the structure of the Company as a REIT and the nature of the operations for the operating properties, no provision for federal income taxes has been provided for at UDR. Historically, the Company has generally incurred only state and local excise and franchise taxes. UDR has elected for certain consolidated subsidiaries to be treated as taxable REIT subsidiaries (“TRS”).

Income taxes for our TRS are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rate is recognized in earnings in the period of the enactment date. The Company’s deferred tax assets are generally the result of differing depreciable lives on capitalized assets and timing of expense recognition for certain accrued liabilities. As of March 31, 2019 and December 31, 2018, UDR’s net deferred tax asset/(liability) was less than $(0.1) million and less than $(0.1) million, respectively.

GAAP defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. GAAP also provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition.

The Company recognizes its tax positions and evaluates them using a two-step process. First, UDR determines whether a tax position is more likely than not (greater than 50 percent probability) to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

UDR had no material unrecognized tax benefit, accrued interest or penalties at March 31, 2019. UDR and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The tax years 2015 through 2018 remain open to examination by tax jurisdictions to which we are subject. When applicable, UDR recognizes interest and/or penalties related to uncertain tax positions in Tax (provision)/benefit, net on the Consolidated Statements of Operations.

United Dominion Reality L.P.

Entity information

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016‑13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, and to present the net amount of the financial instrument expected to be collected. The updated standard will be effective for the Operating Partnership on January 1, 2020. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which amends the transition requirements and scope of ASU 2016-13 and clarifies that receivables arising from operating leases are not within the scope of the credit losses standard, but rather, should be accounted for in accordance with the leases standard. The Operating Partnership is currently evaluating the effect that the updated standard will have on the consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The standard amends the existing lease accounting guidance and requires lessees to recognize a lease liability and a right-of-use asset for all leases on their balance sheets. Lessees of operating leases will continue to recognize lease expense in a manner similar to current accounting. For lessors, accounting for leases under the new guidance is substantially the same as in prior periods, but eliminates current real estate-specific provisions and changes the treatment of initial direct costs. The standard became effective for the Operating Partnership on January 1, 2019.

The Operating Partnership elected the following package of practical expedients provided by the standard: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases. The Operating Partnership also elected the short-term lease exception provided for in the standard and therefore will only recognize right-of-use assets and lease liabilities for leases with a term greater than one year.

The Operating Partnership recognized right-of-use assets of $94.2 million and lease liabilities of $88.2 million as of January 1, 2019 upon adoption of the standard. The right-of-use assets included $6.0 million of prepaid rent and intangible assets that was included within Other assets on our Consolidated Balance Sheets as of December 31, 2018.

The lease liabilities represent the present value of the remaining minimum lease payments as of January 1, 2019 related to ground leases for communities where we are the lessee. The right-of-use assets represent our right to use an underlying asset for the lease term, which are calculated utilizingthe lease liabilities plus any prepaid lease payments and intangible assets for ground leases acquired in the purchase of real estate. Our right-of-use assets and related lease liabilities recognized as of January 1, 2019 may change as a result of updates to the projected future minimum lease payments. Certain of our ground lease agreements where we are the lessee have future minimum lease payments that reset in the future based upon a percentage of the fair market value of the land at the time of the reset. One of these resets is in process as of March 31, 2019 and is estimated to increase our right-of-use assets and lease liabilities up to a maximum of $146.5 million and $140.5 million, respectively, during the remainder of 2019. The Operating Partnership will continue to recognize lease expense for these leases in a manner similar to previous accounting based on our election of the package of practical expedients. However, in the event we modify existing ground leases and/or enter into new ground leases subsequent to the adoption of the standard, such leases would likely be classified as finance leases under the standard and require expense recognition based on the effective interest method. Under the standard, initial direct costs for both lessees and lessors would include only those costs that are incremental to the arrangement and would not have been incurred if the lease had not been obtained. As a result, subsequent to the adoption of the standard, we are now expensing non-incremental leasing costs as incurred.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02, Leases. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both: (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Operating Partnership elected the practical expedient to account for lease and non-lease components as a single component in lease contracts where we are the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard, which the Operating Partnership also elected.

Principles of Consolidation

Principles of Consolidation

The Operating Partnership accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with the amended consolidation guidance. The Operating Partnership first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Operating Partnership consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Operating Partnership consolidates an entity when it controls the entity through ownership of a majority voting interest.

Income/(Loss) Per Operating Partnership Unit

Income/(Loss) Per Operating Partnership Unit

Basic income/(loss) per OP Unit is computed by dividing net income/(loss) attributable to the general and limited partner unitholders by the weighted average number of general and limited partner units outstanding during the year. Diluted income/(loss) per OP Unit reflects the potential dilution that could occur if securities or other contracts to issue OP Units were exercised or converted into OP Units or resulted in the issuance of OP Units and then shared in the income/(loss) of the Operating Partnership.

Real Estate Sales Gain Recognition

Real Estate Sales Gain Recognition

For sale transactions resulting in a transfer of a controlling financial interest of a property, the Operating Partnership generally derecognizes the related assets and liabilities from its Consolidated Balance Sheets and records the gain or loss in the period in which the transfer of control occurs. If control of the property has not transferred to the counterparty, the criteria for derecognition are not met and the Operating Partnership will continue to recognize the related assets and liabilities on its Consolidated Balance Sheets.

Sale transactions to entities in which the Operating Partnership sells a controlling financial interest in a property but retains a noncontrolling interest are accounted for as partial sales. Partial sales resulting in a change in control are accounted for at fair value and a full gain or loss is recognized. Therefore, the Operating Partnership will record a gain or loss on the partial interest sold, and the initial measurement of our retained interest will be accounted for at fair value. 

Sales of real estate to joint ventures or other noncontrolled investees are also accounted for at fair value and the Operating Partnership will record a full gain or loss in the period the property is contributed.

To the extent that the Operating Partnership acquires a controlling financial interest in a property that it previously accounted for as an equity method investment, the Operating Partnership will not remeasure its previously held interest if the acquisition is treated as an asset acquisition. The Operating Partnership will include the carrying amount of its previously held equity method interest along with the consideration paid and transaction costs incurred in determining the amounts to allocate to the related assets and liabilities acquired on its Consolidated Balance Sheets. When treated as an asset acquisition, the Operating Partnership will not recognize a gain or loss on consolidation of a property.

Comprehensive Income/(Loss)

Comprehensive Income/(Loss)

Comprehensive income/(loss), which is defined as the change in equity during each period from transactions and other events and circumstances from nonowner sources, including all changes in equity during a period except for those resulting from investments by or distributions to unitholders, is displayed in the accompanying Consolidated Statements of Comprehensive Income/(Loss). For the three months ended March 31, 2019 and 2018, the Operating Partnership’s other comprehensive income/(loss) consisted of the gain/(loss) on derivative instruments that are designated as and qualify as cash flow hedges and (gain)/loss reclassified from other comprehensive income/(loss) into earnings. The (gain)/loss reclassified from other comprehensive income/(loss) is included in Interest expense on the Consolidated Statements of Operations. See Note 9, Derivatives and Hedging Activity, for further discussion.

Income Taxes

Income Taxes

The taxable income or loss of the Operating Partnership is reported on the tax returns of the partners. Accordingly, no provision has been made in the accompanying financial statements for federal or state income taxes on income that is passed through to the partners. However, any state or local revenue, excise or franchise taxes that result from the operating activities of the Operating Partnership are recorded at the entity level. The Operating Partnership’s tax returns are subject to examination by federal and state taxing authorities. Net income for financial reporting purposes differs from the net income for income tax reporting purposes primarily due to temporary differences, principally real estate depreciation and the tax deferral of certain gains on property sales. The differences in depreciation result from differences in the book and tax basis of certain real estate assets and the differences in the methods of depreciation and lives of the real estate assets.

The Operating Partnership evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Operating Partnership’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Management of the Operating Partnership is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The Operating Partnership has no examinations in progress and none are expected at this time.

Management of the Operating Partnership has reviewed all open tax years (2015 through 2018) of tax jurisdictions and concluded there is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken in future tax returns.

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REAL ESTATE OWNED (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Entity information

Summary of carrying amounts for real estate owned (at cost)

The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	1,954,363	$	1,849,799
Depreciable property — held and used:
Land improvements		214,483		213,224
Building, improvements, and furniture, fixtures and equipment		8,475,755		8,133,136
Real estate intangible assets		35,954		—
Real estate owned		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Real estate owned, net	$	6,916,456	$	6,541,999

United Dominion Reality L.P.

