The paragraph is an introduction to UDR's First Quarter 2025 Earnings Call. The call is hosted by Vice President of Investor Relations, Trent Trujillo, who notes that the company's financial results and supplemental disclosures have been released and are available online. He mentions that forward-looking statements made during the call are based on reasonable assumptions but are not guaranteed, and associated risks are detailed in their press release and SEC filings. He requests that questions during the Q&A session be concise. UDR's Chairman and CEO, Tom Toomey, welcomes participants and introduces other key executives who are present, noting that 2025 has started well for the company.

In the first quarter, UDR exceeded initial expectations for revenue, expenses, and NOI growth due to favorable market conditions and effective operating strategies. Key operational metrics, such as resident turnover, occupancy, concessions, and pricing power, have improved. UDR has reaffirmed its full-year 2025 guidance and will reassess during peak leasing season. The company focuses on three growth drivers: innovation, informed by successful value-add initiatives; listening to associates and residents to refine operations and strategy; and enhancing customer experience, leading to improved retention, margin expansion, and cash flow growth. UDR empowers associates with data and responsibilities, boosting engagement and career opportunities.

The paragraph highlights UDR's recognition as a top workplace and its strategies for capital deployment, supported by a strong balance sheet, to drive future growth. It outlines positive industry drivers, including strong demand due to a housing undersupply, a slowdown in new supply affecting rent growth favorably, and renting being significantly more affordable than homeownership. Although affected by macroeconomic uncertainties, the long-term growth prospects for the multifamily industry and UDR's competitive advantages remain strong.

The paragraph emphasizes UDR's focus on maintaining a dynamic and innovative culture to create value for its residents and stakeholders. It acknowledges Jim Klingbeil's contributions to the board and his decision not to seek re-election, crediting him with playing a key role in UDR's transformation into a respected company. Mike Lacy then outlines the company's first-quarter financial results, highlighting better-than-expected year-over-year growth in same-store revenue and NOI. Key factors contributing to this growth include improved renewal rates, lower resident turnover, and higher occupancy levels compared to historical averages. He also touches on early second-quarter trends and the impact of innovation initiatives on 2025 growth guidance.

The strategic decision to boost occupancy during a slow leasing period has led to revenue and NOI outperformance, positioning the company well for the traditional leasing season. Other income growth from rentable items rose by 10% due to innovation and value-added services. Year-over-year same-store expense growth was only 2.3% in the first quarter, better than expected, because of favorable real estate taxes, insurance savings, and lower repair costs due to better resident retention. Core operating trends remained resilient in April, with improved blended lease rate growth, strong occupancy in the high 96% range, and resident retention outperforming historical norms. The expectation is for continued strong retention and lower turnover, potentially increasing cash flow by approximately $7 million if this trend continues.

The paragraph discusses the company's continued improvements in measuring and enhancing customer experience, which have increased renewal rates and are expected to boost turnover and margins. Other income sources, like rentable items, are growing steadily. The company's property enhancements are contributing to revenue growth and better customer experiences, with same-store results exceeding guidance expectations. However, the company remains cautious about macroeconomic volatility. Regionally, coastal markets, particularly the East Coast, are performing well, with Washington D.C. being the top market and Boston exceeding expectations. The East Coast has high occupancy and revenue growth, supported by strong demand and limited new supply.

The West Coast, contributing 35% to NOI, exceeded expectations with high occupancy and revenue growth due to factors like return-to-office mandates and limited new supply. Conversely, the Sunbelt, accounting for 25% of NOI, faced challenges with high new supply, resulting in negative lease rate growth, though demand and absorption were strong, with Tampa and Orlando performing best. Overall, the company's first-quarter 2025 results surpassed expectations, with strong same-store revenue and NOI growth. They emphasize adaptability and strategic adjustments to maintain revenue growth and operating margins amidst uncertainties.

In the paragraph, Joe Fisher outlines the company's financial performance and strategic activities. The first quarter FFO as adjusted per share was $0.61, aligning with guidance and supported by better-than-expected same-store growth. Minor declines in FFOA per share were due to seasonal expenses and other factors. The guidance for the second quarter FFOA per share is set at $0.61 to $0.63, reflecting anticipated growth. On the transactions front, the company sold two apartment communities in New York for $211.5 million and began developing a 300-home project in Riverside, California, with a total cost of $134 million. They also increased their investment in a Philadelphia apartment community, bringing total investment to $183.2 million. They are considering further development projects for 2025 and 2026.