Entity information

Summary of carrying amounts for real estate owned (at cost)

The following table summarizes the carrying amounts for our real estate owned (at cost) as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Land	$	711,256	$	711,256
Depreciable property — held and used:
Land improvements		92,624		92,000
Buildings, improvements, and furniture, fixtures and equipment		3,023,995		3,008,729
Real estate owned		3,827,875		3,811,985
Accumulated depreciation		(1,692,702)		(1,658,161)
Real estate owned, net	$	2,135,173	$	2,153,824

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UNCONSOLIDATED ENTITIES (UNITED DOMINION REALTY, L.P.) Unconsolidated Entities (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Unconsolidated entities

Combined summary of balance sheets relating to unconsolidated joint ventures and partnerships

Combined summary balance sheets relating to the unconsolidated joint ventures and partnerships (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	3,193,477	$	3,311,034
Cash and cash equivalents		44,714		49,867
Other assets		127,789		124,428
Total assets	$	3,365,980	$	3,485,329
Third party debt, net	$	2,032,098	$	2,125,350
Accounts payable and accrued liabilities		59,096		71,272
Total liabilities		2,091,194		2,196,622
Total equity	$	1,274,786	$	1,288,707

Schedule of combined financial information relating to unconsolidated joint ventures and partnerships operations (not just proportionate share)

Combined summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Total revenues	$	81,532	$	67,957
Property operating expenses		30,312		26,937
Real estate depreciation and amortization		29,580		26,848
Operating income/(loss)		21,640		14,172
Interest expense		(21,924)		(19,406)
Other income/(loss)		1,625		(5)
Net income/(loss)	$	1,341	$	(5,239)

United Dominion Reality L.P.

Unconsolidated entities

Combined summary of balance sheets relating to unconsolidated joint ventures and partnerships

Combined summary balance sheets relating to all of the DownREIT Partnership (not just our proportionate share) are presented below as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	March 31,		December 31,
	2019		2018
Total real estate, net	$	1,151,740	$	1,167,720
Cash and cash equivalents		21		39
Note receivable from the General Partner		218,520		221,022
Other assets		4,855		5,561
Total assets	$	1,375,136	$	1,394,342
Secured debt, net	$	430,890	$	431,735
Other liabilities		23,006		26,597
Total liabilities		453,896		458,332
Total capital	$	921,240	$	936,010

Schedule of combined financial information relating to unconsolidated joint ventures and partnerships operations (not just proportionate share)

Combined summary financial information relating to all of the DownREIT Partnership (not just our proportionate share) is presented below for the three months ended March 31, 2019 and 2018  (dollars in thousands):

	Three Months Ended
	March 31,
	2019		2018
Rental income	$	31,606	$	34,012
Property operating expenses		(13,096)		(14,487)
Real estate depreciation and amortization		(20,294)		(21,495)
Operating income/(loss)		(1,784)		(1,970)
Interest expense		(3,888)		(3,574)
Interest income on note receivable from the General Partner		1,988		1,196
Net income/(loss)	$	(3,684)	$	(4,348)

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LEASES (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Lease

Lessee - Future minimum lease payments and total operating lease liabilities

Future minimum lease payments and total operating lease liabilities from our ground leases and office space as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases		Office Space		Total
2019	$	3,676	$	57	$	3,733
2020		4,901		76		4,977
2021		4,901		32		4,933
2022		4,901		-		4,901
2023		4,901		-		4,901
Thereafter		313,919		-		313,919
Total future minimum lease payments (undiscounted)		337,199		165		337,364
Difference between future undiscounted cash flows and discounted cash flows		(249,138)		(8)		(249,146)
Total operating lease liabilities (discounted)	$	88,061	$	157	$	88,218

Lessee - components of operating lease expenses

The components of operating lease expenses from our ground leases and office space were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total ground lease expense (b)		2,279
Contractual office space expense (b)		19
Total operating lease expense	$	2,298

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses and office space expense is recorded in General and administrative on the Consolidated Statements of Operations.

Lessor - Future minimum lease payments

Future minimum lease payments from our retail and commercial leases and our ground lease as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases		Ground Lease		Total
2019	$	14,826	$	1,995	$	16,821
2020		19,825		2,660		22,485
2021		18,768		2,660		21,428
2022		17,071		2,660		19,731
2023		15,712		2,660		18,372
Thereafter		85,712		110,168		195,880
Total future minimum lease payments (a)	$	171,914	$	122,803	$	294,717

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

United Dominion Reality L.P.

Lease

Lessee - Future minimum lease payments and total operating lease liabilities

Future minimum lease payments and total operating lease liabilities from our ground leases as of March 31, 2019 are as follows (dollars in thousands):

	Ground Leases
2019	$	3,676
2020		4,901
2021		4,901
2022		4,901
2023		4,901
Thereafter		313,919
Total future minimum lease payments (undiscounted)		337,199
Difference between future undiscounted cash flows and discounted cash flows		(249,138)
Total operating lease liabilities (discounted)	$	88,061

Lessee - components of operating lease expenses

The components of operating lease expenses from our ground leases were as follows (dollars in thousands):

	Three Months Ended
	March 31, 2019
Ground lease expense:
Contractual lease rent expense	$	2,140
Variable ground lease expense (a)		139
Total operating lease expense	$	2,279

(a) Variable ground lease expense includes adjustments such as changes in the consumer price index and payments based on a percentage of income of the lessee.

(b) Ground lease expense is reported within the line item Other operating expenses on the Consolidated Statements of Operations.

Lessor - Future minimum lease payments

Future minimum lease payments from our retail and commercial leases as of March 31, 2019 are as follows (dollars in thousands):

	Retail and Commercial Leases
2019	$	5,357
2020		7,600
2021		7,270
2022		6,684
2023		6,375
Thereafter		19,578
Total future minimum lease payments (a)	$	52,864

(a) We have excluded our apartment home leases from this table as nearly all of our apartment home leases have initial terms of 12 months of less.

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DEBT, NET (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Entity information

Schedule of debt instruments

The following is a summary of our secured and unsecured debt at March 31, 2019 and December 31, 2018  (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
					Weighted		Weighted
					Average		Average	Number of
	March 31,		December 31,		Interest		Years to	Communities
	2019		2018		Rate		Maturity	Encumbered
Secured Debt:
Fixed Rate Debt
Mortgage notes payable (a)	$	416,468	$	417,989	3.82	%	5.6	7
Fannie Mae credit facilities (b)		90,000		90,000	3.95	%	1.3	1
Deferred financing costs		(1,275)		(1,343)
Total fixed rate secured debt, net		505,193		506,646	3.85	%	4.8	8
Variable Rate Debt
Tax-exempt secured notes payable (c)		94,700		94,700	2.31	%	3.9	2
Deferred financing costs		(97)		(119)
Total variable rate secured debt, net		94,603		94,581	2.31	%	3.9	2
Total Secured Debt, net		599,796		601,227	3.60	%	4.7	10
Unsecured Debt:
Variable Rate Debt
Borrowings outstanding under unsecured credit facility due January 2023 (d) (j)		—		—	—	%	3.8
Borrowings outstanding under unsecured commercial paper program due April 2019 (e) (j)		90,000		101,115	2.78	%	0.1
Borrowings outstanding under unsecured working capital credit facility due January 2021(f)		54,310		16	3.32	%	1.8
Term Loan due September 2023 (d) (j)		35,000		35,000	3.39	%	4.5
Fixed Rate Debt
3.70% Medium-Term Notes due October 2020 (net of discounts of $12 and $14, respectively) (j)		299,988		299,986	3.70	%	1.5
4.63% Medium-Term Notes due January 2022 (net of discounts of $997 and $1,087, respectively) (j)		399,003		398,913	4.63	%	2.8
1.93% Term Loan due September 2023 (d) (j)		315,000		315,000	1.93	%	4.5
3.75% Medium-Term Notes due July 2024 (net of discounts of $548 and $574, respectively) (g) (j)		299,452		299,426	3.75	%	5.3
8.50% Debentures due September 2024		15,644		15,644	8.50	%	5.5
4.00% Medium-Term Notes due October 2025 (net of discounts of $447 and $465, respectively) (h) (j)		299,553		299,535	4.00	%	6.5
2.95% Medium-Term Notes due September 2026 (j)		300,000		300,000	2.95	%	7.4
3.50% Medium-Term Notes due July 2027 (net of discounts of $582 and $600, respectively) (j)		299,418		299,400	3.50	%	8.3
3.50% Medium-Term Notes due January 2028 (net of discounts of $1,043 and $1,072, respectively) (j)		298,957		298,928	3.50	%	8.8
4.40% Medium-Term Notes due January 2029 (net of discounts of $6 and $6, respectively) (i) (j)		299,994		299,994	4.40	%	9.8
Other		15		16
Deferred financing costs		(16,301)		(16,413)
Total Unsecured Debt, net		2,990,033		2,946,560	3.65	%	5.7
Total Debt, net	$	3,589,829	$	3,547,787	3.73	%	5.5

For purposes of classification of the above table, variable rate debt with a derivative financial instrument designated as a cash flow hedge is deemed as fixed rate debt due to the Company having effectively established a fixed interest rate for the underlying debt instrument.

Our secured debt instruments generally feature either monthly interest and principal or monthly interest-only payments with balloon payments due at maturity. As of March 31, 2019, secured debt encumbered $1.3 billion or 12.2% of UDR’s total real estate owned based upon gross book value ($9.4 billion or 87.8% of UDR’s real estate owned based on gross book value is unencumbered).

(a) At March 31, 2019, fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2020 through September 2028 and carry interest rates ranging from 3.15% to 4.35%.

The Company will from time to time acquire properties subject to fixed rate debt instruments. In those situations, the Company records the debt at its estimated fair value and amortizes any difference between the fair value and par value to interest expense over the life of the underlying debt instrument.

During the three months ended March 31, 2019 and 2018, the Company had $0.6 million and $0.7 million, respectively, of amortization of the fair market adjustment of debt assumed in the acquisition of properties, which was included in Interest expense on the Consolidated Statements of Operations. The unamortized fair market adjustment was a net premium of $4.4 million and $5.0 million at March 31, 2019 and December 31, 2018, respectively.

(b) UDR had one secured credit facility  with Fannie Mae with a commitment of $90.0 million at March 31, 2019.  The Fannie Mae credit facility matures in July 2020  and bears interest at a fixed rate of 3.95%.

Further information related to this credit facility is as follows (dollars in thousands):

	March 31,			December 31,
	2019			2018
Borrowings outstanding	$	90,000		$	90,000
Weighted average borrowings during the period ended		90,000			253,813
Maximum daily borrowings during the period ended		90,000			314,869
Weighted average interest rate during the period ended		4.0	%		4.7	%
Weighted average interest rate at the end of the period		4.0	%		4.0	%

(c) The variable rate mortgage notes payable that secure tax-exempt housing bond issues mature in August 2019 and March 2032. Interest on these notes is payable in monthly installments. The variable rate mortgage notes have interest rates ranging from 2.25% to 2.47% as of March 31, 2019.

(d) The Company has a $1.1 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $350.0 million unsecured term loan (the “Term Loan”). The credit agreement for these facilities (the “Credit Agreement”) allows the total commitments under the Revolving Credit Facility and the total borrowings under the Term Loan to be increased to an aggregate maximum amount of up to $2.0 billion, subject to certain conditions, including obtaining commitments from one or more lenders. The Revolving Credit Facility has a scheduled maturity date of January 31, 2023, with two six-month extension options, subject to certain conditions. The Term Loan has a scheduled maturity date of September 30, 2023. 

Based on the Company’s current credit rating, the Revolving Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points and a facility fee of 15 basis points, and the Term Loan has an interest rate equal to LIBOR plus a margin of 90 basis points. Depending on the Company’s credit rating, the margin under the Revolving Credit Facility ranges from 75 to 145 basis points, the facility fee ranges from 10 to 30 basis points, and the margin under the Term Loan ranges from 80 to 165 basis points.

The Credit Agreement contains customary representations and warranties and financial and other affirmative and negative covenants. The Credit Agreement also includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable.

The following is a summary of short-term bank borrowings under the Revolving Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total revolving credit facility	$	1,100,000		$	1,100,000
Borrowings outstanding at end of period (1)		—			—
Weighted average daily borrowings during the period ended		—			—
Maximum daily borrowings during the period ended		—			—
Weighted average interest rate during the period ended		—	%		—	%
Interest rate at end of the period		—	%		—	%

(1) Excludes $3.3 million and $3.3 million of letters of credit at March 31, 2019 and December 31, 2018, respectively.

(e) The Company has an unsecured commercial paper program. Under the terms of the program, the Company may issue unsecured commercial paper up to a maximum aggregate amount outstanding of $500.0 million. The notes are sold under customary terms in the United States commercial paper market and rank pari passu with all of the Company’s other unsecured indebtedness. The notes are fully and unconditionally guaranteed by the Operating Partnership.

The following is a summary of short-term bank borrowings under the unsecured commercial paper program at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total unsecured commercial paper program	$	500,000		$	500,000
Borrowings outstanding at end of period		90,000			101,115
Weighted average daily borrowings during the period ended		149,365			344,235
Maximum daily borrowings during the period ended		330,000			440,000
Weighted average interest rate during the period ended		2.8	%		2.4	%
Interest rate at end of the period		2.8	%		2.9	%

(f) The Company has a working capital credit facility, which provides for a $75.0 million unsecured revolving credit facility (the “Working Capital Credit Facility”) with a scheduled maturity date of January 15, 2021. Based on the Company’s current credit rating, the Working Capital Credit Facility has an interest rate equal to LIBOR plus a margin of 82.5 basis points. Depending on the Company’s credit rating, the margin ranges from 75 to 145 basis points.

The following is a summary of short-term bank borrowings under the Working Capital Credit Facility at March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,			December 31,
	2019			2018
Total working capital credit facility	$	75,000		$	75,000
Borrowings outstanding at end of period		54,310			16
Weighted average daily borrowings during the period ended		22,967			26,101
Maximum daily borrowings during the period ended		66,170			64,633
Weighted average interest rate during the period ended		3.3	%		2.9	%
Interest rate at end of the period		3.3	%		3.3	%

(g) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $100.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 3.69%.

(h) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $200.0 million of this debt. The all-in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.53%.

(i) The Company previously entered into forward starting interest rate swaps to hedge against interest rate risk on $150.0 million of this debt. The all in weighted average interest rate, inclusive of the impact of these interest rate swaps, was 4.27%.

(j) The Operating Partnership is a guarantor of this debt.

Secured credit facilities

Further information related to this credit facility is as follows (dollars in thousands):

	March 31,			December 31,
	2019			2018
Borrowings outstanding	$	90,000		$	90,000
Weighted average borrowings during the period ended		90,000			253,813
Maximum daily borrowings during the period ended		90,000			314,869
Weighted average interest rate during the period ended		4.0	%		4.7	%
Weighted average interest rate at the end of the period		4.0	%		4.0	%

Schedule of aggregate maturities, including amortizing principal payments of secured and unsecured debt

The aggregate maturities, including amortizing principal payments on secured and unsecured debt, of total debt for the next ten calendar years subsequent to March 31, 2019 are as follows (dollars in thousands):

	Total Fixed		Total Variable		Total		Total		Total
Year	Secured Debt		Secured Debt		Secured Debt		Unsecured Debt		Debt
2019	$	2,860	$	67,700	$	70,560	$	90,000	$	160,560
2020		198,076		—		198,076		300,000		498,076
2021		1,117		—		1,117		54,310		55,427
2022		1,157		—		1,157		400,000		401,157
2023		41,245		—		41,245		350,000		391,245
2024		—		—		—		315,644		315,644
2025		127,600		—		127,600		300,000		427,600
2026		50,000		—		50,000		300,000		350,000
2027		—		—		—		300,000		300,000
2028		80,000		—		80,000		300,000		380,000
Thereafter		—		27,000		27,000		300,000		327,000
Subtotal		502,055		94,700		596,755		3,009,954		3,606,709
Non-cash (a)		3,138		(97)		3,041		(19,921)		(16,880)
Total	$	505,193	$	94,603	$	599,796	$	2,990,033	$	3,589,829

(a) Includes the unamortized balance of fair market value adjustments, premiums/discounts and deferred financing costs. For the three months ended March 31, 2019 and 2018, the Company amortized $1.0 million and $1.0 million, respectively, of deferred financing costs into Interest expense.    

United Dominion Reality L.P.

Entity information

Schedule of debt instruments

Secured debt consists of the following as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Principal Outstanding				As of March 31, 2019
							Weighted
					Weighted		Average
	March 31,		December 31,		Average		Years to	Communities
	2019		2018		Interest Rate		Maturity	Encumbered
Secured Debt
Tax-exempt secured note payable	$	27,000	$	27,000	2.47	%	13.0	1
Deferred financing costs		(69)		(71)
Total Secured Debt, Net	$	26,931	$	26,929	2.50	%	13.0	1

XML

RELATED PARTY TRANSACTIONS (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

United Dominion Reality L.P.

Related Party Transaction [Line Items]

Schedule of Notes payable due to General Partner

The following table summarizes the Operating Partnership’s Notes payable due to the General Partner as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	Interest rate at		Balance Outstanding
	March 31,		March 31,		December 31,
	2019		2019		2018
Note due August 2021	5.34	%	$	5,500	$	5,500
Note due December 2023	5.18	%		83,196		83,196
Note due April 2026	4.12	%		184,638		184,638
Note due November 2028	4.69	%		133,205		133,205
Note due December 2028 (a)	3.73	%		284,435		293,576
Total notes payable due to the General Partner			$	690,974	$	700,115

In December 2018, the Operating Partnership converted the remaining outstanding portion of the Advances (to)/from the General Partner capital balance in connection with entering into an unsecured revolving note payable with the General Partner.  There is no limit on the total commitments under this note. Interest is incurred on the unpaid principal balance at a variable interest rate equivalent to the General Partner’s weighted average interest rate on borrowings, or 3.73% as of March 31, 2019. The note matures on December 1, 2028.  To the extent there is an outstanding principal balance on the revolving note payable, the General Partner, at its discretion, can demand payment at any time prior to the stated maturity date of the note,

XML

FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Entity information

Schedule of estimated fair values

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018, are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	36,974	$	40,329	$	—	$	—	$	40,329
Derivatives - Interest rate contracts (b)		3,315		3,315		—		3,315		—
Total assets	$	40,289	$	43,644	$	—	$	3,315	$	40,329
Derivatives - Interest rate contracts (b)	$	2,285	$	2,285	$	—	$	2,285	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		416,468		423,329		—		—		423,329
Fannie Mae credit facilities		90,000		90,540		—		—		90,540
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		54,310		54,310		—		—		54,310
Commercial paper program		90,000		90,000		—		—		90,000
Unsecured notes		2,862,024		2,897,215		—		—		2,897,215
Total liabilities	$	3,609,787	$	3,652,379	$	—	$	2,285	$	3,650,094
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	1,051,498	$	1,051,498	$	—	$	1,051,498	$	—

					Fair Value at December 31, 2018, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable (a)	$	42,259	$	45,026	$	—	$	—	$	45,026
Derivatives - Interest rate contracts (b)		4,757		4,757		—		4,757		—
Total assets	$	47,016	$	49,783	$	—	$	4,757	$	45,026
Derivatives - Interest rate contracts (b)	$	356	$	356	$	—	$	356	$	—
Secured debt instruments - fixed rate: (c)
Mortgage notes payable		417,989		416,314		—		—		416,314
Fannie Mae credit facilities		90,000		90,213		—		—		90,213
Secured debt instruments - variable rate: (c)
Tax-exempt secured notes payable		94,700		94,700		—		—		94,700
Unsecured debt instruments: (c)
Working capital credit facility		16		16		—		—		16
Commercial paper program		101,115		101,115		—		—		101,115
Unsecured notes		2,861,842		2,829,390		—		—		2,829,390
Total liabilities	$	3,566,018	$	3,532,104	$	—	$	356	$	3,531,748
Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (d)	$	972,740	$	972,740	$	—	$	972,740	$	—

(a) See Note 2, Significant Accounting Policies.