The paragraph discusses UDR's financial position and investment strategies. UDR has acquired a senior loan, giving them more control over a community investment, and fully funded a $13 million preferred equity investment in a San Francisco apartment community with a 12% return rate. They have positive cash flow, allowing most returns to be paid in cash. Their balance sheet is strong, with over $1 billion in liquidity, low refinancing risk, a low average interest rate of 3.4%, and strong leverage metrics, such as a 27% debt-to-enterprise value and a 5.7x net debt-to-EBITDAre. They are confident in their capital deployment strategy. The paragraph concludes with the opening of a Q&A session, where Nick Joseph from Citibank questions the company's optimism regarding rent trends amidst macroeconomic uncertainties.

The paragraph discusses the macroeconomic environment and its impact on the business. Joe Fisher highlights a significant decrease in supply from 2024 to 2025, with ongoing pricing power and stable concessionary conditions contributing positively. Despite a volatile macro backdrop, strong demand, job growth, and wage growth provide a favorable outlook. Fisher notes a need for only a small acceleration in blended lease rate growth to achieve full-year targets, with minimal downside risk. Mike Lacy adds that strong trends in April and a strategy to increase occupancy during shoulder quarters have been beneficial for the leasing season.

The paragraph discusses the company's focus on total revenue, pointing out strong occupancy rates of nearly 97% and anticipated blend rates for the year. In the back half of the year, they expect blend rates to be around 3%, down from historical trends of 4%. The discussion then shifts to a senior loan on a Philadelphia asset, which the company had to purchase due to a default, impacting their first-quarter results. The company plans to consolidate and stabilize this asset in the second quarter, anticipating a future yield of around 4% as they improve operations and occupancy, currently in the mid-85% range.

The paragraph discusses the impact of a bulk Wi-Fi rollout on rental pricing, specifically regarding renewal rents. Ami Probandt, speaking on behalf of Michael Goldsmith from UBS, inquires whether the rollout affects tenants' willingness to negotiate rent increases. Mike Lacy responds that the rollout, which has already reached 30,000 homes with 10,000 more planned for the year, does not adversely affect rent growth. He mentions that their current occupancy and rent growth align with peer averages. Tom Toomey adds that high-speed internet is essential, and their bulk purchasing yields better margins and service. Joe Fisher appears ready to contribute further insights.

The paragraph discusses initiatives focused on providing win-win solutions for both customers and the company, specifically highlighting a community-wide Wi-Fi setup that eliminates the need for individual setup appointments and allows connectivity throughout the property. The company ensures competitive pricing and value in comparison to the market. Ami Probandt expresses a desire for similar Wi-Fi solutions in her building and shifts the conversation to a San Francisco deal, questioning its viability in light of issues with other DPE (Development Project Estimation) deals. Joe Fisher explains that the troubled investments were largely due to post-COVID challenges like construction delays, material shortages, and cost overruns, particularly affecting urban projects.

The paragraph discusses the challenges faced by certain urban real estate assets, specifically in San Francisco and Philadelphia, which have not recovered at the same rate as the rest of the portfolio. The speaker highlights strategies to mitigate risk, such as focusing on recapping operating assets where rent and performance are more predictable, thus reducing development exposure. The deal mentioned involves a recap with favorable loan-to-value ratios and consistent cash flow, making the investment secure. The discussion then shifts to a question from Austin Wurschmidt regarding market accelerations, to which Mike Lacy responds, noting a general improvement in market conditions across the board compared to the first quarter, with growth moving from around 0.9% to the mid-2% range.

The paragraph discusses regional real estate market trends and strategies to mitigate risks in the latter half of the year. The speaker notes significant acceleration in the Sunbelt, particularly in Texas and Florida, with a noticeable improvement in Austin. D.C. and Boston are showing positive performance on the East Coast despite initial concerns, while San Francisco and Seattle are doing well on the West Coast. Seattle, in particular, has shown significant improvement. Their strategy includes sending out rent renewals with increases between 4.5% and 5% and being flexible with negotiations. They note an encouraging trend in new lease growth, observing a flat rate in April compared to a negative rate in the first quarter.

The paragraph discusses a strategy to boost property renewals and occupancy rates during high-demand periods, specifically the second and third quarters, by being more aggressive with pricing. Cooper Clark, speaking on behalf of Jamie Feldman from Wells Fargo, asks Joe Fisher about the current yields on developments and acquisitions, including those involving the LaSalle joint venture (JV). Joe Fisher responds that they are underwriting and showing significantly more deals with LaSalle compared to the previous year, noting that LaSalle’s capital partner had paused activity last year due to global market reassessments. This year, they received approval to proceed with new deals, and Fisher expects to discuss a new deal they are pursuing by July, though he mentions that price discovery remains a key factor.