(b) See Note 11,  Derivatives and Hedging Activity.

(c) See Note 7,  Secured and Unsecured Debt, Net.

(d) See Note 9,  Noncontrolling Interests.

United Dominion Reality L.P.

Entity information

Schedule of estimated fair values

The estimated fair values of the Operating Partnership’s financial instruments either recorded or disclosed on a recurring basis as of March 31, 2019 and December 31, 2018 are summarized as follows (dollars in thousands):

					Fair Value at March 31, 2019, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	March 31,		March 31,		Liabilities		Inputs		Inputs
	2019		2019		(Level 1)		(Level 2)		(Level 3)
Description:
Secured debt instruments - variable rate: (a)
Tax-exempt secured notes payable	$	27,000	$	27,000	$	—	$	—	$	27,000
Total liabilities	$	27,000	$	27,000	$	—	$	—	$	27,000

					Fair Value at December 31, 2018, Using
					Quoted
	Total				Prices in
	Carrying				Active
	Amount in				Markets
	Statement of				for Identical		Significant
	Financial		Fair Value		Assets		Other		Significant
	Position at		Estimate at		or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2018		2018		(Level 1)		(Level 2)		(Level 3)
Description:
Secured debt instruments - variable rate: (a)
Tax-exempt secured notes payable	$	27,000	$	27,000	$	—	$	—	$	27,000
Total liabilities	$	27,000	$	27,000	$	—	$	—	$	27,000

(a) See Note 6,  Debt, Net.

XML

DERIVATIVES AND HEDGING ACTIVITY (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Entity information

Schedule of outstanding interest rate derivatives

As of March 31, 2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate swaps (a)	4	$	315,000
Interest rate caps	1	$	65,197

(a) In addition to the interest rate swaps summarized above, the Company entered into two additional interest rate swaps with a notional value totaling $75.0 million that will become effective in December 2019.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of GAAP. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and resulted in no gain or loss and a loss of less than $0.1 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

Fair value of Company's derivative financial instruments and their classification on Consolidated Balance Sheets

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018  (dollars in thousands):

	Asset Derivatives				Liability Derivatives
	(included in Other assets)				(included in Other liabilities)
	Fair Value at:				Fair Value at:
	March 31,		December 31,		March 31,		December 31,
	2019		2018		2019		2018
Derivatives designated as hedging instruments:
Interest rate products	$	3,315	$	4,757	$	2,285	$	356

Effect of Company's derivative financial instruments on Consolidated Statements of Operations

The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018  (dollars in thousands):

									Gain/(Loss) Recognized in
					Gain/(Loss) Reclassified				Interest expense
	Unrealized holding gain/(loss)				from Accumulated OCI into				(Amount Excluded from
	Recognized in OCI				Interest expense				Effectiveness Testing)
Derivatives in Cash Flow Hedging Relationships	2019		2018		2019		2018		2019		2018
Three Months Ended March 31,
Interest rate products	$	(2,210)	$	1,710	$	945	$	172	$	—	$	—

Effect of Company's derivatives not designated as hedging instruments on the Consolidated Statements of Operations

	Three Months Ended
	March 31,
	2019		2018
Total amount of Interest expense presented on the Consolidated Statements of Operations	$	33,542	$	29,943

Offsetting of Derivative Assets

The Company has elected not to offset derivative positions on the consolidated financial statements. The tables below present the effect on its financial position had the Company made the election to offset its derivative positions as of March 31, 2019 and December 31, 2018 (dollars in thousands):

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Assets		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Assets	Assets		Sheets		(a)		Instruments		Received		Net Amount
March 31, 2019	$	3,315	$	—	$	3,315	$	—	$	—	$	3,315
December 31, 2018	$	4,757	$	—	$	4,757	$	—	$	—	$	4,757

(a) Amounts reconcile to the aggregate fair value of derivative assets in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote. 

Offsetting of Derivative Liabilities

			Gross		Net Amounts of		Gross Amounts Not Offset
			Amounts		Liabilities		in the Consolidated
	Gross		Offset in the		Presented in the		Balance Sheet
	Amounts of		Consolidated		Consolidated				Cash
	Recognized		Balance		Balance Sheets		Financial		Collateral
Offsetting of Derivative Liabilities	Liabilities		Sheets		(a)		Instruments		Posted		Net Amount
March 31, 2019	$	2,285	$	—	$	2,285	$	—	$	—	$	2,285
December 31, 2018	$	356	$	—	$	356	$	—	$	—	$	356

Amounts reconcile to the aggregate fair value of derivative liabilities in the “Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets” located in this footnote.

United Dominion Reality L.P.

Entity information

Schedule of outstanding interest rate derivatives

As of March 31, 2019, we had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

	Number of
Product	Instruments	Notional
Interest rate caps	1	$	19,880

XML

CAPITAL STRUCTURE (UNITED DOMINION REALTY, L.P.) Capital Structure (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

United Dominion Reality L.P.

Entity information

Schedule of Limited Partners' Capital Account by Class [Table Text Block]

The following table shows OP Units outstanding and OP Unit activity as of and for the three months ended March 31, 2019:

			UDR, Inc.
	Class A			Class A
	Limited	Limited	Limited	Limited	General
	Partners	Partners	Partner	Partner	Partner	Total
Ending balance at December 31, 2018	1,751,671	7,636,173	174,016,155	121,661	110,883	183,636,543
Vesting of LTIP Units	—	416,579	—	—	—	416,579
OP redemptions for UDR stock	—	(1,808,548)	1,808,548	—	—	—
Ending balance at March 31, 2019	1,751,671	6,244,204	175,824,703	121,661	110,883	184,053,122

XML

COMMITMENTS AND CONTINGENCIES (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Loss Contingencies [Line Items]

Summary of real estate commitments

The following summarizes the Company’s real estate commitments at March 31, 2019  (dollars in thousands):

	Number	UDR's			UDR's Remaining
	Properties	Investment (a)			Commitment
Wholly-owned — redevelopment	2	$	245		$	35,255
Joint ventures:
Unconsolidated joint ventures - development	1		5,471			26,530	(b)
Preferred equity investments	2		25,711	(c)		39,618	(d)
Other investments	-		4,280			13,500	(e)
Total		$	35,707		$	114,903

(a) Represents UDR’s investment as of March 31, 2019.

(b) Represents UDR’s proportionate share of expected remaining costs to complete the development.

(c) Represents UDR’s investment in 1300 Fairmount and Essex for the properties under development as of March 31, 2019.

(d) Represents UDR’s remaining commitment for 1300 Fairmount and Essex.

(e) Represents UDR’s remaining commitment for other investment ventures.

United Dominion Reality L.P.

Loss Contingencies [Line Items]

Summary of real estate commitments

The following summarizes the Operating Partnership’s real estate commitments at March 31, 2019 (dollars in thousands):

	Number			Operating Partnership's
	Properties	Investment		Remaining Commitment
Real estate communities - redevelopment	1	$	108	$	24,892

XML

REPORTABLE SEGMENTS (UNITED DOMINION REALTY, L.P.) (Tables)

3 Months Ended

Mar. 31, 2019

Entity information

Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to Net income/(loss)

The following table details rental income and NOI for UDR’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to UDR, Inc. on the Consolidated Statements of Operations (dollars in thousands):

	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	100,565	$	96,665
Mid-Atlantic Region		54,300		52,694
Southeast Region		29,532		28,339
Northeast Region		30,192		29,585
Southwest Region		14,152		13,821
Non-Mature Communities/Other		30,162		21,393
Total segment and consolidated rental income	$	258,903	$	242,497
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	3,154	$	2,738
Mid-Atlantic Region		2,003		1,736
Southeast Region		1,788		1,697
Northeast Region		630		581
Southwest Region		733		569
Non-Mature Communities/Other		711		665
Total segment and consolidated rental income	$	9,019	$	7,986
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	103,719	$	99,403
Mid-Atlantic Region		56,303		54,430
Southeast Region		31,320		30,036
Northeast Region		30,822		30,166
Southwest Region		14,885		14,390
Non-Mature Communities/Other		30,873		22,058
Total segment and consolidated rental income	$	267,922	$	250,483
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	78,439	$	74,979
Mid-Atlantic Region		39,179		37,506
Southeast Region		22,010		21,047
Northeast Region		20,977		20,951
Southwest Region		8,992		8,477
Non-Mature Communities/Other		20,086		13,654
Total segment and consolidated NOI		189,683		176,614
Reconciling items:
Joint venture management and other fees		2,751		2,822
Property management		(7,703)		(6,888)
Other operating expenses		(5,646)		(2,009)
Real estate depreciation and amortization		(112,468)		(108,136)
General and administrative		(12,467)		(11,759)
Casualty-related (charges)/recoveries, net		—		(940)
Other depreciation and amortization		(1,656)		(1,691)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		49		(1,677)
Interest expense		(33,542)		(29,943)
Interest income and other income/(expense), net		9,813		2,759
Tax (provision)/benefit, net		(2,212)		(227)
Net (income)/loss attributable to redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership		(2,057)		(7,390)
Net (income)/loss attributable to noncontrolling interests		(42)		(79)
Net income/(loss) attributable to UDR, Inc.	$	24,503	$	81,756

(a) Same-Store Community population consisted of 37,959 apartment homes.

Details of assets of UDR's reportable segments

The following table details the assets of UDR’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets:
Same-Store Communities:
West Region	$	3,773,413	$	3,763,366
Mid-Atlantic Region		2,323,591		2,317,369
Southeast Region		786,575		779,310
Northeast Region		1,494,009		1,491,994
Southwest Region		448,299		447,305
Non-Mature Communities/Other		1,854,668		1,396,815
Total segment assets		10,680,555		10,196,159
Accumulated depreciation		(3,764,099)		(3,654,160)
Total segment assets — net book value		6,916,456		6,541,999
Reconciling items:
Cash and cash equivalents		1,043		185,216
Restricted cash		23,111		23,675
Notes receivable, net		36,974		42,259
Investment in and advances to unconsolidated joint ventures, net		749,100		780,869
Operating lease right-of-use assets		94,145		—
Other assets		134,896		137,710
Total consolidated assets	$	7,955,725	$	7,711,728

United Dominion Reality L.P.

Entity information

Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to Net income/(loss)

The following table details rental income and NOI for the Operating Partnership’s reportable segments for the three months ended March 31, 2019 and 2018, and reconciles NOI to Net income/(loss) attributable to OP unitholders on the Consolidated Statements of Operations (dollars in thousands):

	Three Months Ended
	March 31, (a)
	2019		2018
Reportable apartment home segment lease revenue
Same-Store Communities
West Region	$	60,782	$	58,340
Mid-Atlantic Region		14,810		14,532
Southeast Region		12,462		11,979
Northeast Region		7,972		7,848
Non-Mature Communities/Other		8,650		10,470
Total segment and consolidated rental income	$	104,676	$	103,169
Reportable apartment home segment other revenue
Same-Store Communities
West Region	$	1,994	$	1,824
Mid-Atlantic Region		535		495
Southeast Region		776		750
Northeast Region		166		166
Non-Mature Communities/Other		187		188
Total segment and consolidated rental income	$	3,658	$	3,423
Total reportable apartment home segment rental income
Same-Store Communities
West Region	$	62,776	$	60,164
Mid-Atlantic Region		15,345		15,027
Southeast Region		13,238		12,729
Northeast Region		8,138		8,014
Non-Mature Communities/Other		8,837		10,658
Total segment and consolidated rental income	$	108,334	$	106,592
Reportable apartment home segment NOI
Same-Store Communities
West Region	$	47,798	$	45,829
Mid-Atlantic Region		10,524		10,393
Southeast Region		9,257		8,792
Northeast Region		6,205		6,216
Non-Mature Communities/Other		5,355		7,059
Total segment and consolidated NOI		79,139		78,289
Reconciling items:
Property management		(2,979)		(2,931)
Other operating expenses		(2,400)		(1,554)
Real estate depreciation and amortization		(34,654)		(37,565)
General and administrative		(4,661)		(4,309)
Casualty-related (charges)/recoveries, net		—		(342)
Gain/(loss) on sale of real estate owned		—		70,300
Income/(loss) from unconsolidated entities		(2,740)		(5,017)
Interest expense		(7,371)		(5,026)
Net (income)/loss attributable to noncontrolling interests		(388)		(418)
Net income/(loss) attributable to OP unitholders	$	23,946	$	91,427

(a) Same-Store Community population consisted of 15,723 apartment homes.

Details of assets of UDR's reportable segments

The following table details the assets of the Operating Partnership’s reportable segments as of March 31, 2019 and December 31, 2018 (dollars in thousands):

	March 31,		December 31,
	2019		2018
Reportable apartment home segment assets
Same-Store Communities
West Region	$	1,988,360	$	1,981,007
Mid-Atlantic Region		664,103		663,083
Southeast Region		343,520		340,722
Northeast Region		406,759		406,149
Non-Mature Communities/Other		425,133		421,024
Total segment assets		3,827,875		3,811,985
Accumulated depreciation		(1,692,702)		(1,658,161)
Total segment assets - net book value		2,135,173		2,153,824
Reconciling items:
Cash and cash equivalents		59		125
Restricted cash		14,010		13,563
Investment in unconsolidated entities		95,673		103,026
Operating lease right-of-use assets		93,987		—
Other assets		24,425		34,052
Total consolidated assets	$	2,363,327	$	2,304,590

XML

CONSOLIDATION AND BASIS OF PRESENTATION - GP Units (UNITED DOMINION REALTY, L.P.) (Details)	3 Months Ended
	Mar. 31, 2019 community item shares	Mar. 31, 2018	Dec. 31, 2018 shares
Basis of presentation
Number of real estate properties | community	131
Number of apartments owned (in apartments homes) | item	41,041
Operating Partnership outstanding units	184,053,122
Operating Partnership units outstanding related to limited partner	184,053,122		183,636,543
United Dominion Reality L.P.
Basis of presentation
General Partners' ownership (as a percent)	95.70%
Operating Partnership units outstanding related to limited partner	176,057,247
United Dominion Reality L.P.
Basis of presentation
Rental revenues percent of General Partner's consolidated rental revenues	40.00%	43.00%
Number of real estate properties | community	52
Number of markets operating within (in markets) | item	15
Number of apartments owned (in apartments homes) | item	16,434
Operating Partnership outstanding units	184,053,122		183,636,543
OP units outstanding related to general partner	110,883		110,883
Operating Partnership units outstanding related to limited partner	183,942,239		183,525,660
UDR, Inc.
Basis of presentation
General Partners' ownership (as a percent)	53.20%
Operating Partnership outstanding units	17,233,074
Operating Partnership units outstanding related to limited partner	175,946,364		174,137,816
Percentage of units outstanding in Partnership	95.70%		94.90%
UDR, Inc. | United Dominion Reality L.P.
Basis of presentation
General Partners' ownership (as a percent)	95.70%
Operating Partnership outstanding units			174,248,699
OP units outstanding related to general partner	176,057,247
Percentage of units outstanding in Partnership			94.90%
Non-affiliated Partners
Basis of presentation
Operating Partnership outstanding units	15,134,306
Operating Partnership units outstanding related to limited partner	7,995,875
Percentage of units outstanding in Partnership	4.30%
Non-affiliated Partners | United Dominion Reality L.P.
Basis of presentation
Operating Partnership outstanding units			9,387,844
Operating Partnership units outstanding related to limited partner	7,995,875
Percentage of units outstanding in Partnership	4.30%		5.10%
Class A Limited Partner | United Dominion Reality L.P.
Basis of presentation
Operating Partnership units outstanding related to limited partner	1,873,332		1,873,332
Class A Limited Partner | UDR, Inc.
Basis of presentation
Operating Partnership units outstanding related to limited partner	121,661		121,661
Limited Partner
Basis of presentation
Operating Partnership units outstanding related to limited partner	6,244,204		7,636,173
Limited Partner | UDR, Inc.
Basis of presentation
Operating Partnership units outstanding related to limited partner	175,824,703		174,016,155
General Partner | UDR, Inc.
Basis of presentation
Operating Partnership units outstanding related to limited partner	110,883		110,883
Non-affiliated Partners | United Dominion Reality L.P.
Basis of presentation
Operating Partnership units outstanding related to limited partner	7,995,875		9,387,844
Percentage of units outstanding in Partnership	4.30%		5.10%
Non-affiliated Partners | Class A Limited Partner
Basis of presentation
Operating Partnership units outstanding related to limited partner	1,751,671		1,751,671

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SIGNIFICANT ACCOUNTING POLICIES (UNITED DOMINION REALTY, L.P.) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Accounting policies
Lease classification per practical expedient	true
Operating lease right-of-use assets	$ 94,145
Operating lease liabilities	$ 88,218
United Dominion Reality L.P.
Accounting policies
Lease classification per practical expedient	true
Operating lease right-of-use assets	$ 93,987
Operating lease liabilities	$ 88,061
ASU 2016-02 | Adjustment
Accounting policies
Operating lease right-of-use assets			$ 94,300
Operating lease liabilities			88,300
Prepaid rent and intangible assets				$ 6,000
ASU 2016-02 | Adjustment | United Dominion Reality L.P.
Accounting policies
Operating lease right-of-use assets			94,200
Operating lease liabilities			$ 88,200
Prepaid rent and intangible assets				$ 6,000
Forecast | ASU 2016-02 | Adjustment | Maximum
Accounting policies
Operating lease right-of-use assets		$ 146,700
Operating lease liabilities		140,700
Forecast | ASU 2016-02 | Adjustment | United Dominion Reality L.P. | Maximum
Accounting policies
Operating lease right-of-use assets		146,500
Operating lease liabilities		$ 140,500