The paragraph discusses the current state of real estate volumes and pricing compared to pre-COVID times and the years 2021-2023. While volumes are down from the peak years, pricing remains stable with good price discovery. Prime assets in good locations are priced in the mid-4s cap rates, while older, less desirable assets can reach cap rates in the 5s. Due to fewer leveraged buyers, B-quality assets aren't pricing as well. On the development side, new opportunities are being underwritten with cap rates in the low to mid-6s. A recent deal in Riverside is targeted at a 6% yield. The company is working to activate its land pipeline, with upcoming projects in Northern Virginia and Dallas planned for late this year or early next year. However, they are not seeking new land acquisitions currently.

The paragraph discusses a shift in strategy towards a more opportunistic and capital-balanced approach. Joe Fisher explains that they are focusing on capital recycling through dispositions and are leveraging payoffs from existing projects. They see the timing as favorable for activating land development due to a decrease in new supply. Additionally, they aim to grow their joint venture platform by expanding their number of partnerships, with plans for more deals in the near future. The approach involves identifying assets that are less favorable due to yield, margin, or market conditions for potential disposition to optimize their capital recycling strategy.

In the article paragraph, Jana Galan from Bank of America poses a question to Mike Lacy regarding the market trends in the Southwest region, specifically focusing on Dallas and Austin. She asks if the current quarter could represent the low point for new leases in that area. Mike responds by indicating that Florida, particularly Tampa and Orlando, is experiencing positive momentum and might see new lease growth sooner. He notes that Nashville might see improvement by the end of the year or early next year, with Austin being the furthest behind due to a significant supply of available properties. Austin is a small market for them, making up only 1.5% of their NOI, and it may not see positive momentum until late this year or next year. John Kim from BMO Capital Markets then asks about the expected blended growth for the first half of the year, indicating potential new lease growth of 1.5% to 2% in the second quarter.

The paragraph discusses a financial performance update and outlook. Tom Toomey mentions that if they can maintain a 2.5% increase observed in April throughout the second quarter, they will meet their initial expectations for the first half of the year. John Kim points out the positive growth in new lease rates in the second quarter, which aligns with expectations. Toomey notes that renewals are steady at around 4.5%, with potential for increases in the third quarter. Joe Fisher confirms that they are on track to achieve an additional $15 million in income from value-add services, driven by growth in initiatives like Wi-Fi, parking, and package locker services.

The paragraph is part of a discussion about the positive trend in reducing turnover rates. The speaker highlights that their turnover has declined from an average of over 50% from 2012 to 2019 to around 32% currently, marking significant progress over the past few years. They mention that last year they achieved a 43% turnover rate, but aimed to improve by 1%, and now they are on track to be 3% better, with April showing a 4% improvement year-over-year. A question is raised about whether turnover can become too low, potentially limiting opportunities to increase rent.

The paragraph discusses a company's shift from focusing on transactional interactions to prioritizing long-term relationships with residents, emphasizing lifetime value. The teams have the necessary tools and training to improve experiences, which positively impacts turnover, pricing, occupancy, and margins. The company is addressing recurring issues and implementing a new CRM, which is halfway rolled out and expected to enhance efficiency by the end of May. Overall, the company is committed to transforming industry practices, with an emphasis on total revenue performance. Tom Toomey reiterates the focus on industry-wide changes beyond individual metrics.

The paragraph discusses the strategies of a company to improve its financial performance by reducing bad debt to pre-pandemic levels and optimizing rental revenue. They focus on reducing apartment turnover and maintaining high occupancy rates to increase revenue, dynamically adjusting pricing to optimize total revenue without sacrificing it. Rich Anderson inquires about the possibility of raising guidance based on current market conditions, considering factors like potential consumer recession and tariffs but notes that the company traditionally does not adjust guidance after the first quarter. Joe Fisher confirms their practice of not raising guidance post-Q1, in line with industry norms.

In the paragraph, Joe Fisher expresses excitement about the strong start to the year but notes that there's still uncertainty and work ahead. An update is expected by July and the second quarter. Haendel St. Juste from Mizuho then questions the current mezzanine lending environment, asking about the level of inbound deals, especially with macroeconomic uncertainties and higher rates. Andrew Cantor responds, stating that inbound development deals have declined compared to historical levels, though there's an increase in opportunities to recapitalize operating assets. However, the volume of inbound opportunities remains below the historical average.

The paragraph provides updates on a CFO search and discusses the current transaction market for assets. Tom Toomey notes that after a strong candidate response, face-to-face interviews have begun for the CFO position, emphasizing the importance of finding the right fit for the team and strategy. Meanwhile, Andrew Cantor addresses the transaction market, highlighting differing perspectives: some say activity is quiet due to market disruption, while others believe deals remain active due to attractive interest rates. Cantor observes that current buyers are more focused on future fundamentals, specifically looking at 2026 and 2027, and emphasizes the importance of asset-specific and market-specific considerations, as well as the concept of basis in transactions.