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REAL ESTATE OWNED (UNITED DOMINION REALTY, L.P.) - Summary (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Real estate owned
Land	$ 1,954,363	$ 1,849,799
Depreciable property - held and used:
Land improvements	214,483	213,224
Building, improvements, and furniture, fixtures and equipment	8,475,755	8,133,136
Real estate owned	10,680,555	10,196,159
Accumulated depreciation	(3,764,099)	(3,654,160)
Total real estate owned, net of accumulated depreciation	6,916,456	6,541,999
United Dominion Reality L.P.
Real estate owned
Land	711,256	711,256
Depreciable property - held and used:
Land improvements	92,624	92,000
Building, improvements, and furniture, fixtures and equipment	3,023,995	3,008,729
Real estate owned	3,827,875	3,811,985
Accumulated depreciation	(1,692,702)	(1,658,161)
Total real estate owned, net of accumulated depreciation	$ 2,135,173	$ 2,153,824

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REAL ESTATE OWNED (UNITED DOMINION REALTY, L.P.) - Acquisitions and Dispositions (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) state community item	Mar. 31, 2018 USD ($)
Real Estate Owned Disclosure
Number of communities owned (in communities) | community	131
Number of states in which there are owned and consolidated communities | state	11
Development costs excluding direct costs and capitalized interest	$ 3.3	$ 3.4
Number of apartments owned (in apartments homes) | item	41,041
Interest capitalized during period	$ 1.1	4.6
United Dominion Reality L.P.
Real Estate Owned Disclosure
Number of communities owned (in communities) | community	52
Number of states in which there are owned and consolidated communities | state	9
Number of apartments owned (in apartments homes) | item	16,434
United Dominion Reality L.P. | Maximum
Real Estate Owned Disclosure
Development costs excluding direct costs and capitalized interest	$ 0.1	0.1
Interest capitalized during period	$ 0.1	$ 0.1

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UNCONSOLIDATED ENTITIES (UNITED DOMINION REALTY, L.P.) - Summary Financial Information (Details) - UDR Lighthouse DownREIT L.P. - United Dominion Reality L.P. - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Total real estate, net	$ 1,151,740		$ 1,167,720
Cash and cash equivalents	21		39
Note receivable from the General Partner	218,520		221,022
Other assets	4,855		5,561
Total assets	1,375,136		1,394,342
Secured debt, net	430,890		431,735
Other liabilities	23,006		26,597
Liabilities	453,896		458,332
Total capital	921,240		$ 936,010
Rental income	31,606	$ 34,012
Property operating expenses	(13,096)	(14,487)
Real estate depreciation and amortization	(20,294)	(21,495)
Operating income/(loss)	(1,784)	(1,970)
Interest expense	(3,888)	(3,574)
Interest income on note receivable from the General Partner	1,988	1,196
Net income /(loss)	$ (3,684)	$ (4,348)

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UNCONSOLIDATED ENTITIES (UNITED DOMINION REALTY, L.P.) - Additional Information (Details) $ in Thousands	Mar. 31, 2019 USD ($) community item	Dec. 31, 2018 USD ($)
Unconsolidated entities
Number of real estate properties | community	131
Number of apartment homes owned and consolidated | item	41,041
Equity Method Investments | $	$ 749,100	$ 780,869
United Dominion Reality L.P.
Unconsolidated entities
Number of real estate properties | community	52
Number of apartment homes owned and consolidated | item	16,434
Equity Method Investments | $	$ 95,673	103,026
United Dominion Reality L.P. | UDR Lighthouse DownREIT L.P.
Unconsolidated entities
Number of real estate properties | community	12
Number of apartment homes owned and consolidated | item	5,657
Equity Method Investments | $	$ 95,700	$ 103,000

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LEASES (UNITED DOMINION REALTY, L.P.) - Lessee Future Minimum Payments - (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) lease community
Lessee operating leases
Number of communities subject to ground leases | community	6
Operating leases existence of option to extend	true
Lease classification per practical expedient	true
Operating lease right-of-use assets	$ 94,145
Weighted average remaining lease term	70 years 10 months 24 days
Weighted average discount rate	5.20%
Number of ground lease contracts in dispute | lease	1
Future minimum lease payments
2019	$ 3,733
2020	4,977
2021	4,933
2022	4,901
2023	4,901
Thereafter	313,919
Total future minimum lease payments (undiscounted)	337,364
Difference between future undiscounted cash flows and discounted cash flows	(249,146)
Operating lease liabilities	$ 88,218
Ground Leases
Lessee operating leases
Lease classification per practical expedient	true
Future minimum lease payments
2019	$ 3,676
2020	4,901
2021	4,901
2022	4,901
2023	4,901
Thereafter	313,919
Total future minimum lease payments (undiscounted)	337,199
Difference between future undiscounted cash flows and discounted cash flows	(249,138)
Operating lease liabilities	88,061
Ground Leases | Disputed Operating Lease
Lessee operating leases
Annual lease payment	500
Ground Leases | Minimum
Lessee operating leases
Annual lease payment	1,200
Ground Leases | Maximum
Lessee operating leases
Annual lease payment	$ 4,000
United Dominion Reality L.P.
Lessee operating leases
Number of communities subject to ground leases | community	6
Operating leases existence of option to extend	true
Lease classification per practical expedient	true
Operating lease right-of-use assets	$ 93,987
Weighted average remaining lease term	71 years 1 month 6 days
Weighted average discount rate	5.20%
Number of ground lease contracts in dispute | lease	1
Future minimum lease payments
Operating lease liabilities	$ 88,061
United Dominion Reality L.P. | Ground Leases
Future minimum lease payments
2019	3,676
2020	4,901
2021	4,901
2022	4,901
2023	4,901
Thereafter	313,919
Total future minimum lease payments (undiscounted)	337,199
Difference between future undiscounted cash flows and discounted cash flows	(249,138)
Operating lease liabilities	88,061
United Dominion Reality L.P. | Ground Leases | Disputed Operating Lease
Lessee operating leases
Annual lease payment	500
United Dominion Reality L.P. | Ground Leases | Minimum
Future minimum lease payments
Total future minimum lease payments (undiscounted)	1,200
United Dominion Reality L.P. | Ground Leases | Maximum
Future minimum lease payments
Total future minimum lease payments (undiscounted)	$ 4,000

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LEASES (UNITED DOMINION REALTY, L.P.) - Lessee Expenses (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Lessee operating leases
Total lease expense	$ 2,298
Ground Leases
Lessee operating leases
Contractual lease expense	2,140
Variable lease expense	139
United Dominion Reality L.P. | Ground Leases
Lessee operating leases
Contractual lease expense	2,140
Variable lease expense	139
Total lease expense	$ 2,279

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LEASES (UNITED DOMINION REALTY, L.P.) - Lessor (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) property
Lessor leases
Number of properties subject to a ground lease | property	1
Lease classification per practical expedient	true
Future minimum lease payments
2019	$ 16,821
2020	22,485
2021	21,428
2022	19,731
2023	18,372
Thereafter	195,880
Total future minimum payments	294,717
Maximum
Future minimum lease payments
Variable lease expense	200
Retail and Commercial Spaces
Future minimum lease payments
2019	14,826
2020	19,825
2021	18,768
2022	17,071
2023	15,712
Thereafter	85,712
Total future minimum payments	$ 171,914
United Dominion Reality L.P.
Lessor leases
Lease classification per practical expedient	true
United Dominion Reality L.P. | Maximum
Future minimum lease payments
Variable lease expense	$ 100
United Dominion Reality L.P. | Retail and Commercial Spaces
Future minimum lease payments
2019	5,357
2020	7,600
2021	7,270
2022	6,684
2023	6,375
Thereafter	19,578
Total future minimum payments	$ 52,864

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DEBT, NET (UNITED DOMINION REALTY, L.P.) - Summary (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) community	Dec. 31, 2018 USD ($)
Fixed and variable rate debt
Weighted Average Interest Rate	3.73%
Weighted Average
Fixed and variable rate debt
Years to maturity	5 years 6 months
Variable Rate Debt | Tax-exempt secured notes payable
Fixed and variable rate debt
Principal outstanding	$ 94,700	$ 94,700
Weighted Average Interest Rate	2.31%
Communities Encumbered (in communities) | community	2
Variable Rate Debt | Tax-exempt secured notes payable | Weighted Average
Fixed and variable rate debt
Years to maturity	3 years 10 months 24 days
United Dominion Reality L.P.
Fixed and variable rate debt
Principal outstanding	$ 26,931	26,929
Weighted Average Interest Rate	2.50%
Communities Encumbered (in communities) | community	1
United Dominion Reality L.P. | Weighted Average
Fixed and variable rate debt
Years to maturity	13 years
United Dominion Reality L.P. | Variable Rate Debt
Fixed and variable rate debt
Deferred finance costs, net	$ (69)	(71)
United Dominion Reality L.P. | Variable Rate Debt | Tax-exempt secured notes payable
Fixed and variable rate debt
Principal outstanding	$ 27,000	$ 27,000
Weighted Average Interest Rate	2.47%
Communities Encumbered (in communities) | community	1
United Dominion Reality L.P. | Variable Rate Debt | Tax-exempt secured notes payable | Weighted Average
Fixed and variable rate debt
Years to maturity	13 years

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DEBT, NET (UNITED DOMINION REALTY, L.P.) - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fixed and variable rate debt
Long-term commercial paper	$ 500,000
Borrowings outstanding	3,300	$ 3,300
Commercial Paper
Fixed and variable rate debt
Commercial paper program	$ 90,000	$ 101,115
Interest rate at the end of the period	2.80%	2.90%
United Dominion Reality L.P. | Financial Guarantee
Fixed and variable rate debt
Guarantor borrowing capacity	$ 1,100,000
United Dominion Reality L.P. | Unsecured Commercial Bank Credit Facility
Fixed and variable rate debt
Long-term commercial paper	$ 500,000
United Dominion Reality L.P. | Mortgages Notes Payable | Variable Rate Debt | Operating Partnership
Fixed and variable rate debt
Interest rate at the end of the period	2.47%
United Dominion Reality L.P. | Unsecured Commercial Paper
Fixed and variable rate debt
Borrowings outstanding	$ 90,000	$ 101,100
United Dominion Reality L.P. | 3.70% Term Notes Due October 2020
Fixed and variable rate debt
Guarantor borrowing capacity	300,000
United Dominion Reality L.P. | 4.63% Medium-Term Notes due January 2022
Fixed and variable rate debt
Guarantor borrowing capacity	400,000
United Dominion Reality L.P. | Term Loan due September 2023
Fixed and variable rate debt
Guarantor borrowing capacity	350,000
United Dominion Reality L.P. | 3.75% Medium-Term Notes Due July 2024
Fixed and variable rate debt
Guarantor borrowing capacity	300,000
United Dominion Reality L.P. | 4.00% Medium-Term Note due October 2025
Fixed and variable rate debt
Guarantor borrowing capacity	300,000
United Dominion Reality L.P. | 2.95% Medium-Term Note due September 2026
Fixed and variable rate debt
Guarantor borrowing capacity	300,000
United Dominion Reality L.P. | 3.50 Medium-Term Note due July 2027
Fixed and variable rate debt
Guarantor borrowing capacity	300,000
United Dominion Reality L.P. | Medium-Term note due January 2029
Fixed and variable rate debt
Guarantor borrowing capacity	$ 300,000

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RELATED PARTY TRANSACTIONS (UNITED DOMINION REALTY, L.P.) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Related party transactions
Related party management fees	$ 4,000	$ 3,700
United Dominion Reality L.P.
Related party transactions
Debt Instrument, Interest Rate Period End		3.73%
Notes payable due to the General Partner	690,974		$ 700,115
Interest expense, related party	7,181	$ 3,053
United Dominion Reality L.P. | UDR, Inc.
Related party transactions
General and administrative expenses allocated to the Operating Partnership by UDR	$ 3,600	$ 3,500
Note due August 2021 | United Dominion Reality L.P.
Related party transactions
Debt Instrument, Interest Rate Period End	5.34%
Notes payable due to the General Partner	$ 5,500		5,500
Note due December 2023 | United Dominion Reality L.P.
Related party transactions
Debt Instrument, Interest Rate Period End	5.18%
Notes payable due to the General Partner	$ 83,196		83,196
Note due April 2026 | United Dominion Reality L.P.
Related party transactions
Debt Instrument, Interest Rate Period End	4.12%
Notes payable due to the General Partner	$ 184,638		184,638
Note due November 2028 | United Dominion Reality L.P.
Related party transactions
Debt Instrument, Interest Rate Period End	4.69%
Notes payable due to the General Partner	$ 133,205		133,205
Note due December 2028 | United Dominion Reality L.P.
Related party transactions
Debt Instrument, Interest Rate Period End	3.73%
Notes payable due to the General Partner	$ 284,435		$ 293,576

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FAIR VALUE OF DERIVATIVES AND FINANCIAL INSTRUMENTS (UNITED DOMINION REALTY, L.P.) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Debt instruments - fair value
Transfer between the levels	$ 0
Fair Value, Measurements, Recurring | Carrying Amount
Debt instruments - fair value
Total liabilities	3,609,787	$ 3,566,018
Fair Value, Measurements, Recurring | Fair Value
Debt instruments - fair value
Total liabilities	3,652,379	3,532,104
Level 2 | Fair Value, Measurements, Recurring | Fair Value
Debt instruments - fair value
Total liabilities	2,285	356
Level 3 | Fair Value, Measurements, Recurring | Fair Value
Debt instruments - fair value
Total liabilities	3,650,094	3,531,748
United Dominion Reality L.P. | Fair Value, Measurements, Recurring | Carrying Amount
Debt instruments - fair value
Total liabilities	27,000	27,000
United Dominion Reality L.P. | Fair Value, Measurements, Recurring | Fair Value
Debt instruments - fair value
Total liabilities	27,000	27,000
United Dominion Reality L.P. | Level 3 | Fair Value, Measurements, Recurring | Fair Value
Debt instruments - fair value
Total liabilities	27,000	27,000
Variable Rate Debt | United Dominion Reality L.P. | Tax-exempt secured notes payable | Fair Value, Measurements, Recurring | Carrying Amount
Debt instruments - fair value
Fair value	27,000	27,000
Variable Rate Debt | United Dominion Reality L.P. | Tax-exempt secured notes payable | Fair Value, Measurements, Recurring | Fair Value
Debt instruments - fair value
Fair value	27,000	27,000
Variable Rate Debt | United Dominion Reality L.P. | Level 3 | Tax-exempt secured notes payable | Fair Value, Measurements, Recurring | Fair Value
Debt instruments - fair value
Fair value	$ 27,000	$ 27,000

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DERIVATIVES AND HEDGING ACTIVITY (UNITED DOMINION REALTY, L.P.) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) instrument	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Derivatives
Estimated additional accumulated other comprehensive Income/(Loss) transferred to interest expense	$ 3,200
Payment required to pay for contract termination	$ 1,400
Interest rate caps | Not Designated as Hedging Instrument
Outstanding interest rate derivatives not designated as hedging instrument
Number instruments | instrument	1
Notional	$ 19,880
United Dominion Reality L.P.
Derivatives
Derivatives	0		$ 0
Estimated additional accumulated other comprehensive Income/(Loss) transferred to interest expense	0
United Dominion Reality L.P. | Interest rate contracts
Derivatives
Gain/(Loss) recognized in Interest Income and Other Income/(Expense), net	$ 0	$ 0
United Dominion Reality L.P. | Interest rate caps | Not Designated as Hedging Instrument
Outstanding interest rate derivatives not designated as hedging instrument
Number instruments | instrument	1
Notional	$ 19,880
Other income/(expense) | Interest rate contracts
Derivatives
Gain/(Loss) recognized in Interest Income and Other Income/(Expense), net	0
Other income/(expense) | United Dominion Reality L.P. | Interest rate contracts
Derivatives
Gain/(Loss) recognized in Interest Income and Other Income/(Expense), net	0	$ 0
Interest expense | United Dominion Reality L.P. | Cash Flow Hedging
Derivatives
Gain/(Loss) recognized in Interest Income and Other Income/(Expense), net	$ 0

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CAPITAL STRUCTURE (UNITED DOMINION REALTY, L.P.) - Units Rollforward (Details)	3 Months Ended
	Mar. 31, 2019 shares
Capital structure
Balance	183,636,543
Vesting of LTIP Units	416,579
Balance	184,053,122
UDR, Inc.
Capital structure
Balance	174,137,816
Balance	175,946,364
Non-affiliated Partners
Capital structure
Balance	7,995,875
Class A Limited Partner | UDR, Inc.
Capital structure
Balance	121,661
Balance	121,661
Non-affiliated Partners | Class A Limited Partner
Capital structure
Balance	1,751,671
Balance	1,751,671
Limited Partner
Capital structure
Balance	7,636,173
Vesting of LTIP Units	416,579
OP redemptions for UDR stock	1,808,548
Balance	6,244,204
Limited Partner | UDR, Inc.
Capital structure
Balance	174,016,155
OP redemptions for UDR stock	(1,808,548)
Balance	175,824,703
Class A Limited Partner | UDR, Inc.
Capital structure
Balance	121,661
Balance	121,661
General Partner | UDR, Inc.
Capital structure
Balance	110,883
Balance	110,883