The paragraph discusses the decision to invest in a development project in Riverside, highlighting that it aligns with the company's yield thresholds, yielding about a 6% return. Joe Fisher explains that despite market disruptions and a preference for infill markets with better cost dynamics, this project was prioritized due to its promising location between Downtown Riverside and a nearby campus. The company has held the land since about 2019 and previously worked with a partner they bought out over time. While they have been cautious with development recently, this project was identified as favorable, with more expected to start later in the year.

The paragraph is a part of a conference call where Adam Kramer from Morgan Stanley asks about the current market fundamentals and the return to office trends in Washington, D.C., an important market for the company. Mike Lacy responds by stating that D.C. makes up about 15% of the company's NOI, with a mix of urban and suburban properties. The company had a successful quarter with 4.9% revenue growth and a high occupancy rate of 97.7%. They closely monitor leading indicators like cancellations, vacancies, and traffic to ensure the market remains healthy. Overall, D.C. has been performing well and remains a focus for the company, with adjustments planned as needed throughout the year.

The paragraph discusses the impact of the return to office on occupancy rates and public transit ridership, particularly in Washington D.C., where occupancy remains above 97% with minimal concessions. Public transit ridership is increasing, and jobless claims have returned to normal levels, indicating a potential stabilization. Joe Fisher and Adam Kramer are mentioned in this context, with Kramer thanking the participants. Julien Blouin from Goldman Sachs asks about the Boston market, highlighting concerns about potential risks from university and research funding cuts and biotech sector softness. Mike Lacy responds, emphasizing that the Boston market, which constitutes a significant part of their portfolio, has performed better than expected.

The paragraph discusses the current state of real estate markets in Boston, highlighting the strengths and weaknesses of different areas such as the North Shore, South Shore, and downtown. Despite strong initial revenue growth of 4.6% in the first quarter, there is an expectation that North Shore's growth will slow down due to increased supply. The text touches on Boston's thriving rental market with stable concessions and occupancy rates, as well as its relatively low reliance on the biotech and life sciences sectors. The discussion also notes the positive outlook for Boston's supply due to permitting activities, suggesting relative affordability for renters. A conversation takes place between Joe Fisher and Julien Blouin, considering the resilience of various regions (East Coast, West Coast, Sunbelt) in the event of a potential economic downturn, with the resilience dependent on the cause of the demand decline.

The paragraph discusses the impact of various economic downturns, such as the Global Financial Crisis (GFC) and tech-related declines, on different U.S. regions. It highlights that certain markets, like those in D.C., Boston, and parts of the Sunbelt, tend to be less volatile. The speaker emphasizes the advantage of having a diversified portfolio, suggesting it provides insulation against potential recessions. In a subsequent question, Ann Chan inquires about any unusual financial impacts in the first quarter. Joe Fisher responds, noting the quarter was operationally stable but was affected by timing issues with General and Administrative (G&A) expenses, which are expected to normalize, maintaining confidence in the annual guidance.

The paragraph discusses a financial situation involving a Fairmount loan buyout and its impact on a company's finances. Joe Fisher explains that after reserving the value of the loan to $183 million, it made the company's position 100% leveraged, rendering the debt service coverage irrelevant due to it being on nonaccrual status. He estimates a forward return of $6 to $7 million in net operating income (NOI), expecting further upside. Ann Chan then asks about improvements in bad debt related to an AI screening program. Alex Kim adds a query about the same program, questioning if any improvements have been observed.

The paragraph discusses improvements in a program involving ID verification and proof of income, which has contributed to reductions in bad debt and better financial outcomes. Mike Lacy mentions increased average deposits (up 17%), more applications with cosigners (up 1%), and improved credit scores (up 20 points to 730). These enhancements have helped manage riskier tenants more effectively. Joe Fisher adds that net bad debt reserve is declining, accounts receivable are improving, and there are fewer long-term delinquencies, despite ongoing legal process delays. The overall trend is approaching pre-COVID levels of net bad debt expense.

The paragraph summarizes a conference call discussion where participants highlight the potential benefits and financial opportunities from implementing AI platforms, specifically mentioning a potential $15 to $20 million in cash flow improvement needed to return to pre-COVID levels. Participants emphasize the importance of careful implementation to ensure the right residents are attracted to their communities. The call concludes with thanks from UDR's Chairman and CEO, Tom Toomey, who expresses appreciation for the interest and support and looks forward to future events. The operator then ends the conference.

This summary was generated with AI and may contain some inaccuracies.