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CAPITAL STRUCTURE (UNITED DOMINION REALTY, L.P.) - Ownership Interests (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) class $ / shares shares	Dec. 31, 2018 USD ($) shares
Capital structure
Limited partnership units owned	184,053,122	183,636,543
Redeemable noncontrolling interests in the Operating Partnership | $	$ 1,051,498	$ 972,740
Number of classes of LTIP Units | class	2
United Dominion Reality L.P.
Capital structure
Limited partnership units owned	176,057,247
United Dominion Reality L.P.
Capital structure
General Partnership units outstanding	110,883	110,883
Limited partnership units owned	183,942,239	183,525,660
Required period to be outstanding before unit is redeemable (in years)	1 year
Redeemable noncontrolling interests in the Operating Partnership | $	$ 363,500	$ 371,900
UDR, Inc.
Capital structure
Limited partnership units owned	175,946,364	174,137,816
Percentage of units	95.70%	94.90%
UDR, Inc. | United Dominion Reality L.P.
Capital structure
General Partnership units outstanding	176,057,247
Percentage of units		94.90%
Non-affiliated Partners
Capital structure
Limited partnership units owned	7,995,875
Percentage of units	4.30%
Non-affiliated Partners | United Dominion Reality L.P.
Capital structure
Limited partnership units owned	7,995,875
Percentage of units	4.30%	5.10%
Class A Limited Partner
Capital structure
Cumulative, annual, non-compounded preferred return on Class A Partnership units	8.00%
Value of Class A Partnership units (in dollars per share) | $ / shares	$ 16.61
Class A Limited Partner | United Dominion Reality L.P.
Capital structure
Limited partnership units owned	1,873,332	1,873,332
Class A Limited Partner | UDR, Inc.
Capital structure
Limited partnership units owned	121,661	121,661
Non-affiliated Partners | United Dominion Reality L.P.
Capital structure
Limited partnership units owned	7,995,875	9,387,844
Percentage of units	4.30%	5.10%
Non-affiliated Partners | Class A Limited Partner
Capital structure
Limited partnership units owned	1,751,671	1,751,671
LTIP Units One
Capital structure
Vesting period	4 years
Minimum | LTIP Units
Capital structure
Vesting period	1 year
Period of time LTIP units have been outstanding	2 years
Minimum | Employee Director | LTIP Units Two
Capital structure
Vesting period	1 year
Maximum | LTIP Units
Capital structure
Vesting period	3 years
Maximum | Employee Director | LTIP Units Two
Capital structure
Vesting period	3 years

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Commitments and Contingencies (UNITED DOMINION REALTY, L.P.) Commitments and Contingencies (Details) $ in Thousands	Mar. 31, 2019 USD ($) community
Loss Contingencies [Line Items]
Number of communities owned (in communities) | community	131
Cost Incurred to Date	$ 35,707
UDR's Remaining Commitment	$ 114,903
United Dominion Reality L.P.
Loss Contingencies [Line Items]
Number of communities owned (in communities) | community	52
Real estate communities - redevelopment | United Dominion Reality L.P.
Loss Contingencies [Line Items]
Number of communities owned (in communities) | community	1
Cost Incurred to Date	$ 108
UDR's Remaining Commitment	$ 24,892

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REPORTABLE SEGMENTS (UNITED DOMINION REALTY, L.P.) (Details). $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) segment item	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Segments
Equity Method Investments	$ 749,100		$ 780,869
Same store communities | item	37,959
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Rental income	$ 267,922	$ 250,483
Reconciling items:
Property management	(7,703)	(6,888)
Other operating expenses	(5,646)	(2,009)
Real estate depreciation and amortization	(112,468)	(108,136)
General and administrative	(12,467)	(11,759)
Casualty-related (charges)/recoveries, net		(940)
Gain/(loss) on sale of real estate owned		70,300
Income/(loss) from unconsolidated entities	49	(1,677)
Interest expense	(33,542)	(29,943)
Net (income)/loss attributable to noncontrolling interests	(42)	(79)
Net income/(loss) attributable to OP unitholders	24,503	81,756
Reportable apartment home segment assets:
Total segment assets	10,680,555		10,196,159
Accumulated depreciation	(3,764,099)		(3,654,160)
Total real estate owned, net of accumulated depreciation	6,916,456		6,541,999
Total segment asset - net book value	6,916,456		6,541,999
Reconciling items:
Cash and cash equivalents	1,043	1,083	185,216	$ 2,038
Restricted cash	23,111	19,770	23,675	19,792
Investment in unconsolidated entities	749,100		780,869
Operating lease right-of-use assets	94,145
Other assets	134,896		137,710
Total assets	$ 7,955,725		7,711,728
Reportable Segments
Number of reportable segments | segment	2
Condition for Community considered to have stabilized occupancy	90%
Time to maintain percent occupancy to be considered a community	3 months
Practical expedient, single lease component	true
Same Store Communities West Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	$ 100,565	96,665
Other revenue	3,154	2,738
Rental income	103,719	99,403
Reportable apartment home segment NOI	78,439	74,979
Reportable apartment home segment assets:
Total segment assets	3,773,413		3,763,366
Same Store Communities Mid-Atlantic Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	54,300	52,694
Other revenue	2,003	1,736
Rental income	56,303	54,430
Reportable apartment home segment NOI	39,179	37,506
Reportable apartment home segment assets:
Total segment assets	2,323,591		2,317,369
Same Store Communities Southeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	29,532	28,339
Other revenue	1,788	1,697
Rental income	31,320	30,036
Reportable apartment home segment NOI	22,010	21,047
Reportable apartment home segment assets:
Total segment assets	786,575		779,310
Same Store Communities Northeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	30,192	29,585
Other revenue	630	581
Rental income	30,822	30,166
Reportable apartment home segment NOI	20,977	20,951
Reportable apartment home segment assets:
Total segment assets	1,494,009		1,491,994
Same Store Communities Southwest Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	14,152	13,821
Other revenue	733	569
Rental income	14,885	14,390
Reportable apartment home segment NOI	8,992	8,477
Reportable apartment home segment assets:
Total segment assets	448,299		447,305
Non-Mature communities/Other
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	30,162	21,393
Other revenue	711	665
Rental income	30,873	22,058
Reportable apartment home segment NOI	20,086	13,654
Reportable apartment home segment assets:
Total segment assets	1,854,668		1,396,815
Total Communities
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	258,903	242,497
Other revenue	9,019	7,986
Rental income	267,922	250,483
Reportable apartment home segment NOI	189,683	176,614
United Dominion Reality L.P.
Segments
Equity Method Investments	$ 95,673		103,026
Same store communities | item	15,723
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Rental income	$ 108,334	106,592
Reconciling items:
Property management	(2,979)	(2,931)
Other operating expenses	(2,400)	(1,554)
Real estate depreciation and amortization	(34,654)	(37,565)
General and administrative	(4,661)	(4,309)
Casualty-related (charges)/recoveries, net		(342)
Gain/(loss) on sale of real estate owned		70,300
Income/(loss) from unconsolidated entities	(2,740)	(5,017)
Interest expense	(7,371)	(5,026)
Net (income)/loss attributable to noncontrolling interests	(388)	(418)
Net income/(loss) attributable to OP unitholders	23,946	91,427
Reportable apartment home segment assets:
Total segment assets	3,827,875		3,811,985
Accumulated depreciation	(1,692,702)		(1,658,161)
Total real estate owned, net of accumulated depreciation	2,135,173		2,153,824
Total segment asset - net book value	2,135,173		2,153,824
Reconciling items:
Cash and cash equivalents	59	74	125	293
Restricted cash	14,010	13,011	13,563	$ 12,579
Investment in unconsolidated entities	95,673		103,026
Operating lease right-of-use assets	93,987
Other assets	24,425		34,052
Total assets	$ 2,363,327		2,304,590
Reportable Segments
Number of reportable segments | segment	2
Condition for Community considered to have stabilized occupancy	90%
Time to maintain percent occupancy to be considered a community	3 months
Practical expedient, single lease component	true
United Dominion Reality L.P. | Same Store Communities West Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	$ 60,782	58,340
Other revenue	1,994	1,824
Rental income	62,776	60,164
Reportable apartment home segment NOI	47,798	45,829
Reportable apartment home segment assets:
Total segment assets	1,988,360		1,981,007
United Dominion Reality L.P. | Same Store Communities Mid-Atlantic Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	14,810	14,532
Other revenue	535	495
Rental income	15,345	15,027
Reportable apartment home segment NOI	10,524	10,393
Reportable apartment home segment assets:
Total segment assets	664,103		663,083
United Dominion Reality L.P. | Same Store Communities Southeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	12,462	11,979
Other revenue	776	750
Rental income	13,238	12,729
Reportable apartment home segment NOI	9,257	8,792
Reportable apartment home segment assets:
Total segment assets	343,520		340,722
United Dominion Reality L.P. | Same Store Communities Northeast Region
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	7,972	7,848
Other revenue	166	166
Rental income	8,138	8,014
Reportable apartment home segment NOI	6,205	6,216
Reportable apartment home segment assets:
Total segment assets	406,759		406,149
United Dominion Reality L.P. | Non-Mature communities/Other
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	8,650	10,470
Other revenue	187	188
Rental income	8,837	10,658
Reportable apartment home segment NOI	5,355	7,059
Reportable apartment home segment assets:
Total segment assets	425,133		$ 421,024
United Dominion Reality L.P. | Total Communities
Summary of rental income and NOI for UDRs reportable segments and reconciliation of NOI to loss from continuing operations
Lease revenue	104,676	103,169
Other revenue	3,658	3,423
Rental income	108,334	106,592
Reportable apartment home segment NOI	$ 79,139	$ 78,289